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Fed rate hikes are to blame for housing market slowdown: Anthony Chan


♪♪ CHARLES: MARK TWAIN ONCE SAID REPORTS OF MY DEATH HAVE BEEN GREATLY EXAGGERATED. THE SAME CAN BE SAID FOR THIS ECONOMY. THE NEWS ALWAYS MORE INTERESTED IN DISASTERS THAN POSITIVE STORIES BUT MORE RECENTLY THE FOCUS HAS BEEN ON POSSIBLE DISASTERS WHILE COMPLETELY IGNORING ANY GOOD NEWS. NOW THE LAST COUPLE WEEKS HAS SEEN SEVERAL MISSES ON KEY ECONOMIC DATA POINTS BUT ALSO LOTS OF POSITIVE DATA INCLUDING REPORTS THAT HAVE BEEN BETTER THAN WALL STREET CONSENSUS. CASE IN POINT YESTERDAY. MAY AUTO SALES, 2019, FIRST MONTHLY GAIN OF THE YEAR, DESPITE PREDICTIONS THAT THE INDUSTRY WOULD FALL OFF A CLIFF. MANY BIG AUTO COMPANIES DON’T POST INTERNAL NUMBERS. WE GOT TOYOTA UP 3.2%. FIAT UP 2.2%. ECONOMY IS CYCLICAL. IT WILL MOVE LOWER BUT I WONDER IF IT WILL BE REPORTED PROPERLY INSTEAD OF POLITICIZED? I’M CONCERNED ABOUT CONSTANT NEGATIVE MEDIA AND DOOMSDAY GUESSING ON EFFORTS. I WANT TO BRING IN FORMER JPMORGAN CHASE CHIEF ECONOMIST ANTHONY CHEN. THANKS FOR COMING HERE.>>THANK YOU. CHARLES: YOU’RE ONE OF MY TOP FIVE ECONOMISTS. I DON’T KNOW WHERE YOU FIT BUT I LOVE YOUR WORK AND STRAIGHTFORWARDNESS, THE FACT YOU’RE APOLITICAL.>>THAT’S RIGHT. CHARLES: WHERE DO YOU SEE THE ECONOMY? THERE ARE OBVIOUSLY WEAK SPOTS BUT IT ALSO SHOWS RESOLVE THAT KEEPS SURPRISING PEOPLE?>>I FEEL VERY GOOD ABOUT THE ECONOMY. WE HAVE VERY TIGHT LABOR MARKETS. WE’LL GET A EMPLOYMENT REPORT ON FRIDAY I THINK IS VERY GOOD. WE’LL GET A NUMBER UN175,000 GAINS FOR NON-FARM PAYROLLS. CHARLES I’VE DONE RESEARCH THAT FORECASTS WHEN YOU GET RECESSION. I LOOK AT THAT YIELD CURVE. THERE IS A WHOLE BUNCH OF DIFFERENT REASONS. I LOOK AT THE 10 TO TWO YEAR. I LOOK AT INDEX OF LEADING ECONOMIC INDICATORS, THEY BOTH FLASH RECESSION SIGNALS, GO AS FAR AS BACK THE DATA TAKES IT HAS 100% TRACK RECORD. 10 TO TWO YEAR IS NOT INVERTED. LEADING INDEX OF ECONOMIC INDICATORS HAS NOT DROPPED THROUGH CONSECUTIVE MONTHS. RECESSION, I’M NOT GETTING THOSE SIGNALS. I’M FEELING GOOD ABOUT THE ECONOMY OVER NEXT 11 MONTHS. CHARLES: INVERSE IS THREE MONTH AND 10-YEAR.>>THREE MONTHS TO THE 10-YEAR. 10-YEAR TO THE FED FUNDS RATES. THOSE TWO HAVE INVERTED SLIGHTLY BUT 10-YEAR TO TWO YEAR HAS NOT, NEITHER HASN’T DECKS OF LEADING ECONOMIC INDICATORS GIVING YOU RECESSION SIGNALS. CHARLES: AREAS OF WEAKNESS, FOR INSTANCE, HOUSING, IT HAS BEEN A CHRONIC PROBLEM. IS THAT SOMETHING WE SHOULD BE CONCERNED ABOUT, IS THAT TELLING US ANYTHING ABOUT THE FOOT OUR OR MOSTLY A REAR HAVE YOU MIRROR LOOKING THING?>>THE HOUSING MARKET SLOWED DOWN BECAUSE THE FEDERAL RESERVE RAISED RATES. THAT IS INTEREST SENSITIVE SECTOR. THAT IS ONE OF THE SECTORS THAT FEEL THAT EFFECT. THE FACT THAT HOUSING PRICES OUTPACED WAGES. AT SOME POINT THE TREND IS UNSUSTAINABLE, DOESN’T LAST. THAT IS THE QUOTE BY HERBERT STEIN, CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISORS UNDER RICHARD NIXON. CHARLES: SOME COMMON SENSE PERSON I BET SAID IT TOO. LET ME ASK YOU ABOUT JAY POWELL’S COMMENTS, MY THEORY, I LISTENED TO A LOT OF HIS SPEECHES. HE LOVES THE FACT THAT HE BELIEVED THE FEDERAL RESERVE SAVED THIS COUNTRY, SAVED OUR ECONOMY. I DON’T THINK HE WILL LET US GO INTO RECESSION. AT LEAST HE WILL TRY HIS BEST TO LET IT HAPPEN UNDER HIS WATCH.>>I THINK YOU’RE SPOT ON, CHARLES. WE SEE THE FEDERAL SERVE AS TWO CHILDREN, THEY HAVE AN EMPLOYMENT MANDATE AND PRICE MANDATE. THEY DON’T HAVE TO WORRY ABOUT THE PRICE MANDATE. WE HAVE CORE PERSONAL CONSUMPTION, RISING YEAR-OVER-YEAR, TARGET 2%. THEY ARE TELLING YOU TO AVERAGE INFLATION TARGETING F THEY CONTINUE, THEY HAVE UNDERSHOT FOR SOME YEARS. THEY CAN GO A LITTLE BIT HIGHER. BUT EVEN THAT IS NOT AN ISSUE. FOR THAT I THINK THEY WILL LET IT RUN A LITTLE HOTTER. THAT IS WHY FED CHAIRMAN POWELL FEELS VERY COMFORTABLE WITH REALLY HELPING THE ECONOMY IF HE SEES ANY SIGN OF TURBULENCE

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29 thoughts on “Fed rate hikes are to blame for housing market slowdown: Anthony Chan

  1. In 2007 the FED raised interest rates 17 times which caused the collapse now the problem is outrageous prices.

  2. The Fed is responsible all right. They are responsible for about half the houses in America being in a giant price bubble AGAIN. And it's worse that 2008 right now. How many Americans are priced out of these markets because of the stinking Fed? How much fake money has been funneled to house asset holders, and how much has all that free money diluted real money earned from actual work. To hell with the asset price propping Fed. How do they know what the right asset price is? They don't. They all should be jailed for market fraud.

  3. The banks, realtors and home sellers playing the "housing bubble" V 2.0. Version 1.0 was the testing ground for V 2.0

  4. News Flash chubby tubby in the PIMP suit, you can lower the interest rate to zero and home prices are still to expensive for most people.

  5. Will Fox delete the video "Live: House Oversight…" immediately after its conclusion so we can't comment on it?

  6. Remember the problem was cutting rates to begin with and blowing up this bubble. They doomed the economy.

  7. Anyone ever wonder what logistically gives the FED the power to dictate interest rates?

    '17-CV-02954-KLM
    Operation: Crucified Serpent

    Justice is coming.

  8. Dear Fox, you are a good boy, always trying to find ways to blame Trumps failtures to others …..
    Go on with that … 1930+ showed us what will happen

  9. High Property taxes in Washington and California add to it. That and Inflation make it not even possible for common Americans to afford rent let alone a High mortgage payment.

    Meanwhile banks are taking homes from people on fixed incomes who are ripped off by bad policies from corrupt politicians. HOMELESSNESS continues to Rise

  10. How are people supposed to by houses when the cities are full of illegals that the taxpayers have to pay for thanks to the dems …

  11. You can't even leave anything outside without an illegal stealing it or their kids ripping it apart … and you wonder why people can't afford houses …

  12. This is funny for those of us who managed to deal with 16% and 18% rates and survived. And these snowflakes today can not take up to 6%. How fragile can these little minds get. Doomed the economy most of us would have been happy with 8%. If they can not handle it they should not be able to buy a house, ever.

  13. Funny how these dumb dumbs changing the story now.

    6 months ago talking about rate hikes and everything else. Said last thing fed would do is cut rates…..looks like completely wrong about that.

    What’s coming next? QE4. None of these goofs talking about it.

    Learn to do your own analysis. Don’t trust these guys and especially don’t trust CNBC.

    Always do opposite of CNBC….95% of the time you will win….facts

  14. Fox always has a bogie man to blame. Housing prices are too high, cut the price to more reasonable prices and the housing market will boom.

  15. Which means housing wasn't sustainable. For needing free money. The prices of housing needs to go back down to 3x average income.

    Meaning they over valued by 300% .

    Good day. Hope you crash just not into me.

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