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[ad_1] Home prices are skyrocketing, housing inventory is at all-time lows and homebuyers have to contend with multiple bids. Can this last? No, it can’t. In time, markets always find balance and balance is a good thing. But, that doesn’t mean housing is going to crash. One of the reasons that I moved into the “team higher mortgage rate” camp is that what I saw in January, February, and March of this year was so unhealthy that I labeled the housing market savagely unhealthy. I set a specific home-price growth model for the years 2020-2024 that said if home prices only grew at 23% during this five-year period, the housing market would still be OK, given wage growth. Obviously, my home-price growth model got smashed! With where prices were heading when mortgage rates were under 4%, we were looking at 35%-40% cumulative home-price growth in just three years. That isn’t a good thing, so I want to see a cool down in prices. However, a cool-down in prices is not the same thing as a housing crash. Let’s take a look at what it would take to crash homes prices in America. A few things in life are constant: the sun rises, we will all die someday, and every year people say housing is going to crash. Also, people always say we are about to go into recession and that the dollar is going to collapse any day now! I believe in economic models and I’m not going to throw up a few charts without forecasting models, because I want to show the pathway for these things to occur. We have to take everything one day at a time and add new variables when appropriate. After writing the America is Back recovery model on HousingWire, I wrote an article on my blog about what it would take to crash home prices on April 10, 2020. Economic vision is critical when forecasting what would happen back then, because those were some of the darkest economic days I can remember. Still, some of us had faith in our economic models. COVID-19 happened right at the start of 2020; this is also the period in time when i had forecast a five-year once-in-a-lifetime period for housing to start. The years 2020-2024 were always going to be different from 2008-2019. As it turned out with COVID, we had the most significant housing demographic patch ever recorded in history, with the lowest mortgage rates ever recorded, and homeowners, on paper, have the best financials ever.  With that said, let’s look at what needs to happen for home prices to to crash. Here’s a point-by-point comparison of what I said before April 10, 2020 and where we are today. Inventory velocity April 10, 2020: We needed a lot of inventory, fast The velocity of inventory rising in the next three months is limited. It should increase with a longer duration time to sell a home. However, unlike in 2006 when demand was getting weaker and inventory was above six months, it’s the opposite now during the B.C. (before COVID) stage. However, for A.D. (after the disease), this is why lockdown protocols have to stay on for much longer. This will then mean that demand gets hit for a longer duration. April 2022: Inventory has not recovered. Inventory collapsed in 2020, 2021 and 2022. We still have negative year-over-year inventory data, which is why I have labeled this is a savagely unhealthy housing market. My goal is for the total inventory to get back to 1.52 -1.93 million — once that happens, I can take the unhealthy label off the housing market. We need prices to fall this year, next year, and in 2024 to ensure we are under 23% cumulative price growth for 2025. With inventory collapsing, we are in big trouble. We are in the part of the year that inventory typically increases. We want the inventory to be positive year over year, not negative! If you’re looking for a housing crash, you need inventory to skyrocket with no demand bidding. Monthly supply data being at 1.7 months isn’t going to do that. As you can see above, the monthly supply in 2006, 2007, 2008, 2009, 2010, and 2011 was above 6 months on average, running at 8.71 months during this six-year period. April 10, 2020: We had cycle highs in demand with the inventory at cycle lows. Inventory levels during this time of lockdown protocols start from a much different spot than in 2006. Also, the demographics for housing look solid as the biggest age group in U.S. history are ages 26-32, and the first-time median home buyer age is now 33. April 2022: If anything, demand is higher and inventory is lower. We are currently at 1.7 months, so if you’re looking for housing to crash, you will need to see a lot more total inventory and monthly supply data to skyrocket in a short time. April 10, 2020: Many people predicted a crash in housing due to forbearance, which would require a lot of distressed sales. Due to timing, this would have to be a 2021 story. Foreclosures are a long process. The government is going to try its best to prevent as many foreclosures as possible. Even if you see a noticeable rise in delinquencies, this doesn’t mean distress bulk foreclosure buying is about to happen in one to two months. Due to the forbearance factor in 2020, I would keep an eye on this in 2021 for sure. The legit high-level risk homeowners are 2018/2019 and 2020 FHA homebuyers because they lack selling equity, and they would make up that smaller portion of sub -60 FICO score home loans bought in this cycle. April 2022: There was no forbearance crash. The forbearance crash bros whiffed, not in a small way, but in the most prominent fashion ever recorded in history. Not only did the epic housing crash they called for not happen, home prices overheated in 2021 so much that the housing

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[ad_1] Airbus cuts A330 orders, reveals Russia delivery U-turn [ad_2] Source link

[ad_1] Banks have extended loans of Rs 18.6 trillion to about 34.4 crore beneficiaries so far under the Pradhan Mantri Mudra Yojana (PMMY), which completes seven years on Friday, finance minister Nirmala Sitharaman has said. Under the scheme, meant primarily for budding and small entrepreneurs in the non-corporate and non-farm sectors, loans up to Rs 10 lakh are extended to a beneficiary at affordable rates. Prime Minister Narendra Modi hailed the performance of the scheme. Guided by the principle of funding the unfunded, the Mudra Yojana has “given an opportunity to countless Indians to showcase their entrepreneurial skills and become job creators”, Modi said. Women make up over 68% of the Mudra account holders and 22% of the loans were disbursed to new entrepreneurs, Sitharaman said. As many as 51% of total sanctioned loans have gone to beneficiaries in the SC/ST/ OBC categories, which suggests the scheme stands for social justice as well, the minister said. The scheme was launched by the Prime Minister on April 8, 2015. Although the pandemic has hit the pace of growth of Mudra loans, the disbursement has still remained well above the annual average of Rs 2.66 trillion until FY20. In FY21, such loan disbursements stood at Rs 3.12 trillion and in FY22, these touched Rs 3.03 trillion. Given that most of the Mudra loans are collateral-free, experts have warned of growing risks of deterioration of asset quality, although they also concede that the scheme has improved access to credit of people belonging to vulnerable sections. Mudra loans are extended to three categories of borrowers — Sishu, Kishore and Tarun. Customers seeking loans up to Rs 50,000 come under the Sishu category; the Kishore category covers credit above Rs 50,000 and up to Rs 5 lakh; and the Traun category covers loan above Rs 5 lakh and up to Rs 10 lakh. [ad_2] Source link

[ad_1] Freddie Mac’s headquarters in Washington, D.C. Freddie Mac has unveiled its third credit risk transfer offering of the year through its Structured Agency Credit Risk (STACR) program. This latest transaction will bring the total note issuance so far in 2022 through STACR to $5.1 billion secured by single-family mortgage reference loan pools valued in total at $121.5 billion. This latest credit risk transfer (CRT) offering, STACR 2022-DNA3, involves a $1.8 billion note backed by a reference loan pool of 140,950 residential mortgages with an outstanding principal balance of $42.9 billion The leading loan originators represented in the reference loan pool on a percentage basis for this third STACR transaction, according to Kroll Bond Rating Agency’s [KBRA’s] ratings report on the deal, are Rocket Mortgage, 9.1%; United Wholesale Mortgage (UWM), 7%; J.P. Morgan Chase Bank, 5%; and Pennymac, 4.8%. KBRA’s presale ratings report on the STACR 2022-DNA3 offering indicates that appraisal wavers were granted for nearly 40% of the reference pool loans, which were assessed instead through the agency’s Automated Collateral Evaluator, or ACE, system.  “It should be noted that while the ACE program assesses the acceptability of a property value or sales price based on the use of proprietary models and market data, it does so without Freddie Mac having performed a property review or having obtained a valuation of the property,” the KBRA report states. “As a result, KBRA applied a broad valuation haircut to such loans.” The KBRA report also mentions that the loan reference pool for the CRT offering has far more geographic diversity when compared to a typical residential mortgage-backed securities offering involving high-balance loans. The average loan balance in the reference pool for the current CRT offering is $304,267. “When considering the average California percentage in KBRA-rated prime jumbo pools (approximately 45% to 50%), the California concentration in STACR 2022-DNA3 is relatively low at 16.0%,” the KBRA report states. “… Geographic diversity helps mitigate the risk that a regional economic recession or natural disaster will have an outsized impact on default rates.” The initial STARC deal of this year, STACR 2022-DNA1 was a $1.4 billion note offering issued against a reference loan pool of 190,774 residential mortgages with an outstanding principal balance of $33.6 billion. In the second offering, STACR 2022-DNA2, Freddie issued a $1.9 billion note against a reference pool of 143,889 single-family mortgages valued at about $45 billion.  The leading originators for the loan pool in the first STACR offering of 2022, according to a KBRA ratings report, were UWM, 7%; Newrez LLC, 7%; Rocket Mortgage, 6.6%; Pennymac, 6.3%; and J.P. Morgan Chase, 5.9%. UWM also was the leading originator in the second STACR deal of 2022, at 9.1% of the loan pool. Rocket Mortgage also made a showing, at 8.3%, followed by Wells Fargo, 6.1%; J.P. Morgan Chase, 5.9%; and Newrez, 5%. Freddie Mac earlier this year announced that its credit-risk transfer (CRT) program is projecting note-issuance volume of at least $25 billion in 2022.  Through Freddie Mac’s STACR transactions, private investors participate with the agency in sharing a portion of the mortgage credit risk in the reference loan pools retained by the agency. Investors receive principal and interest payments on the STACR notes they purchase, but if credit losses exceed a predefined threshold per the security issued, then investors are responsible for absorbing the losses exceeding that mark.  Freddie Mac’s overall single-family CRT program in 2021 issued some $18.7 billion in notes backed by mortgage pools valued in total at nearly $829 billion through 10 STACR offerings and 11 ACIS [Agency Credit Insurance Structure] transactions.  “Since the first CRT transaction in 2013, Freddie Mac’s single-family CRT program has cumulatively transferred approximately $85.3 billion in credit risk on approximately $2.7 trillion in mortgages through STACR and ACIS,” Freddie Mac announced in late February. “As of December 31, 2021, approximately 53 percent of the single-family mortgage portfolio was covered by credit enhancement.” The post Freddie Mac rolls out $1.8 billion CRT note offering appeared first on HousingWire. [ad_2] Source link

[ad_1] The post Causes of Economic Inflation and What You Should Know appeared first on Millennial Money. Chances are, you’ve been to the gas pump or the store and suffered from sticker shock lately. If you’re wondering if inflation plays a part, you’d be absolutely right.  Economic inflation is caused when an unusually high demand for products, housing, utilities, food, and other daily necessities leads to a shortage of supply. Prices to produce these products go up as needed materials and resources grow scarce. This makes things more expensive for consumers.  It’s a snowball effect of the worst kind.  And that pandemic thing we’ve all been dealing with has primed the U.S. for the perfect inflation storm. As more and more people sat at home bored out of their minds, online shopping and large-ticket purchases soared.  Consider one such company – Peloton. As millions of Americans were kept out of gyms, they turned to this giant workout conglomerate. People purchased so many bikes from the company that it couldn’t get them shipped overseas fast enough.  So the company resorted to spending extra money to fly its equipment overseas instead. This cost Peloton millions and the costs were mostly likely passed on to the consumer in one way or another.  The Primary Causes of Inflation in the U.S. A strong economy with free-flowing cash can actually backfire. While it’s nice to have extra spending money on hand, too much of it can lead to supply issues and expensive production costs. Not to mention price hikes from companies that would like to profit.   U.S. inflation can be caused by:  Increased demand for products Spending habit changes due to big events like pandemics or natural disasters Scarcity of materials for producing in-demand goods An excess of currency flowing through the economy which encourages spending Increases in wages that could throw spending out of balance with supply Price hikes by companies that would like to profit from the spending frenzy Other things can contribute to inflation in the U.S. as well. A few of these causes aren’t top of mind when we think about why prices are rising all around us. Extra money flowing to consumers via government stimulus payments can lead to deep pockets for some — who are then able to spend more freely than they might have before.  Meant to help people through the sting of shutdowns and job losses, stimulus payments were crucial for some people’s survival. But others used the cash to buy more stuff, thus putting a strain on supply.  Add stimulus money to the commuting and entertainment savings everyone enjoyed while working from home, and you’ve got a recipe for a spending frenzy, for sure.  The Primary Types of Inflation Most of us are familiar with the kind of inflation where increased buying leads to higher prices, but there are actually three primary types of inflation to be aware of: Demand-pull inflation Cost-push inflation Built-in inflation Characteristics of demand-pull Inflation Demand-pull inflation is a type of inflation that happens when there is more demand for goods and services than what can be produced at that time. This happens when the economy is doing well and people have money to spend. Businesses normally have to increase prices to slow down buyer behavior so they can try to meet the demand. The main characteristic of demand-pull inflation is rising prices. Characteristics of cost-push inflation Cost-push inflation happens when the cost of production goes up and businesses have to pass (or “push”) these costs along to consumers in the form of higher prices. For example, if the cost of wheat goes up and producing bread becomes more costly for the bread company, the price for a loaf of bread will increase to help with those added expenses. This type of inflation is often caused by factors beyond the control of businesses or individuals, such as natural disasters or an increase in the price of imported goods. The main characteristic of cost-push inflation is also rising prices. Characteristics of built-in inflation Built-in inflation is like a continuous circle of cost-of-living and wage increases. As life becomes more expensive, workers require raises to keep up. As these wages increase, the companies having to pay out more must raise their prices to be able to survive that added expense. It’s not necessarily linked to demand but simply the high cost of living.  When businesses are required to raise their minimum wage, the employees are happier — until prices begin to reflect that added expense businesses must absorb. The main characteristic of built-in inflation is rising prices, but it can also lead to lower unemployment because businesses have to hire more workers to keep up with production. Measuring Inflation by Speed  Not everyone agrees with measuring inflation by the traditional “type” above. Some economists gauge and define inflation by its speed.  Creeping inflation: mild inflation of around 2%, which the Fed tries to maintain for optimal economic stability/growth.  Walking inflation: strong inflation at a rate of 3-10% — characterized by crazy buying habits, supply problems, and prices most people can’t afford.  Galloping inflation: catastrophic inflation of 10% or more ,which leads to crumbling economies and the loss of credibility with foreign investors.  Hyperinflation: an extremely rare event where prices grow out of control — most often caused by excess printing of money during extreme circumstances such as war.  Fiscal Inflation Factors Sometimes government policy, currency flow and value, and interest rates contribute to inflation. They can also be used as measures for correcting inflation.  Fiscal measures that affect inflation: Monetary policy Fiscal policy Exchange rates How Can Monetary Policy Affect Inflation? Monetary policy is governed by a central bank, such as the Federal Reserve System in the United States. Its policies control the availability of money and credit to help promote national economic objectives. Much like Gringotts Wizarding Bank in Harry Potter, the central bank stays independent from political influence and is free to make its own policy. Although not run by goblins,

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[ad_1] Moscow laments troop deaths as Ukraine braces for new Russian offensive [ad_2] Source link

[ad_1]  Kia India, today announced the launch of refreshed versions of two of its most popular products, Kia Seltos and Kia Sonet. These refreshed versions now come with multiple updates and additional features that further enhance the value propositions of both these products. In addition, many existing features from higher variants are now being extended to lower variants. With an enhanced focus on safety, Kia India will now offer 4 airbags, standard across all lower variants, by adding side airbags to refreshed Seltos and refreshed Sonet. Kia India has also announced that it will introduce two new colours, ‘Imperial Blue’ and ‘Sparkling Silver’, on these refreshed versions of Kia Seltos and Kia Sonet. The vehicles come equipped with the completely revamped Kia Connect app to offer advanced connectivity to its customers. The company has also introduced Intelligent Manual Transmission (iMT) technology paired with a diesel engine on the refreshed Kia Seltos. Kia India has launched the refreshed Seltos and Sonet at a starting price of INR 10.19 Lakh (ex-showroom, pan-India) and INR 7.15 Lakh (ex-showroom, pan-India), respectively. Myung-sik Sohn, Chief Sales Officer, Kia India said, “We are extremely pleased to continue our positive momentum in the competitive Indian auto market. Our focus on the safety of the occupants is reflected in the refreshed Seltos and Sonet, with 4 airbags standard across all lower variants. Additionally, various convenience and styling changes have also been incorporated to recreate newer benchmarks in their respective segments. Until now, we have sold almost 2.67 Lakh units of Seltos and nearly 1.25 Lakh units of Sonet in the Indian market.” REFRESHED SELTOS The refreshed Kia Seltos has been updated with 13 new enhancements. The company has introduced the Intelligent Manual Transmission (iMT) technology with the 1.5 Diesel engine on the Kia Seltos HTK+ variant. The vehicle also comes in a new variant HTX AT powered by Diesel 1.5 powertrain.  Kia India also has extended paddle shifters along with multi-drive and traction modes for all automatic variants of the refreshed Kia Seltos for a sportier and more responsive driving experience. Multiple other safety features such as Side Airbag, Electronic Stability Control (ESC), Vehicle Stability Management (VSM), Brake Assist (BA), Hill Assist Control (HAC), Highline Tyre Pressure Monitoring System (Highline TPMS) and All-Wheel Disc brakes are also offered as standard on the refreshed Kia Seltos. Furthermore, The HTX+ variant of the vehicle also boasts curtain airbags. Further, design changes have been made in the Seltos logo design on the D-cut steering wheel, SUS scuff plate and tailgate to further enhance its appeal. In the case of Seltos X Line, it will now be offered with the X Line Logo on Indigo Pera Seats. REFRESHED SONET The refreshed Kia Sonet has been updated with 09 new enhancements. It will now be equipped with Side Airbag and Highline Tyre Pressure Monitoring System (Highline TPMS) as standard across variants to further enhance safety. The company will also offer safety features like Electronic Stability Control (ESC), Vehicle Stability Management (VSM)  , Brake Assist (BA), Hill Assist Control (HAC) as standard on the iMT trims. Further, curtain airbags will now be offered from HTX+ variant onwards. Customers of the newly launched Kia Sonet will get the Advanced 10.67 cm (4.2”) Colour Instrument Cluster  from the HTX variant itself.  The Semi Leatherette seat will now be offered from the HTE variant itself. Similar to the refreshed Seltos, the newly launched refreshed Sonet will also get design changes in the Sonet logo on the D-cut steering wheel and tailgate. [ad_2] Source link

[ad_1] Million Dollar Journey editor and Canadian Financial Summit founder Kyle Prevost shares financial headlines of the week and offers context for Canadian investors. A new voice, but same message One cannot simply replace Dale Roberts. All I can do is attempt to “stand on the shoulders of giants” that came before me. I’m Kyle Prevost and I’ll do my best to make sure we don’t fall off of Dale’s giant shoulders as I continue to try and make sense of the markets. I’ve been around the Canadian personal finance scene in various capacities for a while now, as a writer and editor at Million Dollar Journey and founder of the Canadian Financial Summit. I’m also a teacher, and my students would tell you that I’m my best with a captive audience. I’m hoping that MoneySense readers will be a more gentle learning community than the teenagers I’ve taught business, economics and personal finance to for the last couple of decades. At least I won’t be able to tell if you’re on your phones and ignoring me, or rolling your eyes at my jokes. I’ve worked with Dale for years, and I know he’s the one to call if I need some veteran leadership. And while I hope Dale is enjoying some well-earned relaxation, the markets never take time off. Breaking news: Companies that make more money are more valuable At first glance, you could be forgiven for thinking this might not be the right time to “buy low” and perhaps it could be exactly the right time to “sell high,” in looking at a 2021 chart of U.S. stock returns. Source: Morningstar Reading too much into extrapolated, homespun wisdom is exactly the sort of common error that smart investors try to avoid. The truth is: While stock market valuations can wander away from underlying fundamentals for a time, it all eventually comes back to the question: “Which companies are actually making money?” The more earnings a company has, or is projected to have, the more investors are willing to pay for a share—and the more valuable the company becomes. Well, it turns out, companies made a lot of money in 2021. Bloomberg reported that 2021 was the most profitable year for American companies since 1950. Sure, inflation dampens the impact of the nominal numbers, but while employees enjoyed an 11% raise in pay, corporate earnings skyrocketed by 35%.  Basically, American companies realized they could cut costs and/or charge a lot more for their products and services. That, of course, makes them more valuable. We’re now in the unique situation of having witnessed quickly rising stock prices at the same time as a slightly compressed price-to-earnings ratio (P/E), which may signify that possible market pullbacks in the next few quarters won’t be as drastic as some are predicting. With the Fed stating Americans have roughly US$4.2 trillion in dry savings account powder ready to fire at will, those profit margins aren’t likely to come back to Earth anytime soon. Don’t have a cow… unless it’s an ETF When communicating anything in regards to the financial spinoff effects of a war, I will acknowledge, first and foremost, that portfolio returns are a distant consideration relative to the horrors taking place daily. The destruction of homes, infrastructure and, ultimately, lives has had awful direct consequences for Ukrainians. The conflict will also indirectly impact lives and markets all over the world. Both Russia and Ukraine are not only massive producers of important commodities, such as wheat, but they are also responsible for exporting much of the fertilizer that helps to produce food around the globe. With some degree of disruption of Ukrainian agricultural production assured, and possible issues in Russia and Belarus as well, there will be an opportunity for companies from other countries to increase production and grab market share. A quick way to get broad exposure to the agricultural sector is through the iShares Global Agriculture Index ETF, which goes by the aptly named ticker symbol of COW and trades on the TSX. Investors in COW are instantly diversified across 36 companies, mostly based in the U.S., with a smattering from Italy, Canada and Israel. The largest holdings include Archer Daniels Midland, Mosaic, Corteva, Bunge and John Deere. Here’s a breakdown of subsector weightings: Source: Blackrock.com Units of COW have already realized a 20% gain in the last month, so future profit opportunities have been “baked in” to some extent, but with an overall P/E ratio of 14.27, it still appears conservatively valued compared to bubblier markets. COW’s returns over the last year and three years, of 34% and 26% respectively, show a favourable longer-term trend line. Source: Yahoo Finance If you’re looking for a pure-Canadian single-stock approach to the situation, Saskatchewan-based Nutrien (NTR) happens to be the world’s biggest potash producer. And it is integral to the global fertilizer supply chain. Together, Russia and Belarus account for 37.6% of the world’s potash production. While analysts can’t be sure how much of Belarus’ and Russia’s capacity will be hampered by war, tariffs and sanctions, there is no doubt that many potash buyers will be looking for a more stable supplier in the immediate future. As with our favourite bovine ETF, however, the question quickly becomes: “Has a best-case scenario for Nutrien already been priced in?” Source: Yahoo Finance Steven Hansen, managing director and equity analyst at Raymond James, believes there might still be some meat on the bone when it comes to future returns. Here are four quotes from him, via Bloomberg: “They do have a large amount of idle potash capacity they could bring to market that they have not done yet. The thing is, it will require them to hire a bunch more people and get some new equipment.”  “[Nutrien is], really, the only player that has idle or excess capacity still available globally. So they will play a really important role in, I’ll say, backfilling with the supply that’s been taken out of the market in the