#US100: Real Estate CRASH and China's trade Collapsing#US100 Trend Short Bearish
Market Phase High Volatility
Current Phase: Sideways Bearish
VP Shift: D-Shape
Fundamentals
Americans pay $ 2,538 a month for their home loan
Who can, should, wants to pay for it? Three years ago, Americans paid ( on average ) less than $ 1,500 a month for their real estate loan. Today they pay $ 2,538. This is a record high, and an increase of 11.6% over the previous year, according to the current data of the provider Redfin. In the first graphic we see the course of the years 2020 to 2023. The orange line shows this year's climb. In the second graphic, we have seen the development of sales of existing houses in the #USA since 2003. The current crash does not yet reach the dimension of the 2008 financial crisis, but it is a significant crash. Sure: When the monthly burden on a property is no longer sustainable for the average American, fewer and fewer people buy a house. The 30-year mortgage rates are loud Mortgage Bankers Association currently at 6.43 %. At the end of 2021 – shortly before the start of the big interest rate turnaround in the USA, it was around 3 %.
This new high in the monthly burden on a real estate loan in the USA was reached, according to Redfin, although the average selling price for homes in the four weeks to the 16th. April decreased by 2.6% compared to the previous year – is the largest decline in over a decade. Increased housing costs are one reason why potential home buyers are reluctant: upcoming house sales have decreased by 19% compared to the previous year, the largest decline in almost three months, and mortgage purchases decreased 10% last week. Buyers are also hampered by the lack of houses for sale because the number of new advertisements has decreased by 21% because homeowners rely on comparatively low mortgage rates.
But even if fewer people buy a house, many are looking for it. The Homebuyer Demand Index from Redfin – a measure of inquiries about visiting houses, submitting an offer or starting a house search – rose in the week to the 16th. April by 3% compared to the previous week and by 12% compared to the previous month %. Compared to the previous year, the demand index fell by 7%, which is the smallest decline in eleven months.
„ #Home buyers go window shopping and many enter the shop, but only a few of them come to the checkout “, as Redfin's deputy chief economist Taylor Marr puts it. „ There is not much choice on the shelves, and high mortgage rates and still high prices make houses too expensive for many buyers. Some buyers are discouraged by the rise in mortgage rates this week, partly due to the unexpectedly high bank profits that an increase in interest rates will result from Federal Reserve make it more likely next month. “
Nasdaq: The climb remains fragile – Rally weighs solely on Big Tech
Driven by strong Apple numbers and a rebound in the struck Bank shares there was a rally on Wall Street on Friday. The market width S&P 500 rose by 1.85% to 4,136 points, while the Nasdaq 100 even recorded an increase of 2.13% to 13,259 points. The Dow Jones had a gain of 1.65% to 33,674 points. With the Quarterly report from Apple, the reporting season in the United States has reached its peak. The Big Tech values all delivered good numbers, which kept the technology index Nasdaq at a high level.
This week the focus is on new ones Inflation data, mainly because the labor market report on Friday was significantly better than expected. Given the robust labor market, fears are increasing that consumer prices ( CPI ) could be higher than expected. The sharp rise in wages is an indication of this. As the US Department of Labor announced, average wages rose 0.5% in April compared to the previous month, but were expected to be only 0.3%. Hourly wages even rose by 4.4 percent compared to the same month in the previous year. Inflation could remain sticky due to rising wage growth. An early one Change in interestthe US Federal Reserve is becoming increasingly unlikely. The longer the interest rates remain at a high level, the thinner the air for sensitive technology stocks is likely to become.
Nasdaq: Big Tech reviews a problem?
Nevertheless, many investors have recently accessed Big Tech shares. But that is mainly due to the banking crisis. Investors are currently preferring safe ports such as gold and solid companies, which include big tech values in particular. These recently led the rally in Nasdaq. Because of the enormous market weighting alone, Apple is a driver of the rally. The heavyweight increased by 33% this year and was therefore an important pillar for the Nasdaq. However, Big Tech is now extremely sporty. Apple comes up with a PE ratio ( KGV ) of 29.50, which is significantly above the historical average. The share was valued higher only once before, during the Corona crisis ( KGV of 35.3 ).
The PE ratio of the Nvidia share, however, reached a value of 164.80, never before was the share so expensive. The current AI hype probably has a large part in it. Considering that earnings per share ( EPS ) of the large tech heavyweights like Microsoft and Apple have been stagnating for a year and a half or in the case of Nvidia even declined sharply, suggesting that there is not much room for maneuver. However, given the high weighting, the Nasdaq is dependent on Big Tech. If the tech heavyweights stall, it will also be difficult for the Nasdaq. The market width is therefore the big drawback, this is particularly evident in the wide-ranging Nasdaq Composite. The Advanced / Declineindicatorcurrently shows the non-existent market width. So the recent surge remains fragile as long as the rally is mainly on Big Tech's shoulders.
Nasdaq: Outbreak attempt
For the Nasdaq 100, the weekly closing went to a new annual high of 13,293 points. The Nasdaq 100 Futures climbed to a high of 13,358, which means that it was just under the high of 01. May at 15,365. But at the upper limit of the sideways range at around 13,350 it was over for now. Since 30. March, the technology index mainly deals in a range between 12,960 and 13,350 points.
In order for the eruption to succeed on the top, the Nasdaq Futures must rise sustainably over the barrier. Then he could aim for the next mark at 13,420 and the zone at 13,565 / 615. An increase up to the course of the 16th. August at 13,732 would also be possible. However, it only becomes critical again when the index falls below 13,030 and then breaks the lower limit of the range. In this case, taxes up to 12,810, 12,737 or 12,678 are likely.
#Realestate: does the crash start from #Sweden?
Since interest rates have risen worldwide, real estate prices have been under pressure - this is especially true for Sweden
Since interest #rates have risen worldwide, real estate prices have been under pressure –, especially for Sweden. Real estate prices have been falling sharply there for months, now the larger landlord of commercial real estate is coming under pressure. Is that just the tip of the iceberg?
Because in the USA, too, the prices for commercial real estate in descending flight – are a problem for the US regional banks, which are already under pressure, and which have granted the most loans in this area. Morgan Stanley expects one for the American commercial real estate market bigger price drop than even in the financial crisis.
In #Europe, however, Sweden could be the first domino to fall in real estate! In Sweden, prices were in times of zero interest rates massively increased, now the crash threatens. Many Swedes only paid interest for years, but did not repay the loan at all – in anticipation of further rising property prices. The situation with commercial estate in Sweden is even more precarious.
Sweden: Real estate crisis worsens – Focus on commercial real estate
The financing terminal in parts of the Swedish real estate sector is escalating. One of the country's largest commercial real estate rental companies, SBB, has announced that it will suspend its dividend payment after downgrading its credit rating to the high standard level. He also canceled a planned capital increase with which he wanted to strengthen his balance sheet. Bloomberg reports that.
The share price of #Samhallsbyggnadsbolaget i Norden AB fell on Tuesday by up to 9.5% to the lowest level in five years. There had already been a 20% price slide on Monday after the rating agency S&P Global Ratings had lowered the SBB credit rating to the high standard level.
#SBB announced on Tuesday night that the market reaction had thwarted a planned subscription rights issue for young shares in the amount of 2.6 billion crowns ( 233 million euros ) and that real estate would therefore be sold, to strengthen liquidity. It also announced that the dividend would be postponed.
SBB is symptomatic of a major problem in the Swedish real estate industry. The equivalent of around EUR 37 billion is due in the next five years, a quarter of which is due this year. They are therefore also considered an early warning signal for the European real estate sector in general, because a large part of their debts have short-term and variable interest rates.
Arctic Securities AS welcomes SBB's plan to improve its liquidity situation. “ These two decisions, the suspension of the dividend payment and the cancellation of the planned issue of D shares, are generally positive for SBB shareholders ”, said real estate analyst Michael Johansson. “ The problem for SBB is that the dividend has already been decided by the general meeting, so their only option is to suspend it. ”
Sweden's largest landlord is fighting with a debt burden of the equivalent of more than seven billion euros. The downgrading and the stock collapse are also blows for CEO Ilija Batljan, who has repeatedly assured investors that he would take action, to defend the company's first-class rating in the face of rising interest rates and increasing investor fear of the sector.
Danske Bank A / S sees the canceled share issue as a “ sign that #SBB currently has no access to the capital markets ”. This increases the refinancing risks.
Real estate prices in Sweden: Descent continues unabated
Swedish real estate prices continued one of the worst descents in the world, which could be further fueled by the interest rate hikes, which have not yet become fully effective.
Home prices fell seasonally adjusted by 1% in April, led by the drop in single-family house prices, according to SBAB data published on Monday. This follows a decrease of 0.
8% in March.
The data were released after the Swedish central bank announced a half-point increase in interest rates to 3.5% last week and forecast a high of 3.65. Since most Swedish mortgage rates are only set for three months, it will take some time for the Riksbank's latest move to fully affect borrowers. The state lender therefore assumes that the trend that can be observed in Canada and Australia, among others, will continue as mortgage costs continue to rise.
Sweden's house prices will continue to fall, not only the Swedish central bank warns:
„ We expect prices to continue to fall in spring and early summer, especially if the recent increase in Riksbank has been fully incorporated into mortgage rates “, SBAB chief economist Robert Boije said in a statement.
The weakness of the real estate market, which according to SBAB has so far led to an average loss in value of 16% for single-family houses, is weighing on the Swedish economy. It also means problems for the construction sector, which accounts for around 11% of Swedish economic output. In the first four months of the year, the number of bankruptcies in the construction industry rose by 29%, according to data published by the credit agency UC on Tuesday.
China's trade with the United States and Europe continues to collapse
China: Lousy import numbers – global recession likely
The western financial markets are reacting with falling courses on the extremely weak data on the import of China – because this has made a global recession more likely.
One thing is also becoming increasingly clear: the recovery in China is much weaker than expected, the Middle Kingdom cannot fulfill the function of the growth locomotive for the global economy even after the lockdowns have ended.
China is facing declining imports and slower export growth, which is clearly clouding the country's economic outlook. China's trade with the United States and Europe continues to break in, which suggests either a sluggish economy up to the recession or a further progressive decoupling with China – or both.
Either way: the miserable import data show a massive weakness in demand in China – because the decline in China's imports of -7.9% compared to the same month in the previous year is dramatic in that regard, when large parts of China were in the lockdown at the time! So now, despite the end of the lockdowns, imports continue to fall.
China: Significantly shrinking imports, slower growing exports
China's imports shrank significantly in April, while exports rose at a slower pace. This development reinforces the signs of weak domestic demand despite the lifting of COVID restrictions and puts additional pressure on the economy, which is already struggling with slower global growth.
Compared to the previous year, imports into the second largest economy in the world fell by 7.9% after having already decreased by 1.4% in the previous month. Exports, on the other hand, increased by 8.5%, which means a slowdown compared to an increase of 14.8% in March, as stated by the customs authority's data on Tuesday emerges.
In a survey, economists did not expect growth in imports, while an increase of + 8.0% in exports forecast had been.
Government officials have repeatedly warned of a „ difficult “ and „ complex “ external environment.
However, the significant deterioration in trade flow in the past month will only increase concerns about foreign demand and the risks to the domestic economy, especially against the background of the weak recovery compared to the previous year, when imports and exports were severely affected by the COVID 19 restrictions in China.
The decline in imports suggests that the global economy can no longer benefit greatly from China's domestic growth engine. At the same time, it is also increasing the extent of the weakness of some important trading partners such as Vietnam as a sign of a global recession.
According to analysts, the drastic monetary tightening measures of the past 12-18 months and the recent burdens in the western banking sector are worrying both China and the global economy about the recovery prospects.
China: Declining exports to the United States and Europe
Exports to the United States decreased -6.5% year-on-year to $ 43 billion in April, while imports fell -2.9% to $ 13.3 billion. China's trade surplus shrank by -7% to $ 29.7 billion.
Trade with Europe also declined. Exports to the European Union decreased by -17.7% in April to $ 44.7 billion in April. Imports also shrank by -38.6% to $ 23.4 billion. At the same time, China's trade surplus with the EU grew by + 31.5% to $ 21.3 billion.
Deliveries to ASEAN slowed to + 4.5% in April, compared to + 35.4% in the previous month. The region is China's largest export partner.
Declining imports of important raw materials indicate a waning economy
China's coal imports also declined in April after reaching their highest level in 15 months in the previous month. This indicates a decline in economic demand. Imports of copper, an indicator of global growth and natural gas, also declined during this period.
Overall, the data again paint a mixed picture of the economy in China. The recovery is further slower than hoped. The consumption that Xi Jinping wanted to establish as the second pillar of the economy with its „ inner cycle “ does not really start. Europe and the United States take less goods, and that is the end of it decoupling continue – either because the economy is weak, or because it is politically wanted.
China continues on its way and finds other sales markets. The latest official purchasing manager index for manufacturing in April showed a significant contraction of the new export orders, which illustrates the challenges, Chinese decision-makers and companies are facing each other in the hope of a robust economic recovery after COVID.
Disclosure according to § 80 WpHG for possible conflicts of interest:
The author of this publication declares that he can be invested in any of the financial instruments mentioned, analyzed or commented on at any time. This may result in a conflict of interest. However, the author assures that he has prepared every analysis and every market comment in compliance with journalistic due diligence, in particular the obligation to report truthfully as well as the necessary expertise, care and conscientiousness.
