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Market Morning: Housing Numbers, Oil Bounce, ECB Soothes, Bitcoin Bloodbath

This Week in Economic Data World

Not much going on this week, but what is going on is all concentrated on Tuesday and Wednesday. On Tuesday we have housing starts and building permits, which give us a better idea of whether the slowdown we have seen lately in housing is something bigger than just a blip. Housing starts have been leveling off since the beginning of the year. A number below 1.2M would could confirm the beginning of a downtrend and probably portend a fall in real estate prices, which we are already seeing in high end markets. On Wednesday, 5Y inflation expectations, currently at 2.6%, and the 30Y mortgage rate, last clocked in at 5.17%. Also, durable orders and existing home sales. (BATS:ITB)

SEE: Crypto Mining Firm Bitfarms Opts For Traditional Listing To Raise Capital Amid Huge Gains

Interest Rates Start The Week Off Higher

US Treasury yields have fallen significantly over the past two weeks, from a high of 3.24% on the 10Y now down to 3.08%, for a fall of 16 basis points. Part of the cause has been stock market volatility that has led to some safe haven seeking. The yield on the short end for 2Y Treasuries has also fallen, though slightly less at about 15 basis points, narrowing the yield spread by a single basis point, which now stands at 26 points. Long term rates have been above 3% now for two months, with the Federal Reserve widely seen to be raising the overnight rate at their next Federal Open Market Committee meeting exactly one month from now, which will close on December 19. Overnight money market rates are currently at 2.20%.

Commenting on the recent downturn in debt yields, Victor Groberg, CEO of DebtConsolidation.co, a service that guides through the process of securing long term loans at low rates, commented on the rare trough in loan delinquency the US economy is currently experiencing. “Delinquency rates on all loans have fallen continuously, pretty much every quarter since topping in 2010. We are now right near record lows in delinquency rates that we last hit at the peak of the housing bubble. Delinquencies don’t get much lower than this,” he said. However, he added that this situation may not last much longer. “If rates continue to rise we’ll unfortunately see the delinquency rate shoot right back up just like it did 10 years ago, which means if you’re in debt and you want to avoid this, now is an opportune time to consolidate at a low rate.”

Oil Up As Trump Wants Doesn’t Want to Hear About Khashoggi Anymore

Is President Donald Trump’s conscience irking him a bit too much? He reportedly does not want to hear the tap of journalist Jamal Khashoggi’s murder, this as the CIA has made a rare foray into public commentary revealing that Saudi Crown Prince Muhammad bin Salman most likely directed the murder personally. Trump is trying to preserve a US relationship with the wild and impetuous bin Salman as the CIA is at the same time trying to sabotage Trump’s efforts, probably because the people in the CIA never got along with Trump in the first place and why not use oil as your toy to settle a score? Sounds reasonable. Contrary to the CIA, Trump claims that “we may never know” the Crown Prince’s role in the murder, which is certainly true if we don’t want to try to find out for the sake of a barrel of crude oil, which is up 1.2% this morning as the futures market kicks off. (NYSEARCA:USO)

Florida Finally Decides On Its Senator, and it’s (R)ick Scott

Republican and former Florida governor Rick Scott has overcome yet another recount vote focused on Dade, Broward and Palm Beach counties, which can never seem to get an election straight this millennium. Scott maintained a 10,033 vote lead over Democrat Bill Nelson, winning by just a little bit more than a tenth of a percentage point. With this seat the Republicans firmly control the Senate while the Democrats firmly control the House, which should make for fun headlines and a lot of yelling back and forth as we all grab our popcorn and watch more spending increases. Florida will have 2 Republican senators for the first time since 1913.

ECB Signals That Monetary Policy Will Stay Super Duper Easy

In Central Bank World today, we have the European Central Bank, which has signaled through one of its mouthpieces Francois Villeroy de Galhau, speaking in Tokyo over the weekend. “Net purchases will very probably end in December. The end of our net asset purchases will not, however, mean the end of our monetary stimulus, far from it,” Villeroy said in a speech for delivery at conference in Tokyo. This could end up being a significant problem for the Euro, as interest rate spreads between the US Dollar and the Euro are encouraging European banks to borrow Euros at low rates and swap for US Dollars and profit on the easy spread. At some point the Euro falls too fast because of this, inflation in the Eurozone goes much higher, and the ECB will have to reverse course regardless of the sovereign debt situation if it wants to preserve the currency. Let’s see what happens next month when the ECB stops buying bonds hand over fist. (NYSEARCA:UUP) (NYSERACA:FXE)

Bitcoin Blood Bath and Crypto Carnage Continues

Bitcoin (BTC-USD) has crashed below the $100B market cap level, now standing at just below $95B, or $5,444 a coin as of the wee morning hours. These are the lowest levels for the world’s first cryptocurrency since October 2017. Bitcoin Cash (BCH-USD) has been doing much worse, down another 8% this morning, pushing $300 a coin. Bitcoin Cash is in the throes of a hard forking hash war, where competing pools of miners are building competing chains to see who can build the longest one the fastest and have their brand of Bitcoin Cash retain brand recognition as the true Bitcoin Cash, or the true Bitcoin, depending on who you ask. The war continues between the Bitcoin Cash ABC group and the Bitcoin Cash SV group. Meanwhile, the rest of the crypto complex is getting smashed and falling through support levels. Has crypto capitulation finally arrived? We will find out in the coming days.

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