May 19. Housing as a barometer of economic strength
–In the US, the San Francisco Fed put out a paper titled “The Slowdown in Existing Home Sales” citing the increase in mortgage rates since May of 2013 as the culprit for recent lethargy in US home sales. There has also been much chatter about the possibility of a real estate crash (as opposed to slowdown) in China. I’m no expert, but the chart below, a heavily traded steel rebar contract (Shanghai) is in an unambiguous downward trend. Down over 15% since the beginning of the year. Clearly a reflection of diminished construction activity.
