Thursday, November 20, 2014
Not a good sign
So, my question is, is momentum in labor and production strong enough to keep markets growing while real estate markets continue to present a liquidity problem.
The first graph here shows Commercial and Industrial Loans and Closed End Residential Real Estate Loans since before the recession. We can see here how both seemed to accelerate at the beginning of the QE3 taper.
But, the second graph is a close up view of recent weekly changes. Closed End Residential Real Estate has not only flattened. It is clearly declining and is now back to levels not seen since March. And C&I Loans look like they may be leveling off also.
The FHFA has announced plans to lighten up on some regulations of securitized mortgages. But the loans shown in the graph are loans owned by the banks. The path we are seeing here is not a positive scenario. And, 5 year inflation expectations from TIPS is still down around 1.4%.
On the bright side, inflation seems to have firmed up in the last couple of months. I have been watching CPI less Food, Energy, and Shelter. It has rebounded after going into negative territory in July and August.