Robert Shiller Its An Exuberant Time – When Rate Increases Are Viewed As Normal

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Robert Shiller Its An Exuberant Time – When Rate Increases Are Viewed As Normal

Robert Shiller, Yale professor of economics and co-founder of the Case-Shiller Index, joins ‘Squawk on the Street’ to discuss rising rates and the impact on mortgage rates.

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Transcript

It's not just Fed policy. It's also just a generally strong consumer confidence that we see at this point in time. The economy has looked strong. For years and especially since Trump took the presidency and. I think we're just in an exuberant time that people find these rate increases as normal. Given the economic conditions.

Professor can both consumers and investors stomach the pace that we've seen in terms of the increase. Even if it was expected it has a spillover effect. Yeah.

Well I think the Fed is careful. It has been tightening now for a while. But at a very measured pace. I don't think it's creating any alarm at the present time. I think. You know I said this is an exuberant time but it's also a complacent time. We've seen such steady growth. We had a reset over 4 percent GDP growth number. People extrapolate those things and right now they're not. They're not. So worried about interest rate increases.

So do you think if if in fact people are complacent what are they complacent about the possibility that in fact growth falters that in fact the rise in interest rates is not necessarily purely a signal that better times where do you think the blindspots might be. I think the complacency is. Somewhat in inattention.

That we've been. Remember this thing about Kavanaugh we've been concerned with other things the economy seems to be coasting upward. But this kind of complacency this kind of confidence I think is volatile in the past this kind of confidence could be disrupted. Mysteriously sometimes with market corrections. Wanted to ask you about your expertise in housing and how you see these higher rates impacting the housing market which is already looking. A bit shaky. A bit shaky. Yeah. In our latest S&P CoreLogic Case Shiller report. We noted that there is a weakening of home price increases but they're still going up at a good pace. Nationally. There are some cities Seattle New York Boston that have shown a lot of weakening but it's still not falling. I think that. These housing weakness has to do somewhat with the trade war. You might think it shouldn't but the idea that we're going to have Chinese investors or foreign investors pushing up home prices. Is a bit of a downer at the moment. So yeah the question is whether this is a turning point in the housing market. I'm a little bit worried about that but not ready to call that.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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