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The Fed Has Pricked The Housing Bubble

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

No Liquidity

There is no liquidity in the market today. A lot of traders have fled because the winter storm is messing up their holiday and travel plans. So don’t let the daily gyrations bother you.

The Labor Department on Thursday reported that unemployment claims rose to 216,000 in the latest week, up from a revised 214,000 in the previous week. Continuing unemployment claims decreased slightly to 1.672 million in the latest week, compared to a revised 1.678 million in the previous week.

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Overall, the job market remains healthy, but major winter storms may cause unemployment claims to rise in the upcoming weeks.

Soft Landing

The Commerce Department revised its third-quarter GDP estimate up to a 3.2% annual pace, up from its previous estimate of 2.9%. Consumer spending was revised up to a 2.3% annual pace from 1.7% previously estimated and was the primary reason for the upward revision.

The bulk of third-quarter GDP growth (approximately 2.77%) was attributable to the SPR crude oil release, which caused the trade deficit to shrink. I should add that the Atlanta Fed is estimating 2.7% annual GDP growth for the fourth quarter. If there is such a thing as a “soft economic landing,” we appear to be in the midst of it.

Housing Bubble Pricked

The National Association of Realtors announced on Wednesday that existing home sales declined 7.7% in November to an annual pace of 4.09 million. This was the tenth straight monthly decline and the slowest annual sales pace since May 2020.

Median home prices are now $370,700 and have decline for five straight months. In the past 12 months, median home prices have risen 3.5%. Obviously, the Fed has “pricked” the housing bubble and hopefully “owners equivalent rent” will soon moderate, which will help inflation cool off.

Crude oil is very firm this week. The primary reason that I expect crude oil prices to rise in the New Year is due the fact that the Biden Administration is expected to stop draining a million barrels a day from the Strategic Petroleum Reserve (SPR), since is down to the lowest level since 1980 and the new Republican House is expected to be very critical of the SPR releases.

Furthermore, China is reopening and crude oil demand is expected to steadily rise. Finally, crude oil prices traditionally rally in the spring due to increasing seasonal demand. In my opinion, crude oil prices could easily rise above $100 per barrel in the upcoming months and eventually hit $120 per barrel during peak demand.

Coffee Beans

eCommerce has become the most popular shopping channel for gift shoppers in the three focus countries United States, Germany, and UK. More than 70% of respondents in all three countries state that they plan to buy their Christmas gifts from online stores this year. Source: ecommerceDB. See the full story here.