00:00Right now we have existing home sales and of course those rising a little bit to the upside.
00:06Michael McKee, you can give us the data.
00:08We have very strong data for existing home sales.
00:11They're up 3.2% for the month of May.
00:14That's after a 7 tenths gain in the month of April.
00:17And it's certainly way ahead of the 1.1% that was expected in terms of percentage gain.
00:23In terms of existing home sales themselves, 4,170,000 at an annual rate.
00:30And that is up from 4,004,000.
00:33So we're looking at a fairly strong month.
00:36Now, the important thing to remember about existing home sales is that they're based on contracts signed about two months
00:44ago.
00:44And two months ago was when we hit our low in mortgage rates for the past couple of years.
00:49And it's gone back up again now.
00:51So this is probably not something that's going to continue for the next few months.
00:55In terms of the data, we get single-family homes up 3.5%.
00:59Condos and co-ops were flat on the month.
01:02So single-family homes, people out there buying maybe to close by the time school was over so they could
01:09move.
01:09But at this point, with rates going up, not sure that that's going to continue.
01:14No.
01:14And I mean, I guess you have to take every good piece of economic data, you know, as a good
01:18piece of economic data.
01:19And a lot of wealth has been created in the country with markets at these levels.
01:23But what should we read about this?
01:25I mean, we heard earlier, you know, toll doing so differently to, you know, to home sellers out there that
01:32cater to the other parts of the K-shaped economy.
01:34Yeah, well, toll is on the top part of the K.
01:36Yeah, exactly.
01:37And the others more on the lower part of the K.
01:40And we know that there's a K-shaped economy with people who are making money off of assets and from
01:45the stock market doing much better than others.
01:48But with interest rates where they are, we're still stuck in the same situation we have been for years in
01:53that a lot of people own houses with low mortgage rates and they don't want to sell their current house
01:59to buy something new at a much higher rate.
02:01So it's going to take a sustained drop in mortgage rates to really kickstart the home sales industry.
02:08Would this be another way for Kevin Walsh to sort of say, you know, look, it's not a good idea
02:13to increase rates right now, you know, not just because the president maybe wouldn't want it, but also because, look,
02:19it could crimp homeownership.
02:21Well, it probably is a minor argument.
02:23There are other reasons why he doesn't want to raise interest rates right now.
02:30And at this point, they're going to have to do a lot more work.
02:34You would have to have Fed rates fall significantly in order to influence overall mortgage rates, which are more pushed
02:42by the 10-year note than by the Fed numbers.
02:45And so markets at this point, you've seen, are expecting inflation and they are then pricing for it.
02:54I have to ask about CPI tomorrow.
02:56We were very surprised by the payrolls data.
02:57So we can't be absolutely certain that we know what's going to happen tomorrow when the numbers cross?
03:02Well, there is a fairly strong feeling about what's going to happen tomorrow as people look at what overall prices
03:08have been.
03:09We're expecting a jump on a year-over-year basis to headline number to 4.2%.
03:14That would be the strongest in about three years.
03:18And the core, still under 3% at 2.9% is the forecast, but that's still way above what
03:25the Fed wants to see.
03:26And we're seeing basically inflation moving in the wrong direction.
03:30So we will expect to see some bad news on inflation tomorrow.
03:34It will be bad news for the Fed, which doesn't want to raise interest rates, but may be getting pushed
03:39in that direction if the war doesn't end and these price rises continue also.
03:44Bad news, obviously, for the White House and Republicans in an election year.
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