Daily Archives: June 22, 2020


U.S. reports more than 30,000 #coronavirus cases two days straight, the highest number since May 1 – CNBChttps://t.co/1X9U4Jioad

— Christophe Barraud (@C_Barraud) June 22, 2020

#WhiteHouse Preparing for Second Wave of Coronavirus, Trade Adviser Says – WSJhttps://t.co/tlyOk5lXoZ

— Christophe Barraud (@C_Barraud) June 22, 2020

U.S. banks are ‘swimming in money’ as deposits increase by $2 trillion amid the coronavirus – CNBChttps://t.co/O2CTGUDvR9

— Christophe Barraud (@C_Barraud) June 21, 2020

Small US Companies Squeezed Hardest By Covid-19 Effects – FT https://t.co/FNukyWzGBz

— LiveSquawk (@LiveSquawk) June 22, 2020


#Australia | #RBA's Lowe opens door to inflation target review – AFRhttps://t.co/jP1CCGCAOZ

— Christophe Barraud (@C_Barraud) June 22, 2020

#China likely lost at least 40 soldiers in border clash: Indian minister – Reutershttps://t.co/Hour5pg83r

— Christophe Barraud (@C_Barraud) June 22, 2020

Worst North Korea economy in two decades pushing Kim Jong Un to lash out https://t.co/PGhWMQNjAY

— Bloomberg Asia (@BloombergAsia) June 22, 2020


#EU and #China to seek to cool tensions at video summit – Reutershttps://t.co/ngI5YCp9dp

— Christophe Barraud (@C_Barraud) June 22, 2020

Conte Says #Italy Will Probably Seek to Widen Budget Shortfall – Bloomberghttps://t.co/ySXb3X23N8

— Christophe Barraud (@C_Barraud) June 22, 2020

#Germany's coronavirus reproduction rate jumps above key containment level – Reuters
*The coronavirus reproduction rate in Germany jumped to 2.88 on Sunday, up from 1.79 a day earlier.https://t.co/s5i5gQttZ8

— Christophe Barraud (@C_Barraud) June 21, 2020

The #ECB’s most determined attempt yet to confront the German legal headache bedeviling its quantitative easing policy may emerge as soon as this week.- Bloomberghttps://t.co/lIxJYfuy0V

— Christophe Barraud (@C_Barraud) June 22, 2020

Wreckage of Global Economy Now Looks Even Worse to #IMF: Eco Week – Bloomberg
*Link: https://t.co/qggD7ifU29 pic.twitter.com/oMuVQPjo1L

— Christophe Barraud (@C_Barraud) June 22, 2020

Combined liabilities of the and its agencies such as the European Stability Mechanism and the European Investment Bank could approach one trillion euros ($1.12 trillion) by end-2021, Citigroup Inc. strategist Michael Spies estimates – Bloomberg
*Link: https://t.co/b7gsK7dugG pic.twitter.com/N0mGac6hx8

— Christophe Barraud (@C_Barraud) June 20, 2020

Beijing setback, Royal Mail results, flash PMIs https://t.co/wsJBFR32ld

— FT Economics (@fteconomics) June 21, 2020

Second COVID wave, key PMI data to impact markets as UK preps to reopen restaurants https://t.co/aDl0uh2paf

— Yahoo Finance UK (@YahooFinanceUK) June 21, 2020

Data out this week will show where the economy is starting to mend and where damage is lingering from efforts to contain the new coronavirus https://t.co/McWjVCN3qD

— Real Time Economics (@WSJecon) June 21, 2020

On Monday at 15.00 BST, the National Association of Realtors (NAR) will release the Existing Home Sales (EHS) for May. According to the Bloomberg consensus, EHS should decrease by 5.6% MoM to 4.09M, which would be the lowest level since November 2010.

→ EHS will surprise downward due to technical and fundamental factors:

→ EHS will rebound sharply in June as suggested by first data related to pending home sales.



1. Data construction implies that May will reflect the worst of the crisis

Most of economists never looked at the construction of EHS data which explains a large part of miscalculation. According to the Census Bureau, “the majority of transactions are reported when the sales contract is closed. Most transactions usually involve a mortgage which takes 30-60 days to close. Therefore, an existing home sale (closing) most likely involves a sales contract that was signed a month or two prior.” In other words, most buyers placed their offers in April (and to a lesser extent in March), during the height of stay-at-home orders. As a result, May existing home sales will reflect the worst of the crisis, with a print likely below 4.00M.


2. Local/state data showed that sales decline was broad-based across the country

Local/state figures and other proxies suggest that national existing home sales (non-seasonally adjusted: NSA) are likely to plunge by more than 30% YoY in May (which could be close to the largest decline ever). However, it’s worth noting that the crash was amplified by calendar effects, namely fewer business days in May 2020 (compared to May 2019).


These results look coherent with Redfin estimates which highlighted a 30.8% YoY drop after seasonal adjustment (the decline would have been larger on a NSA basis) in May. On the inventory front, Redfin also noted that new listings of homes for sale “are still about 20% below February’s level”, confirming that supply has been constrained over the past few months.


3. Local/state data suggest that pending home sales will rebound sharply in May amid normalization and lower mortgage rates.

On the positive side, local reports suggest that pending home sales (seasonally adjusted: SA), a leading indicator for existing home sales, rebounded on a MoM basis in May. As a matter of fact, Redfin lead economist Taylor Marr revealed that “Although the housing market was still mostly stalled in May, it’s worth noting that homes under contract to be sold jumped 33% between April and May after two consecutive months of decline.”

A sharp increase of EHS seems very likely in June a context where the situation started to normalize in several states (reopening), with purchases’ applications rising significantly. CNBC reported on June 17 that “Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That was the ninth consecutive week of gains and the highest volume in more than 11 years.” The article also underlined that “Buyers were also fueled by a new record low mortgage rate. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.30% from 3.38%, with points decreasing to 0.29 from 0.30 (including the origination fee) for loans with a 20% down payment.”

Sub-Zero Landmark Spells Summer Heatwave for #Gold – Bloomberg (@johnauthers)
*Negative and falling real bond yields can only burnish the appeal of an asset that pays no income.
*Link: https://t.co/S7YGKXbw5J pic.twitter.com/aOhNHZwzqR

— Christophe Barraud (@C_Barraud) June 22, 2020

The ratio of the Nasdaq 100 to the S&P 500 has only been higher than it is now on three prior trading days in history — March 8th, 9th, and 10th of 2000. https://t.co/pT1cCms6Lf $QQQ $$ pic.twitter.com/3gG2mtUZmA

— Bespoke (@bespokeinvest) June 22, 2020

J.P. Morgan on the #Covid19 #recession: deepest but shortest in 100 years. pic.twitter.com/1APK76ueHx

— jeroen blokland (@jsblokland) June 22, 2020

Platts: 4 Commodity Charts To Watch This Week https://t.co/DKvbWpjZG6

— zerohedge (@zerohedge) June 22, 2020

Russell non earners $IWM pic.twitter.com/O5Oulx9mgX

— Teddy Vallee (@TeddyVallee) June 22, 2020