-$37 Barrels, Rates Improve, Freight Down

The price of oil has fallen dramatically since the pandemic – from $60 a barrel in January to negative $37 per barrel on Monday. Suddenly oil companies and speculators (investors who buy in large quantaties hoping to sell for a higher price) needed to store a massive amount of unsellable, hazardous product. In some cases storage prices increased from 600%. Instead of paying $150,000 per day to store a tank of oil, companies suddenly paid nearly $1M a day – which caused bankruptcies and sparked innovation – as all different types of companies from water storage to shampoo figured out how to profit from this opportunity.

Rates – continue to languish at historic lows and are down marginally from last week. Year over year they are down approximately 7/8%

Jobs – the number of people filing for unemployment for the first time remains at an alarmingly high 1.3M per week – approximately 6.5X pre-covid levels. On top of the 1.3M new unemployment claims 17.3M people received unemployment insuranace last week on an ongoing basis. Additionally there are 15M people receiving Pandemic Unemployment Assistance, a number separate from the index meaning that 32M people are receiving some sort of aid.

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New Construction – the builder confidence index shot up 14 points to 72 – right back to pre-covid levels. This index is a survey from builders that measures: buyer traffic, current sales, and future sales expectations. Single family starts are up 17% from the previous month (down by 4% year over year).

1-Shipment Volumes_Jun 2020

Freight – the Cass Freight Index (which tracks the movements of goods) improved slightly in June but volume is down 17.8% year over year.

Applications – year-over-year are up approximately 5%. Purchases, while down 6% from last month, are up 16% from this time last year. Refinances are up nearly 107% in the same timeframe.

Forbearance – the percent of loans in forbearance decreased marginally from 8.39% to 8.18%. This is the 4th consecutive week of marginal declines.

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