Could climate change be stifled with central bank cooperation and the creation of a ‘carbon coin?’ If you love realistic science fiction, macroeconomics, and banking this book is a great read. Set in 2025 the premise is simple, climate change has accelerated and central banks need to be convinced that a carbon coin is the right solution as money won’t have any value if there is a mass initiation event. These carbon coins would be paid to fossil fuel companies as a reward for decarbonizing and the global central banks would guarantee a base value allowing them to trade on the open market. In essence this would be betting long on society not collapsing. Since the publishing of his novel, Robinson has met with U.N. official and central bankers and there are various real-life groups pushing the creation of a carbon coin.
Mortgage Rates – moved sideways this week as the price of Mortgage Backed fluctuated minimally. Rates are up about 3.5% from this time last year.
Home Sales slowed 5.9% in October down 28.4% year over year. Nationwide there is 3.3 months’ supply of homes, but 38% of this inventory is under contract so there is effectively only 2.5 months of supply. Average time on market is at 21 days (up from 19). Homes are selling in less than 30 days 64% of the time. First Time Home Buyers accounted for 28% of sales which is at the same level as this time last year. Cash buyers accounted for 26% of sales (up from 22%) while investors purchased 16% of homes (up from 15%). Foreclosures and short sales made up only 1% of all transactions.
Single Family Rents – The Core Logic Single Family Rent Index showed that some cities had as much as 20% year over year growth (Miami) and low and low-middle tier rents are currently out performing higher tier rents. Low-middle tier is considered 100% or less than regional median. Nationwide Single Family Rents increased by 10.2% (down from 13.9% peak in April). This is the 5th consecutive month of softening and it should help with CPI inflation report.
Freight – the Cass Freight Index showed that expenditures, or the total amount spent on freight, fell 4.9% in October. Year over year the index is up 11% but that is down from 21% in September. While shippers aren’t seeing savings yet, cost relief is probable for 2023 and should help the overall inflation picture.
Inflation – the Producer Price Index (PPI) showed that overall inflation increased 0.2% in October which was cooler than expectations. Year over year, the PPI is up 8% which is down from last month’s reading of 8.4%. The core rate, which strips out food and energy, did not move in October and is up 6.7% year over year (down from 7.2% last month).
Mortgage Applications to purchase homes increased by 4% last week but remain down 46% year over year. Refinances are down 88% year over year.