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Macro Briefing: 16 August 2022

* Russian military base in Crimea hit by a series of explosions * Recession worries take a bite out of oil prices * China’s housing market weakens in…

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This article was originally published by The Capital Spectator

* Russian military base in Crimea hit by a series of explosions
* Recession worries take a bite out of oil prices
* China’s housing market weakens in July after briefly stabilizing
* Weak economic data in US and China weigh on commodities prices
* US gasoline prices may continue falling to $3 a gallon, says analyst
* German sentiment among financial analysts near all-time low in August
* US homebuilder sentiment points to recession for housing sector
* NY Fed Mfg Index falls re: current conditions, indicating contraction in August:

The sharp drop in US homebuilder sentiment for August is forecasting a recession for housing, based on the The National Association of Home Buyers/Wells Fargo index, which surveys the mood in the industry each month. “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” says NAHB Chief Economist Robert Dietz. Despite the gloomy update, there’s a possibility of firmer results ahead. “As signs grow that the rate of inflation is near peaking, long-term interest rates have stabilized, which will provide some stability for the demand-side of the market in the coming months,” notes Dietz.

US oil price trade under $90 a barrel. “I think oil prices could go lower,” says Sarah Emerson, president of ESAI Energy, an analytics company. “We have several factors coming together at the same time: We have China reducing its imports of crude oil in the third quarter, we have the end of the summer gasoline season, we have concerns about an economic slowdown, and frankly, plenty of supply.”

US economy will likely suffer either deep recession or high inflation, predicts economist Nouriel Roubini. “The fed funds rate should be going well above 4% — 4.5%-5% in my view — to really push inflation towards 2%,” says the chairman and chief executive officer of Roubini Macro Associates. “If that doesn’t happen, inflation expectations are going to get unhinged. Or if that happens, then we are going to have a hard landing. Either way, either you get a hard landing or you get inflation getting out of control.”

interest rates

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