The U.S. housing market is in for a prolonged slump, according to at least one expert.
In a recent interview with Fox Business, ProChain Capital President David Tawil discussed the Federal Reserve’s ongoing battle with inflation and why a prolonged period of high interest rates could “crush some very interest-rate-sensitive industries, such as real estate.”
Tawil predicted a “multiyear, maybe decade-long fallout,” starting with commercial property and spilling over into the residential sector later.
“Housing has been incredibly strong despite all of the turmoil going on with respect to rates,” he said.
“There will be a fallout.”
“I think rate hikes are on the horizon,” Tawil said in the interview. His thesis is based on the fact that core inflation – the surging price of goods and services excluding volatile elements like food and fuel – have proven stickier than expected.
Whereas overall inflation cooled to 3% in June, according to the Fed’s latest numbers, the core consumer price index (CPI), which excludes food and energy, remained elevated at 4.8%. This measure has been persistently and stubbornly high for the past few years.
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In a recent study, researchers from the Federal Reserve Bank of San Francisco went a step further to explore what they call “supercore inflation,” which excludes the prices of food, fuel and housing. The researchers speculated that this subcategory of price pressure could be persistent, even if the job market cools down.
If that proves true, the central bank may have to keep interest rates elevated longer, a situation that Tawil believes could force the real estate market into a difficult period of adjustment. Faced with the prospect of refinancing properties at high rates, many owners, in both commercial and residential sectors, may decide to cut their losses and sell, which would put more inventory on the market, causing prices to fall.
He suggests investors look elsewhere to protect or expand their capital. Specifically, his team is focused on technology and cryptocurrencies such as Bitcoin.
The crypto option
Tawil’s team is bullish on technology, especially crypto. Tawil’s year-end target for Bitcoin is $50,000, roughly 67% higher than the digital currency’s current price.
The optimism is based on the flow of new institutional capital into the sector. Tawil points out that industry giants such as Blackrock have applications pending for regulatory approval of Bitcoin exchange-traded funds (ETFs).
Bloomberg’s ETF analyst Eric Balchunas estimates the move could unlock roughly $30 trillion in additional capital — a game changer for the controversial industry.
Bitcoin currently trades at just under $30,000. It’s up around 76% year-to-date, handily outperforming the commercial real estate sector and even the S&P 500.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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