: Weekend reads: What to expect now for home prices, stocks and bonds

by | Sep 30, 2022 | Stock Market

This week Freddie Mac said the average interest rate on a 30-year mortgage loan in the U.S. had climbed to 6.70% from 6.29% the week before and 6.02% two weeks ago. The average rate a year ago was 3.01%. Would-be sellers who have low-rate mortgage loans are reluctant if it means they need to take out a new loan to fund their next home. Would-be buyers are forced out of the market, as the monthly principal and interest payment for a new 30-year loan, based on Freddie Mac’s figures, has increased 53% from a year ago.

Home-sale contracts are being canceled at a record pace in some areas. But these factors could lead to a buyer’s market in 2023 if prices plunge. Here are the areas economists expect to see the largest home price declines. The strong dollar and the stock market

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The dollar has strengthened as the Federal Reserve has taken the lead among central banks in raising interest rates. This is reverberating across the world, making it more costly for countries to make interest payments on dollar-denominated debt and increasing the cost of any commodity traded in dollars. The rising dollar lowers prices on imported goods for Americans and can also lower their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500
would decline as a direct result of the strong dollar and called the current foreign-exchange backdrop an “untenable situation” for the stock market. On the other hand: Companies are trying to blame weak earnings on the strong U.S. dollar, but that’s a lame excuseThis is what happens when bearish sentiment runs high Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund
who describes opportunities cropping up as institutional investors dump stocks. He also explains his winning long-term strategy, which has included a very long-term investment in Tesla Inc.
A a positive sign for the stock market: These 12 stocks have seen strong insider buyingTime to buy bonds? When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive. Khuram Chaudhry, a European equity quantitative strategist at JPMorgan in London, makes the case for buying bonds now. What about preferred stocks?

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