Party Crasher

Image source: Microstocker.Pro, Anna Nikonorova, Yulia Gust, FabrikaSimf - Shutterstock

What's going on?

Not to burst your bubble, new homeowners, but home prices around the world are flashing the same warning signs they did in the lead-up to the 2008 financial crisis

What does this mean?

Nowadays, home isnt just where the heart is: its where our old jobs, new puppies, and frivolous lockdown purchases are too. Thats encouraged homeowners to move to bigger and better places, and thanks to a combination of record-low interest rates, pandemic savings, tax incentives, and government stimulus programs theres been no reason not to.

No surprises, then, that the global housing market is now in a bubble. According to a new report from Bloomberg Economics, New Zealand, Canada, and Sweden rank as the worlds frothiest, closely followed by the US and the UK. Thats based on how high certain indicators like the ratio of house prices to rent or locals salaries are, even compared to where they were before the 2008 financial crisis.

Why should I care?

For markets: Leave banks outta this.
The report points out that we might see the market drop off steadily rather than in one fell swoop. But neither would be good news for banks, whose mortgage-lending heavily exposes them to the real estate market. And they could do without the extra headache: the sectors stocks fell earlier this week after JPMorgan said its anticipating a bigger-than-expected drop in trading revenue this quarter, suggesting that the trading boom in stocks and bonds, at least is starting to tail off.

The bigger picture: Crypto is inevitable.
Cryptocurrency trading, meanwhile, is still going strong. That might be why investment bank Goldman Sachs recently unveiled a dedicated cryptocurrency trading team, and why its now expanding its crypto offering from bitcoin products to ether products. That might be smart: a new survey suggests hedge funds will hold 7% of their total assets in crypto within five years, and investment banks count plenty of them as their clients (tweet this).

Originally posted as part of the Finimize daily email.

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