updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131hustle domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131wpforms-lite domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131Buyers in the US may find houses cheaper as home prices are expected to fall when the Fed stops its current tightening cycle.
The Federal Reserve’s decisions on interest rates would likely affect US home prices, according to a Yale University professor of economics. Professor Robert Shiller said that although prices have rallied for a decade, the rally could end once the rate increases stop.
Shiller explained that the interest rate problem affects many people and not just those looking to sell homes. As these rates rise, everyone wants to take advantage and make the most out of the hikes:
“The fear of interest rate increases has influenced people’s thinking – it’s not just the homeowners, it’s new buyers who wanted to get in before the interest rates went up even more…They wanted to lock in. So that’s been a positive influence on the market. But it’s coming to an end.”
According to the S&P Shiller US National Home Price Index (CSUSHPINSA), prices have steadily risen since 2012. In May, data from the Black Knight Home Price Index showed that US home prices rose 0.7% from April. At a seasonally adjusted rate, the increase was a record high.
Furthermore, home prices in May were 0.1% higher than they were the year before. Black Knight’s vice president of enterprise research Andy Walden said the 0.7% month-over-month gain points to an annualized growth rate of 8.9%.
Interestingly, US home prices fell last summer as the average interest rates for the 30-year fixed-rate mortgage jumped over 100% in six months. The fall persisted until January when prices rose again as supply fell.
In early May, the Federal Reserve increased the interest rate by 25 basis points, the 10th consecutive hike in a little over a year. The decision pushed interest rates to the 5% – 5.25% range, the highest since August 2007. Following the increase, some Democratic lawmakers asked the Fed to suspend rate hikes for fears of job losses and a possible recession. As part of the statement announcing the hike, Fed Chairman Jerome Powell hinted that the regulator would suspend further hikes.
At the last meeting in June, the Fed did suspend hikes, stating that the suspension is necessary to “assess additional information and … implications for monetary policy.” However, a projection from the Federal Open Market Committee (FOMC) indicates nine members expect between 1 and 4 more interest rate hikes this year. Only two members believe there will be no more hikes until 2024.
Economists polled by Reuters say that the Fed will increase rates by 25 basis points at its next meeting on July 26, to a 5.25% – 5.50% range. However, most believe the upcoming hike would be the last of the current cycle.
According to Shiller, the increase in interest rates over the last few years has been “dramatic.” The professor believes that everyone feels it’s enough and a soft landing, however imperfect, is possible. However, Shiller says he’s not worried because the recent increase in home prices is likely seasonal, as these prices usually climb in the summer.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The high demand for AI stocks has raised concerns about a possible bubble, as many investors are pumping funds into AI technologies. However, renowned economist Jeremy Siegel believes it’s not yet time for a bubble.
Investors are placing big bets on the potential for artificial intelligence (AI) as the technology continues to boom. While some have expressed concerns about a possible bubble forming in the AI market, Jeremy James Siegel, a renowned economist, and Russell E. Palmer, professor of finance at the Wharton University of Pennsylvania, remain optimistic, stating that it is not a bubble yet.
In an interview with CNBC on Monday, Siegel disclosed that the current situation differs from the dot-com bubble of the late 1990s, referring to a period between 1995 and 2000 when investors bought stocks of internet-based startups hoping for high returns but were met with market failures instead.
The Wharton professor said that he has been getting questions about whether the increased interest in AI would lead to a repeat event of the dot-com bubble.
Siegel believes that the current excitement around AI is driven by two things: the interest in the technology and the success of companies like Nvidia, a leading provider of AI chips. Nvidia, an American-based multinational tech firm, recently reported blowout earnings in the just-concluded quarter. This caused its shares to rally by 24% and reach an all-time high.
The demand for Nvidia’s chips in AI applications has been skyrocketing, driving the company’s market capitalization close to $1 trillion. During the earnings call, Nvidia’s CEO, Jensen Huang, confirmed the surging demand for their data center products. Year-to-date, Nvidia shares have surged by an impressive 166%.
While the Wharton professor acknowledges that Nvidia shares may be slightly overvalued in the long term, he emphasizes that momentum can carry stocks far higher than their fundamental value in the short term, noting that predicting how high these shares might go is difficult.
″[In the] long term I would say that [Nvidia shares] were probably slightly overvalued. But for the short term, we know momentum can carry stocks far higher than their fundamental value, and no one can predict how high they might go,” Siegel said.
Since the launch of ChatGPT, a generative AI chatbot designed by OpenAI in November last year, interest in such technologies has skyrocketed, causing panic that AI might replace humans.
Companies like Adobe and Activision Blizzard have recently joined the AI bandwagon to empower human creativity.
Earlier this month, Adobe introduced its “Generative Fill” AI to support graphic designers using Photoshop to create unique content. Like Adobe, Blizzard also plans to launch an image-generating system to assist humans.
In April, e-commerce giant Amazon announced the launch of its “Amazon Bedrock”, which offers Amazon Web Service (AWS) users the opportunity to build their own generative AI technologies using its foundation models (FMs).
The company aims to make AI development more accessible by providing a secure online service that enables corporate entities to create their own applications.
Amazon claims that the new service can run AI software more effectively and affordably than other competitors, aiming to make AI technology available to a broader range of businesses.
In addition to Amazon Bedrock, the e-commerce giant has incorporated AI into its platform to improve its delivery speed. The new tool will assist shoppers in locating the nearest warehouse with the products the customer needs.
I always find it interesting when people who are highly accomplished in their respective fields start getting their heads turned by cryptocurrency. One such case is Catherine Tucker, the Sloan Distinguished Professor of Management and a Professor of Marketing at MIT Sloan.
I came across her excellent paper, Antitrust and Costless Verification: An Optimistic and a Pessimistic View of the Implications of Blockchain Technology, which was way ahead of its time, being written in 2018 yet still highly relevant today. Indeed, she surmises that at the time, her academic peers thought digital currencies were merely “a flash in the pan”.
Sitting down to interview Catherine on the paper, as well as changes in the landscape since the paper was written four years ago, I got some answers on some topics that me curious.
CoinJournal (CJ): It was quite early to be writing academic papers on cryptocurrency back in 2018 – how did you first get into crypto and decide to write the paper? What was the initial reaction from your professional peers?
Catherine Tucker (CT): As a researcher I started working on issues of cryptoeconomics back in 2014 when I was part of the team that helped run the MIT bitcoin experiment where we gave $100 in bitcoin to each MIT undergraduate.
At the time my academic peers thought of digital currencies as a flash in the pan.
CJ: Have your views on the impact of blockchain technology changed since 2018?
CT: No. Though I think more people are understanding that blockchain is not bitcoin.
CJ: Would you have expected back in 2018 formal regulation around crypto to have progressed further at this stage, with regards to both antitrust and other areas?
CT: I think regulation has been slow and backwards looking so far. I think we have work to go when we come up with laws that reflect the nature of crypto rather than instead being laws that try and make crypto technologies work like earlier vintages of technologies.
CJ: One area I immediately think of upon reading your (excellent) paper is that of Central-Bank Issued Digital Currencies (CBDC’s). The power this would grant either a large company (say Apple, Google) or a government could be enormous – do you have any thoughts on this, especially from an antitrust perspective?
CT: Well central banks already are in charge of fiat currencies! And we trade off any market power due to tradeoffs about stability and credibility. I don’t think this will be different here. I also think that in general due to low switching costs that any tech firm sponsored cryptocurrency is unlikely to have substantial market power in the traditional economics sense.
CJ: Big tech companies have become even more powerful in the last few years. Do you still believe blockchain alternatives could theoretically offer more democratic platforms and impact growing antitrust, as discussed in the paper in 2018?
CT: Blockchain by making things less physical and more digital reduces switching costs that are the traditional source of market power. So I continue to be optimistic.
CJ: You wrote about open source code, and how it is a key factor regarding blockchain platforms and antitrust, but do you believe that a lot of pump-and-dumps or fraud is as a result of simple copy-paste forks of existing blockchains being so easy to set up?
CT: I think that crypto as an area of technology has been unusual in terms of the amount of scams that have existed. I think this is the combination of so much investment going in, new untested technologies and that there have been unusually high returns relative to other sectors of the economy. This combination has sadly led to scams. I don’t think it is necessarily a reflection of the ease of scamming particularly.
CJ: Since you wrote this paper, decentralised finance (DeFi) exploded onto the scene in 2020. Could this have large impacts on potential antitrust, and the control that such big institutions currently have over financial markets?
CT: I am excited about decentralised finance. If you think about it especially in economies out of the US, banking tends to be unusually concentrated and that there are large switching costs for leaving a bank. Decentralised finance as a movement promises to change this pattern of concentration.
CJ: You wrote in the paper that “whereas the market is nascent and currently no cryptocurrency or blockchain project has reached any meaningful market power, at scale some of the projects will have enough market share to influence prices and consumer welfare”. Do you believe Bitcoin’s large lead in terms of influence and market cap does not constitute meaningful market power, given its ability to move the markets of all other cryptocurrencies?
CT: No. I think Bitcoin as a first mover in a sector where there are untested technologies has had an advantage in terms of attracting attention. I am not aware of any switching costs that would particularly mean though that its large market share implies monopoly power. As many a trader knows it is easy to switch between bitcoin and other competitors.