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Business

Prepare yourself: ‘The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006’

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“‘I don’t think that home sales are going to grind to a complete halt. They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.’”


— Len Keifer, deputy chief economist at Freddie Mac

The U.S. housing sector is in the midst of the biggest slowdown in over a decade, one economist says. But don’t expect prices to fall back down to earth just yet.

“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,’” Len Keifer, deputy chief economist at Freddie Mac
FMCC,
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tweeted.

“It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer,” he explained.” He said home-purchase mortgage applications are down 40% from their most recent peak in 2021.

Purchases and refinance applications are in fact down to the lowest level in 22 years.

Mortgage applications as a data point “gives you a sense of where the market might be headed,” Keifer said in an interview with MarketWatch, “because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”

Keifer expects home sales to henceforth “slow quite a bit over the summer.”

Meanwhile, Freddie Mac data released on Thursday morning revealed that mortgage rates have risen, on the back of rising interest rates and inflation.

To be clear, “I don’t think that home sales are going to grind to a complete halt,” Keifer stressed. “They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.”

Would prices fall as a result of a ‘contraction’?

While some may jump to the conclusion that weaker data represents a possible fall in home prices, experts caution otherwise.

“Does this mean that house prices are going to crash? I don’t think so,” Keifer said.

Freddie Mac’s research shows that when interest rates go up, while home sales and mortgage originations go up, house prices won’t necessarily fall or rise. “They tend to be stickier,” Keifer said.

“And while the rate of growth tends to slow, they don’t tend to fall,” he added.

Write to: aarthi@marketwatch.com



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Science

New Physics Theory Suggests Black Holes Are Key to Universe’s Expansion and Contraction Cycles

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The universe is expanding. No one with any expertise in astronomy or physics disagrees with that fact.

Likewise, nobody really disagrees that, at some point many billions of years in the future, the universe is going to expand too far—and run out of energy for further expansion. At that point, something has to change. That’s where the disagreement begins.

There’s a new wrinkle in that cosmological argument, and it’s a doozy. According to a new study from cosmologists Daniela Pérez and Gustavo Romero, both from the Instituto Argentino de Radioastronomía, the universe has been repeatedly expanding and contracting, and big black holes are some of the only things that have survived these endless cycles of destruction and renewal. These cycles are part of what cosmologists call a possible “cosmological bounce.”

A mathematical model of a theoretical black hole is the centerpiece of Péerez and Romero’s peer-reviewed study, which was published last month in the science journal Physical Review D.

“Our main result is that the solution represents a dynamical black hole that exists at all epochs of the bouncing cosmological model,” they wrote.

In other words, Peérez and Romero’s black hole survived even when everything around it got wiped out as the universe collapsed on its way to an eventual rebound.

It’s a compelling finding. The question of a black hole’s role in a bouncing universe “is clearly interesting,” Leandros Perivolaropoulos, a physicist at the University of Ioannina in Greece who was not involved with the study, told The Daily Beast, “and this paper may be viewed as an initial attempt to address it.”

But beware: There are a lot of assumptions baked into Peérez and Romero’s argument. It’s possible that, at the moment a universe bounces from contraction to expansion, all the rules that guide our understanding of physics go out the window. We might be trying to fathom the unfathomable.

“General relativity itself breaks down at both the black hole singularity and the cosmological bounce singularity,” Perivolaropoulos said. “Thus any conclusion based on it can not be taken seriously.”

In other words, at the moment the universe collapses to its smallest size right before bouncing back, gravity would stop functioning normally. That’s what we mean by a singularity: an exception to the laws of physics. We have no idea how a black hole would behave when the rules no longer apply.

Peérez and Romero’s methods “have a significant potential for improvement, to put it mildly,” Perivolaropoulos added.

“General relativity itself breaks down at both the black hole singularity and the cosmological bounce singularity. Thus any conclusion based on it can not be taken seriously.”

— Leandros Perivolaropoulos, University of Ioannina

To be clear, the underlying idea that the universe repeatedly expands and contracts is not new. A cosmological bounce is one of several leading theories among cosmologists who study the origin and fate of the universe.

In fact, at least one team of scientists even believes our 13.7-billion-year-old universe is at the end of the most recent expansion phase, and could start contracting again in a hundred million years or so on its way to a fresh bounce in a few billion, or tens of billions, of years.

Alternative theories for ways the universe might end include the universe slowing down and freezing, collapsing in on itself or spinning apart into countless, fragmentary pocket universes. Amid all the options, it’s clear why the cosmological bounce is attracting a lot of interest. It’s an elegant way of explaining some of the weirder things we see all around us in space.

For one, it might help explain why, in a universe that’s mostly uniformly empty, we have these weird, scattered clumps of stuff. Galaxies. Stars. Planets. People. Irregularities in space that are the byproducts of the endless expansion and contraction.

The bounce might also make sense of the biggest black holes. Specifically, the “supermassive” variety that are billions of times more massive than our sun that exert such a powerful gravitational force on the space around them that not even light can escape.

So far we’ve spotted two of these huge black holes using a new global array of radio telescopes called the Event Horizon Telescope. One was observed at the center of our own Milky Way galaxy. The other was spotted at the heart of Messier 87, a galaxy 54 million light-years away.

A black hole contains the closest thing to a singularity—an exception to accepted rules of physics—that we can directly observe with our telescopes. In the dark, impossibly dense heart of a black hole, our understanding of the universe breaks down. Like Perivolaropoulos said.

There’s something special about an object that big and dense. And that something special might help the biggest black holes survive each time the universe bounces and everything else gets compacted into a kind of smooth paste of matter and energy.

Their survival could be key. Maybe, just maybe, it’s no accident that black holes endure, and retain their unique weirdness, when everything around them contracts into homogeneity. Maybe the black holes are one of the reasons why the universe is capable of bouncing back after one of its once-every-30-billion-years-or-so contractions.

According to Pérez and Romero, there are reasons to believe big black holes, still intact after a cosmological bounce, help the universe rebuild by feeding matter back into space and mixing up the newly-expanding matter with their energy.

“If black holes get through the bounce, they can produce perturbations that would give rise to structure and early galaxy formation in the expanding phase,” they wrote. Black holes can act as engines of creation or re-creation, if you will—helping form galaxies, stars and planets in a rebounding galaxy.

“Maybe the black holes are one of the reasons why the universe is capable of bouncing back after one of its once-every-30-billion-years-or-so contractions.”

It’s an appealing idea. Especially in light of another theory gaining credibility (in parallel with the idea of a cosmological bounce) that there are supermassive black holes at the center of every galaxy. We just haven’t found them all yet.

To be fair, Pérez and Romero aren’t the first cosmologists to explore the relationship between a bouncing universe and big black holes. Bernard Carr and Timothy Clifton from Queen Mary University of London, alongside Alan Coley from Dalhousie University in Canada, have been writing about black holes surviving cosmological bounces for years now. “The mathematics we did suggest it’s possible,” Coley told The Daily Beast.

The difference is that, in the model from Coley and his coauthors, the black holes are embedded in the surrounding structure of the contracting universe rather than being contained inside it. That would make it easier for the black holes to endure even as the stuff inside the universe’s structure collapses in on itself.

In Pérez’s and Romero’s thinking, the black holes are inside the structure. “They’re looking at a slightly different model,” Coley said. In this conception of the bouncing universe, the black holes are even tougher than anyone imagined before–and potentially more important to the universe’s fresh expansion.

If there’s peril in the corner of cosmology that Pérez and Romero share with Coley and his coauthors, it’s that hard data on bouncing universes and enduring supermassive black holes is pretty thin. Our space probes are few and far between. We can see only so far with older telescopes.

To get a better handle on a possible black-hole-assisted cosmological bounce, we need to find more black holes. Especially big ones at the centers of galaxies. We also need better measurements of the background radiation of the universe. A fine reading of the radiation might point to cycles of expansion and contraction.

The good news is, these observations might be possible soon. The new BICEP Array, a suite of four radio telescopes under construction at the South Pole, could give us good radiation readings starting in the next few years. And we can expect more images (and even some movies) of big black holes from the Event Horizon Telescope.

If cosmologists such as Pérez, Romero, and Coley start finding black holes everywhere, and also register the telltale radiation patterns of a bouncing universe, then we might need to start making peace with the idea that everything we can see and imagine is a lot less unique than we previously thought.

In fact, we might be living in the third, hundredth or thousandth version of the universe after repeated bounces, each one fueled in part by ever-bigger black holes.

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Science

The Universe Could Start Shrinking ‘Remarkably’ Soon, Scientists Say

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After nearly 13.8 billion years of nonstop expansion, the Universe could soon grind to a standstill, then slowly start to contract, new research published in the journal Proceedings of the National Academy of Sciences suggests.

 

In the new paper, three scientists attempt to model the nature of dark energy – a mysterious force that seems to be causing the Universe to expand ever faster – based on past observations of cosmic expansion.

In the team’s model, dark energy is not a constant force of nature, but an entity called quintessence, which can decay over time.

The researchers found that, even though the expansion of the Universe has been accelerating for billions of years, the repellent force of dark energy may be weakening.

According to their model, the acceleration of the Universe could rapidly end within the next 65 million years – then, within 100 million years, the Universe could stop expanding altogether, and instead it could enter an era of slow contraction that ends billions of years from now with the death – or perhaps the rebirth – of time and space.

And this could all happen “remarkably” quickly, said study co-author Paul Steinhardt, Director of the Princeton Center for Theoretical Science at Princeton University in New Jersey.

“Going back in time 65 million years, that’s when the Chicxulub asteroid hit the Earth and eliminated the dinosaurs,” Steinhardt told Live Science. “On a cosmic scale, 65 million years is remarkably short.”

 

Nothing about this theory is controversial or implausible, Gary Hinshaw, a professor of physics and astronomy at the University of British Columbia who was not involved in the study, told Live Science.

However, because the model hinges on past observations of expansion alone – and because the present nature of dark energy in the Universe is such a mystery – the predictions in this paper are currently impossible to test. For now, they can only remain theories.

Energy of the void

Since the 1990s, scientists have understood that the expansion of the Universe is speeding up; the space between galaxies is widening faster now than it was billions of years ago.

Scientists named the mysterious source of this acceleration dark energy – an invisible entity that seems to work contrary to gravity, pushing the Universe’s most massive objects farther apart rather than drawing them together.

Though dark energy makes up approximately 70 percent of the total mass-energy of the Universe, its properties remain a total mystery.

A popular theory, introduced by Albert Einstein, is that dark energy is a cosmological constant  – an unchanging form of energy that’s woven into the fabric of space-time. If that’s the case, and the force exerted by dark energy can never change, then the Universe should continue expanding (and accelerating) forever.

 

However, a competing theory suggests that dark energy doesn’t need to be constant in order to fit with observations of past cosmic expansion.

Rather, dark energy may be something called quintessence – a dynamic field that changes over time. (Steinhardt was one of three scientists who introduced the idea in a 1998 paper in the journal Physical Review Letters.)

Unlike the cosmological constant, quintessence can be either repulsive or attractive, depending on the ratio of its kinetic and potential energy at a given time. Over the last 14 billions years, quintessence was repulsive. 

For most of that period, though, it contributed insignificantly compared to radiation and matter to the expansion of the Universe. That changed about five billion years ago, when quintessence became the dominant component and its gravitational repulsion effect caused the expansion of the universe to speed up.

“The question we’re raising in this paper is, ‘Does this acceleration have to last forever?'” Steinhardt said. “And if not, what are the alternatives, and how soon could things change?”

The death of dark energy

In their study, Steinhardt and his colleagues, Anna Ijjas of New York University and Cosmin Andrei of Princeton, predicted how the properties of quintessence could change over the next several billion years.

 

To do this, the team created a physical model of quintessence, showing its repellent and attractive power over time, to fit with past observations of the Universe’s expansion. Once the team’s model could reliably reproduce the Universe’s expansion history, they extended their predictions into the future.

“To their surprise, dark energy in their model can decay with time,” Hinshaw said. “Its strength can weaken. And if it does so in a certain way, then eventually the antigravitational property of dark energy goes away and it transitions back into something that’s more like ordinary matter.”

According to the team’s model, the repellent force of dark energy could be in the midst of a rapid decline that potentially began billions of years ago.

In this scenario, the accelerated expansion of the Universe is already slowing down today. Soon, perhaps within about 65 million years, that acceleration could stop altogether – then, within as few as 100 million years from now, dark energy could become attractive, causing the entire universe to start contracting.

In other words, after nearly 14 billion years of growth, space could start to shrink.

“This would be a very special kind of contraction that we call slow contraction,” Steinhardt said. “Instead of expanding, space contracts very, very slowly.”

Initially, the contraction of the Universe would be so slow that any hypothetical humans still alive on Earth wouldn’t even notice a change, Steinhardt said. According to the team’s model, it would take a few billion years of slow contraction for the Universe to reach about half the size it is today.

The end of the Universe?

From there, one of two things could happen, Steinhardt said. Either the Universe contracts until it collapses in on itself in a big “crunch”, ending space-time as we know it – or, the Universe contracts just enough to return to a state similar to its original conditions, and another Big Bang  – or a big “bounce” – occurs, creating a new Universe from the ashes of the old one.

In that second scenario (which Steinhardt and another colleague described in a 2019 paper in the journal Physics Letters B), the Universe follows a cyclical pattern of expansion and contraction, crunches and bounces, that constantly collapse and remake it.

If that’s true, then our current Universe may not be the first or only Universe, but just the latest in an infinite series of Universes that have expanded and contracted before ours, Steinhardt said. And it all hinges on the changeable nature of dark energy.

How plausible is all this? Hinshaw said the new paper’s interpretation of quintessence is a “perfectly reasonable supposition for what the dark energy is”.

Because all of our observations of cosmic expansion come from objects that are millions to billions of light-years away from Earth, current data can only inform scientists about the Universe’s past, not its present or future, he added.

So, the Universe could very well be barreling toward a crunch, and we’d have no way of knowing until long after the contraction phase began.

“I think it really just boils down to how compelling do you find this theory to be and, more importantly, how testable do you find it to be?” Hinshaw added.

Unfortunately, there is no good way to test whether quintessence is real, or whether cosmic expansion has started to slow, Steinhardt admitted. For now, it’s just a matter of fitting the theory with past observations – and the authors do that capably in their new paper.

Whether a future of endless growth or rapid decay awaits our Universe, only time will tell.

This article was originally published by Live Science. Read the original article here.

 

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Business

UK economy shrank by 9.9% in 2020, its largest contraction on record

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A man wearing a mask as a preventive measure against the spread of Covid-19 walks in London.

May James | SOPA Images | LightRocket via Getty Images

The U.K. economy contracted by 9.9% in 2020, its largest annual contraction since records began, as the coronavirus pandemic ravaged economic activity.

In the final quarter of the year, gross domestic product (GDP) grew by 1%, according to the Office for National Statistics, as the country re-imposed nationwide lockdown measures in a bid to combat a resurgence of Covid-19 cases.

The 9.9% annual contraction is more than twice that seen in 2009 in the aftermath of the global financial crisis.

Economists polled by Refinitiv had expected an 8% annual decline, in 2020 with a fourth-quarter expansion of 0.5%. This follows a revised 16.1% rebound in the third quarter as social, travel and business restrictions were eased.

As of Friday morning, the U.K. has recorded more than 4 million cases and 115,000 deaths, according to data compiled by Johns Hopkins University. The U.K. has been blighted by new and more transmissible variants of the virus in recent months.

Hitesh Patel, portfolio manager at Quilter Investors, said the U.K. had experienced an “annus horribilis” in the form of the “trifecta” of a public health crisis, economic shutdowns and uncertainty surrounding Brexit.

“However, 2020 is in the past and the U.K. arguably has a promising second half of the year ahead given the success of the vaccine rollout,” he said.

“This could easily be derailed should one of the mutations prevent the vaccines properly taking effect, but for now a double dip recession has been avoided and soon lockdowns may potentially be the thing of the past.”

England remains in a nationwide lockdown with no clear end date, although British Prime Minister Boris Johnson confirmed on Wednesday that around one in four adults, approximately 13 million people, have now received the first dose of a Covid vaccine.

Monthly GDP in December increased by 1.2% from the previous the month, but remained 6.3% below the level of February 2020. Fourth-quarter GDP remained 6.6% below the level seen in the fourth quarter of 2019.

The services sector grew by 1.7% in December having contracted by 3.1% in November, while manufacturing posted its eighth consecutive month of growth, the ONS said, albeit its smallest incline since May 2020.

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