A hot housing market is a financial crisis risk

Plus: Trump knew. [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a flying car of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Don’t sleep on [housing’s potential to cause problems](. - Cassidy Hutchinson’s [testimony was damning for Donald Trump](. - [Wind and solar energy]( are booming. - Saudi Arabia [can’t pump much more](. The housing market, possibly. Source: Metro-Goldwyn-Mayer/Getty Images Come Fly With Me (or Not) The US housing market is either the car at the end of “Thelma and Louise” or “[Chitty Chitty Bang Bang](” — soaring one last time before (spoiler alert) crashing into a ravine or defying the laws of physics and flying forever. As someone who has a rocky relationship with physics (I am bad at “sports” and “standing”), my natural inclination is to assume natural laws will have their cruel victory in the end. [Investors should brace for just such a thing](, in fact, warns John Authers. New [data]( from S&P CoreLogic and the FHFA showed home prices continuing to rise to nosebleed heights in April, despite average mortgage rates jumping to more than 5% that month. Rates are now pushing 6%, mortgage bonds are getting hammered, and borrowing costs for mortgage originators have doubled in a matter of months, John notes. Resilient home prices in such an environment may make homeowners feel cozy about their Zestimates. But they’re no bueno for a Fed on a [sworn mission to kill inflation dead](, as Jonathan Levin reminds us, given that housing is a massive component of inflation. The Fed might well feel inclined to keep squeezing the market until it breaks. Those of us who were sentient in 2008 know how that can go. The banking system is better prepared for such an event than it was 14 years ago, but the new ecosystem of non-bank lenders springing up in the wake of the crisis may not be. Better hope this thing has airbags.  Bonus Look-Out-Below Reading: - Crypto is the [new home for dangerous shadow banking](. — Matt Levine - [Treasury yields may have peaked](, which means a recession is on the way. — Gary Shilling Trump Jesus, Take the Wheel Cassidy Hutchinson yesterday gave several hours of damning sworn testimony about the mental state of Donald Trump leading up to the Jan. 6 insurrection. So naturally today we in the media are following that up by chasing down one person’s [claim]( about one detail some are using to undermine Hutchinson’s credibility. But whether an angry Trump lunged for the wheel of his SUV or tried to give a Secret Service agent an unwanted neck massage or not is irrelevant. The overwhelming — and uncontested — balance of Hutchinson’s account makes clear [Trump knew exactly what he was doing]( as he whipped up the mob to thwart democracy, Bloomberg’s editorial board writes. Certainly all the [behavior described yesterday is consistent]( with what longtime Trump chronicler Tim O’Brien has personally witnessed: The Former Guy is somebody who throws tantrums — and lunches — and makes threats when things don’t go exactly his way. It’s also clear [Trump and his crew committed crimes]( in the process of trying to overturn the election, Jonathan Bernstein argues. Attorney General Merrick Garland will have to decide if he agrees. At the very least, Trump placed his own ego above the Constitution he was sworn to defend. Expect nothing less if he gets a chance at a repeat performance. Bonus Undermining-Democracy Reading: [TikTok could be a worse font of misinformation]( in US elections than Facebook. — Tim Culpan Telltale Charts Don’t be distracted by the world’s lust for fossil fuels during the pandemic and war, writes Liam Denning: [Wind and solar have contributed almost all the growth]( in energy demand for the past few years, a trend that will probably continue. It’s a good thing, too, because oil may stay relatively scarce. Saudi Arabia says it can raise output to 12 million barrels a day from 11 million, but Javier Blas writes there are [many reasons to doubt it can sustain]( such a level for long. Further Reading Twenty-five years after Hong Kong’s handover, China is executing its [long-term plan to take full control](, destroying the city’s spirit in the process. — Matthew Brooker NATO needs strong [defensive positions on Russia’s border]( to prevent future invasions. — Hal Brands People are talking again about a [Middle East NATO](, but it’s as impossible as ever. — Bobby Ghosh [California’s inflation rebates]( will spur more inflation. — Jared Dillian Confusing official language [makes it harder to fight Covid](. — Faye Flam [Strengthening laws in states that already allow abortions]( will help more vulnerable women. — Rhonda Vonshay Sharpe When it comes to America’s [race with China for Mars rocks](, quality of results beats speed. — Adam Minter ICYMI Tesla laid off [hundreds of autopilot workers](. R. Kelly was [sentenced to 30 years in prison](. [Venice is cracking down]( on day-trippers. Senate Democrats are considering another crack at [climbing Mount Manchin](. Kickers Medieval Times workers [want to unionize](. (h/t Scott Kominers) South African fossils of human ancestors may be [a million years older]( than we thought. Will Mars samples [contaminate Earth](? Taco Bell’s newest crime against nature will [involve a bloated Cheez-It](. Notes: Please send bloated Cheez-Its and complaints to Mark Gongloff at mgongloff1@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. 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