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Saturday, July 26, 2014

Schedule for Week of July 27th

by Calculated Risk on 7/26/2014 01:17:00 PM

This will be a busy week for economic data with several key reports including the July employment report on Friday and the advance Q2 GDP report on Wednesday.

Other key reports include the ISM manufacturing index on Friday, July vehicle sales, also on Friday, and the May Case-Shiller house price index on Tuesday.

There will a two-day FOMC meeting on Tuesday and Wednesday, and the Fed is expected to announce on Wednesday a decrease in asset purchases from $35 billion per month to $25 billion per month.

----- Monday, July 28th -----

10:00 AM ET: Pending Home Sales Index for June. The consensus is for a 0.3% increase in the index.

10:30 AM: Dallas Fed Manufacturing Survey for July. This is the last of the regional Fed manufacturing surveys for July.

During the day: the 2014 Social Security Trustees Reports

----- Tuesday, July 29th -----

Case-Shiller House Prices Indices9:00 AM: S&P/Case-Shiller House Price Index for May. Although this is the May report, it is really a 3 month average of March, April and May.

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes through the April 2014 report (the Composite 20 was started in January 2000).

The consensus is for a 9.9% year-over-year increase in the Composite 20 index (NSA) for May. The Zillow forecast is for the Composite 20 to increase 9.6% year-over-year, and for prices to increase 0.4% month-to-month seasonally adjusted.

10:00 AM: Conference Board's consumer confidence index for July. The consensus is for the index to increase to 85.5 from 85.2.

10:00 AM: Q2 Housing Vacancies and Homeownership report from the Census Bureau. This report is frequently mentioned by analysts and the media to report on the homeownership rate, and the homeowner and rental vacancy rates. However, this report doesn't track with other measures (like the decennial Census and the ACS).

----- Wednesday, July 30th-----

7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 235,000 payroll jobs added in July, down from 280,000 in June.

8:30 AM: Gross Domestic Product, 2nd quarter 2014 (advance estimate); Includes historical revisions from the BEA. The consensus is that real GDP increased 2.9% annualized in Q2.

2:00 PM: FOMC Meeting Announcement.  No change in interest rates is expected (for a long time). However the FOMC is expected to reduce QE3 asset purchases by $10 billion per month at this meeting.

----- Thursday, July 31st -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 305 thousand from 284 thousand.

9:45 AM: Chicago Purchasing Managers Index for July. The consensus is for a increase to 63.0, up from 62.6 in June.

----- Friday, Aug 1st -----

8:30 AM: Employment Report for July. The consensus is for an increase of 228,000 non-farm payroll jobs added in July, down from the 288,000 non-farm payroll jobs added in June.

The consensus is for the unemployment rate to be unchanged at 6.1% in July. 

Payroll jobs added per monthThis graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed to show the underlying payroll changes).

June was the fifth month in a row with more than 200 thousand jobs added, and employment in June was up 2.495 million year-over-year.

The economy has added 9.7 million private sector jobs since employment bottomed in February 2010 (9.1 million total jobs added including all the public sector layoffs).

There are 895 thousand more private sector jobs now than when the recession started in 2007, and total employment is now 415 thousand above the pre-recession peak.

8:30 AM: Personal Income and Outlays for June including revised estimates 2011 through May 2014. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.2%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for July). The consensus is for a reading of 81.5, up from the preliminary reading of 81.3, and down from the June reading of 82.5.

Vehicle SalesAll day: Light vehicle sales for July. The consensus is for light vehicle sales to decrease to 16.7 million SAAR in July from 16.9 million in June (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the June sales rate.

10:00 AM: Construction Spending for June. The consensus is for a 0.5% increase in construction spending.

ISM PMI10:00 AM: ISM Manufacturing Index for July. The consensus is for an increase to 55.9 from 55.3 in June.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion in June at 55.3%. The employment index was at 52.8%, and the new orders index was at 58.9%.

Unofficial Problem Bank list declines to 452 Institutions

by Calculated Risk on 7/26/2014 08:15:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for July 25, 2014.

Changes and comments from surferdude808:

As anticipated, the FDIC provided an update on its enforcement action activity which contributed to many changes to the Unofficial Problem Bank list this week. In all, there were 11 removals this week pushing the list count down to 452 institutions with assets of $146.1 billion. A year ago the list held 729 institutions with assets of $260.9 billion. For the month, the list count fell by 16 after 10 action terminations, four mergers, and two failures. This is the smallest monthly count decline since a net drop of 12 during the month of June 2013. This may be the leading edge of a slowdown in action terminations.

The FDIC surprised us by closing GreenChoice Bank, FSB, Chicago, IL ($73 million) this Friday. This is the 14th failure this year approximating the pace last year when 16 banks had failed by this point. GreenChoice is the 60th Illinois-based institution to fail since the on-set of the Great Recession. The count in Illinois only trails the 88 in Georgia and 71 in Florida.

FDIC terminated actions against Alliance Bank Central Texas, Waco, TX ($187 million); Monarch Community Bank, Coldwater, MI ($182 million Ticker: MCBF); First Personal Bank, Orland Park, IL ($166 million); Rabun County Bank, Clayton, GA ($163 million); Flagship Bank Minnesota, Wayzata, MN ($94 million); One World Bank, Dallas, TX ($82 million); Bay Bank, Green Bay, WI ($81 million); and Kendall State Bank, Valley Falls, KS ($38 million).

Finding their way off the list through a merger partner were Atlas Bank, Brooklyn, NY ($116 million) and Bay Bank, Mobile, AL ($78 million).

Most likely there will be few changes to the list next week.
CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 452.

Friday, July 25, 2014

Bank Failure Friday: Greenchoice Bank, Chicago, Illinois,14th Failure of 2014

by Calculated Risk on 7/25/2014 07:39:00 PM

From the FDIC: Providence Bank, LLC, South Holland, Illinois, Assumes All of the Deposits of Greenchoice Bank, fsb, Chicago, Illinois

As of March 31, 2014, GreenChoice Bank, fsb had approximately $72.9 million in total assets and $71.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $14.2 million. ... GreenChoice Bank, fsb is the 14th FDIC-insured institution to fail in the nation this year, and the fourth in Illinois.
There were 24 failures in 2013, and it appears there will be about the same this year. F

Vehicle Sales Forecasts: Over 16 Million SAAR again in July

by Calculated Risk on 7/25/2014 01:59:00 PM

The automakers will report July vehicle sales next Friday, August 1st.  Sales in June were at 16.92 million on a seasonally adjusted annual rate basis (SAAR), and it appears sales in July will be above 16 million SAAR again.  The analyst consensus is for July sales of 16.8 million SAAR.

Note:  There were 26 selling days in July this year compared to 25 last year.  

Here are a few forecasts:

From J.D. Power: U.S. auto sales seen rising 9 percent in July: JD Power-LMC

U.S. auto sales in July will be the strongest for the month since 2006, and rise 9 percent from last year, automotive industry consultants J.D. Power and LMC Automotive predicted on Thursday.

For the fifth consecutive month, the seasonally adjusted annualized sales rate will top 16 million new vehicles, at 16.6 million, the consultancies said.

LMC raised its full-year 2014 forecast for new auto sales to 16.3 million, from 16.2 million.
From TrueCar: New Vehicle Sales Continue to Sizzle in July; TrueCar Increases 2014 Annual Sales Forecast to 16.35M
Seasonally Adjusted Annualized Rate ("SAAR") of 16.7 million new vehicle sales is up 6.8 percent from July 2013.
From Kelley Blue Book: New-Car Sales to Jump 11.6 Percent Year-Over-Year in July
The seasonally adjusted annual rate (SAAR) for July 2014 is estimated to be 16.6 million, up from 15.7 million in July 2013 and down from 16.9 million in June 2014.
Another solid month for auto sales.

Hotels: Record High Occupancy Rate for Week Ending July 19th

by Calculated Risk on 7/25/2014 11:10:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 19 July

In year-over-year measurements, the industry’s occupancy rate rose 2.9 percent to 77.1 percent. Average daily rate increased 4.1 percent to finish the week at US$117.57. Revenue per available room for the week was up 7.1 percent to finish at US$90.68.
emphasis added
Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

This is the highest occupancy rate for any week since at least January 2000.  The previous high was 77.0% in late July 2000.

And from HotelNewNow.com: June US hotel occupancy best of this century
Just how good is the current state of demand? Take a bite of this juicy nugget: June occupancy of 71.7% is the highest of any June this century.

The above factoid was culled by Jan Freitag, senior VP of global development for STR and our resident hotel data aficionado. Jan’s also a master of context, explaining this milestone another way: The average occupancy for U.S. hotels is now higher than the previous peak recorded in June 2007 (71.1%).

To understand how we got here, you need look no further than economics 101. For much of the past few years, the relationship between supply and demand has been, well, just great.

As of June, demand growth (12-month moving average) was up 3.2%, according to STR data. Supply growth? Only 0.8%.

In other words, supply growth still has had no impact, as Freitag points out.
...
June ADR (12-month moving average) was $112, up 3.9%. The result is revenue per available room of $71, which represents growth of 6.4%.

Both those ADR and RevPAR numbers represent all-time highs for the U.S. hotel industry.
The following graph shows the seasonal pattern for the hotel occupancy rate for the last 15 years using the four week average.

Hotel Occupancy Rate Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the same level as in 2000. 

Right now it looks like 2014 will be the best year since 2000 for hotels.   A very strong year ...

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com