by Calculated Risk on 10/25/2008 12:30:00 PM

Initially I posted a story about a significant plunge in truck sales for Volvo. However the details were misleading because of cancellations.

Here is a story from Bloomberg: European Heavy-Truck Sales Drop 4.8% as Economic Growth Wanes

European heavy-truck sales fell 4.8 percent last month as the credit crisis and concern that a recession is coming deterred companies from expanding fleets.

Manufacturers sold 28,947 trucks weighing 16 metric tons or more in September compared with 30,403 a year earlier, the Brussels-based European Automobile Manufacturers Association said in a statement today. Nine-month deliveries rose 3.5 percent to 250,580 vehicles.

by Calculated Risk on 10/25/2008 09:08:00 AM

Click on cartoon for larger image in new window. Used with permission from cartoonist John Ambrosavage at Ambrotoons.com email for ambrotoons

by Calculated Risk on 10/24/2008 11:47:00 PM

Life Imitates Art (hat tip John) ... only 20 seconds.

Update: Greenspan and Casablanca "Shocked" 19 seconds

by Calculated Risk on 10/24/2008 09:25:00 PM

Tom Petruno at the LA Times Money & Co. breaks it down: Many world stock markets now off 50% or more from peaks

Here's a club no country wants to join, yet its ranks are swelling: The 50%-Off (Or Worse) Stock Market Club.
...
Here’s a sampling (not meant to be all-inclusive):

Markets down more than 70%: Vietnam (-70.5%), Peru (-73.2%), Ireland (-73.4%), Russia (-73.9%), Iceland (-88.7%).

Markets down between 60% and 70%: Hong Kong (-60.1%), Poland (-62.6%), China (-69.8%).

Petruno has more. By comparison, the U.S. is holding up OK - so far. I guess we could call this global synchronized cliff diving!

by Calculated Risk on 10/24/2008 07:37:00 PM

This is from yesterday (Oct 23rd). 36 minutes 15 seconds.

If the player doesn't work, here is the link.

by Calculated Risk on 10/24/2008 06:29:00 PM

I've been using a two month method to predict PCE. This estimate suggests real PCE will decline by 2.4% in Q3.

Fed economists Riccardo DiCecio and Charles S. Gascon have used real time data to estimate PCE and check the reliability of this approach: Predicting Consumption: A Lesson in Real-Time Data (November 2008)

Whereas I used revised data for historical comparisons, the Fed economists only used data that was available for analysts at the time of the estimate (a much better test of the approach). The economists found that using the change in the second-month of each quarter (over the second-month of the previous quarter) was very reliable.

Click on graph for larger image in new window.

The chart plots the approximated (second-month) and actual growth rates of PCE since 1991 using real-time data: That is, the growth rates at each point on the chart are computed using only the data that would have been available to a researcher at the time of the estimate. The approximated measure for 2008:Q3 is –2.3 percent, suggesting the first decline in PCE since the fourth quarter of 1991.

Since PCE accounts for almost 71% of GDP, this also suggests the change in real GDP in Q3 might be negative. This depends on exports, changes in inventories and government spending (investment will certainly be negative in Q3).

by Calculated Risk on 10/24/2008 04:11:00 PM

From the FDIC: Stearns Bank, National Association Acquires the Insured Deposits of Alpha Bank & Trust, Alpharetta, GA

Alpha Bank and Trust, Alpharetta, Georgia, was closed today by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named receiver.
...
As of September 30, 2008, Alpha Bank & Trust had total assets of $354.1 million and total deposits of $346.2 million. Stearns Bank did not pay the FDIC a premium for the right to assume the failed bank's insured deposits.

At the time of closing, there were approximately $3.1 million in uninsured deposits held in approximately 59 accounts that potentially exceeded the insurance limits.
...
In addition to assuming the failed bank's insured deposits, Stearns Bank, N.A. will purchase approximately $38.9 million of Alpha's assets. The FDIC will retain the remaining assets for later disposition.

The transaction is the least costly resolution option, and the FDIC estimates that the cost to its Deposit Insurance Fund will be $158.1 million. The last bank to fail in Georgia was Integrity Bank, Alpharetta, on August 29, 2008. Alpha Bank & Trust is the sixteenth FDIC-insured institution to be closed this year.

This is a pretty small bank, but it is amazing that this will cost the Deposit Insurance Fund $158 million.

by Calculated Risk on 10/24/2008 02:29:00 PM

Click on graph for larger image in new window.

This graph shows the combined loaded inbound and outbound traffic at the ports of Long Beach and Los Angeles in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Inbound traffic should be peaking for the year as retailers prepare for the holiday season. Inbound traffic is off from August, and about 12% below last September.

Outbound traffic fell off a cliff in September, and is 17% below August 2008, and at about the same level as a year ago.

From the WSJ: Reliance on Exports Hurts Asia

The meltdown in Asian stock prices on Friday stemmed in part from the growing realization that the heavy reliance on exports that has driven Asia's powerful growth is now turning into the its worst enemy.

The evaporation of consumer spending in the U.S. and Europe is starting to hit deeply at Asian manufacturing titans that thrive on sales to the rest of the world, and that are now rapidly scaling down their capital spending.

So much for decoupling. It's hard to believe this comes as a surprise ...

by Calculated Risk on 10/24/2008 01:48:00 PM

From Bloomberg: Libor for Overnight Dollars Rises as Recession Concern Mounts

The London interbank offered rate, or Libor, that banks charge for such loans climbed 7 basis points to 1.28 percent today, British Bankers' Association said. It gained for the first time in 10 days yesterday. The comparable rate for U.K. pounds jumped 19 basis points to 4.75 percent. The Libor-OIS spread, a measure of cash scarcity, widened by the most since Oct. 10.

The yield on 3 month treasuries: 0.80% down from 0.94% (Worse)

The Fed is expected to lower rates next week by anywhere from 25 bps to even 75 bps, but I'd still like to see the three month treasury closer to 1.0% (or whatever the Fed Funds rate is next week). The effective Fed Funds rate is aoubt 0.80%, so this isn't horrible.

The TED spread: 2.70 up from 2.58 yesterday (Worse)

The two year swap spread from Bloomberg: 125.02 up from 117.00 (Worse)

Activity in the Treasury's Supplementary Financing Program (SFP). This is the Treasury program to raise cash for the Fed's liquidity initiatives. If this program slows down borrowing, I think that would be a good sign.

Here is a list of SFP sales. Three days without an announcement, so maybe the Fed is easing up a little. possible progress.

The A2P2 spread is 4.48, down from 4.6. A little better.

During a recession, this spread usually increases because the risk of default for lower quality paper increases. However the recent values (over 400 bps) are far in excess of normal. If the credit crisis eases, I'd expect a significant decline in this spread.

Industry contacts. Still no positive news. I'm tracking some financing deals there are being held up right now. If these deals complete that would be a good sign. Still no word.

Another disappointing day in the credit markets.

by Calculated Risk on 10/24/2008 11:54:00 AM

The Dept of Transportation reports on U.S. Traffic Volume Trends:

Travel on all roads and streets changed by -5.6% (-15.0 billion vehicle miles) for August 2008 as compared with August 2007. Travel for the month is estimated to be 253.7 billion vehicle miles.

Click on graph for larger image in new window.

This graph shows the annual change in the rolling 12 month average of U.S. vehicles miles driven. Note: the rolling 12 month average is used to remove seasonality.

By this measure, vehicle miles driven are off 2.6% YoY, and the decline in miles driven is worse than during the early '70s oil crisis - and almost as bad as the 1979-1980 decline.

From the WSJ: Oil Prices Drop, Despite OPEC Cut

Crude-oil futures Friday fell to their lowest point since May 2007, with concerns of a global recession overwhelming an Organization of Petroleum Exporting Countries decision to trim output.

Light, sweet crude for December delivery was recently down $4.38, or 6.5%, at $63.46 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures exchange fell $4.19 to $61.73 a barrel.

Nymex crude is off more than $80 from July's record highs. Oil's speedy reversal pushed OPEC to convene an emergency meeting in Vienna early Friday, where the cartel pledged to cut 1.5 million barrels a day from its production quota of 28.8 million barrels a day, effective Nov. 1.

This is clear demand destruction.