by Calculated Risk on 2/10/2011 07:23:00 PM

I've received some great feedback on the List: Ranking Economic Data post from earlier today.

In that post I tried to provide a ranking for a number of economic releases with links to source data and graphs.

I probably should have put the Trade Balance report a little higher (ht Dirk) - probably on the 'C List', although at times this belongs on the 'B List'.

And on Existing Home Sales: This was a tough choice. For me, the key to the NAR report is the inventory number - I watch it closely at times (I'd even say that existing home inventory is 'B List' data at times), but the sales number is much less important (Note: later this summer, I expect the NAR to revise down sales for the last few years).

The rise in existing home inventory in late 2005 helped me call the top of the housing bubble activity and predict that prices would start falling in 2006.

Please check out the list - I'll provide occasional updates. And thanks to all for the feedback.

by Calculated Risk on 2/10/2011 03:52:00 PM

Update: Mubarak says he staying, but will delegate power to the VP (If I heard it correctly).

Live Video on YouTube

From al Jazeera: Live blog Feb 10 - Egypt protests

Update: Live blog Feb 11 - Egypt protests

12:45am US President Barack Obama will meet with his national security team at the White House to discuss the situation in Egypt, presidential spokesman Robert Gibbs says.

12:34am ElBaradei on Twitter: "Egypt will explode. Army must save the country now."

by Calculated Risk on 2/10/2011 02:08:00 PM

Here is a first cut at ranking economic data. These lists are not exhaustive (I'm sure I left a few off), and the rankings are not static. As an example, right now initial weekly unemployment claims is ‘B List’ data, but when (if) the expansion takes hold, weekly claims will move unceremoniously to the 'D List'.

I've marked several indicators with '***' indicating I think this data is currently more important than usual. This includes weekly claims and several real estate related releases (delinquency reports, negative equity, vacancy rates).

For each indicator I've included a link to the source, and a link to the current graph gallery.

Some of the lower ranked data is useful as leading indicators. As an example, the Architecture Billings Index is a leading indicator for investment in commercial real estate. And the NMHC apartment survey leads changes in apartment rents and vacancy rates. Also some of the lower ranked data helps forecast some of the more important data. I'll discuss leading indicators (another list that is not static!) in a future post.

Note: There has been some research (by Wall Street analysts) about how "surprises" for many of these indicators impact the stock market. In general the ranking is similar with the employment situation report being #1.

Another FAQ: Why does CR give everything away for free? Because ...

A-List
• BLS: Employment Situation Report (Employment Graphs)
• BEA: GDP Report (quarterly) (GDP Graphs)

B-List
• Census: New Home Sales (New Home Graphs)
• Census: Housing Starts (Housing Graphs)
• ISM Manufacturing Index (ISM Graph)
• Census: Retail Sales (Retail Graphs)
• BEA: Personal Income and Outlays (graph)
• Fed: Industrial Production (graphs IP and Capacity Utilization)
• BLS: Core CPI (graph CPI)
• ***DOL: Weekly Initial Unemployment Claims (graph weekly claims)

C-List
• Philly Fed Index (Graph Philly Fed)
• NY Fed Empire State Manufacturing Index (Graph Empire Index)
• Chicago ISM: Chicago PMI
• Census: Durable Goods
• ISM Non-Manufacturing Index (Graphs)
• House Prices: Case-Shiller and CoreLogic (House Price Graphs)
• NAR: Existing Home Sales (Graphs Existing Home)
• NAHB: Housing Market Index (Graph NAHB HMI)
• Census: Trade Balance (Graph Trade Balance)
• ***MBA: Mortgage Delinquency Data (Quarterly) (Graph MBA delinquency)
• ***LPS: Mortgage Delinquency Data (Graphs LPS Delinquency)
• ***CoreLogic: Negative Equity Report (quarterly) (Graphs Negative Equity)
• ***AIA: Architecture Billings Index (Graph ABI)
• ***Reis: Office, Mall, Apartment Vacancy Rates (Quarterly) (Graphs REIS Vacancy Rate)
• ***NMHC Apartment Survey (Quarterly) (Graph NMHC Survey)

D-List
• Reuters / Univ. of Michigan Consumer Confidence Index (Graph Consumer Confidence)
• MBA: Mortgage Purchase Applications Index (Graph MBA Index)
• BLS: Job Openings and Labor Turnover Survey (Graph JOLTS)
• Census: Construction Spending (Graph Construction Spending)
• Census: Housing Vacancy Survey (Quarterly) (Graphs Homeownerhip, Vacancy Rates)
• Fed: Senior Loan Officer Survey (Quarterly)
• AAR: Rail Traffic (Graph Transportation)
• ATA: Trucking (Graph Transportation)
• Ceridian-UCLA: Diesel Fuel Index (Graph Transportation)
• NFIB: Small Business Survey (Graphs NFIB Survey)
• Fed: Flow of Funds (Quarterly) (Graph Mortgage Equity Withdrawal)
• STR: Hotel Occupancy (Graph Hotel Occupancy)
• CRE Prices: CoStar, Moody’s (Graph Moody's and CoStar)
• Manufacturers: Light Vehicle Sales (Graph Vehicle Sales)
• NRA: Restaurant Performance Index (Graph)
• Fed: Consumer Credit (Graph Consumer Credit)
• DOT: Vehicle Miles Driven (Graph Miles Driven)
• LA Port Traffic (Graph Port Traffic)
• BLS: Producer Price Index
• ADP Employment Report
• Conference Board Confidence Index
• NAR: Pending Home Sales

Sources (Government):
BEA: Bureau of Economic Analysis
BLS: Bureau of Labor Statistics
Census: Census Bureau
DOL: Dept of Labor
DOT: Dept. of Transportation
Fed: Federal Reserve

Sources (Industry):
AAR: Association of American Railroads
AIA: American Institute of Architects
ISM: Institute for Supply Management
LPS: Lender Processing Services
MBA: Mortgage Bankers Association
NAHB: National Association of Homebuilders
NAR: National Association of Realtors
NFIB: National Federation of Independent Business
NRA: National Restaurant Association
STR: Smith Travel Research

by Calculated Risk on 2/10/2011 11:29:00 AM

• From the NY Times: Egypt’s Army Signals Transfer of Power

• From the WSJ: Mubarak Expected to Step Down

Egyptian President Hosni Mubarak is expected to step aside Thursday evening, the head of the country's ruling party said ... Hossam Badrawy, secretary-general of the National Democratic Party, said he told Mr. Mubarak in a telephone call Thursday that the president needs to step down for the good of the country.

Mr. Mubarak didn't say what he would do, Mr. Badrawy said, but Mr. Badrawy said he believes the president will step down.

by Calculated Risk on 2/10/2011 09:56:00 AM

From RealtyTrac: Foreclosure Activity Increases 1 Percent in January

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for January 2011, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 261,333 U.S. properties in January, a 1 percent increase from the previous month but a 17 percent decrease from January 2010.

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”
...
A total of 75,198 U.S. properties received default notices (NOD, LIS) in January, a 1 percent decrease from the previous month and a 27 percent decrease from January 2010 — the 12th straight month where default notices decreased on a year-over-year basis. January was also the fourth straight month where default notices decreased on a month-over-month basis, giving it the lowest monthly total for default notices since July 2007.

The decline in default notices is similar to the decline in serious delinquencies. However repossession activity will probably increase as lenders work through the legal issues and the huge backlog of homes in the foreclosure process.

by Calculated Risk on 2/10/2011 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Feb. 5, the advance figure for seasonally adjusted initial claims was 383,000, a decrease of 36,000 from the previous week's revised figure of 419,000. The 4-week moving average was 415,500, a decrease of 16,000 from the previous week's revised average of 431,500.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims for the last 10 years. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 16,000 to 415,500.

This is the lowest level for initial weekly unemployment claims since July 2008, although the 4-week average was a little lower early last month. The fairly rapid decline in the 4-week average over the last few months has been good news.

by Calculated Risk on 2/09/2011 08:20:00 PM

From CoStar: CoStar Commercial Repeat-Sale Indices, February 2011 Release

• At the national level, CoStar’s Investment Grade Repeat-Sale Index was up nearly 7% for the month of December continuing the see-saw pattern observed with oscillating monthly pricing data, resulting in a slight positive quarter. ... From its peak in July 2007, the Investment Grade pricing index is down 34.1%, with the trough occurring in January 2010 when the Index was down 40%.

• The strong performance of the Investment Grade index was enough to lift the U.S. national Composite Index, which is an equal-weighted repeat sales analysis of all commercial real estate sales, with two thirds of the transaction count contained within the General Index. The Composite Index was up 1.8% for the month, down 5.8% for the quarter and down 6.3% for the year. Overall the Composite Index is down 22% over the past two years.
emphasis added

Click on graph for larger image in new window.

This graph from CoStar shows the indexes for investment grade, general commercial and a composite index. The general commercial index was down, the other two were up slightly from November.

It is important to remember that there are very few CRE transactions (compared to residential), and that there is a high percentage of distressed sales, so prices are very volatile. On the number of "pairs":

The CCRSI January 2011 report is based on data through the end of December, 2010. In December of 2010 983 pair sales were recorded compared to 656 in the prior month, 610 in October and 690 in September. It is typical to see volume increase at year end. In December of 2009 the pair sales count was 807, so volume on this basis is up 22% from a year earlier. Distress sales as a percent of the total has been increasing in each of the four quarters in 2010 with just over 20% in the 4th quarter with 18.5% for all of 2010. By property type the highest percent of distress in the fourth quarter were for Hospitality at 36%, followed by Multifamily at 24%, office at 21% and industrial and retail both near 19%.

So this is based on only 983 transactions.

by Calculated Risk on 2/09/2011 05:45:00 PM

From NY Fed Vice President Brian Sack: Implementing the Federal Reserve’s Asset Purchase Program. This is for those interested in how the asset purchase program (QE2) works. A couple of excerpts:

[T]he Desk has been able to purchase large volumes of securities in a rapid manner, as required by the policy decisions made by the FOMC. Indeed, over the period since the FOMC's decision to expand the SOMA portfolio, the Desk has purchased about $300 billion of Treasury securities. That total includes about $220 billion of purchases out of the intended $600 billion expansion of the portfolio, and another $80 billion of purchases associated with the reinvestment of principal payments on agency debt and mortgage-backed securities. In terms of the monthly pace, the purchases so far have been running at about $105 billion per month, consisting of roughly $75 billion in new investments and $30 billion of reinvestments. To meet this pace, the Desk has been operating in the market on nearly every available day.

And on the recent increase in rates:

Since early November, one of the notable developments in financial markets has been the sharp increase in longer-term interest rates. At first glance, this change may seem at odds with the portfolio balance channel. However, it is important to understand the factors that led to the increase in interest rates in the current circumstances.

The upward movement in longer-term interest rates in large part reflects the greater optimism among investors about the outlook for economic growth. Investors revised up their baseline forecasts for the economy and reduced the perceived downside risks that they see around that outlook. This shift in the outlook led the market to price in the possibility of earlier increases in short-term interest rates and to scale back the size of asset purchases that they expect from the Federal Reserve. Both of those developments contributed to the significant rise in yields.

In contrast, the rise in yields does not appear to be driven by the concerns expressed by some that the asset purchase program would unleash a considerable rise in U.S. inflation and inflation expectations to levels well above those consistent with the Federal Reserve's mandate. Such an outcome would be detrimental to the economic outlook, leading to downward pressure on risky asset prices and a substantial weakening in the value of the dollar. However, what has taken place in U.S. markets to date does not resemble this outcome. Indeed, over the period since the November FOMC meeting, longer-term inflation expectations have remained at levels consistent with the Federal Reserve's mandate, risky asset prices have advanced and the dollar has held its ground.

by Calculated Risk on 2/09/2011 04:10:00 PM

Last year I mentioned a rumor that WikiLeaks might release some BofA documents.

Here is an update from Reuters: WikiLeaks Founder Suggests BofA Documents Are a Dud

The bombshell that WikiLeaks founder Julian Assange has said could "take down a bank or two" may in fact be something of a dud.
...
Assange said it consists of e-mails from the hard-drive of a Bank of America executive's computer and that the latest messages are dated sometime in 2006. ... Assange's private characterizations of the Bank of America material as being dated and difficult to interpret contrasts with inflammatory public statements he has made ... touting the significance of bank-related materials WikiLeaks has been planning to publish.

Note: I only mention this because I posted the rumor last year.

by Calculated Risk on 2/09/2011 12:58:00 PM

Fed Chairman Ben Bernanke has come under fire recently from many directions.

Of course I've been a frequent critic of Ben Bernanke over the years. I thought he missed the housing and credit bubble when he was a member of the Fed Board of Governors from 2002 to 2005. And I frequently ridiculed his comments when he was Chairman of the President Bush's Council of Economic Advisers from June 2005 to January 2006.

And we can't forget Bernanke's "contained" to subprime comments in March 2007. That became a running joke.

But I've also noted that once Bernanke started to understand the financial problems, he was very effective at providing liquidity for the markets. And there is no question that the short-term liquidity facilities were very effective and successful.

And I think Fed Chairman Ben Bernanke deserves praise today. His speech was very clear and he made several key points during the Q&A:

• QE is an extension of conventional monetary policy at the zero bound. As Bernanke noted

[T]he two types of policies affect the economy in similar ways. ... Conventional monetary policy easing works by lowering market expectations for the future path of short-term interest rates ... By comparison, the Federal Reserve's purchases of longer-term securities do not affect very short-term interest rates, which remain close to zero, but instead put downward pressure directly on longer-term interest rates.
With the Fed funds rate at the zero bound, the Fed had to resort to unconventional policy to provide further accommodation.

And with the unemployment rate near 10% (when QE2 started), and inflation well below the target rate, the Fed had no choice but to provide additional accommodation.

• Inflation in emerging markets is the responsibility of emerging market countries. The Fed is focused on inflation in the U.S., and the key measures of inflation show that inflation is below the Fed’s target of around 2%. For more on inflation, see Dr. Altig at Macroblog: Inflation confusion

• The U.S. needs a credible plan to reduce the long term deficit, but this doesn’t mean cutting the deficit in the short term since the U.S. economy still needs fiscal support.

• The debt and deficit are serious issues, but the debt ceiling debate is just political grandstanding. (I’ve made fun of both parties on this issue).

Right now I think the Fed is doing an excellent job with monetary policy, and I was very pleased that Bernanke stayed away from specifics on the deficit (not his responsibility).