by Calculated Risk on 7/14/2011 04:09:00 PM

From DataQuick: Bay Area June Home Sales Surge, Median Price Edges Up to 2011 High

Bay Area home sales rose sharply last month from May to the highest level for any month since June 2010, when outgoing homebuyer tax credits gave housing demand a final boost.
...
A total of 7,998 new and resale houses and condos sold in the nine-county Bay Area last month. ... June sales have ranged from a low of 7,118 in 1993 to a high of 15,735 in 2004, while the average is 10,129. Sales last month fell 21.0 percent below the June average. June is normally a strong month and, among all months, it’s had the highest number of sales most often – seven of the past 23 years.
...
“It’s difficult to point to one specific thing that caused last month’s sales to jump more than usual from May. It wasn’t just in the Bay Area – we saw it across much of the state. June likely benefitted from a combination of factors, such as price reductions, low mortgage rates and perhaps a batch of short sale transactions from spring that took months to close. Bargain hunters, mainly investors and first-time buyers, remain very active,” said John Walsh, DataQuick president. ... “Let’s keep in mind, however, that last month was not a particularly strong June, historically speaking, and one month’s increase in sales from the prior month doesn’t constitute a trend.”
...
Last month 399 newly built houses and condos sold in the Bay Area, down 43.8 percent from a year earlier and the second-lowest for a June in DataQuick’s records, behind 360 new-home sales in 1993.

This is another report suggesting an increase in existing home sales in June compared to the reported 4.81 million sold in May on a seasonally adjusted annual rate (SAAR) basis (before the coming benchmark revisions).

Hopefully Tom Lawler will have a June forecast soon. National existing home sales for June will be reported on July 20th. New home sales will reported on July 26th.

Note on New Home sales: DataQuick reports when the escrow closes, and the Census Bureau reports when a contract is signed. So you can't use this low level of sales to forecast June new home sales - this is just confirmation that there were very few contracts signed 6 months or so ago (since it takes about 6 months to close a new home).

by Calculated Risk on 7/14/2011 02:01:00 PM

Import traffic declined at the LA area ports in June. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach 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 - and possible hints about the trade report for June. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image in graph gallery.

On a rolling 12 month basis, inbound traffic is down 0.3% from May, and outbound traffic is up 0.5%.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of June, loaded inbound traffic was down 5% compared to June 2010, and loaded outbound traffic was up 7% compared to June 2010.

Exports have been increasing, although bouncing around month-to-month. Exports are up from last year, but still below the peak in 2008.

Imports were down from last year, and are below the levels of June in 2005 through 2008 too.

In May, LA port traffic suggested in increase in trade with China (and other Asians countries), and this month the data suggests a decline in imports with Asian countries. Combined with a decline in oil prices, I expect the trade deficit to decline sharply in June.

by Calculated Risk on 7/14/2011 12:27:00 PM

Note: Unless there is a dramatic change, I'm only going to post the hotel occupancy numbers once every few weeks.

From HotelNewsNow.com: LA tops holiday week hotel performance gains

Overall, the U.S. hotel industry’s occupancy rose 2% to 63.8%, ADR increased 3.4% to US$98.40, and RevPAR finished the week up 5.4% to US$62.74.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average for the occupancy rate.

Click on graph for larger image in graph gallery.

The summer leisure travel season has now started, and the occupancy rate will increase over the next couple of months. Right now the occupancy rate is tracking 2008 - and well above 2009 - but still below the "normal" level.

A reminder: the occupancy rate started to fall off in the summer of 2008, and really fell off a cliff in the fall of 2008 ... so I expect the occupancy rate in 2011 to stay mostly above 2008 for the rest of the year.

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

Earlier today ...
• Retail Sales increased 0.1% in June
• Weekly Initial Unemployment Claims decline to 405,000

by Calculated Risk on 7/14/2011 09:10:00 AM

On a monthly basis, retail sales increased 0.1% from May to June (seasonally adjusted, after revisions), and sales were up 8.1% from June 2010. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $387.8 billion, an increase of 0.1 percent (±0.5%) from the previous month, and 8.1 percent (±0.7%) above June 2010.

Click on graph for larger image in graph gallery.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales have been mostly moving sidways since March.

Retail sales are up 16.6% from the bottom, and now 2.5% above the pre-recession peak.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.4% on a YoY basis (8.1% for all retail sales).

This was about at expectations for no change in retail sales. Retail sales ex-autos were unchanged, and gas station sales declined 1.3% last month as prices fell. Another weak retail sales report ...

by Calculated Risk on 7/14/2011 08:30:00 AM

The DOL reports:

Special Factor: Minnesota has indicated that approximately 11,500 of their reported initial claims are a result of state employees filing due to the state government shutdown.

In the week ending July 9, the advance figure for seasonally adjusted initial claims was 405,000, a decrease of 22,000 from the previous week's revised figure of 427,000. The 4-week moving average was 423,250, a decrease of 3,750 from the previous week's revised average of 427,000.

This is the 14th straight week with initial claims above 400,000, and the 4-week average is at about the same the level as in January.

The following graph shows the 4-week moving average of weekly claims for the last 40 years.

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased slightly this week to 423,250.

This is just one week, and this series is very volatile (that is why most people follow the 4-week average). Also last week was revised up significantly. Still, the decline to 405,000 is a positive ...

by Calculated Risk on 7/13/2011 09:05:00 PM

The Euro zone summit meeting originally planned for Friday has apparently been delayed - probably until next week or until an agreement can be announced.

Meanwhile the bank stress test results will be released on Friday, and there is already disagreement about the results.

• From Reuters: Euro zone leaders summit on Greece seen next week-diplomats

Leaders of countries in the euro zone are likely to meet next week to discuss a second aid package for Greece as well as private-sector involvement in reducing the country's debt burden, EU diplomats said on Wednesday.

• From the Irish Times: Europe must be decisive on euro crisis, says Kenny

EUROPE HAS to respond “comprehensively and decisively’’ to the economic crisis, Taoiseach Enda Kenny told the Dáil. “Ireland will contribute to that,’’ he said.

Mr Kenny said there was no point in having a EU Council meeting tomorrow unless there was a decision, or set of decisions, on the European situation.

• From Bloomberg: Germany’s Helaba Snubs EU Stress-Test Regulator in Run Up to Publication

Germany’s Landesbank Hessen- Thueringen snubbed the European Union’s bank stress tests two days before the publication of results, refusing to give the European Banking Authority permission to publish all of its data.

The bank, known as Helaba, disputes the EBA’s measurements of Core Tier 1 capital, the factor by which banks are said to have passed or failed the tests, because they don’t include some instruments allowed by German regulators. The lender said it passed the exams with a capital ratio of 6.8 percent, counting contractual changes around state funds of 1.92 billion euros ($2.71 billion), not included in the EBA results.

• From the Irish Times: Irish bond yields soar to record highs on 'junk' status

by Calculated Risk on 7/13/2011 05:07:00 PM

From Moody's: Moody's Places US Aaa Government Bond Rating and Related Ratings on Review for Possible Downgrade

Moody's Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.
...
The review of the US government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default.

Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate.

No surprise.

by Calculated Risk on 7/13/2011 01:00:00 PM

• From Bloomberg: Greece’s Issuer Default Ratings Cut to CCC From B+ by Fitch on Lack of Aid

Greece had its long-term foreign and local currency issuer default ratings cut to CCC from B+ by Fitch Ratings because of the lack of an aid program for the debt-laden country.

• Did Bernanke shift on QE3?

From Binyamin Appelbaum at the NY Times: Bernanke Says Fed Would Consider New Stimulus Effort

The unexpected weakness is forcing the Fed to reconsider its determination early this year to refrain from new efforts to stimulate growth. While no additional actions appear imminent, Mr. Bernanke said in Congressional testimony Wednesday that the Fed would be prepared to act if necessary ...

Mr. Bernanke made clear Wednesday that a resumption of the central bank’s economic revival campaign faces a high hurdle. He said that the Fed would look for two conditions: economic weakness beyond current expectations and a renewed threat of deflation.

The first seems obvious to most people. The second, however, may the more important factor.

From Jon Hilsenrath at the WSJ: Bernanke Shifts Tone on Further Policy Easing

Chairman Ben Bernanke acknowledged in his House testimony today that the Federal Reserve might need to take additional steps to ease monetary policy. “The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” he said.

This represents a slight shift in tone for the Fed chairman. In a press conference in June, Mr. Bernanke, in response to a question, laid out what the Fed COULD do if it saw a need to provide more stimulus to the economy. In his testimony Wednesday, he effectively said more stimulus MIGHT be needed, but only under certain conditions, namely persistent slow growth and a slowdown in inflation that again raises the prospect of Japan-style deflation.

This isn't like Jackson Hole last year when Bernanke telegraphed QE2. If this is a shift in tone, it is slight.

by Calculated Risk on 7/13/2011 10:00:00 AM

Note: Testimony starts at 10 AM ET.

Here is the CSpan feed

Here is the CNBC feed.

Prepared testimony from Fed Chairman Ben Bernanke: Semiannual Monetary Policy Report to the Congress

by Calculated Risk on 7/13/2011 09:00:00 AM

This is the new UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: Pulse of Commerce Index^TM

Press Release: Pulse of Commerce Index Rebounds – Up 1.0 Percent In June

The Ceridian-UCLA Pulse of Commerce Index™ (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation rose 1.0 percent in June on a seasonally and workday adjusted basis, a welcome rebound following declines in the previous two months. Despite the stronger performance in June, the economy continues to remain in idle with the PCI remaining below its level at the end of the first quarter.

“Over the past year the U.S. economy has been in ‘she loves me, she loves me not’ mode,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”

Click on graph for larger image in graph gallery.

This graph shows the index since January 2000.

“The June PCI is anticipating industrial production to show modest growth of 0.17 percent for June when the number is released by the Government on July 15, 2011,” [said Craig Manson, senior vice president and Index expert for Ceridian]
...
The Ceridian-UCLA Pulse of Commerce Index™ is based on real-time diesel fuel consumption data for over the road trucking ...

This index has mostly been moving sideways all year. As Leamer noted, this "could be the start of a positive trend, but a one month spike does not make a trend, particularly in light of the many false starts experienced over the last year."

Notes: I've heard from other sources that trucking picked up a little at the end of June - perhaps because of lower fuel prices. This index does appear to track Industrial Production over time (with plenty of noise).