by Calculated Risk on 9/10/2011 01:45:00 PM

Earlier:
• Summary for Week ending September 9th

Several key reports will be released this week: Retail Sales, Industrial Production, and the Consumer Price Index (CPI).

There will also be a special focus on the monthly surveys for some improvement from the dismal readings in August: both the Philly Fed and NY Fed (Empire state) manufacturing surveys for September will be released on Thursday, and the preliminary consumer sentiment survey for September will be released on Friday.

Both retail sales and Industrial Production were probably weak in August.

Note: The Greek bailout issue will be headline news.

----- Sunday, Sept 11th -----
The opening of the National September 11 Memorial & Museum at the World Trade Center. Live cam feeds at the World Trade Center.

----- Monday, Sept 12th -----
No scheduled releases.

----- Tuesday, Sept 13th -----
7:30 AM: NFIB Small Business Optimism Index for August.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index decreased to 89.9 in July from 90.8 in June. Optimism has declined for five consecutive months now.

8:30 AM: Import and Export Prices for August. The consensus is a for a 0.9% decrease in import prices.

9:00 AM: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for August (a measure of transportation).

----- Wednesday, Sept 14th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been very weak over the last several months and the four average was at 1995 levels last week.

8:30 AM: Producer Price Index for August. The consensus is for a 0.1% decrease in producer prices (0.2% increase in core).

8:30 AM: Retail Sales for August.

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

The consensus is for retail sales to be a 0.2% increase in August, and for a 0.3% increase ex-auto.

10:00 AM: Manufacturing and Trade: Inventories and Sales for July. The consensus is for a 0.5% increase in inventories.

----- Thursday, Sept 15th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a decrease to 412,000 from 414,000 last week.

8:30 AM ET: NY Fed Empire Manufacturing Survey for September. The consensus is for a reading of -3.6, up from -7.7 in August (above zero is expansion).

8:30 AM: Consumer Price Index for August. The consensus is for a 0.2% increase in prices. The consensus for core CPI is an increase of 0.2%.

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for August.

This graph shows industrial production since 1967. Industrial production increased in July to 94.2.

The consensus is for a 0.1% increase in Industrial Production in August, and for Capacity Utilization to be unchanged at 77.5%.

10:00 AM: Philly Fed Survey for September. This index fell off a cliff in August. The consensus is for a reading of -15.0 (above zero indicates expansion), up from -30.7 last month.

----- Friday, Sept 16th -----
9:55 AM: Reuters/University of Mich Consumer Sentiment preliminary for September.

Consumer sentiment declined sharply in July and August - from 71.5 in June to 63.7 in July and to 55.7 in August - this is just above the crisis low off 55.3 in November 2008.

The consensus is for a slight increase to 56.0 from 55.7 in August.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for August 2011

12:00 PM: Q2 Flow of Funds Accounts from the Federal Reserve.

by Calculated Risk on 9/10/2011 08:15:00 AM

This was a light week for economic data and the focus was mostly on the financial crisis in Europe, and also on speeches by President Obama (a new stimulus proposal) and by Fed Chairman Ben Bernanke (the Fed appears prepared to act after the two day meeting ending on Sept 21st).

There was some good news: the trade deficit declined sharply in July (and the trade deficit was revised down for earlier months). This led Goldman Sachs to upgrade their Q3 GDP forecast yesterday: "We revised up our Q3 GDP growth forecast from 1% to 2% (annual rate) on the back of better-than-expected trade and consumer spending data." The ISM non-manufacturing index was weak, but still indicated expansion in the service sector - and that was better than expected.

Next week will be busier for U.S. economic data, including a few surveys for September that will probably show improvement since August. Of course Europe - and Greece - will remain a major focus.

Here is a summary in graphs:

• Trade Deficit decreased sharply in July

Click on graph for larger image.

The Department of Commerce reported "[T]otal July exports of $178.0 billion and imports of $222.8 billion resulted in a goods and services deficit of $44.8 billion, down from $51.6 billion in June, revised. July exports were $6.2 billion more than June exports of $171.8 billion. July imports were $0.5 billion less than June imports of $223.4 billion."

Exports increased and imports decreased in July (seasonally adjusted). Exports are well above the pre-recession peak and up 15% compared to July 2010; imports are up about 13% compared to July 2010.

The trade deficit was well below the consensus forecast of $51 billion.

The second graph shows the U.S. trade deficit, with and without petroleum, through July. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The decline in the trade deficit was due to an increase in exports. Also the trade deficit for the first six months of the year was revised down - especially in Q2.

• ISM Non-Manufacturing Index indicates expansion in August

The August ISM Non-manufacturing index was at 53.5%, up from 52.7% in July. The employment index decreased in August to 51.6%, down from 52.5% in July. Note: Above 50 indicates expansion, below 50 contraction.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was above the consensus forecast of 50.5% and indicates slightly faster expansion in August than in July.

• BLS: Job Openings "little changed" in July

From the BLS: Job Openings and Labor Turnover Summary "The number of job openings in July was 3.2 million, little changed from June. Although the number of job openings remained below the 4.4 million openings when the recession began in December 2007, the level in July was 1.1 million openings higher than in July 2009 (the most recent trough)."

Notice that hires (purple) and total separations (red and blue columns stacked) are pretty close each month. When the purple line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

In general job openings (yellow) has been trending up - and job openings increased slightly again in July - and are up about 13% year-over-year compared to July 2010.

Overall turnover is increasing too, but remains low. Quits increased slightly in July, and have been trending up - and quits are now up about 9% year-over-year.

• Weekly Initial Unemployment Claims increase to 414,000

This graph shows the 4-week moving average of weekly claims since January 2000 (longer term graph in graph gallery).

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week to 414,750.

Weekly claims increased slightly, and the 4-week average is still elevated - and remains above the 400,000 level.

• Mortgage Rates fall to Record Low

From Freddie Mac: Mortgage Rates Attain New All-Time Record Lows Again "Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates, fixed and adjustable, hitting all-time record lows ..."

Here is a long term graph of 30 year mortgage rate in the Freddie Mac survey. The Freddie Mac survey started in 1971. Mortgage rates are currently at a record low for the last 40 years (mortgage rates were close to this range in the '50s).

This graph shows the MBA's refinance index (monthly average) and the the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey®. Refinance activity declined a little last week, but activity was up significantly in August compared to July.

With 30 year mortgage rates now at record lows, mortgage refinance activity will probably pick up some more in September - but so far activity is lower than in '09 - and much lower than in 2003.

• Other Economic Stories ...
• Fed's Beige Book: "Economic activity continued to expand at a modest pace"
• From Chicago Fed President Charles Evans: The Fed's Dual Mandate Responsibilities and Challenges Facing U.S. Monetary Policy
• CBO: An Evaluation of Large-Scale Mortgage Refinancing Programs
• From Jon Hilsenrath at the WSJ: Fed Prepares to Act
• From Fed Chairman Ben Bernanke: The U.S. Economic Outlook
• The American Jobs Act
• AAR: Rail Traffic mixed in August
• Lawler: Early Read on Existing Home Sales in August

by Calculated Risk on 9/09/2011 09:07:00 PM

• From Kash Mansori at The Street Light: When Fear Dominates

Today's twin pieces of news out of Germany - that the ECB's most prominent German, Juergen Stark, is resigning, and the unconfirmed report that the German government is preparing a contingency plan to support its banks in the event of a Greek default - had the effect of fanning the flames of fear running through world financial markets.

• From the WSJ: Default and Dissent Threaten Greece

Greece is being buffeted on several fronts. It is in danger of missing budget-cutting targets that its euro-zone rescuers insist are the price of continued aid. Participation by banks in a crucial debt-restructuring plan may be less than planned. And euro-zone countries are mired in a debate over whether Greece must provide collateral to secure its bailout money.

There is little room for anything to go wrong. Without more aid, Greece will run out of cash within weeks, senior Greek government officials say.

Meanwhile, popular dissent in Greece is seething. Mass protests are expected to greet Prime Minister George Papandreou in Thessaloniki, Greece's second city, where he is slated to give a speech Saturday at the international trade fair, defending the harsh fiscal cuts his government has pledged.

• From the Financial Times: Greek PM to give key speech amid hostility

The Greek prime minister will face a hostile audience on Saturday when he makes a key economic policy speech ... his finance minister was on Friday forced to dismiss market speculation that the country might default over the weekend [calling] the rumours “a game in bad taste; an organised piece of speculation against the euro and the eurozone countries”.
excerpt with permission

by Calculated Risk on 9/09/2011 06:34:00 PM

F. N. B. O. F.
F. D. I. C. 9. 1. 1.
F. U. B. A. R.
by Soylent Green is People
From the FDIC: CharterBank, West Point, Georgia, Assumes All of the Deposits of The First National Bank of Florida, Milton, Florida

As of June 30, 2011, The First National Bank of Florida had approximately $296.8 million in total assets and $280.1 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $46.9 million. ... The First National Bank of Florida is the 71st FDIC-insured institution to fail in the nation this year, and the eleventh in Florida.

It is Friday!

by Calculated Risk on 9/09/2011 06:18:00 PM

From the Telegraph: G7 communique: in full (ht jb)

Agreed terms of reference by G7 Finance Ministers and Central Bank Governors

We met at a time of new challenges to global economic recovery, with significant challenges to growth, fiscal deficits and sovereign debt, stemming from past accumulated imbalances. This is reflected in heightened tensions in financial markets. There are now clear signs of a slowdown in global growth. We are committed to a strong and coordinated international response to these challenges.

We are taking strong actions to maintain financial stability, restore confidence and support growth. In the US, President Obama has put forward a significant package to strengthen growth and employment through public investments, tax incentives, and targeted jobs measures, combined with fiscal reforms designed to restore fiscal sustainability over the medium term. Euro area countries are implementing the decisions taken on July 21 to address financial tensions, notably through the flexibilisation of the EFSF, reaffirming their inflexible determination to honor fully their own individual sovereign signatures and their commitments to sustainable fiscal conditions and structural reforms. Japan is implementing substantial fiscal measures for reconstruction from the earthquake while ensuring the commitment to medium-term fiscal consolidation.

Concerns over the pace and future of the recovery underscore the need for a concerted effort at a global level in support of strong, sustainable and balanced growth. We must all set out and implement ambitious and growth-friendly fiscal consolidation plans rooted within credible fiscal frameworks. Fiscal policy faces a delicate balancing act. Given the still fragile nature of the recovery, we must tread the difficult path of achieving fiscal adjustment plans while supporting economic activity, taking into account different national circumstances.

Monetary policies will maintain price stability and continue to support economic recovery. Central Banks stand ready to provide liquidity to banks as required. We will take all necessary actions to ensure the resilience of banking systems and financial markets. In this context we reaffirm our commitment to implement fully Basel III.

by Calculated Risk on 9/09/2011 04:07:00 PM

• S&P off 31+, Dow off 300+. Graph below ...

• From economist Tom Lawler: "[Based on incoming data] I’m upping my estimate for August existing home sales (as estimated by the NAR) to a SAAR of 4.91 million."

• From the WSJ: Economic, Debt Worries Mount in Euro Zone

The unexpected departure of European Central Bank chief economist Jürgen Stark intensified investors' worries about the euro-zone financial crisis Friday and unleashed a broad pullback from risk in European financial markets, sinking the euro to its lowest level in more than six months.

Stark was an inflation hawk and opposed all EU bailouts and ECB bond buying.

• Another MERS court victory, this time at the 9th Circuit Court of Appeals (ht Mish). From the opinion:

The district court properly dismissed the plaintiffs’ First Amended Complaint without leave to amend. The plaintiffs’ claims that focus on the operation of the MERS system ultimately fail because the plaintiffs have not shown that the alleged illegalities associated with the MERS system injured them or violated state law. As part of their fraud claim, the plaintiffs have not shown that they detrimentally relied upon any misrepresentations about MERS’s role in their loans. Further, even if we were to accept the plaintiffs’ contention that MERS is a sham beneficiary and the note is split from the deed in the MERS system, it does not follow that any attempt to foreclose after the plaintiffs defaulted on their loans is necessarily “wrongful.” The plaintiffs’ claims against their original lenders fail because they have not stated a basis for equitable tolling or estoppel of the statutes of limitations on their TILA and Arizona Consumer Fraud Act claims, and have not identified extreme and outrageous conduct in support of their claim for intentional infliction of emotional distress.

Thus, we AFFIRM the decision of the district court.

MERS is the Mortgage Electronic Registration System, and some people argued that MERS would lead to the total collapse of Western Civilization or something ... I've argued for years that those fear were way overblown.

• This graph (click on graph for larger image) from Doug Short shows the wild market swings over the last few weeks.

by Calculated Risk on 9/09/2011 02:25:00 PM

The Association of American Railroads (AAR) reports carload traffic in Auguest 2011 decreased 0.3 percent compared with the same month last year, and intermodal traffic (using intermodal or shipping containers) increased 0.4 percent compared with August 2010. On a seasonally adjusted basis, carloads in August 2011 were flat compared to July 2011; intermodal in August 2011 was up 0.3% from July 2011.

On a non-seasonally adjusted basis, total U.S. freight rail carloads were down 0.3% in August 2011 from August 2010. Railroads originated 1,482,570 carloads in August 2011, down from 1,486,378 in August 2010. ... As the chart [below] shows, for the past five months rail carload traffic has been joined at the hip with the same month in 2010.

Click on graph for larger image in graph gallery.

This graph shows U.S. average weekly rail carloads (NSA).

Rail carload traffic collapsed in November 2008, and now, over 2 years into the recovery, carload traffic is only about half way back.

"Excluding coal, U.S. rail carloads in August 2011 were up 1.0% over August 2010. Excluding coal and grain, U.S. rail carloads in August 2011 were up 3.7% over August 2010"

The second graph is for intermodal traffic (using intermodal or shipping containers):

Intermodal continued its upward march in August. U.S. railroads originated 1,179,838 trailers and containers in August 2011, an average of 235,968 units per week. That’s the highest weekly average for any month since October 2007. Less impressive is the fact that August 2011 was up just 0.4% (4,196 units) over August 2010.
excerpts with permission

August was another soft month for rail traffic.

by Calculated Risk on 9/09/2011 11:17:00 AM

Note: This is one of the industry specific measures that I follow. I only post this every few weeks or so.

From HotelNewsNow.com: STR: US results for week ending 3 September

In year-over-year comparisons for the week, occupancy rose 6.6 percent to 61.1 percent, average daily rate increased 4.8 percent to US$99.04, and revenue per available room finished the week up 11.6 percent to US$60.53.

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 ended, and the 4-week average of the occupancy rate is starting to decrease seasonally. For the first time since early 2008, the 4 week average of the hotel occupancy rate is back to the pre-recession median level.

Even though the occupancy rate has recovered, ADR is still lower than before the recession.

The second graph shows the 4-week average of the occupancy rate as a percent of the median since 2000. Note: Since this is a percent of the median, the number can be above 100%.

This shows the decline in the occupancy rate during and following the 2001 recession. The sharp decline in 2001 was related to 9/11, and the sharp increase towards the end of 2005 was due to Hurricane Katrina.

The occupancy rate really fell off a cliff in 2008, and has slowly recovered back to the median.

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

by Calculated Risk on 9/09/2011 08:38:00 AM

From Dow Jones: Greek Debt Rollover Process 'Satisfactory'

A debt rollover plan ... is making "satisfactory progress," a Greek government official said Friday as a deadline for euro-zone banks and funds to express interest expired.

"Progress is satisfactory, things are advancing in a positive manner," the official told AFP, declining to give a number of participants in the scheme.

There is no clear "make or break" date for Greece but here are a few key dates via the WSJ: September Roadmap for the Euro Crisis.

Today:
• G-7 finance ministers meet in Marseilles.

• Deadline for non-binding commitments from private-sector creditors to participate in Greece’s proposed bond-exchange program

Saturday, Sept 10th:
• Greek Prime Minister George Papandreou delivers his annual economic policy speech.

Wednesday, Sept 14th
• Greece expected to resume talks with European Commission, IMF and ECB officials on fiscal, economic reforms

The Greek 2 year yield is at 55.3%.

The Portuguese 2 year yield is up to 15.2% (after falling below 12% in August). Also the Irish 2 year yield is at 9.4% (below 8% in August).

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 9/09/2011 12:14:00 AM

Here is the fact sheet for The American Jobs Act

Some of the major proposals (total is around $450 billion):

1) Payroll tax cuts (approx $240 billion):

• Cutting payroll taxes in half for 160 million workers next year: The President’s plan will expand the payroll tax cut passed last year to cut workers payroll taxes in half in 2012 ...

• Cutting the payroll tax in half for 98 percent of businesses: The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll ...

2) Schools and teachers / aid to states (approx $60 billion):

• Preventing up to 280,000 teacher layoffs, while keeping cops and firefighters on the job.

• Modernizing at least 35,000 public schools across the country,supporting new science labs, Internet-ready classrooms and renovations at schools across the country, in rural and urban areas.

3) Other infrastructure ($75 billion)

4) Extend unemployment insurance benefits ($49 billion).

5) Helping More Americans Refinance Mortgages (there are no details yet). "The President has instructed his economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers that exist in the current refinancing program (HARP) to help more borrowers benefit from today’s historically low interest rates."

More from Ezra Klein: What’s in the president’s jobs plan, and what comes next