by Calculated Risk on 10/03/2011 02:39:00 PM

The Euro-zone finance ministers are meeting in Luxembourg today. There will be no decision on Greece; they will wait until after the inspectors issue a report next week. There is an emergency finance minister meeting tentatively scheduled on October 13th to vote on the next loan installment for Greece.

Over the weekend, Greek officials announced public sectors cuts - and that they would miss the deficit targets for 2011 and 2012.

On the meeting today from the WSJ: EU to Discuss Leveraging Rescue Fund

Euro-zone finance ministers Monday will discuss leveraging the region's bailout fund, possibly with the help of the European Central Bank, Economics Commissioner Olli Rehn said Monday.
...
"We are reviewing options of optimizing the use of the EFSF in order to have more out of it and make it more effective as a financial firewall to contain contagion," said Mr. Rehn, the EU's top official for economic and monetary affairs.

The Greek 2 year yield is down to 62.2%. The Greek 1 year yield is at 128%.

The Portuguese 2 year yield is up to 17.6% and the Irish 2 year yield is down sharply to 6.8%. Clearly Portugal is perceived as next in line - and Ireland appears to be doing better.

The Spanish 10 year yield is at 5.1% and the Italian 10 year yield is at 5.5%.

by Calculated Risk on 10/03/2011 11:19:00 AM

Catching up ... this morning from the Census Bureau reported that overall construction spending increased in August:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2011 was estimated at a seasonally adjusted annual rate of $799.1 billion, 1.4 percent (±2.1%)* above the revised July estimate of $788.3 billion. The August figure is 0.9 percent (±1.9%)* above the August 2010 estimate of $791.7 billion.

Private construction spending increased in August:

Spending on private construction was at a seasonally adjusted annual rate of $511.0 billion, 0.4 percent (±1.3%)* above the revised July estimate of $508.9 billion. Residential construction was at a seasonally adjusted annual rate of $237.8 billion in August, 0.7 percent (±1.3%)* above the revised July estimate of $236.2 billion.

Click on graph for larger image in graph gallery.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 64.8% below the peak in early 2006, and non-residential spending is 34% below the peak in January 2008.

Public construction spending is now 11% below the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, both private residential and non-residential construction spending have turned positive, but public spending is now falling as the stimulus spending ends. The improvements in private non-residential are mostly due to energy spending (power and electric).

Earlier:
• ISM Manufacturing index increases in September

Weekend:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd
• A few preliminary comments on the September Employment Report

by Calculated Risk on 10/03/2011 10:00:00 AM

PMI was at 51.6% in September, up from 50.6% in August. The employment index was at 53.8%, up from 51.8%, and new orders index was unchanged at 49.6%.

From the Institute for Supply Management: September 2011 Manufacturing ISM Report On Business®

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 51.6 percent, an increase of 1 percentage point from August, indicating expansion in the manufacturing sector for the 26th consecutive month, at a slightly higher rate. The Production Index registered 51.2 percent, indicating a return to growth after contracting in August for the first time since May of 2009. The New Orders Index remained unchanged from August at 49.6 percent, indicating contraction for the third consecutive month. The Backlog of Orders Index decreased 4.5 percentage points to 41.5 percent, contracting for the fourth consecutive month and reaching its lowest level since April 2009, when it registered 40.5 percent. Comments from respondents generally reflect concern over the sluggish economy, political and policy uncertainty in Washington, and forecasts of ongoing high unemployment that will continue to put pressure on demand for manufactured products."

Click on graph for larger image in new window.

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

This was above expectations of 50.5% and suggests manufacturing expanded at a slightly higher rate in September than in August. It appears manufacturing employment expanded in September with the employment index increasing to 53.8%, up from 51.8% in August.

by Calculated Risk on 10/03/2011 08:48:00 AM

From MarketWatch: Chrysler's U.S. Sept. sales rise 27%

Chrysler Group LLC's U.S. auto sales climbed 27% as the manufacturer posted its strongest September since 2007 and saw double-digit sales increases among its biggest brands.
...
Chrysler ... also estimated the industry's U.S. sales in September at a seasonally adjusted annualized rate of 13.2 million.

The key number for the economy is the seasonally adjusted annual sales rate (SAAR) compared to the last few months, not the year-over-year comparison provided by the automakers. Once all the reports are released, I'll post a graph of the estimated total September light vehicle sales (SAAR) - usually around 4 PM ET.

The consensus is for an increase to 12.6 million SAAR, from 12.1 million in August, however I think we will see a stronger increase based on recent manufacturer and dealer reports. This will probably be the strongest month for auto sales since April (13.13 million SAAR) - before the tsunami in Japan.

I'll add the reports from the other major auto companies as updates to this post.

Update: From MarketWatch: GM U.S. vehicle sales total 207,145 in Sept., up 20%

From MarketWatch: Ford Sept. U.S. sales rise 9%

Weekend:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd
• A few preliminary comments on the September Employment Report

by Calculated Risk on 10/03/2011 12:50:00 AM

• An overview on Europe from the NY Times: Toil and Trouble Over the Caldron That Is Greece

In the short term, Greece remains the central problem. ... Europe’s strategy, to the extent it can be discerned, is to put off restructuring Greece’s debt as long as possible and build up enough backing for a bailout fund so that banks with large exposure to the sovereign debt of Greece and other troubled euro-zone countries, like Portugal, Ireland, Italy and Spain, can survive an all-but-inevitable Greek default.
...
When speaking privately, officials concede that Greece’s debt ... is unsustainable and that lenders will probably have to write some of it off. A “haircut” of 50 percent, followed by a recapitalization of banks if necessary, is the outcome most commonly mentioned.

Germany and France are not prepared to consider doing that yet, though, in part because relieving the pressure on Greece would remove its incentive to overhaul its finances and make its economy more competitive. ... Equally important, Germany and France want to delay any Greek default, orderly or not, until they have bolstered the rescue fund and taken other steps to protect Italy, the biggest economy in southern Europe.

What a mess.

The Asian markets are red tonight with the Nikkei down 2.6%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is down about 8 points, and Dow futures are down about 65 points.

Oil: WTI futures are down to $78 and Brent is down under $102 per barrel.

Yesterday:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd

by Calculated Risk on 10/02/2011 04:46:00 PM

From the Financial Times: Greek cabinet approves budget cuts

[Finance Minister] Venizelos has agreed to eliminate 30,000 public sector jobs by December ... About 23,000 workers nearing retirement will lose their positions. Another 7,000 will be made redundant after mergers and restructurings ... “Given that we’re taking such tough measures ... the sixth tranche is assured.” [said Venizelos]
excerpt with permission

Cutting jobs means putting workers into "reserve" and they are still paid 60% of their salary.

And from Deutche Welle: Greece misses EU and IMF deficit targets

Greece announced late Sunday that its budget deficit will reach 8.5 percent of gross domestic product (GDP) this year, below the initial target of 7.6 percent.

According to a statement issued by the Finance Ministry, Greece will manage to bring the budget deficit down to 6.8 per cent of GDP next year, but it will still miss the bailout target of 6.5 per cent of GDP.

"Because three critical months remain for the completion of the financial year 2011, and the final estimate of 8.5 per cent of GDP deficit can be achieved if the state mechanism and citizens respond accordingly," the finance ministry statement said.

The troika is still working on pay cuts for higher-paid officials.

Yesterday:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd

by Calculated Risk on 10/02/2011 12:32:00 PM

Yesterday:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd

The September employment report will be released on Friday and the consensus is for an increase of 65,000 non-farm payroll jobs in September, up from the zero jobs added in August. Goldman Sachs is forecasting an increase of 50,000 jobs in September.

A key point to remember is that the Verizon labor dispute subtracted 45,000 jobs from the August report and those jobs will be added back in the September report. So even if September was the same as August, we would see 45,000 more jobs added.

Note: The Verizon labor dispute didn't show up in the ADP employment report because the ADP counts employees on the payroll even if they aren't working.

Another key point is that the manufacturing surveys (a small percentage of overall employment) mostly suggested employment expansion in September - and an improvement from August (See table below). Also the Chicago PMI indicated stronger employment expansion in September than in August.

However weekly initial unemployment claims for the BLS reference week were higher in September than in August - suggesting more layoffs. Still - overall - it appears September was somewhat better than August.

Here is a table for the various employment components from several surveys in September starting in August 2007 (before the recession). Here is the spreadsheet in excel. Most of these surveys are just for manufacturing (Fed surveys), however the Chicago PMI includes both manufacturing and services.

Note: Above 50 is expansion for the Chicago PMI, above 0 is expansion for the Fed manufacturing surveys.

Employment Surveys through Sept 2011 Above 50 is expansion for Chicago PMI, All others above zero
	Chicago PMI	NY Fed (Empire State)	Philly Fed	Richmond Fed	Kansas City Fed	Dallas Fed	Avg Fed Mfg Surveys
Aug-07	53.2	11.8	14.7	-1	0	1.6	5.4
Sep-07	51.8	19.2	4.3	0	-1	7.2	5.9
Oct-07	50.2	17.4	7.3	-3	-2	5.8	5.1
Nov-07	52.6	7.1	4.0	-2	-5	2.0	1.2
Dec-07	49.3	5.0	1.3	4	4	-3.3	2.2
Jan-08	47.0	2.4	1.5	-2	12	9.0	4.6
Feb-08	33.5	-2.1	6.2	-2	1	5.5	1.7
Mar-08	44.6	4.5	0.6	-7	-3	4.6	-0.1
Apr-08	35.3	0.0	-4.2	-14	0	2.0	-3.2
May-08	41.2	1.1	-1.9	-10	-2	-5.9	-3.7
Jun-08	46.7	1.2	-8.7	-14	-13	-4.4	-7.8
Jul-08	45.9	-6.3	-6.2	-4	1	7.1	-1.7
Aug-08	39.2	-4.5	-8.4	-19	-3	-5.3	-8.0
Sep-08	49.1	-4.6	-4.5	-21	-11	-5.1	-9.2
Oct-08	41.5	-3.7	-22.3	-22	-14	-11.5	-14.7
Nov-08	33.4	-28.9	-26.5	-25	-22	-20.1	-24.5
Dec-08	39.6	-23.4	-31.3	-34	-32	-21.0	-28.3
Jan-09	34.8	-26.1	-37.1	-29	-34	-28.2	-30.9
Feb-09	25.2	-39.1	-41.0	-33	-33	-40.1	-37.2
Mar-09	28.1	-38.2	-49.6	-29	-35	-50.3	-40.4
Apr-09	31.8	-28.1	-38.8	-28	-23	-39.7	-31.5
May-09	25.0	-23.9	-29.8	-17	-16	-34.1	-24.2
Jun-09	28.9	-21.8	-23.2	-13	-13	-27.8	-19.8
Jul-09	35.3	-20.8	-23.7	-14	-16	-23.4	-19.6
Aug-09	38.7	-7.5	-18.1	-12	-10	-15.4	-12.6
Sep-09	38.8	-8.3	-16.1	-4	-2	-8.9	-7.9
Oct-09	38.3	10.4	-10.4	-4	-4	-12.2	-4.0
Nov-09	41.9	1.3	-3.5	-10	-2	-15.8	-6.0
Dec-09	51.2	-5.3	3.7	2	-4	-3.8	-1.5
Jan-10	59.8	4.0	6.2	2	2	-3.7	2.1
Feb-10	53.0	5.6	8.0	7	-2	-4.2	2.9
Mar-10	53.1	12.4	9.3	8	2	4.5	7.2
Apr-10	57.2	20.3	7.4	19	5	11.6	12.7
May-10	49.2	22.4	3.4	7	2	13.8	9.7
Jun-10	54.2	12.4	-1.0	2	0	7.1	4.1
Jul-10	56.6	7.9	6.6	8	5	7.2	6.9
Aug-10	55.5	14.3	-3.9	3	-1	-3.3	1.8
Sep-10	53.4	14.9	1.4	-1	-2	3.7	3.4
Oct-10	54.6	21.7	1.4	5	0	-2.5	5.1
Nov-10	56.3	9.1	11.7	10	8	7.1	9.2
Dec-10	60.2	-3.4	4.3	15	11	16.1	8.6
Jan-11	64.1	8.4	17.6	14	8	9.3	11.5
Feb-11	59.8	3.6	23.6	15	23	10.5	15.1
Mar-11	65.6	9.1	18.2	16	25	11.6	16.0
Apr-11	63.7	23.1	12.3	12	17	13.4	15.6
May-11	60.8	24.7	22.1	16	9	11.6	16.7
Jun-11	58.7	10.2	4.1	14	17	5.3	10.1
Jul-11	51.5	1.1	8.9	4	4	12.1	6.0
Aug-11	52.1	3.3	-5.2	1	8	5.4	2.5
Sep-11	60.6	-5.4	5.8	7	12	13.4	6.6

by Calculated Risk on 10/02/2011 09:04:00 AM

From KFDM: Gasoline prices are plunging across Texas

The average price for a gallon of gasoline is plunging in Southeast Texas and across the state, according to a survey released Thursday by AAA Texas.

The average is $3.22 a gallon in Beaumont, down 13 cents from last week. The average one year ago was $2.56. The record high was $4 a gallon in July, 2008.

The graph below shows indicates gasoline prices are down sharply over the last couple of weeks.

Note: This graph show oil prices for WTI; gasoline prices in most of the U.S. are impacted more by Brent prices.

Brent Crude is down to $102.76 and WTI is down to $79.20.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Yesterday:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd

by Calculated Risk on 10/01/2011 07:43:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Sept 30, 2011.

Changes and comments from surferdude808:

The Unofficial Problem Bank List finished the month unchanged at 986 institutions with assets of $405.4 billion after six additions and six removals this week. A year-ago, there were 872 institutions with assets of $422.4 billion on the unofficial list.

For the month, there were 15 additions, five failures, four unassisted mergers, and eight action terminations resulting in a net decline of two institutions. The number of institutions on the list fell for the third consecutive month. After declines the previous two months, however, assets rose during the month by $2.1 billion.

Removals include the failed First International Bank, Plano, TX ($240 million). Actions were terminated against Peoples Independent Bank, Boaz, AL ($169 million); Home Savings Bank, Salt Lake City, UT ($118 million); Rock Canyon Bank, Orem, UT ($114 million); and Grand Rivers Community Bank, Grand Chain, IL ($18 million). Ventura County Business Bank, Oxnard, CA ($78 million Ticker: VCBB) was removed as it merged into Royal Business Bank, Los Angeles, CA.

The six additions this week are Amalgamated Bank, New York, NY ($4.4 billion); Community First Bank & Trust, Columbia, TN ($640 million); State Central Bank, Keokuk, IA ($220 million); RiverBank, Spokane, WA ($149 million); The Bank of Kaukauna, Kaukauna, WI ($93 million); and Hometown Community Bank, Cyrus, MN ($24 million).

Other changes include the FDIC issuing a Prompt Corrective Action order against Community Shores Bank, Muskegon, MI ($224 million).

There were a few banks on the Unofficial Problem Bank List that have changed their name during the year including Pacific Capital Bank, National Association, Santa Barbara, CA n/k/a Santa Barbara Bank & Trust, National Association; The First National Bank of Chatsworth, Chatsworth, GA n/k/a First National Community Bank; and Generations Bank, Overland Park, KS n/k/a The Federal Savings Bank.

With the quarter-end, next week we will update the transition matrix as the week should be relatively quiet with the FDIC and OCC only releasing information on a monthly basis.

Earlier:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd

by Calculated Risk on 10/01/2011 02:11:00 PM

Earlier:
• Summary for Week Ending Sept 30th

The key report this week will be the employment situation report for September on Friday. Also Fed Chairman Ben Bernanke's Congressional testimony on Tuesday will be closely watched.

Other key reports includes the September ISM manufacturing index on Monday, auto sales also on Monday - and for housing analysts - the release of the Census 2010 housing statistics on Thursday.

Note: Reis is expected to release their Q3 Office, Mall and Apartment vacancy rate reports this week. Last quarter Reis reported falling vacancy rates for apartments, rising vacancy rates for regional malls, and no change in the office vacancy rate.

----- Monday, Oct 3rd -----
10:00 AM ET: ISM Manufacturing Index for September.

The consensus is for a decrease to 50.5 from 50.6 in August.

10:00 AM: Construction Spending for August. The consensus is for a 0.2% decline in construction spending.

All day: Light vehicle sales for September. Light vehicle sales are expected to increase to 12.6 million (Seasonally Adjusted Annual Rate), from 12.1 million in August.

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

Edmunds is forecasting 12.9 million:

An estimated 1,038,052 new cars will be sold in September for a projected Seasonally Adjusted Annual Rate (SAAR) of 12.9 million light vehicles, forecasts Edmunds.com ... The sales pace marks the highest monthly SAAR since the 13.2 million light vehicles reported in April. That was the last full month before supply disruptions stemming from the Japanese earthquake had a true impact on sales.

----- Tuesday, Oct 4th -----
9 AM ET: Speech by Fed Governor Sarah Bloom Raskin, "Policy Opportunities and Challenges in Crafting a Foreclosure Response", At the Maryland State Bar Association Advanced Real Property Institute, Columbia, Maryland

10 AM: Testimony by Fed Chairman Ben Bernanke, "Economic Outlook and Recent Monetary Policy Actions", Before the Joint Economic Committee, United States Congress, Washington, D.C.

10:00 AM ET: Manufacturers' Shipments, Inventories and Orders for August. The consensus is for a 0.3% decrease in orders.

----- Wednesday, Oct 5th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak over the last month.

8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 90,000 payroll jobs added in September, down slightly from the 91,000 reported in August.

10:00 AM: ISM non-Manufacturing Index for September. The consensus is for a decrease to 52.9 in September.

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.

----- Thursday, Oct 6th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 410,000 from 391,000 last week.

1:00 PM: Census 2010: Statistics on Nation’s Housing Characteristics. This includes details on the nation’s housing characteristics, including housing inventory, where homeowners and renters are located, and distribution and types of vacant units.

----- Friday, Oct 7th -----
8:30 AM: Employment Report for September.

The consensus is for an increase of 65,000 non-farm payroll jobs in September, up from the 0 jobs added in August.

This graph shows the net payroll jobs per month (excluding temporary Census jobs) since the beginning of the recession. The consensus forecast for September is in blue.

The consensus is for the unemployment rate to increase to 9.2% in September.

This second employment graph shows the percentage of payroll jobs lost during post WWII recessions through August.

Through the first eight months of 2011, the economy added 872,000 total non-farm jobs or just 109 thousand per month. The economy has added 1,162,000 private sector jobs this year, or about 145 thousand per month.

Note: The Verizon labor dispute subtracted 45,000 payroll jobs in August. This dispute is over and these jobs will be added back in the September report.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for August.

3:00 PM: Consumer Credit for August. The consensus is for a $8 billion increase in consumer credit.