by Calculated Risk on 3/08/2012 11:41:00 AM

From the Financial Times Eurozone Crisis live blog:

16.35: More from Kerin Hope in Athens – a Greek cabinet minister has just told the FT:

“It will be good news tonight, take-up will be around 80 per cent”

excerpt with permission

This means the collective action clause will be used, but that was expected.

by Calculated Risk on 3/08/2012 08:30:00 AM

The DOL reports:

In the week ending March 3, the advance figure for seasonally adjusted initial claims was 362,000, an increase of 8,000 from the previous week's revised figure of 354,000. The 4-week moving average was 355,000, an increase of 250 from the previous week's revised average of 354,750.

The previous week was revised up to 354,000 from 351,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased slightly this week to 355,000.

The 4-week moving average is near the lowest level since early 2008.

And here is a long term graph of weekly claims:



All current Employment Graphs

by Calculated Risk on 3/07/2012 09:42:00 PM

"Another key day" seems like a broken record, but tomorrow is the deadline for the €206bn private sector Greek bond swap.

Also the ECB meets tomorrow, and ECB President Mario Draghi will hold a press conference.

From the WSJ: Greece Moves Closer to Swap

The €107 billion so far in pledges, coming ahead of the Thursday deadline, suggest that Greece is well on its way to getting enough creditors to consent to make the deal binding for any that refuse to take part.
...
The holdouts aren't likely to affect the broad acceptance of the deal, but they could be a thorn in the side of Greece and its euro-zone rescuers for years to come.

From the Financial Times: Greece inches closer to €206bn debt deal

From the Athens News: Venizelos confident that bond swap will work

Finance Minister Evangelos Venizelos said on Wednesday that he is optimistic that Greece will get the necessary backing from its private creditors for a voluntary bond swap and that the Greek debt will fall to 120 percent of GDP "or even better" by 2020.

Good luck with the 120 percent by 2020, but it does sound like the swap will go ahead.

by Calculated Risk on 3/07/2012 04:59:00 PM

A short note from economist Tom Lawler:

In CoreLogic’s “Negative Equity Report” for December 2011, the company estimated that properties backing a conventional mortgage that were in a negative equity position had an average mortgage balance of $269,000 and were “underwater” on average by $70,000. For properties backing FHA-insured mortgages that were in a negative equity position, the average mortgage balance was $169,000 and the average negative equity amount was $26,000.

What the press release didn’t say, however, is what percent of properties backing FHA-insured mortgages in its database were in a negative equity position (it gave the number, but its database does not include all mortgages). CL was nice enough to give me that figure – according to CL, 31% of the properties in its database backing FHA-insured mortgages were in a negative equity position in December. That compares to 21.8% for properties backing non-FHA mortgages.

CR Note: I'm not surprised that a larger percentage of FHA loans are in negative equity since the FHA has insured a large number of loans in recent years with small downpayments, while prices - according to CoreLogic - have continued to fall (as an example, prices are down about 10% since mid-2010 through the January report released this morning - so most FHA loans made in 2010 are probably in negative equity).

What is a little surprising is the percent of negative equity for those FHA loans. Even though the percent negative equity is much smaller than for non-FHA loans, the percent is still fairly high considering most of the FHA loans were made in the last few years.

by Calculated Risk on 3/07/2012 02:10:00 PM

From Duke University and CFO Magazine: CFOs: Outlook Improves, U.S. Employment Growth to Accelerate

The employment outlook has brightened, with U.S. finance executives expecting to increase their number of domestic full-time employees by 2.1 percent.

“The expected increase in employment is a welcome improvement over last quarter’s 1.5 percent forecast growth rate,” said Kate O’Sullivan, director of content development at CFO Magazine. “It indicates that national unemployment should fall below 8 percent in 2012.”

More than two-thirds of U.S. CFOs say their companies are currently trying to fill vacant positions.
...
The U.S. CFO Optimism Index, in which CFOs rate their confidence in the economy on a scale of 0 to 100, increased from 53 last quarter to 59 this quarter, equaling the index’s long-term average.

“This rebound is encouraging because increases in CFO optimism have historically preceded improvements in the overall economy,”said John Graham, a professor of finance at Duke’s Fuqua School of Business and director of the survey. “Optimism also rebounded in Europe and Asia, suggesting that 2012 should be a better year than 2011.Still, European optimism lags behind the rest of the world.”

CFOs cite weak consumer demand, intense pressure on profit margins, and the difficulty in attracting and retaining qualified employees among the top concerns for their companies.

In March 2011, CFOs in this survey only expected to increase full time employees by 1.2% over the next 12 months, so 2.1% is a solid increase.

Looking back at past results, CFOs expected to increase full time employment by 0.5% in March 2008 (the recession began in December 2007), and they had turned very pessimistic by December 2008 when they expected employment to fall by 5.0% over the next 12 months.

Note: CFOs of public companies expect earnings to grow at a slower pace this year (7.5%). Last year CFOs expected earnings growth of 18%.

by Calculated Risk on 3/07/2012 11:23:00 AM

Notes: The timing of different house prices indexes can be a little confusing. LPS uses December closings - other indexes usually report sales recorded in a month, and there is frequently a lag between closings and recording - so this is closer to what other indexes report for January (without the weighting of several months).

From LPS: LPS HPI Shows U.S. Home Prices Accelerated Decline to 1.0 Percent in Dec.; Early Data Suggests 1.2 Percent Drop in Jan. Likely

The LPS HPI national average home price for transactions during December 2011 reached a price level not seen since September 2002. This is the sixth consecutive month of price decreases.
...
Price changes were largely consistent across the country during December, increasing in only 8.0 percent of the ZIP codes in the LPS HPI. Price changes were also consistent across price tiers with a uniform decline of 1.0 percent.

... Of the 411 MSAs the LPS HPI covers, average prices declined for all of the MSAs (374) in 44 states. In addition, while average prices did not decline for all MSAs in the remaining states, prices fell in a total of 402 MSAs out of the LPS HPI 411.

This is a 3.9% year-over-year change for this index, and LPS expects that the year-over-year change in January will be smaller (around 3.6%)

Click on graph for larger image.

This graph from LPS shows the HPI since January 1995.

The index was down 1.0% in December, and is down 3.9% over the last year.

The index is off 31% from the peak - and is now at a new post-bubble low.

by Calculated Risk on 3/07/2012 08:56:00 AM

Notes: This CoreLogic House Price Index report is for January. The Case-Shiller index released last week was for December. Case-Shiller is currently the most followed house price index, however CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average of the last three months and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® January Home Price Index Shows Sixth Consecutive Monthly Decline

[CoreLogic January Home Price Index (HPI®) report] shows national home prices, including distressed sales, declined on a year-over-year basis by 3.1 percent in January 2012 and by 1.0 percent compared to December 2011, the sixth consecutive monthly decline.

Excluding distressed sales, year-over-year prices declined by 0.9 percent in January 2012 compared to January 2011, but that same metric posted a month-over-month gain, rising 0.7 percent in January. Distressed sales include short sales and real estate owned (REO) transactions.

“Although home price declines are slowly improving and not far from the bottom, home prices are down to nearly the same levels as 10 years ago,” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was down 1.0% in January, and is down 3.1% over the last year.

The index is off 34% from the peak - and is now at a new post-bubble low.

The second graph is from CoreLogic. As Mark Fleming noted, the year-over-year declines are getting smaller.

Some of this decline was seasonal (the CoreLogic index is NSA) and month-to-month price changes will probably remain negative through March 2012. Last year prices fell about 2.5% from January 2011 to March 2011, and there will probably be a similar decline this year.

by Calculated Risk on 3/07/2012 08:15:00 AM

ADP reports:

Employment in the U.S. nonfarm private business sector increased by 216,000 from January to February on a seasonally adjusted basis. The estimated advance in employment from December to January was revised slightly upwards to 173,000 from the initially reported 170,000.

Employment in the private, service-providing sector rose 170,000 in February, and employment in the private, goods-producing sector increased 46,000 in February. Manufacturing employment increased 21,000.

This was slightly above the consensus forecast of an increase of 200,000 private sector jobs in February. The BLS reports on Friday, and the consensus is for an increase of 204,000 payroll jobs in February, on a seasonally adjusted (SA) basis.

Government payrolls have been shrinking, so the ADP report suggests close to 200,000 nonfarm payroll jobs added in January. Note: ADP hasn't been very useful in predicting the BLS report.

by Calculated Risk on 3/06/2012 10:12:00 PM

Jon Lansner at the O.C. Register has some comments from Orange County broker Steve Thomas on inventory: Fewest O.C. homes for sale since 2005

"Turn back the clocks to August 2005 to find a lower inventory. At the very beginning of the year, the active listing inventory stood at 8,114 homes. It was a good beginning compared to 2011 with nearly 1,900 fewer listings on the market. There was a subtle sense that something was different right after bringing in the New Year. Since then, the market has shed 925 homes and now stands at 7,189, 33% fewer than last year. To shed homes during this time of year is totally unprecedented during this downturn. It is much more of what we would see during a hot, appreciating market, reminiscent of 2004 and 2005. ATTENTION SELLERS: that does NOT mean that we are looking at 2004 and 2005 all over again. Let’s be perfectly clear, there is still an enormous back log of distressed homes that have not yet hit the market."

The sharp decline in inventory is happening just about everywhere. Some of this is because there are fewer foreclosures listed for sale, and some is probably because many potential sellers are "waiting for a better market".

Last month I posted a few reasons for the decline: Comments on Existing Home Inventory. I concluded: "The bottom line is the decline in listed inventory is a big deal, and will lead to less downward pressure on prices. Just like last year, inventory will be something to watch closely all year."

by Calculated Risk on 3/06/2012 07:12:00 PM

With questions about the impact of oil prices on the economy, I always pay close attention to Professor Hamilton at Econbrowser ...

From Jim Hamilton: Oil prices and the U.S. economy

Although the prices of oil and gasoline have risen significantly from their values in October, they are still not back to the levels we saw last spring or in the summer of 2008. There is a good deal of statistical evidence ... that an oil price increase that does no more than reverse an earlier decline has a much more limited effect on the economy than if the price of oil surges to a new all-time high.

One reason for this is that much of the impact on the economy of an increase in oil prices comes from abrupt changes in the patterns of consumer spending. ... ut if consumers have recently seen even higher prices than they're paying at the moment, their spending plans and firms' production plans are likely already to have incorporated that reality.

... based on what has happened to oil prices so far, I find myself in the unusual position of being less concerned about the impact of oil prices on the U.S. economy than many other analysts.