by Calculated Risk on 5/07/2012 09:03:00 AM

Oil and gasoline prices have been falling recently. West Texas Intermediate (WTI) futures are down to $97.80, and Brent is down to $112.84 per barrel.

From Bloomberg: U.S. Gasoline Falls to $3.85 a Gallon, Lundberg Survey Shows

The average price for regular gasoline at U.S. filling stations fell 6.75 cents to $3.8452 a gallon, according to Lundberg Survey Inc.

... The price is 15.49 cents lower than a year earlier, when the average was $3.9998. The highest average this year was $3.9671, during the period ended April 6.

“It is crude oil that has delivered this retail gasoline price decline,” Trilby Lundberg, president of Lundberg Survey, said yesterday in a telephone interview.

The following graph shows the decline in gasoline prices. Gasoline prices are down from the peak in early April, and are down year-over-year.

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

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 5/07/2012 01:25:00 AM

There are no major US economic releases scheduled for Monday (consumer credit for March will be released at 3 PM ET). The discussion on Monday will mostly be about the elections in France and Greece, and what they means for the euro zone economy. The politicians in Greece will try to form a coalition government, and if that is not successful, there will be a new election.

The Asian markets are all red tonight. The Nikkei is down about 2.5%, Hang Seng is down 2.7%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are down 13 points, and Dow futures are down 120.

Oil: WTI futures are down to $97.10 and Brent is down to $112.34 per barrel.

Yesterday:
• Summary for Week Ending May 4th
• Schedule for Week of May 6th

Employment posts on Friday:
• April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
• April Employment Summary and Discussion
• More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Current Employment Graphs

by Calculated Risk on 5/06/2012 06:49:00 PM

From Alejandro Lazo at the LA Times: Rents soar as foreclosure victims, young workers seek housing

The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.

Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC's Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent. ... Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

"It was almost too easy," said Magnotta, who chose another renter. "I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong."

A big driver of rent increases has been demand from young workers who are striking out on their own after doubling up with family members during the worst of the economic downturn.

It makes sense that rental demand has been increasing: Demographics are favorable for rentals right now (see graph below: a large cohort is moving into the 25 to 35 year old age group), people who have lost their homes to foreclosure (or short sales) are turning to renting, and some people have probably stopped "doubling up".

The house price-to-rent ratio is back to normal, and further rent hikes will provide support for house prices. Although, as Lazo notes, only people in "good shape financially" are able to buy.

Click on graph for larger image.

This graphic is from the Census Bureau and shows the number of people by age and sex in the US based on the 2000 and 2010 Census. See: Age and Sex Composition: 2010

The baby boom generation is obvious, but there is also a fairly large cohort moving into the key renting age groups. Note that this graph is from two years ago.

by Calculated Risk on 5/06/2012 01:33:00 PM

Update: 2 PM ET from Le Monde: François Hollande élu président de la République

From the WSJ: Hollande Wins French Runoff, Early Polls Show

French Socialist candidate François Hollande won Sunday's presidential runoff ... according to estimates of preliminary results seen by The Wall Street Journal.

Mr. Sarkozy's defeat makes him the 11th euro-zone leader swept away in the sovereign-debt crisis.

The polls close at 2 PM ET, so this is just preliminary. Hollande is an experienced politician and will push for some growth initiatives as opposed to just austerity.

The polls have closed in Greece and preliminary results will be released soon. The Athens News has a live blog of the results. The big surprise - so far - is it looks like Syriza will finish 2nd with Pasok 3rd. Here are some exit poll numbers (any party with 3% or more of the vote will receive seats):

Public Issue for Skai

(min-max, in %)

New Democracy 20.5-24.5
Radical Left Coalition (Syriza) 14-18
Pasok 13-17
Communist Party 7-10.5
Independent Greeks 7-10
Democratic Left 6-9
Golden Dawn 5-8
Ecogreens 2-4
Popular Orthodox Rally (Laos) 2-4
Drasi 1-3
Democratic Alliance 1-3

The 1st place party gets a 50 seat bonus (out of 300 total seats) and the parties split the remaining seats by the percent of the vote. So New Democracy will probably have around 110 to 120 seats (if I understand correctly), and they need a coalition partner to form a majority (probably Pasok). It is a mess.

by Calculated Risk on 5/06/2012 10:44:00 AM

First, on a sad note, from Mish: My Wife Joanne Has ALS, Lou Gehrig's Disease

Today I'm going to share a personal struggle with you. This is news I've largely kept to a small circle of close friends over the past few years and is difficult to talk about. The time has now come to enlist the support of a wider community, and perhaps together, we can make a difference.

Running this site and publishing commentary as frequently as I do demands a tremendous amount of my attention. However, my blog is not the #1 focus of my life. That would be my wife, Joanne.

Joanne has ALS, more commonly known as Lou Gehrig's disease. More specifically, she has Progressive Bulbar Palsy a particularly aggressive form of the disease.

I've known Mish for years, and he has kept me updated on Joanne's condition. As Mish notes, this is an "extremely cruel" disease. A few years ago, a close friend of mine - Ernie - one of my hiking and climbing partners, died from ALS. In a just a few short years, Ernie went from being a strong climber – we climbed a peak together in a winter white out just before he was diagnosed with the disease (a great adventure) - to barely being able to walk on the beach, and then being confined to a well chair, and finally passing away. Very sad.

For those interested, Mish is sponsoring a raffle for the benefit of ALS research.

Today Mish writes: New American Dream is Renting; Reflections on Renting Houses, Cars, Books, Clothes; Will Rentership Fuel the Next Boom? What About Home Prices?

Housing has now gone full circle. President Bush's "Ownership Society" has morphed into the "Rentership Society". The attitude applies to more than houses as noted in the Wall Street Journal article Renting Prosperity by Daniel Gross.

Americans are getting used to the idea of renting the good life, from cars to couture to homes. Daniel Gross explores our shift from a nation of owners to an economy permanently on the move—and how it will lead to the next boom. ...

Renting cars and textbooks is the start of a trend that makes perfect economic sense. However, Zipcars, textbooks, clothes, and electronics are one thing, and housing is another.

When sentiment on houses reaches the widespread belief "It's Better to Rent", prices are bottoming. I expressed that thought on numerous occasions since 2005.

This is how I currently see things.

Note: The graph was originally for Japan, but Mish is using it to show how sentiment changes. Mish thinks we are now in the lower right "purple" zone and back to "It's better to rent".

by Calculated Risk on 5/06/2012 08:38:00 AM

Note: The Greek polls will be open until noon ET Sunday, and the French polls will be open until 2 PM ET.

Here are a few articles:

From the Athens News: Angry Greeks vote in cliffhanger election

Greeks enraged by economic hardship voted on Sunday in a deeply uncertain election ... Leaders from all sides emphasised the importance of the vote - which pollsters say is impossible to call - for the future of Greece, now suffering one of the worst recessions in postwar Europe.

From the WSJ: Greeks Head to Polls Amid Anger, Doubts Over Euro Future

The highly contested vote is expected to reflect the public's widespread anger with the political establishment after years of painful austerity and potentially usher in a prolonged period of unstable administrations and successive elections. ... anti-incumbent sentiment high and the country struggling through a fifth year of recession

From the Financial Times: France votes in presidential election

Millions of voters are casting their ballots in the second and final round of France’s presidential election with François Hollande favourite to win in what would be the first victory for a socialist candidate for 17 years.
excerpt with permission

From the WSJ: France Heads to Polls in Key Election for Euro Zone

From Le Monde: Scrutin présidentiel : Sarkozy et Hollande suspendus au vote des Français

by Calculated Risk on 5/05/2012 10:55:00 PM

The Greek polls will be open until noon ET Sunday, and the French polls will be open until 2 PM ET.

The Greek polls will be open from 7 AM to 7 PM local time according to the Athens News.

Voting in the 2012 general election will get underway at 7am on Sunday ... Polling stations will remain open until 7pm.

Unofficial exit polls will be announced, via the media, by the country’s polling agencies shortly after the closing of polling stations.

The authorities say that they expect results from a quarter of polling stations by 9.30[pm], while the first indicative results are anticipated no sooner than 11[pm] on Sunday night.

The vote should be completed in the early hours of Monday morning

No party will win a majority in Greece; the leading party (New Democracy) will try to form a collation government with one or more of the smaller parties - so the drama will probably drag on for some time.

The French polls will be open from 8 AM to 8 PM local time (from 2 AM ET to 2 PM ET).

Unless there is a major surprise, the media will declare François Hollande the winner pretty early in France.

Earlier:
• Summary for Week Ending May 4th
• Schedule for Week of May 6th

Employment posts yesterday:
• April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
• April Employment Summary and Discussion
• More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Current Employment Graphs

by Calculated Risk on 5/05/2012 08:35:00 PM

Once again rail traffic was "mixed". This was because of the sharp decline in coal traffic (mild winter, low natural gas prices), and also for grains. Other commodities were up, such as building related commodities such as lumber and crushed stone, gravel, sand. From the Association of American Railroads (AAR): Reports Mixed Rail Traffic for April

The Association of American Railroads (AAR) reported U.S. rail carloads originated in April 2012 totaled 1,113,105, down 64,335 carloads or 5.5 percent, compared with April 2011. Intermodal volume in April 2012 was 946,951 trailers and containers, up 32,505 units or up 3.6 percent, compared with April 2011.
...
Commodities with carload declines in April were led by coal, down 85,719 carloads, or 16.6 percent compared with April 2011. This was coal’s biggest year-over-year percentage decline in rail traffic on record.

Click on graph for larger image.

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

Once again, coal was the main reason for the decline in total carloads. Coal carloads were down 16.6% (85,719 carloads) in April 2012, their biggest year-over-year percentage decline on record. A warm winter, low natural gas prices that make gas-based electricity generation more competitive vis-à-vis coal-based generation, and environmental pressures are all reducing U.S. coal consumption, and thus rail coal carloads.

Meanwhile, U.S. rail grain carloads were down 17.2% (16,402 carloads) in April 2012 from April 2011, their 10th straight significant decline. Grain carloads are hurting largely because U.S. grain exports are down.

The second graph is just for coal and shows the sharp decline this year.

Just when you thought coal couldn’t get worse, it did. U.S. coal carloads fell 16.6% (85,719 carloads) in April 2012 from April 2011, the biggest monthly decline on record. (Our data begin in 1988.) Average U.S. coal carloads of 107,379 in April 2012 were the lowest of any month since July 1993. ...
Again this month, rail traffic is more encouraging if you forget about coal and grain. Excluding coal, U.S. rail carloads were up 3.2% (21,384 carloads) in April 2012 over April 2011.

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

Graphs reprinted with permission.

Intermodal traffic is now close to the peak year of 2006.

U.S. intermodal traffic — containers and trailers on railroad flat cars — was up 3.6% (32,505 units) in April 2012 over April 2011 to 946,951 units, its 29th straight year-over-year monthly increase. The average in April 2012 was 236,738 intermodal units per week, the second highest average of any April in history (just behind April 2006’s 237,062) and the 13th highest of any month in history. (Most of the top months are in the fall, when intermodal tends to peak.)

Earlier:
• Summary for Week Ending May 4th
• Schedule for Week of May 6th

Employment posts yesterday:
• April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
• April Employment Summary and Discussion
• More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Current Employment Graphs

by Calculated Risk on 5/05/2012 04:47:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for May 4, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Relatively quiet week for the Unofficial Problem Bank List with five removals. The removals lower the institution list count to 925 with assets of $361.1 billion. A year-ago, the list held 983 institutions with assets of $422.2 billion.

One removal was due to failure -- Security Bank, National Association, North Lauderdale, Florida ($95 million); two removals from action termination by the Federal Reserve-- MidSouth Bank, Murfreesboro, TN ($239 million) and North Valley Bank, Zanesville, OH ($153 million); and two from unassisted mergers -- Farmers National Bank, Walton, KY ($85 million) and State Bank of Cokato, Cokato, MN ($53 million). Perhaps next week the OCC will release its actions through mid-April 2012.

Earlier:
• Summary for Week Ending May 4th
• Schedule for Week of May 6th

Employment posts yesterday:
• April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
• April Employment Summary and Discussion
• More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Current Employment Graphs

by Calculated Risk on 5/05/2012 01:01:00 PM

Earlier:
• Summary for Week Ending May 4th

This will be a light week for economic releases. The key economic release is the March trade balance report to be released on Thursday.

There will be several speeches by Fed officials, including from Fed Chairman Ben Bernanke on bank regulation.

The elections in Europe will be a focus on Sunday.

----- Sunday, May 6th -----
On Sunday, France and Greece will hold elections. In France, François Hollande is expected to win, although recent polls are close.

In Greece, no party will win a majority and many of the minor parties are expected to get a boost from the anti-austerity vote.

----- Monday, May 7th -----
3:00 PM: Consumer Credit for March. The consensus is for a $9.8 billion increase in consumer credit.


----- Tuesday, May 8th -----
7:30 AM: NFIB Small Business Optimism Index for April.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index declined to 92.5 in March from 94.3 in February.

The consensus is for an increase to 93.0 in April.

10:00 AM ET: Job Openings and Labor Turnover Survey for March from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased slightly in February, and the number of job openings (yellow) has generally been trending up. Quits also increased in February, and quits are now at the highest level since 2008. These are voluntary separations and more quits might indicate some improvement in the labor market.


----- Wednesday, May 9th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been weak this year, although this does not include all the cash buyers.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for March. The consensus is for a 0.6% increase in inventories.


----- Thursday, May 10th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims an increased to 366,000 from 365,000 last week.

8:30 AM: Trade Balance report for March from the Census Bureau.

Exports increased slightly in February, while imports decreased sharply. Exports are well above the pre-recession peak and up 9% compared to February 2011; imports are near the pre-recession high and imports are up about 8% compared to February 2011.

The consensus is for the U.S. trade deficit to increase to $49.5 billion in March, up from from $46.0 billion in February. Export activity to Europe will be closely watched due to economic weakness.

8:30 AM: Import and Export Prices for March. The consensus is a for a 0.2% decrease in import prices.

9:30 AM: Speech by Fed Chairman Ben Bernanke, "Banks and Bank Lending: The State of Play", At the 48th Annual Conference on Bank Structure and Competition, Chicago, Illinois


----- Friday, May 11th -----
8:30 AM: Producer Price Index for April. The consensus is for no change in producer prices (0.2% increase in core).

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for May). The consensus is for sentiment to decline to 76.2 from 76.4 in April.