by Calculated Risk on 5/11/2012 10:00:00 AM

Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for May increased to 77.8, up from the April reading of 76.4.

This was above the consensus forecast of 76.2 and the highest level since January 2008. Overall sentiment is still fairly weak - probably due to a combination of the high unemployment rate, high gasoline prices and the sluggish economy.

by Calculated Risk on 5/11/2012 08:42:00 AM

From the BLS: The Producer Price Index for finished goods falls 0.2% in April; finished core rises 0.2%

The decline in the headline number was mostly due to falling energy prices.

The index for crude energy materials fell 6.8 percent in April. From January to April, prices for crude energy materials dropped 15.1 percent subsequent to a 6.6-percent advance for the 3 months ended in January. Almost three-fourths of the April monthly decline can be traced to the index for crude petroleum, which decreased 7.9 percent

However, excluding food and energy, core PPI increased 0.2%. We will probably see a slowdown in April CPI too due to declining oil and gasoline prices in April (to be released next week).

by Calculated Risk on 5/10/2012 09:55:00 PM

There are two minor economic indicators scheduled for release tomorrow.

• The Producer Price Index for April at 8:30 AM ET. The consensus is for no change in producer prices (0.2% increase in core).

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

Here are a couple of other sources for consumer confidence, with opposite readings. First from Gallup: U.S. Economic Confidence Steady at Relatively Improved Level

U.S. economic confidence for the week ending May 6 is at -18, up slightly from the previous week and slightly better than the -20 average for the month of April.

And from IBD: U.S. Consumer Confidence Weakens in May

The IBD/TIPP Economic Optimism Index declined by 0.8 points, or 1.6%, in May posting 48.5 vs. 49.3 in April.

• Of course the big stories tomorrow will be JPMorgan's $2 billion blunder, and the ongoing tragedy in Greece and Europe. It seems very likely that there will be another election in Greece on June 17th, from the Athens News:

Euro zone countries are prepared to keep financing Greece until the country forms a new government, whether one emerges from Sunday's election or if new elections have to be held next month, euro zone officials said on Thursday. "I expect an announcement of new elections in Greece by Sunday at the latest," one euro zone official said. "My understanding is that a second election in Greece could be by mid-June. We have the means to support Greece through the end of June," a second euro zone official said.

"We will provide enough funds for Greece to stay afloat for as long as the political decision is clarified," the first euro zone official said.

"There is no use letting them default in the middle of things. That is what yesterday was all about - giving them enough money to stay afloat and not induce new chaos if people are not paid, but not giving them more than the bare minimum to discourage parties which say that 'we can do whatever we want and they will still save us because it is in the EU's interest.'"

by Calculated Risk on 5/10/2012 08:21:00 PM

Note: The timing of different house prices indexes can be a little confusing. LPS uses February closings only (not an average) and this tends to be closer to what other indexes report for March. The LPS index is seasonally adjusted.

From LPS: LPS Home Price Index Shows U.S. Home Price Increase of 0.2 Percent in February; Early Data Suggests Further Increase of 0.3 Percent is Likely During March

The updated LPS HPI national home price for transactions during February 2012 increased 0.2 percent to a level on par with those seen in June 2003 ...

"Our HPI shows an increase in seasonally adjusted prices this month for the first time since March 2010, and for only the third time in five years,” said Raj Dosaj, vice president of LPS Applied Analytics. “There have been signs of price declines slowing for a few months now, and our estimates for next month are flat to slightly positive. Without a pickup in sales volumes from their current anemic levels, it’s hard to be more optimistic that the market may be nearing the end of its fall.

“Reasons for caution are clear, as we’ve been here before. Non-seasonally adjusted prices increased for a few months in early 2009, 2010 and 2011 – trends that all ended by summer, after which all the gains – and then some – were lost. As is true this month, those temporary increases were on low sales volumes – about 30 percent lower than at any point since 1998. Furthermore, the inventory of distressed homes remains high, which will continue to put a drag on prices.”

Click on graph for larger image.

From LPS:

During the period of most rapid price declines, from April 2007 through April 2009, the LPS HPI national home price fell at an average annual rate of 9.3 percent. ... The slowest declining trend lasted from about April 2009 to April 2010, dates which are marked in Figure 1. ... The expiration of the first-time buyers’ tax incentive in April 2010 marks the start of a steadier decline in house prices. Figure 1 shows the trends for the three different post-bubble intervals.

by Calculated Risk on 5/10/2012 05:19:00 PM

At a special conference call, from the WSJ: J.P. Morgan To Host Surprise Conference Call. A few excerpts:

J.P. Morgan is now forecasting an $800 million loss in the corporate segment in the second quarter.

Dimon says the strategy was "Flawed complex poorly reviewed poorly executed and poorly monitored."

These were egregious mistakes, they were self-inflicted."- Dimon

Other headlines: "Obviously there was sloppiness" "Portofolio still has risk"

by Calculated Risk on 5/10/2012 04:44:00 PM

CR Note: Earlier I posted some distressed sales data for Sacramento. I'm following the Sacramento market to see the change in mix over time (short sales, foreclosure, conventional). Economist Tom Lawler sent me the following table for several other distressed areas. For all of the areas, the share of distressed sales is down from April 2011, the share of short sales has increased and the share of foreclosure sales are down - and down significantly in some areas.

Economist Tom Lawler wrote today: "Note that there are BIG declines in the foreclosure share of resales this April vs. last April, reflecting sharply lower REO inventories."

Tom has been looking at the incoming data from various areas of the country, and wrote today: "There seems little doubt that the NAR’s median existing SF home sales price for April will show a good-sized YOY increase, probably over 5%." In March, the NAR reported median prices were up 2.5% year-over-year.

Of course the median price is impacted by the mix, and some of the increase in the median price is probably due to fewer foreclosure sales at the low end.

Note: The table is as a percentage of total sales. Note that the percent of short sales has been increasing, and the percent of foreclosure sales has been declining - and the percent of total distressed sales has been declining too (but is still very high).

In four of the six cities, there are now more short sales than foreclosure sales!

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share
	12-Apr	11-Apr	12-Apr	11-Apr	12-Apr	11-Apr
Las Vegas	29.9%	23.8%	36.9%	46.3%	66.8%	70.1%
Reno	32.0%	31.0%	26.0%	38.0%	58.0%	69.0%
Phoenix	25.2%	19.7%	18.8%	44.5%	44.0%	64.2%
Minneapolis	10.9%	10.0%	32.0%	43.3%	42.9%	53.3%
Sacramento	30.4%	22.2%	30.3%	44.6%	60.7%	66.8%
Mid-Atlantic (MRIS)	12.2%	11.8%	11.0%	20.9%	23.2%	32.7%

by Calculated Risk on 5/10/2012 02:30:00 PM

I've been following the Sacramento market to look for changes in the mix of house sales in a distressed area over time (conventional, REOs, and short sales). The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

So far there has been a shift from REO to short sales, and the percentage of distressed sales has been declining year-over-year. This data would suggest improvement, however we do not know the impact of the mortgage settlement yet (the court signed off on the agreement last week).

In April 2012, 60.7% of all resales (single family homes and condos) were distressed sales. This was up from 59.6% last month, and down from 66.8% in April 2011. This is lower than the last few years, but 60% distressed is still extremely high!

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales. There is a seasonal pattern for conventional sales (stronger in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales decreases every summer and the increases in the fall and winter.

There will be probably be more foreclosures following the mortgage servicer settlement, but this is still a sharp increase in conventional sales. In another change, there were more short sales than REO sales in April.

Total sales were up 7.2% compared to April 2011, and conventional sales were up 27% year-over-year. Active Listing Inventory declined 65.7% from last April, and total inventory, including "short sale contingent", was off 38% year-over-year.

Cash buyers accounted for 32.0% of all sales (frequently investors), and median prices were down 6.5% from last April.

I've been hoping this data would help determine when the market is improving. Unfortunately the mortgage settlement is a big unknown. Otherwise this would be considered progress, although the market is still in distress.

We are seeing similar patterns in other distressed areas. This will be interesting to watch over the next few months to see the impact of the mortgage settlement.

by Calculated Risk on 5/10/2012 12:36:00 PM

This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008, so all readings are very low. This is expected to be key a demographic over the next couple of decades - if the baby boomers can sell their current homes.

From the NAHB: Builder Confidence in the 55+ Housing Market Shows Significant Improvement in the First Quarter

Builder confidence in the 55+ housing market for single-family homes had a significant increase in the first quarter of 2012 compared to the same period a year ago, according to the latest National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. The index increased 10 points to 27, and although 27 is relatively low for an index that lies on a scale of 0 to 100, it is nevertheless the highest reading since the inception of the index in 2008.

An index number below 50 indicates that more builders view conditions as poor than good. All index components remain well below 50, but increased considerably from a year ago, each reaching an all-time high: Present sales rose 12 points to 27, expected sales for the next six months increased eight points to 32 and traffic of prospective buyers rose nine points to 26.

“Like the overall single-family housing market, the 55+ housing segment is facing a slow but steady recovery,” said NAHB Chief Economist David Crowe. “Consumers are starting to see the resale market show some improvement, which allows them to start thinking about moving into 55+ housing.”

Click on graph for larger image.

This graph compares the NAHB 55+ HMI through Q1 2012. All of the readings are very low for this index, but there has been a fairly sharp increase over the last two quarters. The overall HMI has also shown a sharp increase, but this segment has seen a somewhat larger increase in confidence.

The overall HMI for May will be released next Tuesday.

by Calculated Risk on 5/10/2012 09:05:00 AM

The Department of Commerce reported:

[T]otal March exports of $186.8 billion and imports of $238.6 billion resulted in a goods and services deficit of $51.8 billion, up from $45.4 billion in February, revised. March exports were $5.3 billion more than February exports of $181.5 billion. March imports were $11.7 billion more than February imports of $226.9 billion.

The trade deficit was above the consensus forecast of $49.5 billion.

The first graph shows the monthly U.S. exports and imports in dollars through March 2012.

Click on graph for larger image.

Exports increased in March, and are at record levels. Imports increased even more. Exports are 13% above the pre-recession peak and up 7% compared to March 2011; imports are 3% above the pre-recession peak, and up about 8% compared to March 2011.

The second graph shows the U.S. trade deficit, with and without petroleum, through March.

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.

Oil averaged $107.95 per barrel in March, up from $103.63 in February. Import oil prices were probably a little higher in April too, but will probably decline in May. The increase in imports was a combination of more petroleum imports and more imports from China.

Exports to the euro area were $18.1 billion in March, up from $17.6 billion in March 2011, so the euro area recession is still not a huge drag on US exports.

by Calculated Risk on 5/10/2012 08:30:00 AM

The DOL reports:

In the week ending May 5, the advance figure for seasonally adjusted initial claims was 367,000, a decrease of 1,000 from the previous week's revised figure of 368,000. The 4-week moving average was 379,000, a decrease of 5,250 from the previous week's revised average of 384,250.

The previous week was revised up from 365,000 to 368,000.

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 decreased to 379,000.

This decline in the 4-week moving average followed for four consecutive increases.

And here is a long term graph of weekly claims:


This was close to the consensus of 366,000. This is two consecutive weeks with initial unemployment claims in the 360s, after averaging close to 390,000 over the previous 3 weeks.

All current Employment Graphs