RSS Feed by Calculated Risk on 7/21/2012 01:01:00 PM
Saturday, July 21, 2012
Schedule for Week of July 22nd
Earlier:
• Summary for Week Ending July 20th
This will be an important week for economic data. The key U.S. economic report for the coming week is the Q2 advance GDP report to be released on Friday; this is the last major economic release before the FOMC meeting the following week.
Also New Home sales will be released on Wednesday.
For manufacturing, two regional manufacturing reports will be released (Richmond and Kansas City Fed surveys).
8:30 AM: Chicago Fed National Activity Index (June). This is a composite index of other data.
9:00 AM: The Markit US PMI Manufacturing Index Flash. This is a new release and might provide hints about the ISM PMI for July. The consensus is for a reading of 52.6, down slightly from 52.9 in June.
10:00 AM: Richmond Fed Survey of Manufacturing Activity for July. The consensus is for an increase to 0 for this survey from -3 in June (above zero is expansion).
10:00 AM: FHFA House Price Index for May 2012. This is based on GSE repeat sales and is no longer as closely followed as Case-Shiller (or CoreLogic). The consensus is for a 0.3% increase in house prices.
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.
10:00 AM ET: New Home Sales for June from the Census Bureau. This graph shows New Home Sales since 1963. The dashed line is the May sales rate.
The consensus is for an increase in sales to 370 thousand Seasonally Adjusted Annual Rate (SAAR) in June from 369 thousand in May.
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 380 thousand from 386 thousand.
8:30 AM: Durable Goods Orders for June from the Census Bureau. The consensus is for a 0.6% increase in durable goods orders.
10:00 AM ET: Pending Home Sales Index for June. The consensus is for a 0.9% increase in the index.
11:00 AM: Kansas City Fed regional Manufacturing Survey for July. The consensus is for an increase to 4 from 3 in June (above zero is expansion).
8:30 AM: Q2 GDP (advance release). This is the advance release from the BEA. The consensus is that real GDP increased 1.2% annualized in Q2.This graph shows the quarterly GDP growth (at an annual rate) for the last 30 years.
The Red column (and dashed line) is the consensus forecast for Q2 GDP. The BEA will also release the revised estimates for 2009 through First Quarter 2012.
9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for July). The consensus is for no change from the preliminary reading of 72.0.
10:00 AM: Q2 Housing Vacancies and Homeownership report from the Census Bureau. This report is frequently mentioned by analysts and the media to track the homeownership rate, and the homeowner and rental vacancy rates. However, based on the initial evaluation, it appears the vacancy rates are too high. The Census Bureau is looking into the differences between the HVS, the ACS, and the decennial Census, and until the issues are resolved, this survey probably shouldn't be used to estimate the excess vacant housing supply.
Summary for Week ending July 20th
by Calculated Risk on 7/21/2012 08:01:00 AM
For the last few months, the economic data has been weak and disappointing. Last week I joked: "Luckily there are a few housing reports next week, so all the data will not be grim.", and sure enough the housing data was better than expected (still historically weak, but definitely improving).
Housing started the week off with July home builder confidence at the highest level since March 2007. Then housing starts for June were reported at 760 thousand, and finally the existing home sales report showed the largest year-over-year decline in inventory ever reported. (Sales were weaker than expected, but the key number in the NAR report is inventory).
Unfortunately some non-housing economic data was released too. Retail sales were especially weak in June, initial weekly unemployment claims increased sharply, the Architecture Billings Index (mostly commercial real estate) showed further contraction, and the regional manufacturing surveys suggested ongoing weakness in July.
There were a couple of non-housing positives: Industrial production was up in June, and inflation was benign.
Luckily there is another housing report next week: June New Home sales. But the key report next week will be Q2 GDP - and that will be UGLY (update: around 1%).
Here is a summary of last week in graphs:
• Housing Starts increased to 760 thousand in June, Highest since October 2008
Click on graph for larger image.
Total housing starts were at 760 thousand (SAAR) in June, up 6.9% from the revised May rate of 711 thousand (SAAR). Note that May was revised up from 708 thousand. April was revised up slightly too.
Single-family starts increased 4.7% to 539 thousand in June.
The second graph shows total and single unit starts since 1968.
This shows the huge collapse following the housing bubble, and that total housing starts have been increasing lately after moving sideways for about two years and a half years.
Total starts are up 59% from the bottom start rate, and single family starts are up 53% from the low.
This was above expectations of 745 thousand starts in June. This is another fairly strong housing report.
• Existing Home Sales in June: 4.37 million SAAR, 6.6 months of supply
This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in June 2012 (4.37 million SAAR) were 5.4% lower than last month, and were 4.5% above the June 2011 rate.
The second graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
Inventory decreased 24.4% year-over-year in June from June 2011. This is the sixteenth consecutive month with a YoY decrease in inventory, and the largest year-over-year decline reported.Months of supply increased to 6.6 months in June.
This was below expectations of sales of 4.65 million. However, as I've noted before, those focusing on sales of existing homes, looking for a recovery for housing, are looking at the wrong number. For existing home sales, the key number is inventory - and the sharp year-over-year decline in inventory is a positive for housing.
• Retail Sales declined 0.5% in June
On a monthly basis, retail sales were down 0.5% from May to June (seasonally adjusted), and sales were up 3.8% from June 2011.Sales for May were unchanged at a 0.2% decrease.
This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).
Retail sales are up 21.2% from the bottom, and now 6.0% above the pre-recession peak (not inflation adjusted)
The next graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.
Retail sales ex-gasoline increased by 4.2% on a YoY basis (3.8% for all retail sales). Retail sales ex-gasoline decreased 0.3% in June.This was below the consensus forecast for retail sales of a 0.2% increase in June, and below the consensus for a 0.1% increase ex-auto.
Some of the decrease was related to the decline in gasoline prices, but this is another indicator of a weak June.
• Industrial Production increased 0.4% in June, Capacity Utilization increased
From the Fed: Industrial production and Capacity Utilization Industrial production increased 0.4 percent in June after having declined 0.2 percent in May. ... Capacity utilization for total industry moved up 0.2 percentage point in June to 78.9 percent, a rate 1.4 percentage points below its long-run (1972--2011) average.This graph shows Capacity Utilization. This series is up 12.1 percentage points from the record low set in June 2009 (the series starts in 1967).
Capacity utilization at 78.9% is still 1.4 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 80.6% in December 2007.
Note: y-axis doesn't start at zero to better show the change.
The second graph shows industrial production since 1967.Industrial production increased in June to 97.4. This is 16.7% above the recession low, but still 3.3% below the pre-recession peak.
The consensus is for Industrial Production to increase 0.3% in June, and for Capacity Utilization to increase to 79.2%. The increase IP was slightly above expectations, but Capacity Utilization was below expectations.
• AIA: Architecture Billings Index shows "drop in design activity" in June
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From AIA: Weak Market Conditions Persist According to Architecture Billings IndexThis graph shows the Architecture Billings Index since 1996. The index was at 45.9 in June, up slightly from May. Anything below 50 indicates contraction in demand for architects' services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This suggests further weakness in CRE investment later this year and into next year (it will be some time before investment in offices and malls increases).
• Weekly Initial Unemployment Claims increase to 386,000
Here is a long term graph of weekly claims:The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims declined to 375,500.
The sharp decline last week due to onetime factors, and some increase was expected.
This was well above the consensus forecast of 365,000 and suggests ongoing weakness in the labor market.
• Regional Manufacturing Surveys
From the NY Fed: Empire State Manufacturing Survey The general business conditions index rose five points to 7.4. New orders, however, declined, as that index slipped into negative territory for the first time since November 2011, falling five points to -2.7.From the Philly Fed: July 2012 Business Outlook Survey
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from a reading of −16.6 in June to −12.9. This marks the third consecutive negative reading for the index ...Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through July. The ISM and total Fed surveys are through June.
The average of the Empire State and Philly Fed surveys increased in July, but the average is still negative (contraction).
• Other Economic Stories ...
• NAHB Builder Confidence increases strongly in July, Highest since March 2007
• First Look at 2013 Cost-Of-Living Adjustments and Maximum Contribution Base
• Bernanke: Semiannual Monetary Policy Report to the Congress
• State Unemployment Rates little changed in June
• Fed's Beige Book: Economic activity increased at "modest to moderate" pace, Residential real estate "largely positive"
• Key Measures show slowing inflation in June
Friday, July 20, 2012
Bank Failure #38: Second Federal Savings and Loan Association of Chicago, Chicago, Illinois
by Calculated Risk on 7/20/2012 08:53:00 PM
Pillaged the Chicago way
Illinois inept
by Soylent Green is People
From the FDIC: Hinsdale Bank & Trust Company, Hinsdale, Illinois, Assumes All of the Deposits of Second Federal Savings and Loan Association of Chicago, Chicago, Illinois
As of March 31, 2012, Second Federal Savings and Loan Association of Chicago had approximately $199.1 million in total assets and $175.9 million in total deposits ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $76.9 million. ... Second Federal Savings and Loan Association of Chicago is the 38th FDIC-insured institution to fail in the nation this year, and the fifth in Chicago.Pretty large loss for the DIF. That makes five today ...
Bank Failure #37 in 2012: Heartland Bank, Leawood, Kansas
by Calculated Risk on 7/20/2012 06:07:00 PM
Asset drought wilts more bankers
Scorched earth arrives
by Soylent Green is People
From the FDIC: Metcalf Bank, Lees Summit, Missouri, Assumes All of the Deposits of Heartland Bank, Leawood, Kansas
As of March 31, 2012, Heartland Bank had approximately $110.0 million in total assets and $102.6 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.1 million. Compared ... Heartland Bank is the 37th FDIC-insured institution to fail in the nation this year, and the first in Kansas.Pretty small hit to the DIF. That makes four today so far ...
Bank Failures #34 - 36 in 2012: Florida and Georgia
by Calculated Risk on 7/20/2012 05:18:00 PM
From the FDIC: First National Bank of the Gulf Coast, Naples, Florida, Assumes All of the Deposits of the Royal Palm Bank of Florida, Naples, Florida
As of March 31, 2012, The Royal Palm Bank of Florida had approximately $87.0 million in total assets and $85.1 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $13.5 million. ... The Royal Palm Bank of Florida is the 34th FDIC-insured institution to fail in the nation this year, and the fifth in Florida.From the FDIC: Community & Southern Bank, Atlanta, Georgia, Assumes All of the Deposits of Georgia Trust Bank, Buford, Georgia
As of March 31, 2012, Georgia Trust Bank had approximately $119.8 million in total assets and $117.4 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20.9 million. ... Georgia Trust Bank is the 35th FDIC-insured institution to fail in the nation this year, and the seventh in Georgia.From the FDIC: Community & Southern Bank, Atlanta, Georgia, Assumes All of the Deposits of First Cherokee State Bank, Woodstock, Georgia
As of March 31, 2012, First Cherokee State Bank had approximately $222.7 million in total assets and $193.3 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $36.9 million. ... First Cherokee State Bank is the 36th FDIC-insured institution to fail in the nation this year, and the eighth in Georgia.Two more in Georgia ... not a surprise.
Report: Mortgage originations at large banks increased sharply in Q2
by Calculated Risk on 7/20/2012 02:53:00 PM
Low rates and HARP are driving activity ...
From Jon Prior at HousingWire: Big-four mortgage originations climb 37%
Mortgage originations at the big-four banks increased 37% in the second quarter from last year because of the expanded Home Affordable Refinance Program.If the Fed does expand their balance sheet ("QE3") on Aug 1st, or at the September meeting, the purchases will probably be focused on agency mortgage backed securities. The people able to refinance might even get even lower rates, but many prospective borrowers will still be unable to refinance.
...
Wells continued to dominate. The San Francisco bank wrote $131.9 billion in new loans during the quarter, more than double originations from the same period last year. Wells said 16% of those new loans came through the Home Affordable Refinancing Program.
...
Chase wrote $43.9 billion in new mortgages during the quarter, up 29% from last year and 14.3% from the previous quarter.
...
Bank of America continues to feel the drop off from exiting its correspondent lending channel last year. Originations fell 55% from one year ago to roughly $18 billion, the only yearly decline of the big-four lenders.
...
Citi originations totaled $12.9 billion, up 17% from last year but still down 10% from the previous quarter.
State Unemployment Rates little changed in June
by Calculated Risk on 7/20/2012 11:13:00 AM
From the BLS: Regional and State Employment and Unemployment Summary
Regional and state unemployment rates were little changed in June. Twenty-seven states recorded unemployment rate increases, 11 states and the District of Columbia posted rate decreases, and 12 states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Nevada continued to record the highest unemployment rate among the states, 11.6 percent in June. Rhode Island and California posted the next highest rates, 10.9 and 10.7 percent, respectively. North Dakota again registered the lowest jobless rate, 2.9 percent, followed by Nebraska, 3.8 percent.
Click on graph for larger image in graph gallery.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). New York is at the maximum unemployment rate for the recession - every other state has some blue indicating some improvement. New Jersey is close to the recession maximum.
The states are ranked by the highest current unemployment rate. Only three states still have double digit unemployment rates: Nevada, Rhode Island, and California. This is the fewest since January 2009. In early 2010, 18 states and D.C. had double digit unemployment rates.
It appears some of the "sand states", with the largest housing bubbles, are starting to see faster declines in the unemployment rate (Arizona, Florida, California and Nevada).
Eurozone approves Spanish Bank Bailout, Bond Yields increase
by Calculated Risk on 7/20/2012 08:47:00 AM
From the WSJ: Euro Zone Approves Terms of Spain Bank Bailout
Luxembourg Finance Minister Luc Frieden told reporters there had been a "formal" adoption of the country's memorandum of understanding—the official document outlining the details of the financial assistance package.The yield on the Spanish 10 year bond is now above 7.2% - near the high.
...
The bailout will pump up to €100 billion euros ($123 billion) into ailing Spanish banks and will aim to restore the country's financial sector.
...
Also Friday, Spain's government said it expects the economy to remain in recession next year as it steps up austerity measures.
More austerity. More recession. The beatings continue ...
Thursday, July 19, 2012
LA Times: "Ports of Los Angeles and Long Beach building at furious pace"
by Calculated Risk on 7/19/2012 06:57:00 PM
Here is a sector that is growing ... expecting more imports from Asia:
From Ronald White at the LA Times: Ports of Los Angeles and Long Beach building at furious pace
At the edge of San Pedro Bay, home of North America's largest cargo complex, they're building new piers, wharves and rail yards at a furious pace ... So much construction is underway that the new facilities by themselves would move more freight than the entire port of Savannah, Ga., which ranks No. 4 among the continent's ports.Earlier on Existing Home Sales:
...
The most expensive and extensive upgrades in the history of both ports will cost nearly $6 billion.
...
About 640,000 people work in trade-related jobs in [SoCal] ... That's up from a low of fewer than 600,000 during the recession, but still far short of the 709,000 trade jobs in pre-recession 2007.
• Existing Home Sales in June: 4.37 million SAAR, 6.6 months of supply
• Existing Home Sales: Inventory and NSA Sales Graph
• Existing Home Sales graphs
FNC: Residential Property Values increased 0.6% in May
by Calculated Risk on 7/19/2012 04:04:00 PM
In addition to Case-Shiller, CoreLogic, and LPS, I'm also watching the FNC, Zillow and other house price indexes.
FNC released their May index data today. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.6% in May (Composite 100 index). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.5% and 0.8% in May. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).
The year-over-year trends continued to show improvement in May, with all four composite indexes down 1.8% to 2.1% compared to May 2011. For all the indexes, this is the smallest year-over-year decline in the FNC index since year-over-year prices started falling in 2007 (five years ago).
Click on graph for larger image.
This graph is based on the FNC index (four composites) through May 2012. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.
Some of the month-to-month gain is seasonal since this index is NSA. The key is the indexes are showing less of a year-over-year decline in May. If house prices have bottomed, the year-over-year decline should turn positive later this year or early in 2013.
The May Case-Shiller index will be released Tuesday, July 31st.
Earlier on Existing Home Sales:
• Existing Home Sales in June: 4.37 million SAAR, 6.6 months of supply
• Existing Home Sales: Inventory and NSA Sales Graph
• Existing Home Sales graphs
