by Calculated Risk on 10/22/2012 09:13:00 AM

From Kate Mackenzie at FT Alphaville: The US bright spot

It seems odd — and it may well be short-lived — but the US is beginning to shape up as a rare bright spot in the world economy. Or indeed almost the only bright spot in the world’s economy, except for the Gulf petro-states. That is, if you were to base such an assessment solely on Japan’s September export data, released on Monday.

Japan’s preliminary September trade data tell a story not dissimilar to China’s — exports to Europe are slowing (unsurprisingly) by a lot, down 26 per cent for the month, year-on-year. Asian exports also fell, by 8.3 per cent. But US exports rose 0.9 per cent. The six months between April and September show a more striking contrast: exports to North America rose 16.6 per cent; while for Asia they fell 4.7 per cent and for Western Europe, there was a 20.8 per cent decline.

Actually it isn't that "odd" as Mackenzie mentions in a note at the bottom: "The FT’s Martin Wolf made a comment along these lines in Sydney last week. Plus, Cardiff has been looking at (very) tentative signs of an upturn in housing and construction for some time now, and that was before Jamie Dimon picked up on it."

This is another reminder that Europe and China pose downside risks, but right now the US is doing better than most other areas.

by Calculated Risk on 10/21/2012 09:14:00 PM

Later in the week, there are several key economic releases (Q3 GDP, New Home sales, Durable Goods) and an FOMC announcement on Wednedsy. There are no releases scheduled for tomorrow ...

• Expected: LPS "First Look" Mortgage Delinquency Survey for September.

• At 9:00 PM ET, the Third Presidential Debate: President Obama and former Governor Romney debate Foreign policy at Lynn University in Boca Raton, Florida.

The Asian markets are red tonight, with the Nikkei down 1.2%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures and DOW futures are down slightly.

Oil prices are down with WTI futures down to $90.05 and Brent down at $110.66 per barrel.

Weekend:
• Summary for Week Ending Oct 19th
• Schedule for Week of Oct 21st

Three more questions this week for the October economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 10/21/2012 06:24:00 PM

From Reuters: Average U.S. retail gas prices drop 8 cents in two weeks: survey

Gasoline prices averaged $3.7529 per gallon on October 19, down from $3.8375 on October 5, Trilby Lundberg, editor of the Lundberg Survey, said.
...
Lundberg said further declines in retail gas prices are expected if the cost of crude oil does not rise substantially. She added that in California, gasoline prices could have a "dramatic crash" after refinery problems caused a spike two weeks ago.

Those of us in California are still waiting for the "dramatic crash"! We are still paying well over $4 per gallon because of the recent refinery issues (I filled up Friday and paid $4.50 per gallon, but it looks like prices have fallen further over the last 2 days).

Using the calculator from Professor Hamilton, and the current price of Brent crude oil, the national average should be around $3.60 per gallon. That is about 8 cents below the current level according to Gasbuddy.com, and I expect prices to fall further. Note: Brent crude spot prices is at $110.76 per barrel (WTI is down to $90.05)

Gasoline prices have been on a roller coaster all year. Add a California city to the graph - like Los Angeles or San Francisco - and you will see the recent spike.

Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Yesterday:
• Summary for Week Ending Oct 19th
• Schedule for Week of Oct 21st

by Calculated Risk on 10/21/2012 12:21:00 PM

The Department of Transportation (DOT) reported Friday:

Travel on all roads and streets changed by 1.2% (3.0 billion vehicle miles) for August 2012 as compared with August 2011. Travel for the month is estimated to be 262.4 billion vehicle miles.

Cumulative Travel for 2012 changed by 0.9% (17.8 billion vehicle miles).

The following graph shows the rolling 12 month total vehicle miles driven.

The rolling 12 month total is still mostly moving sideways.

Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 57 months - and still counting.

The second graph shows the year-over-year change from the same month in the previous year.

Gasoline prices were up in August compared to August 2011. In August 2012, gasoline averaged of $3.78 per gallon according to the EIA. Last year, prices in August averaged $3.70 per gallon - but even with the increase in gasoline prices, miles driven increased year-over-year in August.

Just looking at gasoline prices suggest miles driven will be down in September - especially with the very high prices in California. Nationally gasoline prices averaged $3.91 in September, up sharply from $3.67 a year ago.

However, as I've mentioned before, gasoline prices are just part of the story. The lack of growth in miles driven over the last 5 years is probably also due to the lingering effects of the great recession (high unemployment rate and lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.

This graph from the Federal Highway Administration is based on the National Household Travel Survey shows the miles driven by certain age groups over time. The key is a large group is moving into the older age brackets, so their miles driven will decline - a large group is moving the from the "54 to 58" age group into the higher age groups.

I also suspect miles driven has been falling for lower age groups over the last few years, and the next survey will probably show that decline.

With all these factors, it may be years before we see a new peak in miles driven.

Yesterday:
• Summary for Week Ending Oct 19th
• Schedule for Week of Oct 21st

by Calculated Risk on 10/21/2012 09:42:00 AM

The first two articles discuss the rise of extremism in Greece as the country suffers through another year of recession (the unemployment rate in Greece is over 25%). The third article notes that the next tranche of aid is expected by mid-November.

From the NY Times: Amid the Echoes of an Economic Crash, the Sounds of Greek Society Being Torn (ht Ann). An excerpt:

The government just passed a law allowing supermarkets to sell expired food at discounted prices. The price of home heating oil has tripled since 2009, and many apartment blocks are voting not to buy any since too many tenants can’t afford it.

As he stood outside a supermarket in a middle-class neighborhood here, a man who gave his name only as Stefanos, 70, said that his biggest fear was that Greece would reach a point “where for every five people unemployed, only one is working.”

“When that one person comes out of the supermarket, the other five are waiting for him outside to grab his groceries,” he said.

As the talks drag on between the government of Prime Minister Antonis Samaras and Greece’s foreign lenders over politically toxic new austerity measures in exchange for more aid, the news media are filled every day with leaks about possible cuts to salaries and pensions, leading to a state of constant, low-grade panic.
...
As she shopped for vegetables at an outdoor market recently, Angeliki Christaki, 58, said she was growing more worried. “We’re heading toward a scenario of civil war,” she said. “But that’s only natural when the rich are against the poor, when the extreme right wing fights the extreme left wing.”

“I was personally crushed when I saw young kids in a Golden Dawn protest,” she said. “I could not believe my eyes.”

And from the WaPo: Anti-immigrant Golden Dawn rises in Greece

At first glance, the shop on a nondescript street in this chaotic capital looks standard-issue military. Fatigues. Camouflage. Hunting gear. Deeper inside, the political message emerges. Black T-shirts emblazoned with modified swastikas — the symbol of the far-right Golden Dawn party — are on sale. A proudly displayed sticker carries a favorite party slogan: “Get the Stench out of Greece.”

By “stench,” the Golden Dawn — which won its first-ever seats in the Greek Parliament this spring and whose popularity has soared ever since — means immigrants, broadly defined as anyone not of Greek ancestry.

From the Athens News: Samaras: Certainty of next loan tranche by mid-November

Prime Minister Antonis Samaras on Friday expressed certainty that a 31.5-billion-euro tranche of the EC-ECB-IMF bailout package will be disbursed by mid-November, preferably in its entirety, as soon as a report by the troika is adopted.

Speaking in Brussels at the end of a two-day EU summit, Samaras explained that a new summit will not be required to approve the disbursement, adding that the country's current cash reserves would run out on November 16.
emphasis added

Yesterday:
• Summary for Week Ending Oct 19th
• Schedule for Week of Oct 21st

by Calculated Risk on 10/20/2012 05:33:00 PM

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

Here is the unofficial problem bank list for Oct 19, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

The OCC released its enforcement actions through mid-September 2012 and the FDIC got back to closing a few banks, which led to many changes to the Unofficial Problem Bank List. For the week, there were nine removals and two additions leaving the list at 865 institutions with assets of $333.2 billion. A year ago, the list held 976 institutions with assets of $401.9 billion.

They were six action terminations and three failures this week. The OCC terminated actions against The National Bank, Moline, IL ($1.0 billion); Peoples National Bank, Colorado Springs, CO ($194 million); United Community Bank, National Association, Highland Village, TX ($107 million); First National Bank MidWest, Oskaloosa, IA ($104 million); and First National Bank of Kansas, Burlington, KS ($72 million). The three failures were Excel Bank, Sedalia, MO ($201 million); GulfSouth Private Bank, Destin, FL ($159 million); and First East Side Savings Bank, Tamarac, FL ($67 million).

The two additions were Central Federal Savings and Loan Association, Cicero, IL ($183 million) and F&M Bank and Trust Company, Hannibal, MO ($165 million).

The OCC also issued a Prompt Corrective Action Order against One Bank & Trust, National Association, Little Rock, AR ($475 million). Next week, we anticipate the FDIC will release its actions through September 2012.

Earlier:
• Summary for Week Ending Oct 19th
• Schedule for Week of Oct 21st

by Calculated Risk on 10/20/2012 01:10:00 PM

Earlier:
• Summary for Week Ending Oct 19th

The key U.S. economic report for the coming week is the Q3 advance GDP report to be released on Friday. Also New Home sales will be released on Wednesday.

For manufacturing, two regional manufacturing reports will be released (Richmond and Kansas City Fed surveys).

There is an FOMC meeting on Tuesday and Wednesday, with an announcement scheduled for Wednesday at 2:15 PM ET. No significant announcement is expected.

----- Monday, Oct 22nd ----- No economic releases scheduled.

Expected: LPS "First Look" Mortgage Delinquency Survey for September.

9:00 PM: Third Presidential Debate: President Obama and former Governor Romney debate Foreign policy at Lynn University in Boca Raton, Florida.

----- Tuesday, Oct 23rd -----
10:00 AM: Richmond Fed Survey of Manufacturing Activity for October. The consensus is for an increase to 6 for this survey from 4 in September (above zero is expansion).

----- Wednesday, Oct 24th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

9:00 AM: The Markit US PMI Manufacturing Index Flash. This is a new release and might provide hints about the ISM PMI for October. The consensus is for a reading of 51.5, unchanged from September.

10:00 AM ET: New Home Sales for September from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the August sales rate.

The consensus is for an increase in sales to 385 thousand Seasonally Adjusted Annual Rate (SAAR) in August from 373 thousand in August. Watch for possible upgrades to the sales rates for previous months.

10:00 AM: FHFA House Price Index for August 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 0.4% increase in house prices.

2:15 PM: FOMC Meeting Announcement. No significant announcement is expected.

During the day: The AIA's Architecture Billings Index for September (a leading indicator for commercial real estate).

----- Thursday, Oct 25th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 372 thousand from 388 thousand.

8:30 AM: Durable Goods Orders for September from the Census Bureau. The consensus is for a 7.0% decrease in durable goods orders.

8:30 AM ET: Chicago Fed National Activity Index (September). This is a composite index of other data.

10:00 AM ET: Pending Home Sales Index for September. The consensus is for a 2.5% increase in the index.

11:00 AM: Kansas City Fed regional Manufacturing Survey for October. The consensus is for an a reading of 4, up from 2 in September (above zero is expansion).

----- Friday, Oct 26th-----
8:30 AM: Q3 GDP (advance release). This is the advance release from the BEA. The consensus is that real GDP increased 1.9% annualized in Q3.

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 Q3 GDP.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for October). The consensus is for no change from the preliminary reading of 83.1.

by Calculated Risk on 10/20/2012 08:01:00 AM

The US economic data clearly improved last week. This was the third week in a row with mostly better than expected data, and suggests some recent pickup in economic activity.

The week started off with a strong retail sales report for September. Although some of the increase in sales was related to higher gasoline prices, sales excluding gasoline picked up too.

And once again the housing reports showed significant improvement. Housing starts were up sharply (as were permits), and residential investment is now a fairly strong tailwind for the economy (I expect this to continue in 2013 and beyond). On Friday, existing home sales disappointed a few people, but the underlying details were solid. For some analysis, see: Existing Home Sales: A few comments and NSA Sales Graph

There was even a little improvement in the regional manufacturing reports (these have been showing contraction for months). The Empire State report still showed contraction in October, but at a slower pace than in September, and the Philly Fed report showed expansion for the first time since April.

One negative report was for initial weekly unemployment claims. Claims were down significantly in the prior week, and increased sharply last week. The large swings over the last two weeks were related to timing and technical factors, and are a reminder to use the 4-week average. On a 4-week average basis, unemployment claims are still elevated, but near the cycle low.

Here is a summary of last week in graphs:

• Housing Starts increased sharply to 872 thousand SAAR in September

Click on graph for larger image.

The first graph shows single family and total housing starts.

Total housing starts were at 872 thousand (SAAR) in September, up 15.0% from the revised August rate of 758 thousand (SAAR). Note that August was revised up from 750 thousand.

Single-family starts increased 11.0 to 603 thousand in September.

This was way above expectations of 765 thousand starts in September. This was partially because of the volatile multi-family sector, but single family starts were up sharply too - and above 600 thousand SAAR for the first time since 2008. Right now starts are on pace to be up about 25% from 2011.

All Housing Investment and Construction Graphs
• Existing Home Sales in September: 4.75 million SAAR, 5.9 months of supply

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in September 2012 (4.75 million SAAR) were 1.7% lower than last month, and were 11.0% above the September 2011 rate.

According to the NAR, inventory declined to 2.32 million in September down from 2.40 million in August. Inventory is not seasonally adjusted, and usually inventory increases from the seasonal lows in December and January to the seasonal high in mid-summer.

This 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 20.0% year-over-year in September from September 2011. This is the 19th consecutive month with a YoY decrease in inventory. Months of supply declined to 5.9 months in September.

This was at expectations of sales of 4.75 million. For existing home sales, the key number is inventory - and the sharp year-over-year decline in inventory is a positive for housing.
All current Existing Home Sales graphs
• Retail Sales increased 1.1% in September

On a monthly basis, retail sales were up 1.1% from August to September (seasonally adjusted), and sales were up 5.4% from September 2011.

Sales for August were revised up to a 1.2% increase (from 0.9% increase).

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 24.6% from the bottom, and now 9.0% above the pre-recession peak (not inflation adjusted)

Excluding gasoline, retail sales are up 20.9% from the bottom, and now 8.6% above the pre-recession peak (not inflation adjusted).

This graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 5.3% on a YoY basis (5.4% for all retail sales). Retail sales ex-autos increased 1.1% in September.

This was above the consensus forecast for retail sales of a 0.7% increase in September, and above the consensus for a 0.5% increase ex-auto.

• Industrial Production increased 0.4% in September, Capacity Utilization increased

From the Fed: "Capacity utilization for total industry moved up 0.3 percentage point to 78.3 percent, a rate 2.0 percentage points below its long-run (1972--2011) average."

This graph shows Capacity Utilization. This series is up 11.5 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.3% is still 2.0 percentage points below its average from 1972 to 2010 and below the pre-recession level 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 0.4 percent in September to 97.0. This is 16% above the recession low, but still 3.7% below the pre-recession peak.

The consensus was for Industrial Production to increase 0.2% in September, and for Capacity Utilization to increase to 78.3%. IP was slightly above expectations (some bounce back from shut downs related to Hurricane Isaac) and Capacity Utilization was at expectations. Overall Industrial Production has moved sideways this year.
All current manufacturing graphs
• Key Measures show low inflation in September

This graph shows the year-over-year change for  four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 1.9%, and core CPI rose 2.0%. Core PCE is for August and increased 1.6% year-over-year.

On a monthly basis, two of these measure were above the Fed's target; trimmed-mean CPI was at 2.6% annualized, median CPI was at 2.6% annualized. However core CPI increased 1.8% annualized, and core PCE for August increased 1.3% annualized. These measures suggest inflation is close to the Fed's target of 2% on a year-over-year basis.

The Fed's focus will probably be on core PCE and core CPI, and both are at or below the Fed's target (year-over-year and on a monthly basis).

• Weekly Initial Unemployment Claims increase sharply to 388,000

The DOL reports:

In the week ending October 13, the advance figure for seasonally adjusted initial claims was 388,000, an increase of 46,000 from the previous week's revised figure of 342,000. The 4-week moving average was 365,500, an increase of 750 from the previous week's revised average of 364,750.

The previous week was revised up from 339,000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 365,500. The 4-week average has mostly moved moving sideways this year, but is now near the cycle bottom.

The large swings over the last two weeks were related to timing and technical factors, and is a reason to use the 4-week average.

Weekly claims were higher than the consensus forecast of 365,000.
All current Employment Graphs
• Regional Fed Surveys were mixed

The Philly Fed manufacturing index showed expansion in October after five consecutive months of contraction. From the Philly Fed: October Manufacturing Survey: "Firms responding to the October Business Outlook Survey reported a modest improvement in business activity this month. ... The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased 8 points, to 5.7, marking the first positive reading since April."

Earlier in the week, the NY Fed reported: "The October Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to decline for a third consecutive month. The general business conditions index increased four points but remained negative at -6.2."

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 October. The ISM and total Fed surveys are through September.

The average of the Empire State and Philly Fed surveys increased in October but was still slightly negative.  This suggests another weak reading for the ISM manufacturing index - but maybe slightly better than last month.

by Calculated Risk on 10/19/2012 07:36:00 PM

Bumbling bankers:
Our spreadsheets aren’t adding up
Big Excel problem.
by Soylent Green is People
From the FDIC: Simmons First National Bank, Pine Bluff, Arkansas, Assumes All of the Deposits of Excel Bank, Sedalia, Missouri

As of June 30, 2012, Excel Bank had approximately $200.6 million in total assets and $187.4 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $40.9 million. ... Excel Bank is the 46th FDIC-insured institution to fail in the nation this year, and the third in Missouri.

FDIC hat trick today!

Earlier on Existing Home Sales:
• Existing Home Sales in September: 4.75 million SAAR, 5.9 months
• Existing Home Sales: A few comments and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 10/19/2012 06:40:00 PM

You’re movin’ on up
Said the Feds to East Side Bank
To a deluxe Stearns.
by Soylent Green is People
From the FDIC: Stearns Bank National Association, St. Cloud, Minnesota, Assumes All of the Deposits of First East Side Savings Bank, Tamarac, Florida

As of June 30, 2012, First East Side Savings Bank had approximately $67.2 million in total assets and $65.9 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.1 million. ... First East Side Savings Bank is the 45th FDIC-insured institution to fail in the nation this year, and the seventh in Florida.

Two down today.