by Calculated Risk on 7/27/2013 11:55:00 AM

This will be a very busy week for economic data.  The key reports this week are the Q2 advance GDP report on Wednesday, and the July employment report on Friday.

Other key reports include the ISM manufacturing index on Thursday, auto sales also on Tuesday, and Case-Shiller house prices for May on Tuesday.   The June Personal Income and Outlays report will be released on Friday.

Also there is an FOMC meeting on Tuesday and Wednesday.  Overseas, the ECB and BOE will hold monetary policy meetings, and China's PMI will be released.

----- Monday, July 29th -----
10:00 AM ET: Pending Home Sales Index for June. The consensus is for a 1.4% decrease in the index.

10:30 AM: Dallas Fed Manufacturing Survey for July. This is the last of the regional manufacturing surveys for July. The consensus is a reading of 6.4, mostly unchanged from the reading of 6.5 in June (above zero is expansion).

----- Tuesday, July 30th -----
9:00 AM: S&P/Case-Shiller House Price Index for May. Although this is the May report, it is really a 3 month average of March, April and May.

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes through April 2012 (the Composite 20 was started in January 2000).

The consensus is for a 12.3% year-over-year increase in the Composite 20 index (NSA) for May. The Zillow forecast is for the Composite 20 to increase 12.1% year-over-year, and for prices to increase 1.3% month-to-month seasonally adjusted.

10:00 AM: Conference Board's consumer confidence index for July. The consensus is for the index to decrease to 81.0 from 81.4.

10:00 AM: Q2 Housing Vacancies and Homeownership report from the Census Bureau. This report is frequently mentioned by analysts and the media to report on the homeownership rate, and the homeowner and rental vacancy rates. However, this report doesn't track with other measures (like the decennial Census and the ACS) and this survey probably shouldn't be used to estimate the excess vacant housing supply.

----- Wednesday, July 31st -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 179,000 payroll jobs added in July, down from 188,000 in June.  

8:30 AM: Q2 GDP (advance estimate). This is the advance estimate of Q2 GDP from the BEA. The consensus is that real GDP increased 1.1% annualized in Q2.  This report will includes a Comprehensive Revision from 1929 through 1st quarter 2013.

9:45 AM: Chicago Purchasing Managers Index for July. The consensus is for an increase to 54.0, up from 51.6 in June.

2:00 PM: FOMC Meeting Announcement.  No change to interest rates or QE purchases is expected at this meeting.

----- Thursday, Aug 1st -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 345 thousand from 343 thousand last week.

All day: Light vehicle sales for July. The consensus is for light vehicle sales to decrease to 15.8 million SAAR in July (Seasonally Adjusted Annual Rate) from 15.9 million SAAR in June.

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the June sales rate.

9:00 AM: The Markit US PMI Manufacturing Index for July. The consensus is for the index to increase to 53.1 from 51.9 in June.

10:00 AM ET: ISM Manufacturing Index for July. The consensus is for an increase to 53.1 from 50.9 in June.  Based on the regional surveys, an increase in July seems likely.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion in June at 50.9%. The employment index was at 48.7%, and the new orders index was at 51.9%.

10:00 AM: Construction Spending for June. The consensus is for a 0.4% increase in construction spending.

----- Friday, Aug 2nd -----
8:30 AM: Employment Report for July. The consensus is for an increase of 175,000 non-farm payroll jobs in July; the economy added 195,000 non-farm payroll jobs in June.

The consensus is for the unemployment rate to decrease to 7.5% in July from 7.6% in June.

The following graph shows the percentage of payroll jobs lost during post WWII recessions through June.

The economy has added 7.2 million private sector jobs since employment bottomed in February 2010 (6.6 million total jobs added including all the public sector layoffs).

There are still 1.6 million fewer private sector jobs now than when the recession started in 2007.

8:30 AM ET: Personal Income and Outlays for June. The consensus is for a 0.4% increase in personal income in June, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.1%.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for June. The consensus is for a 2.3% increase in orders.

by Calculated Risk on 7/27/2013 09:50:00 AM

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

Here is the unofficial problem bank list for July 26, 2013.

Changes and comments from surferdude808:

The FDIC released its enforcement actions through June 2013 on Friday. This release led to many changes to the Unofficial Problem Bank List. For the week, there were eight removals and three additions that leave the list holding 729 institutions with assets of $260.9 billion. A year ago, the list held 900 institutions with assets of $349.5 billion. For the month, the list declined by 20 institutions after 19 action terminations, seven unassisted mergers, and six additions. The monthly net decline of 20 institutions is the highest since publication of the list.

Actions were terminated against Amalgamated Bank, New York, NY ($3.6 billion); Parkway Bank and Trust Company, Harwood Heights, IL ($2.0 billion); Alliance Bank, Lake City, MN ($579 million); ISB Community Bank, Ixonia, WI ($285 million); First Trust and Savings Bank, Oneida, TN ($149 million); First Pryority Bank, Pryor, OK ($116 million); The Citizens Bank, Enterprise, AL ($95 million); and Bancroft State Bank, Bancroft, WI ($70 million).

The three additions this week were The Bank of Union, El Reno, OK ($388 million); First Security Trust Bank, Inc., Florence, KY ($93 million); and The Citizens State Bank and Trust Company, Woodbine, KS ($16 million). Also, the FDIC issued a Prompt Corrective Action order against Securant Bank & Trust, Menomonee Falls, WI ($202 million), which has been under a formal enforcement action since 2010.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining since then.

by Calculated Risk on 7/26/2013 05:39:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate declined in June to 2.79% from 2.85% in May. Freddie's rate is down from 3.45% in June 2012, and this is the lowest level since May 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Earlier this week, LPS reported that total delinquencies increased in June - but that was mostly due to an increase in short term delinquencies (seasonally delinquencies increase every June). Freddie Mac is reporting serious delinquencies only.

Note: Fannie Mae will report their Single-Family Serious Delinquency rate for June next week.

Click on graph for larger image

Although this indicates some progress, the "normal" serious delinquency rate is under 1%. 

At the recent rate of improvement, the serious delinquency rate will not be under 1% until 2016 or so.

by Calculated Risk on 7/26/2013 02:04:00 PM

From housing economist Tom Lawler:

Several large, publicly-traded home builders have released earnings for the quarter ended June 30th, 2013, and the operating results varied wildly.  Below are some stats for net orders, settlements, and average sales prices on settlements.

All results in the table below include “discontinued operations,” and Standard Pacific’s results exclude JVs.

Ryland’s results included 177 net orders and 17 settlements associated with its June acquisitions of the Dallas operation of LionsGate homes. Standard Pacific completed its acquisitions of “select homebuilding assets” from Centerline Homes and affiliates in June, which included about 30 current and future communities, five of which are active with 119 homes under contract.

Of the results released so far, “most surprising” was the weakness in net order growth at the two largest US home builders, D.R. Horton (up just 12.2% YOY) and PulteGroup (DOWN 12.4% YOY). D.R. Horton’s sales cancellation rate was 24%, up from 19% in the previous quarter and 23% a year ago. An official cited rising mortgage rates as contributing to the rise in cancellations. Last quarter’s sales cancellation rate was down from a year ago, however, at Meritage, M/I, NVR, and Ryland. D.R. Horton, of course, relies more on the first-time home buyer market than these other builders. Pulte does not report its sales cancellation rate in its press release, though an official said that cancellation rates were “little changed.” In Pulte’s press release the company said that “the recent rise in interest rates has had little effect on overall activity,” despite its incredibly disappointing orders. Pulte attributed the slowdown in net home orders to a 16% reduction in community count, as well as “the company’s decision to purposely slow sales in a number of communities,” particularly in Arizona, Nevada, and Southern California, where an official said Pulte had sold homes “too quickly” (presumably meaning at “too low” a price) in 2012. Stated another way, Pulte increased prices in a fashion that slowed sales.

	Net Orders			Settlements			Average Closing Price
Qtr. Ended:	3/31/13	3/31/12	% Chg	3/31/13	3/31/12	% Chg	3/31/13	3/31/12	% Chg
D.R. Horton	6,822	6,079	12.2%	6,464	4,957	30.4%	$252,290	$224,975	12.1%
Pulte Group	4,885	5,578	-12.4%	4,152	3,816	8.8%	$294,000	$268,000	9.7%
NVR	3,278	2,614	25.4%	2,878	2,475	16.3%	$344,700	$305,100	13.0%
The Ryland Group	2,191	1,415	54.8%	1,659	1,149	44.4%	$287,000	$253,000	13.4%
Standard Pacific	1,516	1,108	36.8%	1,095	815	34.4%	$397,000	$337,000	17.8%
Meritage Homes	1,637	1,353	21.0%	1,321	1,042	26.8%	$330,000	$270,000	22.2%
M/I Homes	1,078	826	30.5%	788	625	26.1%	$281,000	$259,000	8.5%
Total	21,407	18,973	12.8%	18,357	14,879	23.4%	$294,805	$262,220	12.4%

On the pricing front, all builders reported significant increases in average sales prices, with the increases generally attributed both to overall price increases and a shift in mix, with several builders saying there were focused more on the “move-up” market. Demand from first-time home buyers was perceived at many builders as being “weak.”

While overall results varied a lot, net home orders for the above seven home builders combined were up just 12.8% from a year ago – and a bit less after adjusting for acquisitions – which combined was SUBSTANTIALLY below consensus. In the quarter ended March 31, 2013, net orders for these seven builders combined were up 24.0% from the comparable quarter of 2012.

Given the net home orders reported so far by publicly-traded builders, the Census estimates for new SF home sales for Q2/2013 seem surprisingly strong – 134,000 on an unadjusted basis, up over 30% from the second quarter of 2012. The estimated YOY gain in sales Q1/2013 was about 25% .

Of course, comparing home builder reports with Census SF home sales estimates is “challenging.” First, Census does not treat sales cancellations the same as do home builders. Second, historical data suggest that the timing of the recognition of a “sale” by Census lags that of home builders. Third, there can be substantial quarterly swings in market share. And fourth, preliminary Census estimates are subject to substantial revisions, partly because preliminary estimates include “imputed” data, because the survey data used to estimate sales are based on a permit being issued. Many homes may have a sales contract signed prior to a permit being issued, and Census must “guesstimate” such sales using some “historical trends” model (that has often been changed).

Nevertheless, I have found builder reports to be somewhat useful in projecting revisions in Census’ estimates of new SF home sales. Based on the builder reports so far, there is a better than even chance that Census’ new SF home sales estimates for last quarter will be revised downward, and I’d guess that the bulk of the downward revision will be in June sales. It’s worth noting that while Census’ estimated new SF home sales last quarter were up by over 30% YOY (on an unadjusted basis), estimated sales of homes not yet started were up 53%, compared to 24% for sales of homes under construction, and 20% for sales of completed homes. For June Census estimated that there were 18,000 sales of new SF homes not yet started, up from 11,000 last June, and the highest level since June 2007.

by Calculated Risk on 7/26/2013 11:59:00 AM

Note: The automakers will report July vehicle sales on Thursday, August 1st. 

According the Bureau of Economic Analysis (BEA), light vehicle sales in June were at a 15.9 million rate, on a seasonally adjusted annual rate (SAAR) basis.  It looks like July sales will be in the same range.

Here are a few forecasts:

From Kelley Blue Book: Pickup Trucks, Compact Cars And Crossovers Drive July New-Car Sales Up 16 Percent

In July 2013, new light-vehicle sales, including fleet, are expected to be 1,340,000 units, up 16.1 percent from July 2012 and down 4.4 percent from June 2013. The seasonally adjusted annual rate (SAAR) for July 2013 is estimated to be 15.8 million, up from 14.0 million in July 2012 and down from 15.9 million in June 2013.
...
While the overall economy continues to improve at a slow pace, demand for new vehicles is rapidly approaching pre-recession levels. Due to economic improvement during the first half of the year, Kelley Blue Book is raising its sales forecast from 15.3 million to 15.6 million for 2013.

Press Release: J.D. Power and LMC Automotive Report: July New-Vehicle Retail Sales -- Let the Good Times Roll

Total light-vehicle sales in July 2013 are expected to grow to 1,336,700, an 11 percent increase from July 2012 [15.9 million SAAR] ...

LMC Automotive is raising its forecast for both retail and total light-vehicle sales in 2013. The outlook for total light-vehicles is now at 15.6 million units—previously 15.4 million units—while the retail light-vehicle sales forecast increases to 12.8 million units from 12.6 million units.

From TrueCar: July 2013 New Car Sales Expected to Be Up 15.3 Percent According to TrueCar; July 2013 SAAR at 15.8M, Highest July SAAR since 2006

For July 2013, new light vehicle sales in the U.S. (including fleet) is expected to be 1,326,035 units, up 15.3 percent from July 2012 and down 5.1% percent from June 2013 (on an unadjusted basis).

The [July] 2013 forecast translates into a Seasonally Adjusted Annualized Rate ("SAAR") of 15.8 million new car sales, [down] from 15.9 million in June 2013 and up from 14.1 million in July 2012.

"July delivered the highest year-over-year increase so far in 2013," said [Jesse Toprak, senior analyst for TrueCar.com]

Two key points: 1) sales growth will slow in 2013, and 2) it appears auto sales were solid in July.

Analysts are upping their 2013 projections, but it appears sales will not increase at a double digit rate like the last few years - but this will be another strong growth year for auto sales.

Light Vehicle Sales
	Sales (millions)	Annual Change
2005	16.9	0.5%
2006	16.5	-2.6%
2007	16.1	-2.5%
2008	13.2	-18.0%
2009	10.4	-21.2%
2010	11.6	11.1%
2011	12.7	10.2%
2012	14.4	13.4%
20131	15.6	8.3%
1Projections from Kelley Blue Book and J.D. Power / LMC .

by Calculated Risk on 7/26/2013 10:01:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for July increased to 85.1, up from the June reading of 84.1, and up from the preliminary July reading of 83.9.

This was above the consensus forecast of 84.0 and is the highest since July 2007 (pre-recession). Sentiment has generally been improving following the recession - with plenty of ups and downs - and one big spike down when Congress threatened to "not pay the bills" in 2011. 

by Calculated Risk on 7/25/2013 09:02:00 PM

Next week the BEA will release comprehensive revisions to GDP for prior years. From Merrill Lynch on the GDP revisions next week:

The release of 2Q GDP on July 31 will be anything but a typical report. The Bureau of Economic Analysis (BEA) will be announcing the results of its comprehensive benchmark revision which we believe will reveal significant adjustments to GDP, personal income, the savings rate and corporate profits. Here are the main takeaways ...

• The level of GDP will be revised higher over the history of the sample, likely in the order of 3.0pp. We believe the revision will be pro-cyclical and therefore make the recessions look modestly deeper and the recoveries appear stronger. In particular, already-released revisions to source data imply an upward revision to 2012.

• Personal income will also be revised higher. However, it will likely be adjusted to be less volatile, likely smoothing the most recent business cycles.

• The saving rate will be revised higher, likely in the order of 2 to 3pp. This could boost the current rate from 3.2% to as high as 6%. We think the revision will be notable over the past cycle, showing greater precautionary saving in response to the financial crisis. The revisions will make the data more comparable to the Flow of Funds (FOF) accounts and help to align the savings rate measured by the FOF and NIPA.

• An upward revision to GDP growth will bring the trend in GDP more in line with the recovery in jobs. It therefore implies an upward revision to the level of productivity, but in particular we look for an upward revision to productivity growth in 2012.

• Corporate profits are likely to be little changed (with a risk of a small downward revision), but the revised series should be less volatile.

• The PCE deflator will be subject to revisions as well, but we have little information regarding the direction or the magnitude. In past benchmarks, the revisions to the deflator have been marginal.

Overall, the revisions will reveal a stronger household sector, which is wealthier and thriftier than previously believed. It will also show that the economy fared better over the past year than was initially reported, implying greater momentum heading into this year.

Friday:
• At 9:55 AM ET, the Reuter's/University of Michigan's Consumer sentiment index (final for July). The consensus is for a reading of 84.0, up from the preliminary reading of 83.9, but down from the June reading of 84.1.

by Calculated Risk on 7/25/2013 05:43:00 PM

Just a thought, I haven't seen any discussion on this ... the pivot to austerity in early 2010 is widely viewed as a major mistake (as opposed to staying focused on employment). Larry Summers was the Director of the National Economic Council until December 2010, so he probably played a key role in the austerity pivot.

In 2010, Fed Chairman Ben Bernanke was already warning about premature tightening:

"Economic conditions provide little scope for reducing deficits significantly further over the next year or two; indeed, premature fiscal tightening could put the recovery at risk. Over the medium- and long-term, however, the story is quite different."

This has been a familiar comment from Bernanke over the last few years: less austerity now, and put the long run deficit on a sustainable path.  Unfortunately this advice has fallen on deaf ears.

A key question for Mr. Summers is what role he played in the premature pivot to austerity.

Also, from FT Alphaville: Larry Summers on QE

Lawrence Summers made dismissive remarks about the effectiveness of quantitative easing at a conference in April, raising the possibility of a big shift in US monetary policy if he becomes chairman of the Federal Reserve.

... the people who have discussed policy with him say Mr Summers regards fiscal policy as a more effective tool than monetary policy. “More of what will determine things going forward will have to do with fiscal policy and that there is less efficacy from quantitative easing than is supposed,” he said in his Santa Monica remarks.

by Calculated Risk on 7/25/2013 02:21:00 PM

From Freddie Mac today: Mortgage Rates Calm Further

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates easing for the second consecutive week helping to alleviate concerns over a slowdown in the housing market and amid recent strong homes sales data for June. ...

30-year fixed-rate mortgage (FRM) averaged 4.31 percent with an average 0.8 point for the week ending July 25, 2013, down from last week when it averaged 4.37 percent. Last year at this time, the 30-year FRM averaged 3.49 percent.

15-year FRM this week averaged 3.39 percent with an average 0.8 point, down from last week when it averaged 3.41 percent. A year ago at this time, the 15-year FRM averaged 2.80 percent.

The 30 year mortgage rate hit 4.51% in the Freddie Mac survey two weeks ago, and is now down to 4.31%. This is still up sharply from 3.35% in early May.

by Calculated Risk on 7/25/2013 11:05:00 AM

From the Kansas City Fed: Tenth District Manufacturing Survey Rose Moderately

The Federal Reserve Bank of Kansas City released the July Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity rose moderately, although producers' expectations for future activity eased somewhat.

“We saw several positive things in this month's survey. Production and shipments rebounded after being disrupted by storms last month," said Wilkerson. "And while some firms remain hesitant to expand, overall capital spending and hiring plans remain positive.”

The month-over-month composite index was 6 in July, up from -5 in June and 2 in May ... Most other month-over-month indexes also improved. The production index increased from -17 to 21, its highest level since June 2011, and the shipments and new orders indexes also rose markedly. ... In contrast, the order backlog index edged lower from -4 to -7, and the employment index also eased slightly

So far all of the regional surveys - except Richmond - showed improvement in July. The Dallas Fed regional survey will be released next Monday, and the ISM index for July will be released Thursday, August 1st.

Most of the regional surveys (and the Markit Flash PMI) suggest stronger expansion in the ISM index for July.