by Calculated Risk on 3/03/2014 10:00:00 AM

The ISM manufacturing index indicated faster expansion in February than in January. The PMI was at 53.2% in February, up from 51.3% in January. The employment index was at 52.3%, unchanged from 52.3% in January, and the new orders index was at 54.5%, up from 51.2% in January.

From the Institute for Supply Management: February 2014 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in February for the ninth consecutive month, and the overall economy grew for the 57th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The February PMI® registered 53.2 percent, an increase of 1.9 percentage points from January's reading of 51.3 percent indicating expansion in manufacturing for the ninth consecutive month. The New Orders Index registered 54.5 percent, an increase of 3.3 percentage points from January's reading of 51.2 percent. The Production Index registered 48.2 percent, a decrease of 6.6 percentage points compared to January's reading of 54.8 percent. Inventories of raw materials increased by 8.5 percentage points to 52.5 percent. As in January, several comments from the panel mention adverse weather conditions as a factor impacting their businesses in February. Other comments reflect optimism in terms of demand and growth in the near term."
emphasis added

Click on graph for larger image.

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

This was above expectations of 51.9%.

by Calculated Risk on 3/03/2014 08:43:00 AM

The BEA released the Personal Income and Outlays report for January:

Personal income increased $43.9 billion, or 0.3 percent ... in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $48.1 billion, or 0.4 percent.
...
The change in the January estimate of personal income was affected by several special factors. Personal income in January was boosted by several provisions of the Affordable Care Act (ACA), which affected government social benefit payments to persons. In addition, personal income was boosted by cost-of-living adjustments to several federal transfer programs and by pay raises for civilian and military personnel. In contrast, the change in personal income in January was reduced by the expiration of Emergency Unemployment Compensation programs and by lump-sum social security benefit payments that had boosted December personal income. In summary, excluding all of these special factors, personal income increased $23.7 billion, or 0.2 percent, in January, in contrast to a decrease of $15.1 billion, or 0.1 percent, in December.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.3 percent in January, in contrast to a decrease of 0.1 percent in December. ... The price index for PCE increased 0.1 percent in January, compared with an increase of 0.2 percent in December. The PCE price index, excluding food and energy, increased 0.1 percent in January, the same increase as in December.

On inflation, the PCE price index increased at a 1.2% annual rate in January, and core PCE prices increased at a 1.1% annual rate.  This is very low and far below the Fed's 2% target.

The following graph shows real Personal Consumption Expenditures (PCE) through January 2013 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

This is just one month of Q1, but this suggests an increase in the PCE contribution to growth similar to Q4.

by Calculated Risk on 3/02/2014 09:08:00 PM

Monday:
• All day, Light vehicle sales for February. The consensus is for light vehicle sales to increase to 15.4 million SAAR in February (Seasonally Adjusted Annual Rate) from 15.2 million SAAR in January.

• At 8:30 AM ET, the Personal Income and Outlays report for January. The consensus is for a 0.2% increase in personal income, and for a 0.1% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 9:00 AM, the Markit US PMI Manufacturing Index for February.

• At 10:00 AM, the ISM Manufacturing Index for February. The consensus is for an increase to 51.9 from 51.3 in January. The ISM manufacturing index indicated expansion in January at 51.3%. The employment index was at 52.3%, and the new orders index was at 51.2%.

• Also at 10:00 AM, Construction Spending for January. The consensus is for a 0.1% decrease in construction spending.

Weekend:
• Schedule for Week of March 2nd

From MarketWatch: Asia Markets live blog: The China Factory Story

Japan (Nikkei Average) down 2.5%
Sydney (S&P/ASX 200) down 0.8%
Seoul (Kospi) down 0.2%

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 16 and DOW futures are down 126 (fair value).

Oil prices are up with WTI futures at $104.08 per barrel and Brent at $110.93 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.44 per gallon (up sharply over the last month, but down significantly from the same week a year ago).  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

by Calculated Risk on 3/02/2014 10:36:00 AM

From E. Scott Reckard at the LA Times: Supply of new homes for sale remains extremely low

About 15,000 new homes will be sold this year in the six-county region — 58% less than the 20-year average, predicts Pete Reeb, an economist with John Burns Real Estate Consulting in Irvine.

... Only about 10% of today's new projects are attached condominiums, compared with half in previous expansions, said housing consultant Jeff Meyers, who heads Meyers Research in Beverly Hills. ...

The delayed recovery in home construction owes to a variety of factors. Many smaller builders were wiped out by the housing crash, and those that remain can't get financial backing from institutional investors. The larger, publicly traded builders, meanwhile, are reviving stalled projects. But they remain leery of launching new developments in more affordable areas with open land, such as the Inland Empire, where income and employment remain depressed.

Developers are also struggling with a shortage of ready-to-build lots — those with government approvals, streets and utilities in place. That's because planning for new developments screeched to a halt when the housing market imploded. It will be at least next year before the slowly reviving process makes many new projects feasible, said Randall Lewis, executive vice president of Lewis Group ...

Builders in LA have choices: build in more remote areas with open land - but those areas are still struggling, build smaller in-fill projects, or go vertical (high rise condominium projects). Over time, I expect the LA area to go vertical.

by Calculated Risk on 3/01/2014 07:08:00 PM

Fannie Mae reported Friday that the Single-Family Serious Delinquency rate declined in January to 2.33% from 2.38% in December. The serious delinquency rate is down from 3.18% in January 2013, and this is the lowest level since November 2008.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate declined in January to 2.34% from 2.39% in December. Freddie's rate is down from 3.20% in January 2012, and is at the lowest level since February 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

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

Click on graph for larger image

The Fannie Mae serious delinquency rate has fallen 0.85 percentage points over the last year, and at that pace the serious delinquency rate will be under 1% in about eighteen months. Note: The "normal" serious delinquency rate is under 1%.

Maybe serious delinquencies will be back to normal in late 2015 or 2016.

by Calculated Risk on 3/01/2014 12:42:00 PM

This will be a busy week for economic data with several key reports including the February employment report on Friday.

Other key reports include the ISM manufacturing index on Monday, February vehicle sales on Monday, January Personal Income and Outlays on Monday, the ISM service index on Wednesday, and the January trade deficit report on Friday.

The Fed will release the Q4 Flow of Funds report on Thursday.

----- Monday, March 3rd -----
All day: Light vehicle sales for February. The consensus is for light vehicle sales to increase to 15.4 million SAAR in February (Seasonally Adjusted Annual Rate) from 15.2 million SAAR in January.

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

8:30 AM ET: Personal Income and Outlays for January. The consensus is for a 0.2% increase in personal income, and for a 0.1% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:00 AM ET: The Markit US PMI Manufacturing Index for February. 

10:00 AM ET: ISM Manufacturing Index for February. The consensus is for an increase to 51.9 from 51.3 in January.

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

The ISM manufacturing index indicated expansion in January at 51.3%. The employment index was at 52.3%, and the new orders index was at 51.2%.

10:00 AM: Construction Spending for January. The consensus is for a 0.1% decrease in construction spending.

----- Tuesday, March 4th -----
No economic releases scheduled.

----- Wednesday, March 5th -----
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 February. This report is for private payrolls only (no government). The consensus is for 158,000 payroll jobs added in January, down from 175,000 in January.  

10:00 AM: ISM non-Manufacturing Index for February. The consensus is for a reading of 53.6, down from 54.0 in January. Note: Above 50 indicates expansion, below 50 contraction.

2:00 PM: Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, March 6th -----
Early: Trulia Price Rent Monitors for February. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 338 thousand from 348 thousand.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for January. The consensus is for a 0.5% decrease in January orders.

12:00 PM: Q4 Flow of Funds Accounts of the United States from the Federal Reserve.

----- Friday, March 7th -----
8:30 AM: Employment Report for February. The consensus is for an increase of 150,000 non-farm payroll jobs in February, up from the 113,000 non-farm payroll jobs added in  January.

The consensus is for the unemployment rate to be unchanged at 6.6% in February. 

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

The economy has added 8.5 million private sector jobs since employment bottomed in February 2010 (7.8 million total jobs added including all the public sector layoffs).

There are still almost 291 thousand fewer private sector jobs now than when the recession started in 2007.

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

Imports increased, and exports decreased in December.

The consensus is for the U.S. trade deficit to increase to $39.0 billion in January from $38.7 billion in December.

3:00 PM: Consumer Credit for January from the Federal Reserve. The consensus is for credit to increase $14.5 billion in January.

by Calculated Risk on 3/01/2014 10:21:00 AM

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

Here is the unofficial problem bank list for February 28, 2014.

Changes and comments from surferdude808:

Busy week as the FDIC closed a couple of banks, provided an update on its enforcement action activities, and released industry results and the Official Problem Bank List for the fourth quarter of 2013. In all, there were 12 removals that dropped the unofficial list to 566 institutions with assets of $182.1 billion. Assets declined by $10.9 billion from last week with $4.5 billion coming from the update to assets through year-end 2013. A year ago, the list held 808 institutions with assets of $298.1 billion.

Among the 12 removals were six action terminations, four mergers, and two failures. Action were terminated against Patriot Bank, Houston, TX ($1.3 billion); Kaw Valley Bank, Topeka, KS ($364 million); Insouth Bank, Brownsville, TN ($301 million); Northpointe Bank, Grand Rapids, MI ($300 million); SouthernTrust Bank, Goreville, IL ($49 million); and D'Hanis State Bank, Hondo, TX ($47 million). Also, the FDIC terminated a Prompt Corrective Action order against Oxford Bank, Oxford, MI ($261 million Ticker: OXBC).

Removals through unassisted mergers include First Place Bank, Warren, OH ($2.5 billion Ticker: FPFC); Great Florida Bank, Coral Gables, FL ($1.0 billion Ticker: GFLB); First National Bank of New York, Merrick, NY ($255 million); and Premier Service Bank, Riverside, CA ($128 million).

After a month off, the FDIC got back to closing two banks -- Millennium Bank, National Association, Sterling, VA ($130 million Ticker: MBVA); and Vantage Point Bank, Horsham, PA ($63 million).

The FDIC told us this week there are 467 institutions with assets of $153 billion on the Official Problem Bank List. The unofficial list has 99 more institutions and $29.1 billion more in assets. The difference is down from 130 institutions and $47.2 billion in assets last quarter. The differences have narrowed from 157 institutions and $65 billion in assets a year ago. In contrast, the official list had higher totals four years ago with 58 and $76.9 billion more in institutions and assets, respectively.

by Calculated Risk on 2/28/2014 06:14:00 PM

From the FDIC: First Choice Bank, Mercerville, New Jersey, Assumes All of the Deposits of Vantage Point Bank, Horsham, Pennsylvania

As of December 31, 2013, Vantage Point Bank had approximately $63.5 million in total assets and $62.5 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $8.5 million. Compared to other alternatives, First Choice Bank's acquisition was the least costly resolution for the FDIC's DIF. Vantage Point Bank is the 5th FDIC-insured institution to fail in the nation this year, and the first in Pennsylvania.

A twofer Friday!

by Calculated Risk on 2/28/2014 05:45:00 PM

From the FDIC: WashingtonFirst Bank, Reston, Virginia, Assumes All of the Deposits of Millennium Bank, National Association, Sterling, Virginia

As of December 31, 2013, Millennium Bank, N.A. had approximately $130.3 million in total assets and $121.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $7.7 million. Compared to other alternatives, WashingtonFirst Bank's acquisition was the least costly resolution for the FDIC's DIF. Millennium Bank, N.A. is the 4th FDIC-insured institution to fail in the nation this year, and the first in Virginia.

It is Friday!  On pace for about the same number of bank failures as last year (24).

by Calculated Risk on 2/28/2014 04:06:00 PM

From housing economist Tom Lawler: Government New Home Sales Report, If Accurate, Suggests Large Builder Share Down; Aggressive Home Price Hikes May Be to Blame

The Commerce Department earlier this week estimated that new SF home sales ran at a seasonally adjusted annual rate of 468,000, up 9.6% from December’s upwardly-revised (to 427,000 from 414,000) pace. Estimated sales for October and November were revised downward slightly, and the estimated sales for the fourth quarter of 2013 were not revised.

While January’s new SF home sales estimate was somewhat higher than I expected, I was even more surprised that last quarter’s sales estimates were not revised downward. Most large publicly-traded home builders reporting on a calendar quarter showed relatively weak net orders last quarter compared to a year earlier, and the nine large builders I regularly track¹ had combined net orders that were down 3.8% from a year earlier (not seasonally adjusted, of course.) That contrasts sharply with Census estimates showing an unadjusted YOY increase in sales last quarter of about 15%.

Of course, comparisons of builder results and Census sales estimates are tricky, given (1) the different treatment of cancellations; and (2) differences in the timing of the recognition of contract signings. Nevertheless, the difference results were “unusual,” and over the last two years builder results that varied materially from Census preliminary estimates have been a decent predictor of revisions to Census estimates of SF sales.

If in fact the Census sales estimates are reasonable (further revisions will occur, given its methodology), an implication would be that large builders’ share of the new SF home market declined significantly in the second half of last year. One possible reason is that many of the large publicly-traded builders, facing demand that exceeded their ability to supply new homes (in several instances because of “supply-chain” issues) in the early part of the year, jacked up prices by not just unusually large amounts, but by more than other builders. The combination of higher mortgage rates and these unusually aggressive price hikes not only slowed their sales, but also slowed their sales relative to other builders. Given that the huge price hikes at many large builders pushed margins on closed sales in the second half of last year to the highest levels in seven to eight years, it’s perhaps not “shocking” that other builders weren’t as aggressive.

Given the optimistic sales plans most of these large builders have for 2014 – backed by rapid expansions in their land/lot acquisitions over the last one-to-two years – it seems unlikely that these large publicly-traded builders will be able to hike prices much if at all this year unless they are will to see their share erode further, which seems unlikely.

¹ D.R. Horton, Pulte, NVR, Ryland, Beazer, Meritage, Standard Pacific, MDC, and M/I.