by Calculated Risk on 11/27/2016 08:18:00 PM

The words of a President matter. Same with the words of a President-elect. Just like during the campaign, Donald Trump just keeps making stuff up ...

"In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally" Donald Trump, Nov 27, 2016

There is no evidence of significant voter fraud. Sad. And dangerous. Trump is known to make up economic data too ... and that could have negative consequences for the economy and stock market.

Weekend:
• Schedule for Week of Nov 27, 2016

• November NFP Forecasts

Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for November. This is the last of the regional Fed surveys for October.

From CNBC: Pre-Market Data and Bloomberg futures: S&P futures are down 5, and DOW futures are down 30 (fair value).

Oil prices were up over the last week with WTI futures at $45.39 per barrel and Brent at $46.52 per barrel.  A year ago, WTI was at $41, and Brent was at $43 - so oil prices are up year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.12 per gallon - a year ago prices were at $2.04 per gallon - so gasoline prices are up slightly year-over-year.

by Calculated Risk on 11/27/2016 11:01:00 AM

I hope everyone is having a great Thanksgiving weekend!

A couple of NFP forecasts ...

From Nomura:

[W]e forecast private payrolls grew by 155k in November with an additional 5k increase in government payrolls, implying that nonfarm payrolls grew by 160k. ... given another month of solid job gains, we think that the unemployment rate will tick down for a consecutive month and settle on a rounded basis at 4.8% in November. Lastly, on wage growth, we think some negative payback is in order as wage gains in October were amplified by inclement weather cutting short the workweek during the BLS survey reference period. Therefore, we forecast only a 0.1% m-o-m increase in average hourly earnings.
emphasis added

From Merrill Lynch:

Recent labor market data has continued to show solid improvement. We expect the trend to continue in November with 170,000 in nonfarm payroll growth, a slight deceleration from the 176,000 average over the prior three months. We expect 165,000 in private payroll growth, with a modest 5,000 expansion in government payrolls.

We expect the labor force participation rate to remain at 62.8% and the unemployment rate to also remain unchanged at 4.9%. We expect a softer 0.2% mom gain in average hourly earnings after the strong 0.4% mom pop last month, leaving the year-over-year rate at 2.8%.

by Calculated Risk on 11/26/2016 04:31:00 PM

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

Here is the unofficial problem bank list for November 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for November 2016.  During the month, the list remained unchanged at 173 institutions after one removal and one addition.

However, assets increased by $5.0 billion to $59.9 billion.  Updating to third quarter 2016 asset figures added $477 million to the asset total.

A year ago, the list held 255 institutions with assets of $77.0 billion.  This is the first monthly increase in the asset total since $405 million during January 2015 and the largest increase since a $17.2 billion increase during April 2011.  The FDIC terminated its enforcement actions against Noah Bank, Elkins Park, PA ($320 million) and issued a new action against First NBC Bank, New Orleans, LA ($4.9 billion).

by Calculated Risk on 11/26/2016 08:11:00 AM

The key report this week is the November employment report on Friday.

Other key indicators include October Personal Income and Outlays, November ISM manufacturing index, Case-Shiller house prices and November auto sales.

----- Monday, Nov 28th -----
10:30 AM: Dallas Fed Survey of Manufacturing Activity for November. This is the last of the regional Fed surveys for October.

----- Tuesday, Nov 29th-----
8:30 AM ET: Gross Domestic Product, 3rd quarter 2016 (Second estimate). The consensus is that real GDP increased 3.1% annualized in Q3, revised from 2.9% in the advance report.

9:00 AM ET: S&P/Case-Shiller House Price Index for September. Although this is the September report, it is really a 3 month average of July, August and September prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the August 2016 report (the Composite 20 was started in January 2000).

The consensus is for a 5.2% year-over-year increase in the Comp 20 index for September. The Zillow forecast is for the National Index to increase 5.4% year-over-year in September.

----- Wednesday, Nov 30th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for November. This report is for private payrolls only (no government). The consensus is for 160,000 payroll jobs added in November, up from 147,000 added in October.

8:30 AM ET: Personal Income and Outlays for October. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:45 AM: Chicago Purchasing Managers Index for November. The consensus is for a reading of 52.0, up from 50.6 in October.

10:00 AM: Pending Home Sales Index for October. The consensus is for a 0.8% increase in the index.

11:00 AM: The New York Fed will release their Q3 2016 Household Debt and Credit Report

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

----- Thursday, Dec 1st -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 253 thousand initial claims, up from 251 thousand the previous week.

10:00 AM: ISM Manufacturing Index for November. The consensus is for the ISM to be at 52.3, up from 51.9 in October.

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

The ISM manufacturing index indicated expansion at 51.9% in October. The employment index was at 52.9%, and the new orders index was at 52.1%.

10:00 AM: Construction Spending for October. The consensus is for a 0.6% increase in construction spending.

All day: Light vehicle sales for November. The consensus is for light vehicle sales to decrease to 17.8 million SAAR in November, from 17.9 million in  October (Seasonally Adjusted Annual Rate).

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

----- Friday, Dec 2nd -----
8:30 AM: Employment Report for November. The consensus is for an increase of 170,000 non-farm payroll jobs added in November, up from the 161,000 non-farm payroll jobs added in October.

The consensus is for the unemployment rate to be unchanged at 4.9%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In October, the year-over-year change was 2.36 million jobs.

A key will be the change in wages.

by Calculated Risk on 11/25/2016 03:39:00 PM

This was announced Wednesday.  From Jann Swanson at MortgageNewsDialy.com: FHFA Ups Conforming Loan Limit to $424,100

After leaving them in a holding pattern for 10 long years the Federal Housing Finance Agency (FHFA) has raised conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac. Separate loan limit announcements are expected shortly from FHA and the Veterans Administration.

The current loan limit, $417,000, has been in place since 2006. ... the agency has raised conforming loan limits by 1.7 percent to $424,100. The new loan limits are effective as of January 1, 2017.

FHFA designates as so-called high-cost areas, markets where 115 percent of the local median home value exceeds the baseline loan limit. HERA sets the maximum loan limit as a function of the area median home value with a ceiling on the limit of 150 percent of the baseline limit. Under this formula, the new limit for the highest cost areas will have a ceiling of $636,150 in 2017.
...
A list of the maximum conforming loan limits for all counties and county-equivalent areas can be found at 2017 Conforming Loan Limits

by Calculated Risk on 11/25/2016 08:11:00 AM

Towards the end of each year I collect some housing forecasts for the following year.  It looks like analysts are optimistic on New Home sales for 2017, although that might change with higher mortgage rates and policy changes.  I'll post updates as the forecasts change (and add more forecasts soon).

First a review of the previous four years ...

Here is a summary of forecasts for 2016. In 2016, new home sales will probably be around 565 thousand, and total housing starts will be around 1.175 million.  Fannie Mae and Merrill Lynch were very close on New Home sales, and MetroStudy was close on starts.

Here is a summary of forecasts for 2015. In 2015, new home sales were 501 thousand, and total housing starts were 1.112 million.  Zillow, CoreLogic, and the MBA were right on with New Home sales, and CoreLogic, MetroStudy, MBA and Zillow were all correct on starts.

Here is a summary of forecasts for 2014. In 2014, new home sales were 437 thousand, and total housing starts were 1.003 million. No one was close on New Home sales (all way too optimistic), and Michelle Meyer (Merrill Lynch) and Fannie Mae were the closest on housing starts (about 10% too high). In 2014, many analysts underestimated the impact of higher mortgage rates and higher new home prices on new home sales and starts.

Here is a summary of forecasts for 2013. In 2013, new home sales were 429 thousand, and total housing starts were 925 thousand.  Barclays was the closest on New Home sales followed by David Crowe (NAHB).  Fannie Mae and the NAHB were the closest on housing starts.

The table below shows a few forecasts for 2017:

From Fannie Mae: Housing Forecast: November 2016

From NAHB: NAHB’s housing and economic forecast

From Wells Fargo: Monthly Economic Outlook

From NAR: U.S. Economic Outlook: November 2016

Note: For comparison, new home sales in 2016 will probably be around 565 thousand, and total housing starts around 1.175 million.

Housing Forecasts for 2017
	New Home Sales (000s)	Single Family Starts (000s)	Total Starts (000s)	House Prices1
Fannie Mae	671	883	1,308	4.8%2
Merrill Lynch			1,225
NAHB	647	873	1,258
NAR	623	838	1,221	4.2%3
Wells Fargo			1,180
1Case-Shiller unless indicated otherwise 2FHFA Purchase-Only Index 3NAR Median Prices

by Calculated Risk on 11/24/2016 10:26:00 AM

With a Hat Tip to Neil Irwin (he started doing this a few years ago) ... here are five economic reasons to be thankful this Thanksgiving ...

1) Low unemployment claims.

The number of new claims for unemployment insurance benefits is at the lowest level in 40 years (with a much smaller population back then).  The four week average of new unemployment has fallen to 251,000, down from 297,000 a year ago, and down from the peak of 660,000 during the great recession.

Click on graph for larger image.

Here is a graph of initial weekly unemployment claims.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 251,000.

The low level of claims suggests relatively few layoffs.

2) Job Openings Near Record Levels.

There were 5.5 million job openings in September. This is close to the record high of 5.8 million in April 2016.

This graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Job openings (yellow) have been above 5 million for 20 consecutive months.

Note that Quits are up 12% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

More job openings, and rising quits, are positive signs for the labor market.

3) Household Debt burdens are near record lows.

Household debt burdens have declined sharply over the last several years.

The Household debt service ratio was at 13.2% in 2007, and has fallen to under 10% now.

The graph, based on data from the Federal Reserve, shows the Total Debt Service Ratio (DSR), and the DSR for mortgages (blue) and consumer debt (yellow).

The overall Debt Service Ratio increased slightly in Q2 2016, and has been moving sideways and is near a record low.  Note: The financial obligation ratio (FOR) was unchanged in Q2 and is also near a record low (not shown).

The DSR for mortgages (blue) are near the low for the last 35 years.  This ratio increased rapidly during the housing bubble, and continued to increase until 2007. With falling interest rates, and less mortgage debt (mostly due to foreclosures), the mortgage ratio has declined significantly.

This data suggests aggregate household cash flow has improved.

4) Gasoline prices are near the lows since the Great Recession.

For consumers, lower gasoline prices are a huge positive.

Here is a 10 year graph from Gasbuddy.com for nationwide gasoline prices.

Gasoline prices are around $2.12 per gallon, slightly higher than last year at Thanksgiving, and near the lowest since the Great Recession.

5) Wages growth is picking up.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.8% YoY in October.  This series is noisy, however overall wage growth is trending up - especially over the last year and a half.

There is much more positive economic news - solid auto sales, housing starts increasing, U-3 unemployment rate below 5%, and U-6 rate falling, the recent pickup in GDP - and much more.

There are still problems -  not everyone has participated in the current expansion, wealth and income inequality are record extremes, there is too much student debt, and climate change is posing a real threat to the economy in the future - but there are many economic reasons to be thankful this Thanksgiving.

Happy Thanksgiving to All!

by Calculated Risk on 11/23/2016 05:12:00 PM

Economist Tom Lawler sent me the table below of short sales, foreclosures and all cash sales for selected cities in October.

On distressed: The total "distressed" share is down year-over-year in most of these markets.

Short sales and foreclosures are down in these areas.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors continue to pull back, the share of all cash buyers continues to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Oct- 2016	Oct- 2015	Oct- 2016	Oct- 2015	Oct- 2016	Oct- 2015	Oct- 2016	Oct- 2015
Las Vegas	5.1%	6.3%	5.6%	7.3%	10.7%	13.6%	27.4%	30.9%
Reno**	1.0%	4.0%	2.0%	3.0%	3.0%	7.0%
Phoenix	1.8%	2.7%	2.0%	3.6%	3.8%	6.3%	21.0%	24.6%
Sacramento	2.3%	4.0%	2.0%	3.5%	4.3%	7.5%	14.4%	17.8%
Minneapolis	1.2%	2.3%	3.9%	7.8%	5.1%	10.1%	12.7%	15.5%
Mid-Atlantic	2.8%	3.7%	8.9%	11.9%	11.8%	15.6%	16.6%	19.3%
Florida SF	2.3%	3.6%	8.0%	15.6%	10.4%	19.3%	28.6%	34.2%
Florida C/TH	1.5%	2.1%	6.7%	13.5%	8.2%	15.7%	55.5%	61.6%
Miami MSA SF	3.5%	5.7%	8.3%	17.1%	11.8%	22.8%	29.6%	33.8%
Miami MSA CTH	1.6%	2.5%	9.1%	16.5%	10.6%	19.0%	58.8%	63.9%
Chicago (city)					13.0%	18.3%
Spokane					7.2%	12.3%
Northeast Florida					13.9%	25.6%
Orlando							29.0%	36.5%
Toledo							25.6%	30.4%
Tucson							23.4%	28.1%
Knoxville							22.6%	25.4%
Peoria							23.3%	20.8%
Georgia***							20.1%	23.1%
Omaha							16.1%	15.5%
Pensacola
Rhode Island					9.9%	9.6%
Richmond VA			8.0%	9.3%			16.3%	17.1%
Memphis			9.3%	15.5%
Springfield IL**							7.6%	7.8%
*share of existing home sales, based on property records **Single Family Only ***GAMLS

by Calculated Risk on 11/23/2016 02:30:00 PM

There are still different views, but most participants think it will be appropriate to raise the Fed Funds rate "relatively soon". (probably means December)

From the Fed: Minutes of the Federal Open Market Committee, November 1-2, 2016 . Excerpts:

Most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon, so long as incoming data provided some further evidence of continued progress toward the Committee's objectives. Some participants noted that recent Committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting. A few participants advocated an increase at this meeting; they viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment and expected that recent progress toward the Committee's inflation objective would continue, even with further gradual steps to remove monetary policy accommodation. In addition, many judged that risks to economic and financial stability could increase over time if the labor market overheated appreciably, or expressed concern that an extended period of low interest rates risked intensifying incentives for investors to reach for yield, potentially leading to a mispricing of risk and misallocation of capital. In contrast, some others judged that allowing the unemployment rate to fall below its longer-run normal level for a time could result in favorable supply-side effects or help hasten the return of inflation to the Committee's 2 percent objective; noted that proximity of the federal funds rate to the effective lower bound places potential constraints on monetary policy; or stressed that global developments could pose risks to U.S. economic activity. More generally, it was emphasized that decisions regarding near-term adjustments of the stance of monetary policy would appropriately remain dependent on the outlook as informed by incoming data, and participants expected that economic conditions would evolve in a manner that would warrant only gradual increases in the federal funds rate.
emphasis added

by Calculated Risk on 11/23/2016 12:31:00 PM

New home sales for October were reported below the consensus forecast at 563,000 on a seasonally adjusted annual rate basis (SAAR). And the previous months were revised down.

However, sales were up 17.8% year-over-year in October, and this is the best month for October (NSA) since 2007. And sales are up 12.7% year-to-date compared to the same period in 2015.

The glass is more than half full.  This is very solid year-over-year growth and just suggests that expectations were ahead of reality. This is why we look at the trend and not just one month.

Note that these sales (for October) were before the recent increase in mortgage rates.

Earlier: New Home Sales at 563,000 Annual Rate in October.

Click on graph for larger image.

This graph shows new home sales for 2015 and 2016 by month (Seasonally Adjusted Annual Rate).  Sales to date are up 12.7% year-over-year, because of very strong year-over-year growth over the last seven months.

Overall  I expected lower growth this year, in the 4% to 8% range.  Slower growth seemed likely this year because Houston (and other oil producing areas) will have a problem this year.   It looks like I was too pessimistic on new home sales this year.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through October 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.