by Calculated Risk on 5/11/2018 06:32:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on May 11, 2018:

• Total US oil rigs were up, +10 to 844

• Horizontal oil rigs, however, were only up +2 at 745
...
• Oil rig additions came in the neglected ‘directional’ category, but only represented the recovery off rigs taken off line last week

• With the Brent spread over $6 / barrel, the end of the Iran deal, and a general sense of bullishness around oil markets, expect rig count additions to accelerate

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

by Calculated Risk on 5/11/2018 04:07:00 PM

Here is something different, but it is important when looking at demographics ...

The following data is from the CDC United States Life Tables, 2014 by Elizabeth Arias.

In 2014, the overall expectation of life at birth was 78.9 years, a 0.1-year increase from 2013. Between 2013 and 2014, life expectancy at birth increased by 0.1 year for both males (76.4 to 76.5) and females (81.2 to 81.3) and for the black (75.5 to 75.6) and white (79.0 to 79.1) populations. Life expectancy at birth increased by 0.2 years for the Hispanic (81.9 to 82.1) and non-Hispanic black (75.1 to 75.3) populations. Life expectancy at birth remained unchanged for the non-Hispanic white population (78.8).
...
[The following] summarizes the number of survivors out of 100,000 persons born alive by age, race, Hispanic origin, and sex for 2014. ... In 2014, 99.4% of all infants born in the United States survived the first year of life. In contrast, only 87.6% of infants born in 1900 survived the first year. Of the 2014 period life table cohort, 58.1% survived to age 80 and 2.1% survived to age 100. In 1900, 13.5% of the life table cohort survived to age 80 and only 0.03% survived to age 100
emphasis added

Instead of look at life expectancy, here is a graph of survivors out of 100,000 born alive, by age for three groups: those born in 1900-1902, born in 1949-1951 (baby boomers), and born in 2014.

Click on graph for larger image.

There was a dramatic change between those born in 1900 (blue) and those born mid-century (orange). The risk of infant and early childhood deaths dropped sharply, and the risk of death in the prime working years also declined significantly.

The CDC is projecting further improvement for childhood and prime working age for those born in 2014, but they are also projecting that people will live longer.

The second graph uses the same data but looks at the number of people who die before a certain age, but after the previous age. As an example, for those born in 1900 (blue), 12,448 of the 100,000 born alive died before age 1, and another 5,748 died between age 1 and age 5.

The peak age for deaths didn't change much for those born in 1900 and 1950 (between 76 and 80, but many more people born in 1950 will make it).

Now the CDC is projection the peak age for deaths - for those born in 2014 - will increase to 86 to 90!  Using these stats - for those born this year (in 2018) - more than two-thirds will make it to the next century.

Also the number of deaths for those younger than 20 will be very small (down to mostly accidents, guns, and drugs).  Self-driving cars might reduce the accident components of young deaths.

An amazing statistic: for those born in 1900, about 13 out of 100,000 made it to 100.  For those born in 1950, 199 are projected to make to 100 - a significant increase.   Now the CDC is projecting that 2,111 out of 100,000 born in 2014 will make it to 100.  Stunning!

Some people look at this data and worry about supporting all these old people.  To me, this is all great news - the vast majority of people can look forward to a long life - with fewer people dying in childhood or during their prime working years.

by Calculated Risk on 5/11/2018 11:19:00 AM

From Merrill Lynch:

Downward revisions to inventories this week leaves 1Q GDP tracking a tenth lower to 2.2% for 1Q GDP. We are tracking 3.2% for 2Q. [May 11 estimate].
emphasis added

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.0 percent on May 9, unchanged from May 3. [May 9 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 3.0% for 2018:Q2. [May 11 estimate]

CR Note: These early estimates suggest real annualized GDP in the 3% to 4% in Q2.

by Calculated Risk on 5/11/2018 09:25:00 AM

A few excerpts from a Merrill Lynch research note: Retail spending stalls again

According to BAC aggregated credit and debit card data, retail sales ex-autos declined 0.1% mom seasonally adjusted in April. This suggests that the better momentum in consumer spending seen in March failed to carry over to start the second quarter. We saw two headwinds for the consumer in April: weather and higher gasoline prices.

We find evidence that unseasonably cold weather conditions likely played a role in holding back consumer activity. Specifically, the Midwest and the Northeast experienced below average temperatures ...

Higher gasoline prices also likely dampened overall consumer spending. According to the Energy Information Administration, retail gasoline prices jumped 6.4% mom in April as crude oil prices rose on negative supply shock and solid global demand. This led to a surge in spend at gasoline stations and a shift away from other categories. ...
...
Bottom line: Retail spending softened in April. The weather impact should prove temporary but rising gasoline prices is likely to persist, eating away some of the positive impact from higher after-tax wages seen post tax reform.

CR Note: Retail sales for April are scheduled to be released on Tuesday, May 15th. The consensus is retail sales increased 0.3% in April.

by Calculated Risk on 5/10/2018 06:58:00 PM

From SacRealtor.org: April 2018 Statistics – Sacramento Housing Market – Single Family Homes

April closed with 1,587 sales, a 13.8% increase from March’s 1,395. Compared April 2017 (1,512) the current figure is up 5%. Of the 1,587 sales this month, 227 (14.3%) used cash financing, 958 (60.4%) used conventional, 274 (17.3%) used FHA, 64 (4%) used VA and 64 (4%) used Other† types of financing.
...
Active Listing Inventory increased 14.6% from 1,817 to 2,082 units, but the Months of Inventory remained at 1.3 Months. This figure represents the amount of time (in months) it would take for the current rate of sales to deplete the total active listing inventory.  [CR Note: Active inventory is up 17.6% year-over-year]

The Average DOM (days on market) dropped from 25 to 23 month to month and the Median DOM dropped from 11 to 10. “Days on market” represents the days between the initial listing of the home as “active” and the day it goes “pending.” Of the 1,587 sales this month, 78.8% (1,251) were on the market for 30 days or less and 90.2% (1,431) were on the market for 60 days or less.
emphasis added

CR Note: Inventory is still low, but now increasing year-over-year in Sacramento.

The statistics for April are here.

by Calculated Risk on 5/10/2018 02:12:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 5 May

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 29 April through 5 May 2018, according to data from STR.

In comparison with the week of 30 April through 6 May 2017, the industry recorded the following:

• Occupancy: +0.5% to 68.2%
• Average daily rate (ADR): +2.7% to US$130.14
• Revenue per available room (RevPAR): +3.3% to US$88.77
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2018, dash light blue is 2017 (record year due to hurricanes), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

The occupancy rate, to date, is slightly ahead of the record year in 2017 (2017 finished strong due to the impact of the hurricanes).

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 5/10/2018 11:09:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.9% annualized rate) in April. The 16% trimmed-mean Consumer Price Index also rose 0.2% (1.9% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.2% (2.7% annualized rate) in April. The CPI less food and energy rose 0.1% (1.2% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for April here.  Motor fuel was up 43% annualized in April.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.6%, the trimmed-mean CPI rose 2.0%, and the CPI less food and energy rose 2.1%. Core PCE is for February and increased 1.9% year-over-year.

On a monthly basis, median CPI was at 2.9% annualized, trimmed-mean CPI was at 1.9% annualized, and core CPI was at 1.2% annualized.

Using these measures, inflation increased year-over-year in April.  Overall, these measures are close to the Fed's 2% target.

by Calculated Risk on 5/10/2018 08:35:00 AM

The DOL reported:

In the week ending May 5, the advance figure for seasonally adjusted initial claims was 211,000, unchanged from the previous week's unrevised level of 211,000. The 4-week moving average was 216,000, a decrease of 5,500 from the previous week's unrevised average of 221,500. This is the lowest level for this average since December 20, 1969 when it was 214,500.

Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.
emphasis added

The previous week was unrevised.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 216,000.

This was lower than the consensus forecast. The low level of claims suggest few layoffs.

by Calculated Risk on 5/10/2018 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April on a seasonally adjusted basis after falling 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.

The indexes for gasoline and shelter were the largest factors in the seasonally adjusted increase in the all items index, although the food index increased as well. The gasoline index increased 3.0 percent, more than offsetting declines in other energy component indexes and led to a 1.4-percent rise in the energy index. The food index rose 0.3 percent, with the food at home index rising 0.3 percent and the index for food away from home increasing 0.2 percent.

The index for all items less food and energy rose 0.1 percent in April. ... The all items index rose 2.5 percent for the 12 months ending April; this figure has been mostly trending upward since it was 1.6 percent for the period ending June 2017. The index for all items less food and energy rose 2.1 percent for the 12 months ending April.
emphasis added

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was slightly lower than the consensus forecast of a 0.3% for CPI, and a 0.2% increase in core CPI.

by Calculated Risk on 5/09/2018 06:03:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back at 4-Year Highs Ahead of Inflation Data

Mortgage rates moved higher today as bond markets braced for impact from several upcoming events. ... [T]omorrow's Consumer Price Index--a key inflation report that can have an immediate impact on the bond market. If inflation is lower than expected, rates could recover. But if it's as strong as expected (or higher), rates could easily continue higher. That would be unfortunate as today's rate sheets are very close to being the worst in more than 4 years, depending on the lender. [30YR FIXED - 4.625%-4.75%]
emphasis added

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 220 thousand initial claims, up from 211 thousand the previous week.

• Also at 8:30 AM, The Consumer Price Index for April from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.2% increase in core CPI.