by Calculated Risk on 1/20/2019 10:43:00 AM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on January 18, 2019:

• A huge drop in oil rig counts, -21 to 852

• Horizontal oil rig count collapsed, -17 to 765

• The Permian lost 10 horizontal oil rigs, ‘Other US’ lost 16

• Curiously, the Williston (+2), the Eagle Ford (+2) and the Cana Woodford (+5) all gained horizontal oil rigs

• Breakeven to add rigs fell rose to $61 WTI compared to $52.60 WTI on the screen as of the writing of this report.

• The model continues to predict big rig roll-offs in the next several weeks.

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 1/19/2019 08:11:00 AM

Special Note on Government Shutdown: If the Government shutdown continues, then some additional releases will be delayed. For example, this coming week, the new home sales and durable goods reports will not be released if the government remains shutdown - and probably delayed even if the government opens.  (see bottom for key releases already delayed).

The key reports scheduled for this week are December New and Existing Home sales.

For manufacturing, the January Richmond and Kansas City Fed manufacturing surveys will be released.

----- Monday, Jan 21st -----
All US markets will be closed in observance of Martin Luther King Jr. Day

----- Tuesday, Jan 22nd -----
10:00 AM: Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for 5.24 million SAAR, down from 5.32 million.

The graph shows existing home sales from 1994 through the report last month.

Housing economist Tom Lawler expects the NAR to report sales of 4.97 million SAAR for December.

----- Wednesday, Jan 23rd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

9:00 AM: FHFA House Price Index for November 2018. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for January.

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

----- Thursday, Jan 24th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 217 thousand initial claims, up from 213 thousand the previous week.

11:00 AM: the Kansas City Fed manufacturing survey for December.

----- Friday, Jan 25th -----
8:30 AM: Durable Goods Orders for December from the Census Bureau. The consensus is for a 1.8% increase in durable goods orders.

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

This graph shows New Home Sales since 1963. The dashed line is the sales rate for October (November was not released).

The consensus is for 565 thousand SAAR.

----- List of Key Delayed Releases ----
New Home Sales (Census) for November from the Census Bureau. The consensus was for 560 thousand SAAR, up from 544 thousand in October.

Construction Spending (Census) for November. The consensus was for a 0.3% increase in construction spending.

Light vehicle sales (BEA) for December. The consensus was for light vehicle sales to be 17.2 million SAAR in December, down from 17.4 million in November (Seasonally Adjusted Annual Rate).

Trade Balance report (Census) for November from the Census Bureau. The consensus was the trade deficit would be $53.9 billion.  The U.S. trade deficit was at $55.5 billion in October.

Retail sales for December. (Census)  The consensus was for a 0.2% increase in retail sales.

Housing Starts for December. (Census) The consensus was for 1.256 million SAAR, unchanged from 1.256 million SAAR.

by Calculated Risk on 1/18/2019 06:28:00 PM

This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.

The Arizona Regional Multiple Listing Service (ARMLS) reports ("Stats Report"):

1) Overall sales declined to 6,403 from 7,070 in December 2017. Sales were down 1.7% from November, and down 9.4% from December 2017.

2) Active inventory was at 18,049, up from 17,017 in December 2017. This is up 6.1% year-over-year.  This is the second consecutive month with a YoY increase in active inventory.

The last two months - with a YoY increase - followed twenty-four consecutive months with a YoY decrease in inventory in Phoenix.

Months of supply decreased from 3.30 in November to 3.23 in December. This is still low.

by Calculated Risk on 1/18/2019 02:48:00 PM

From Merrill Lynch:

4Q GDP tracking remains at 2.8%. We forecast 1Q GDP growth of 2.2%, but downside risks are emerging due to the government shutdown. [Jan 18 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.6% for 2018:Q4 and 2.2% for 2019:Q1. [Jan 18 estimate]

And from the Altanta Fed: GDPNow

The current GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 2.8 percent on January 16, unchanged from January 10. [Jan 16 estimate]

CR Note: These estimates suggest GDP in the mid-to-high 2s for Q4.

by Calculated Risk on 1/18/2019 02:38:00 PM

From the University of Michigan: Preliminary Results for January 2019

Consumer sentiment declined in early January to its lowest level since Trump was elected. The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid 2014. The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.
emphasis added

CR Note: Sentiment is a coincident indicator.

by Calculated Risk on 1/18/2019 11:49:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were higher in December in 4 states, lower in 3 states, and stable in 43 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Fourteen states had jobless rate decreases from a year earlier and 36 states and the District had little or no change.
...
Iowa had the lowest unemployment rate in December, 2.4 percent. Alaska had the highest jobless rate, 6.3 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).  Only two states and the D.C. have unemployment rates above 5%; Alaska, West Virginia.

A total of seven states are at the series low.

by Calculated Risk on 1/18/2019 09:25:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production increased 0.3 percent in December after rising 0.4 percent in November. For the fourth quarter as a whole, total industrial production moved up at an annual rate of 3.8 percent. In December, manufacturing output increased 1.1 percent, its largest gain since February 2018. The output of mines rose 1.5 percent, but the index for utilities fell 6.3 percent, as warmer-than-usual temperatures lowered the demand for heating. At 109.9 percent of its 2012 average, total industrial production was 4.0 percent higher in December than it was a year earlier. Capacity utilization for the industrial sector rose 0.1 percentage point in December to 78.7 percent, a rate that is 1.1 percentage points below its long-run (1972–2017) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 12.0 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.7% is 1.1% below the average from 1972 to 2017 and below the pre-recession level of 80.8% 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 in December to 109.9. This is 26% above the recession low, and 4% above the pre-recession peak.

The increase in industrial production was above the consensus forecast.  Capacity utilization was also above consensus.

by Calculated Risk on 1/17/2019 07:47:00 PM

Friday:
• At 9:15 AM ET, The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to be unchanged at 78.5%.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for January). The consensus is for a reading of 97.0.

• At 10:00 AM, State Employment and Unemployment (Monthly) for December 2018

by Calculated Risk on 1/17/2019 03:08:00 PM

The CAR reported: California home sales close year on downward trend as home prices post mild gains, C.A.R. reports

California home sales declined for the eighth straight month in December, and a stagnating market for much of the year pushed sales lower in 2018 for the first time in four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

December’s sales figure was down 2.4 percent from the revised 381,400 level in November and down 11.6 percent from home sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.

“The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,” said C.A.R. President Jared Martin. “This trend is expected to continue, as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.

“Additionally, housing markets in and around the wildfire areas have been exhibiting unusual patterns that could remain unsettled for the next few months. The impact, however, is confined mostly within the region and should not have a noticeable effect in the housing market at the state level.”
...
Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).

The Unsold Inventory Index, which is a ratio of inventory over sales, increased year-to-year from 2.5 months in December 2017 to 3.5 months in December 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
emphasis added

Here is some inventory data from the NAR and CAR (ht Tom Lawler).

YOY % Change, Existing SF Homes for Sale
	NAR (National)	CAR (California)
Sep-17	-8.4%	-11.2%
Oct-17	-10.4%	-11.5%
Nov-17	-9.7%	-11.5%
Dec-17	-11.5%	-12.0%
Jan-18	-9.5%	-6.6%
Feb-18	-8.6%	-1.3%
Mar-18	-7.2%	-1.0%
Apr-18	-6.3%	1.9%
May-18	-5.1	8.3%
Jun-18	-0.5%	8.1%
Jul-18	0.0%	11.9%
Aug-18	2.1%	17.2%
Sep-18	1.1%	20.4%
Oct-18	2.8%	28%
Nov-18	4.2%	31%
Dec-18	5.5%1	30.6%
1Estimate from Tom Lawler

by Calculated Risk on 1/17/2019 11:39:00 AM

This is from the Humor Session of the 2019 American Economic Association annual meeting.