by Calculated Risk on 4/25/2020 08:11:00 AM

The key report scheduled for this week is Q1 GDP.

Other key reports include Case-Shiller house prices, ISM Manufacturing survey, Vehicle Sales and Personal Income and Outlays for March.

For manufacturing, the April Dallas and Richmond manufacturing surveys will be released.

The FOMC meets this week, and no change to policy is expected at this meeting.

----- Monday, Apr 27th -----
10:30 AM: Dallas Fed Survey of Manufacturing Activity for April.

----- Tuesday, Apr 28th -----
9:00 AM: S&P/Case-Shiller House Price Index for February.

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

The consensus is for a 3.1% year-over-year increase in the Comp 20 index for February.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for April. This is the last of regional manufacturing surveys for April.

10:00 AM: the Q1 2020 Housing Vacancies and Homeownership from the Census Bureau.

----- Wednesday, Apr 29th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Gross Domestic Product, 1st quarter 2020 (Advance estimate). The consensus is that real GDP decreased 4.0% annualized in Q1, down from 2.1% in Q4.

10:00 AM: Pending Home Sales Index for March. The consensus is for a 10.0% decrease in the index.

2:00 PM: FOMC Meeting Announcement. No change to policy is expected at this meeting.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, Apr 30th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a 3.500 million initial claims, down from 4.427 million the previous week.

8:30 AM ET: Personal Income and Outlays, March 2020. The consensus is for a 1.4% decrease in personal income, and for a 5.0% decrease in personal spending. And for the Core PCE price index to decrease 0.1%.

9:45 AM: Chicago Purchasing Managers Index for April.

----- Friday, May 1st -----
10:00 AM: ISM Manufacturing Index for April. The consensus is for the ISM to be at 36.7, down from 49.1 in March.

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

The PMI was at 49.1% in March, down from 50.1% in February. The employment index was at 43.8% and the new orders index was at 42.2%.

10:00 AM: Construction Spending for March. The consensus is for a 3.9% decrease in construction spending.

All day: Light vehicle sales for April. The consensus is for light vehicle sales to be 6.5 million SAAR in April, down from 11.4 million in March (Seasonally Adjusted Annual Rate).

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

by Calculated Risk on 4/24/2020 05:22:00 PM

NOTE: California sometimes clears the backlog of tests, and this shows a spike in testing. We need to look at the trend.

Test-and-trace is a key criterion in starting to reopen the country.   My current guess is test-and-trace will require around 300,000 tests per day at first since the US is far behind the curve.  Some scientists believe we need around 800,000 tests per day.

Note: The Financial Times reports that Germany is doing more than 50,000 tests per day (with about one-fourth of the US population). That would be 200,000 in the US.  I rounded up to 300,000 per day since the US is so behind on testing. But there are recommendations that Germany needs 200,000 tests per day to do test-and-trace.  (800,000 adjusted for population).

This is just test results reported daily.

There were 223,552 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 14% (red line). The US probably needs enough tests to push  the percentage below 5% (probably much lower based on testing in New Zealand).

All experts agree: We need many more tests!  But we appear to be making progress.

by Calculated Risk on 4/24/2020 05:04:00 PM

Note 1: Economists at both Merrill Lynch and Goldman Sachs expect significant downward revisions to the advance report due to incomplete source data.  The consensus is the advance report will show a decline of 4.0% SAAR in Q1.

Note 2: The NY Fed Nowcast and Atlanta Fed GDPNow models are based on released data and aren't capturing the collapse in the economy in the 2nd half of March. All forecasts, including the Merrill Lynch and other forecasts, are for the seasonally adjust annual rate (SAAR) of decline.

From Merrill Lynch:

We expect real GDP to plunge 7% in 1Q. Consumption and business capex should plummet. [SAAR Apr 24 estimate]
emphasis added

From Goldman Sachs:

On net, we lowered our estimate for GDP growth in next Wednesday’s report by three tenths to -4.8% (qoq ar). We also see increased scope for downward revisions to the source data in coming months, and we estimate the final vintages will show growth of -8.3% (vs. -7.0% previously), with the 3.5pp wedge reflecting non-response bias and incomplete source data. [SAAR Apr 24]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at -0.4% for 2020:Q1 and -7.8% for 2020:Q2. [Apr 24 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2020 is -0.3 percent on April 24, unchanged from April 16 after rounding. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 beyond its impact on GDP source data and relevant economic reports that have already been released. It does not anticipate the impact of COVID-19 on forthcoming economic reports beyond the standard internal dynamics of the model. [Apr 24 estimate]

CR Note: It appears GDP declined around 7% SAAR in Q1. The decline in Q2 will be much larger; the CBO is projecting a decline of close to 40% SAAR in Q2.

by Calculated Risk on 4/24/2020 12:59:00 PM

Housing economist Tom Lawler sent me the following:

From Jeff Tucker at Zillow Economic Research Early Data Point to Slight Housing Turnaround After Initial Coronavirus Pullback (March 2020 Market Report)

“Zillow Economic Research is piloting three new daily metrics — daily new active listings, daily new pending listings and daily median list price — in an effort to bolster our usual monthly data and provide more timely signals about the housing market during this unprecedented health and economic crisis.”

The charts Zillow shows do not show levels, but show year-over-year % changes. While the data are daily, it would appear as if each data point reflects a “rolling week,” or rolling 7-day average.

The definition of pending sales is “(t)he number of listings on Zillow that switch from active to pending status each day,” I’m not positive, but I do not believe this definition will reflect cancellations.

Assuming the data reflect rolling 7-day averages, here are some data from the chart on pending sales.

Week Ending:	YOY % Change in Pending Sales (Zillow)
4/19/20	-32%
4/12/20	-37%
4/5/20	-34%
3/29/20	-23%
3/22/20	-1%
3/15/20	17%
3/8/20	18%
3/1/20	26%

by Calculated Risk on 4/24/2020 11:23:00 AM

From housing economist Tom Lawler:

The edited transcript from the conference call is available here.

“In the first quarter, net new orders were up more than 30% over the prior year for both January and February. It's now old news when I say that, with the virus spreading rapidly and governments implementing shelter-in-place restrictions, homebuying demand slowed dramatically as March progressed. To appreciate the magnitude of the slowdown, in the first full week of March, our net new orders exceeded 800 homes. In the final full week, this number dropped to just 140. As a result, our March 2020 orders in total were down 11% from March of 2019. From orders being up 30-plus percent to being down 11% in just a few weeks is unlike anything we have experienced before.”

“Given how the U.S. economic slowdown intensified as we moved into April, it is no the month, we have sold approximately 920 homes on a gross basis, excluding cancellations. The underlying trend is that buyer traffic to our website, and in turn, our communities has decreased materially. This is obviously a very small sample size, but directionally, we are running a little below 50% of the pace in the first quarter, with the most recent trends generally stable to up slightly.”

“Through the first 3 weeks of April, we've had 360 backlog units canceled, which represents only 3% of homes in backlog.”

Note that if PuleGroup’s gross orders were 920 in the first 3 weeks of April, and cancellations were 360 in the first 3 weeks of April, net orders in the first three weeks of April were just 560, or more than 30% lower than net orders in just the first week of March alone!

While the company didn’t give further information about the weekly pattern of orders or cancellations, it would appear as if net orders in April could be down by about 65% from the monthly average pace of the first quarter.

by Calculated Risk on 4/24/2020 10:02:00 AM

From the University of Michigan: Preliminary Results for April 2020

April's final Sentiment Index reading remained largely unchanged from the mid-month figure (+0.8 points), and households with below median incomes expressed the same level of confidence as those with above median incomes (71.9). This merging reflects somewhat larger April declines among households with above median incomes (-19.8 points) compared with those with below median incomes (-14.0). The seven-day moving average of the Index of Consumer Sentiment indicated a second larger improvement that was quickly reversed (see the featured chart); its cause could not be linked to any direct judgements about the coronavirus. The notable divergence between the two main components of the Sentiment Index remained large. The Current Conditions Index fell by 29.4 points in the past month and by 40.5 points in the past two months, whereas the Expectations Index has posted smaller declines of 9.6 points in the past month and 22.0 points from February. While the decline in both indices indicates an ongoing recession, the gap reflects the anticipated cyclical nature of the coronavirus.
emphasis added

by Calculated Risk on 4/24/2020 08:34:00 AM

From Black Knight: More than 3.4 Million Homeowners – 6.4% of All Mortgages – Now in COVID-19-Related Forbearance Plans According to Black Knight’s McDash Flash Data Set

• The McDash Flash suite from Black Knight leverages daily, loan-level data to provide market participants with the most current view of the forbearance and mortgage performance landscape

• According to the McDash Flash Forbearance Tracker, as of April 23, 2020, more than 3.4 million homeowners – or 6.4% of all mortgages – have entered into COVID-19 mortgage forbearance plans

• This population represents $754 billion in unpaid principal and includes 5.6% of all GSE-backed loans and 8.9% of all FHA/VA loans

• At today’s level, mortgage servicers are bound to advance $2.8 billion of principal and interest payments per month to holders of government-backed securities on COVID-19-related forbearances

• Another $1.3 billion per month in lost funds is faced by those with portfolio-held or privately-securitized mortgages

• Given FHFA’s recently announced four-month limit on advance obligations, servicers of GSE-backed mortgages could still face more than $7 billion in advances based on the number of forbearance plans thus far

by Calculated Risk on 4/23/2020 08:08:00 PM

Friday:
• At 8:30 AM ET, Durable Goods Orders for March from the Census Bureau. The consensus is for a 6.0% decrease in durable goods orders.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Final for April). The consensus is for a reading of 70.0.

by Calculated Risk on 4/23/2020 05:05:00 PM

NOTE: California reported over 165,000 tests yesterday. Perhaps they were clearing a backlog, but a majority of the tests were negative - pushing down the percent positive rate. I'd take yerserday's numbers with a grain of salt.

Test-and-trace is a key criterion in starting to reopen the country.   My current guess is test-and-trace will require around 300,000 tests per day at first since the US is far behind the curve.  Some scientists believe we need around 800,000 tests per day.

Note: The Financial Times reports that Germany is doing more than 50,000 tests per day (with about one-fourth of the US population). That would be 200,000 in the US.  I rounded up to 300,000 per day since the US is so behind on testing. But there are recommendations that Germany needs 200,000 tests per day to do test-and-trace.  (800,000 adjusted for population).

This is just test results reported daily.

There were 193,479 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 17% (red line). The US probably needs enough tests to push  the percentage below 5% (probably much lower based on testing in New Zealand).

All experts agree: We need many more tests!

by Calculated Risk on 4/23/2020 02:29:00 PM

Note: Loans in forbearance will be counted as delinquent in this survey, so the delinquency rate will jump in April (see Black Knight's on this below)

From Black Knight: Black Knight’s First Look: Mortgage Delinquencies See First-Ever March Increase from Early COVID-19 Impact; Foreclosures, Serious Delinquencies Hit Record Lows

• In what’s typically the strongest month of the year for mortgage performance, delinquencies rose by 3.33%, the first March increase since the turn of the century, an early sign of COVID-19’s impact on the market

• Both the national foreclosure and 90-day delinquency rates set new record lows in March, a lingering reminder of the strength of the mortgage market heading into the pandemic

• At just 27,600 for the month, foreclosure starts also fell to their lowest level on record, as COVID-19-related moratoriums began to impact foreclosure inflows

• Prepayment activity jumped by nearly 40% in March, driven by record-low 30-year mortgage rates

• Note: For the purposes of this report going forward, the millions of homeowners who have since entered into forbearance will be counted as past due, but should not be reported as such to the credit bureaus by their servicers
emphasis added

According to Black Knight's First Look report for March, the percent of loans delinquent increased 3.3% in March compared to February, and decreased 7.3% year-over-year.

The percent of loans in the foreclosure process decreased 7.7% in March and were down 18.0% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.39% in March, up from 3.28% in February.

The percent of loans in the foreclosure process decreased in March to 0.42% from 0.45% in February.

The number of delinquent properties, but not in foreclosure, is down 111,000 properties year-over-year, and the number of properties in the foreclosure process is down 44,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Mar 2020	Feb 2020	Mar 2019	Mar 2018
Delinquent	3.39%	3.28%	3.65%	3.73%
In Foreclosure	0.42%	0.45%	0.51%	0.63%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	1,792,000	1,737,000	1,903,000	1,191,000
Number of properties in foreclosure pre-sale inventory:	220,000	239,000	264,000	321,000
Total Properties	2,013,000	1,976,000	2,167,000	2,232,000