by Calculated Risk on 4/26/2020 09:51:00 PM

Weekend:
• Schedule for Week of April 26, 2020

Monday:
• At 10:30 AM ET, Dallas Fed Survey of Manufacturing Activity for April.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 and DOW futures are up slightly (fair value).

Oil prices were down over the last week with WTI futures at $15.52 per barrel and Brent at $21.00 barrel.  A year ago, WTI was at $63, and Brent was at $71 - so WTI oil prices are down about 75% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.74 per gallon. A year ago prices were at $2.88 per gallon, so gasoline prices are down $1.14 per gallon year-over-year.

by Calculated Risk on 4/26/2020 05:01:00 PM

From The Hill: Fauci confident US will double coronavirus testing capacity over next several weeks

Fauci said in a webcast hosted by the National Academy of Sciences that that the U.S. is currently averaging between 1.5 million and 2 million tests per week.

"We probably should get up to twice that as we get into the next several weeks, and I think we will," Fauci said. "Testing is an important part of what we’re doing, but it is not the only part."
…
"You need enough tests so when you’re doing what we’re trying to do right now, which is trying to ease our way back, that you can very easily identify, test, contact trace and get those who are infected out of society so they don’t infect others," he said, adding that positive test results should account for less than 10 percent of tests administered.

Based on these comments, the US might be able to test 400,000 to 600,000 people per day in several weeks - and that would probably be sufficient for test and trace.

There were 256,444 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 10.7% (red line). The US probably needs enough tests to push  the percentage positive below 5%, although Dr. Fauci said below 10%  (probably much lower based on testing in New Zealand).

by Calculated Risk on 4/26/2020 08:11:00 AM

The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for April 2020.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for April 2020. During the month, the list declined by one to 64 banks after one removal. Aggregate assets were little changed at $48.4 billion. A year ago, the list held 73 institutions with assets of $52.1 billion. Exiting the list via failure was The First State Bank, Barboursville, WV ($152 million). This was the second failure in 2020 and the first failure in West Virginia since 2008 when Ameribank, Northfork, WV ($104 million) failed on September 19, 2008.

The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew quickly and peaked at 1,003 institutions in July, 2011 - and has steadily declined to well below 100 institutions.

by Calculated Risk on 4/25/2020 05:16:00 PM

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 300,833 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 13.5% (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 appear to be making progress.

by Calculated Risk on 4/25/2020 10:39:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 18 April

Reflecting the continued impact of the COVID-19 pandemic, the U.S. hotel industry reported significant year-over-year declines in the three key performance metrics during the week of 12-18 April 2020, according to data from STR.

In comparison with the week of 14-20 April 2019, the industry recorded the following:

• Occupancy: -64.4% to 23.4%
• Average daily rate (ADR): -42.2% to US$74.53
• Revenue per available room (RevPAR): -79.4% to US$17.43

“Absolute occupancy and ADR were actually up slightly from the previous week, but it is important to state that this is not any type of early-recovery sign,” said Jan Freitag, STR’s senior VP of lodging insights. “Rather, more demand can be attributed to frontline workers. A perfect example, the most notable occupancy level (33.3%) came in the New York City market, which has welcomed an influx of workers from the medical community.”
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 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

2020 was off to a solid start, however, COVID-19 has crushed hotel occupancy.

Note: Y-axis doesn't start at zero to better show the seasonal change.

This is the lowest 4-weekly average occupancy on record, even considering seasonality.  It appears that around 20% occupancy could be the bottom.

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.