by Calculated Risk on 5/03/2020 06:37:00 PM

Weekend:
• Schedule for Week of May 3, 2020

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 34 and DOW futures are down 275 (fair value).

Oil prices were up over the last week with WTI futures at $18.56 per barrel and Brent at $25.69 barrel.  A year ago, WTI was at $62, and Brent was at $72 - so WTI oil prices are down about 70% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.76 per gallon. A year ago prices were at $2.90 per gallon, so gasoline prices are down $1.14 per gallon year-over-year.

by Calculated Risk on 5/03/2020 05:04:00 PM

The US might be able to test 400,000 to 600,000 people per day sometime in May according to Dr. Fauci - and that would probably be sufficient for test and trace.

There were 237,019 test results reported over the last 24 hours (the number of tests yesterday were revised up).

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 11.1% (red line). The US probably needs enough tests to push  the percentage positive below 5%. (probably much lower based on testing in New Zealand).

by Calculated Risk on 5/02/2020 05:26:00 PM

When I first posted this graph - in mid-March - the US was struggling to conduct much over 10,000 tests per day, while other countries - with smaller populations were testing far more than the US.

Although very late to testing - and slow to ramp up - the US has made significant progress over the last 8 weeks. The US still needs more tests, but there are also some other key hurdles to a successful test-and-trace program.

The US needs to ramp up preparedness on tracing. Some states are hiring people to do this work, but it is not organized at the national level.

The US also needs to reduce the lag time between testing and reporting. I've heard that some people are still waiting days for test results, and that makes isolating (and tracing) more difficult.

And my understanding is higher income areas are seeing more tests than lower income areas. This needs to be fixed.

The US might be able to test 400,000 to 600,000 people per day sometime in May according to Dr. Fauci - and that would probably be sufficient for test and trace.

There were 264,537 test results reported over the last 24 hours (the number of tests yesterday were revised up).

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 11.4% (red line). The US probably needs enough tests to push  the percentage positive below 5%. (probably much lower based on testing in New Zealand).

by Calculated Risk on 5/02/2020 01:48:00 PM

These indicators are for travel and entertainment - some of the sectors that will probably recover very slowly.

The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).

On May 1st there were 171,563 travelers compared to 2,546,029 a year ago.

That is a decline of over 93%. There has been some increase off the bottom, but it is pretty small compared to the normal level of travel.

The second graph shows the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Thanks to OpenTable for providing this restaurant data:

This data is updated through May 1, 2020.

The US was off 100% YoY as of March 21st.

Dining in Seattle and San Francisco declined sharply a week or two ahead of most of the country - and acting early has been shown to minimize the spread of the virus.

Some states - like Texas and Georgia - have started to open up. In Texas, diner traffic was only down 85% YoY.

This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years.  Data is from BoxOfficeMojo.

Note that the data is noisy and depends on when blockbusters are released.

This data is through the week ending April 30, 2020.  Movie ticket sales have been essentially at zero for six weeks.

Basically movie theaters are closed all across the country, and will probably reopen slowly (probably with limited seating at first).

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

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.

STR reported hotel occupancy was off 62.2% year-over-year last week.  Occupancy has increased slightly over the last couple of weeks, however STR believes it is partially "coming from essential workers, homeless housing initiatives and government-contracted guests".

by Calculated Risk on 5/02/2020 08:11:00 AM

The key report scheduled for this week is the April employment report. The report will show stunning job losses and a dramatic increase in the unemployment rate.

----- Monday, May 4th -----
No major economic releases scheduled.

----- Tuesday, May 5th -----
8:30 AM: Trade Balance report for March from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is the trade deficit to be $44.2 billion.  The U.S. trade deficit was at $39.9 Billion in February.

10:00 AM: the ISM non-Manufacturing Index for April.   The consensus is for a reading of 44.0, down from 52.5.

10:00 AM: Corelogic House Price index for March.

----- Wednesday, May 6th -----
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 April. This report is for private payrolls only (no government). The consensus is for 20,000,000 payroll jobs lost in April, down from 27,000 lost in March.

----- Thursday, May 7th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a 3.300 million initial claims, down from 3.839 million the previous week.

3:00 PM: Consumer Credit from the Federal Reserve.

----- Friday, May 8th -----
8:30 AM: Employment Report for April.   The consensus is for 21,000,000 jobs lost, and for the unemployment rate to increase to 16.0%.

There were 701,000 jobs lost in March, and the unemployment rate was at 4.4%.

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

In March the year-over-year change was 1.504 million jobs.

by Calculated Risk on 5/01/2020 05:23:00 PM

The US might be able to test 400,000 to 600,000 people per day in several weeks according to Dr. Fauci - and that would probably be sufficient for test and trace.

There were 320,628 test results reported over the last 24 hours (the number of tests yesterday were revised up).

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 10.8% (red line). The US probably needs enough tests to push  the percentage positive below 5%. (probably much lower based on testing in New Zealand).

by Calculated Risk on 5/01/2020 12:26:00 PM

The NY Fed Nowcast and Atlanta Fed GDPNow models are based on released data and aren't capturing the entire collapse in the economy.  These models will catch up as more data is released.  All forecasts, including the Merrill Lynch and other forecasts, are for the seasonally adjust annual rate (SAAR) of decline.

From Merrill Lynch:

We expect a 30% qoq saar decline in 2Q. Following the 1Q GDP report, our forecast for annual GDP growth this year was adjusted to -5.6%. [SAAR May 1 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at -9.3% for 2020:Q2. [May 1 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -16.1 percent on May 1, down from -12.1 percent on April 30. 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. [May 1 estimate]

by Calculated Risk on 5/01/2020 10:24:00 AM

From the Census Bureau reported that overall construction spending increased in March:

Construction spending during March 2020 was estimated at a seasonally adjusted annual rate of $1,360.5 billion, 0.9 percent above the revised February estimate of $1,348.4 billion. The March figure is 4.7 percent above the March 2019 estimate of $1,299.1 billion.
emphasis added

Both private and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,012.5 billion, 0.7 percent above the revised February estimate of $1,005.8 billion. ...

In March, the estimated seasonally adjusted annual rate of public construction spending was $348.0 billion, 1.6 percent above the revised February estimate of $342.6 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending had been increasing - but turned down in the 2nd half of 2018.  It started increasing again, but will slow due to the pandemic.  Residential spending is 19% below the previous peak.

Non-residential spending is 11% above the previous peak in January 2008 (nominal dollars).

Public construction spending is 7% above the previous peak in March 2009, and 33% above the austerity low in February 2014.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 8.8%. Non-residential spending is down 1.8% year-over-year. Public spending is up  7.9% year-over-year.

This was well above consensus expectations of a 3.9% decrease in spending, however construction spending for January and February were revised down.

Construction spending will decline due to COVID-19, although construction is considered an essential service in most areas.

by Calculated Risk on 5/01/2020 10:05:00 AM

The ISM manufacturing index indicated contraction in April.  The PMI was at 41.5% in April, down from 49.1% in March. The employment index was at 27.5%, down from 43.8% last month, and the new orders index was at 27.1%, down from 42.2%.

From the Institute for Supply Management: April 2020 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector contracted in April, and the overall economy contracted after 131 consecutive months of expansion, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The April PMI® registered 41.5 percent, down 7.6 percentage points from the March reading of 49.1 percent. The New Orders Index registered 27.1 percent, a decrease of 15.1 percentage points from the March reading of 42.2 percent. The Production Index registered 27.5 percent, down 20.2 percentage points compared to the March reading of 47.7 percent. The Backlog of Orders Index registered 37.8 percent, a decrease of 8.1 percentage points compared to the March reading of 45.9 percent. The Employment Index registered 27.5 percent, a decrease of 16.3 percentage points from the March reading of 43.8 percent. The Supplier Deliveries Index registered 76 percent, up 11 percentage points from the March reading of 65 percent, limiting the decrease in the composite PMI®.
emphasis added

This was slightly above expectations of 36.7%, but the declines in new orders and employment were even worse than the headline. This suggests manufacturing contracted sharply in April.

by Calculated Risk on 5/01/2020 07:00:00 AM

From Black Knight: More than 3.8 million homeowners are now in forbearance plans

• As of April 30, more than 3.8 million homeowners are now in forbearance plans, representing 7.3% of all active mortgages.

• Together, they account for $841 billion in unpaid principal and includes 6.1% of all GSE-backed loans and 10.5% of all FHA/VA loans.

• At today’s level, mortgage servicers would need to advance a combined $3 billion/month to holders of government-backed mortgage securities on COVID-19-related forbearances. Another $1. 5 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages (some 6.7% of these loans are in forbearance as well).

• Ginnie Mae announced a pass through assistance program through which it will advance principal and interest payments to investors on behalf of servicers, and FHFA announced last week that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages.

• Even so, given today’s number of loans in forbearance (and these numbers are climbing every day), servicers of GSE-backed loans still face nearly $8 billion in advances over that four-month period.