by Calculated Risk on 5/12/2020 05:39:00 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 might be enough for test and trace.

However, the US might need more than 900,000 tests per day according to Dr. Jha of Harvard's Global Health Institute.

There were 306,581 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 6.6% (red line). The US probably needs enough tests to keep  the percentage positive well below 5%. (probably much lower based on testing in New Zealand).

A step backward from yesterday, but still above 300,000 tests.

by Calculated Risk on 5/12/2020 03:35:00 PM

Note: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was down 0.7% in April compared to the rolling 12 months ending in March.   Outbound traffic was down 1.4% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year (January 25th in 2020).

Because of the timing of the New Year, we would have expected traffic to decline in February without an impact from COVID-19, but bounce back in March and April.

In general imports both imports and exports have turned down recently - and will probably be negatively impacted by COVID-19 over the next several months.

by Calculated Risk on 5/12/2020 01:32:00 PM

From Timothy O'Brien at Bloomberg: A leading real-estate data junkie is now focused on the impact of the coronavirus

My last quote in the article (something I've also written on this blog):

“The course of the economy will be determined by the course of the virus. If it doesn’t last a long time we’ll be fine. If we’re not out of this in just a few months we’ll have a real problem,” he tells me. “I’m the wrong guy in the wrong field to ask where housing will go. Infectious disease specialists will know.”

by Calculated Risk on 5/12/2020 11:18:00 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 0.1% (1.8% annualized rate) in April. The 16% trimmed-mean Consumer Price Index was unchanged (0.3% 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 fell 0.8% (-9.1% annualized rate) in April. The CPI less food and energy fell 0.4% (-5.2% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for April here. Motor fuel decreased at a 93.5% annualized rate 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 2.7%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 1.4%. Core PCE is for March and increased 1.7% year-over-year.

On a monthly basis, median CPI was at 1.8% annualized and trimmed-mean CPI was at 0.3% annualized.

Inflation will not be a concern during the crisis.

by Calculated Risk on 5/12/2020 10:19:00 AM

This is mostly pre-COVID. The second quarter will see a large increase in delinquencies (forbearance will be included as delinquent in Q2).

From the MBA: Mortgage Delinquencies Rise in First Quarter of 2020

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of the first quarter of 2020, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate was up 59 basis points from the fourth quarter of 2019 and down 6 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the first quarter fell by 2 basis points to 0.19 percent.

“The mortgage delinquency rate in the fourth quarter of 2019 was at its lowest rate since MBA’s survey began in 1979. Fast-forward to the end of March, and it is clear the COVID-19 pandemic is impacting homeowners. Mortgage delinquencies jumped by 59 basis points – which is reminiscent of the hurricane-related, 64-basis-point increase seen in the third quarter of 2017,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “The major variances from the fourth quarter of 2019 to this year’s first quarter are tied to the increase in early-stage delinquencies for all loan types. For example, the 30-day FHA delinquency rate rose by 113 basis points, the second-highest quarterly ramp-up in the survey series. The 30-day VA delinquency rate rose by 78 basis points – the highest quarterly increase.”

The seriously delinquent rate in the first quarter decreased by 9 basis points and was down 29 basis points from a year ago. The foreclosure inventory rate – the percentage of loans in the foreclosure process – was at its lowest level last quarter since 1984. Foreclosure starts were down 2 basis points from the previous quarter.

“Mortgage delinquencies track closely with the U.S. job market. With unemployment rising from historical lows in early 2020 to a record 14.7 percent in April, it is inevitable that mortgage delinquencies would increase as well. 33.5 million U.S. workers applied for unemployment benefits in the past seven weeks, and with signs of economic distress continuing into the second quarter, mortgage delinquencies will likely further increase,” said Walsh.

According to Walsh, there may be a flattening in foreclosure starts in future quarterly surveys due to COVID-19-related foreclosure moratoria and borrower forbearance guidelines under the CARES Act. Almost 4 million homeowners are on forbearance plans as of May 3, but MBA’s survey asks servicers to report these loans as delinquent if the payment was not made based on the original terms of the mortgage – in the same manner that delinquency data is collected during natural disasters.

“Once foreclosure moratoria are lifted and forbearance periods end, borrower repayment and modification options, combined with year-over-year equity accumulation and home-price gains, may present alternatives to foreclosure for the millions of distressed homeowners affected by this unfortunate pandemic and economic crisis,” added Walsh.
emphasis added

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.  Delinquencies increased in Q1.

The increase was mostly in the 30 day bucket that increased from 2.17% in Q4 to 2.67% in Q1.   There will be a huge spike in delinquencies in Q2.

The percent of loans in the foreclosure process declined further, and was at the lowest level since at least 1985.

by Calculated Risk on 5/12/2020 09:43:00 AM

Most of this survey is noise, but there is some information, especially on the labor market.

From the National Federation of Independent Business (NFIB): April 2020 Report

Small business optimism took another dive in April, falling 5.5 points to 90.9, with owners expressing certainty the economy will weaken in the near-term, but expecting it to improve over the next six months. The Optimism Index has fallen 13.6 points over the last two months, with nine of 10 Index components declining in April and one improving.
.
[J]ob creation plans fell eight points to a net one percent, the lowest level since December 2012.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 90.9 in April.

by Calculated Risk on 5/12/2020 08:34:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.3 percent before seasonal adjustment.

A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The energy index declined mostly due to the decrease in the gasoline index, though some energy component indexes rose.

The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957. Along with the indexes mentioned above, the indexes for used cars and trucks and recreation also declined. The indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April.

The all items index increased 0.3 percent for the 12 months ending April, the smallest 12-month increase since October 2015. The index for all items less food and energy increased 1.4 percent over the last 12 months, its smallest increase since April 2011.
emphasis added

Overall inflation was below expectations in April. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 5/11/2020 08:05:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Strong But End Day Higher

Mortgage rates began the day slightly lower compared to last Friday, but that didn't last long. Underlying bond markets were under pressure from the outset. When bond prices fall, rates move higher, all other things being equal.

The bond market has a few concerns at the moment--many of them "relative." In fact, it's hard to complain too much about mortgage rates "moving higher" when this afternoon's final destination was still in the low 3% range for top tier 30yr fixed rate quotes. [30YR FIXED 3.20%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for April.

• At 8:30 AM, The Consumer Price Index for April from the BLS. The consensus is for 0.7% decrease in CPI, and a 0.2% decrease in core CPI.

by Calculated Risk on 5/11/2020 05:14:00 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 might be enough for test and trace.

However, the US might need more than 900,000 tests per day according to Dr. Jha of Harvard's Global Health Institute.

There were 394,711 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 4.5% (red line). The US probably needs enough tests to keep  the percentage positive well below 5%. (probably much lower based on testing in New Zealand).

This is the best day so far.

by Calculated Risk on 5/11/2020 04:01:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Increases to 7.91%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 7.54% of servicers’ portfolio volume in the prior week to 7.91% as of May 3, 2020. According to MBA’s estimate, almost 4 million homeowners are now in forbearance plans.
...
“With the calendar turning to May, the share of loans in forbearance increased, but the pace of the increase and incoming forbearance requests continued to slow,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression. It will not be surprising if the forbearance numbers continue to rise. As we anticipated, FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”

Added Fratantoni, “Although the pace of forbearance requests slowed this week, call volume picked up – which could be a sign that more borrowers are calling in to check their options now that May due dates have arrived.”
emphasis added

Click on graph for larger image.

This graph shows the weekly forbearance requests as a percent of servicer's portfolio volume.

The requests peaked in the week of March 30th to April 5th, but might pick up again.

The MBA notes: "Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the fourth consecutive week relative to the prior week: from 0.63% to 0.51%."