by Calculated Risk on 11/02/2020 10:05:00 AM

The ISM manufacturing index indicated expansion in October. The PMI was at 59.3% in October, up from 55.4% in September. The employment index was at 53.2%, up from 49.6% last month, and the new orders index was at 67.9%, up from 60.2%.

From ISM: Manufacturing PMI® at 59.3%; October 2020 Manufacturing ISM® Report On Business®

conomic activity in the manufacturing sector grew in October, with the overall economy notching a sixth consecutive month of growth, 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 October Manufacturing PMI® registered 59.3 percent, up 3.9 percentage points from the September reading of 55.4 percent and the highest since September 2018 (59.3 percent). This figure indicates expansion in the overall economy for the sixth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth. The New Orders Index registered 67.9 percent, an increase of 7.7 percentage points from the September reading of 60.2 percent. The Production Index registered 63 percent, an increase of 2 percentage points compared to the September reading of 61 percent. The Backlog of Orders Index registered 55.7 percent, 0.5 percentage point higher compared to the September reading of 55.2 percent. The Employment Index registered 53.2 percent, an increase of 3.6 percentage points from the September reading of 49.6 percent. The Supplier Deliveries Index registered 60.5 percent, up 1.5 percentage points from the September figure of 59 percent. The Inventories Index registered 51.9 percent; 4.8 percentage points higher than the September reading of 47.1 percent. The Prices Index registered 65.5 percent, up 2.7 percentage points compared to the September reading of 62.8 percent. The New Export Orders Index registered 55.7 percent; an increase of 1.4 percentage points compared to the September reading of 54.3 percent. The Imports Index registered 58.1 percent, a 4.1-percentage point increase from the September reading of 54 percent.
emphasis added

This was above expectations and the employment index moved above 50.

This suggests manufacturing expanded at a faster pace in October than in September.

by Calculated Risk on 11/02/2020 08:06:00 AM

NOTE: I've added another indicator - the occupancy rate for office buildings with security from Kastle Systems (ht Burt). This is near the bottom.

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

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

Click on graph for larger image.

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

The dashed line is the percent of last year for the seven day average.

This data is as of Nov 1st.

The seven day average is down 63% from last year (37% of last year).

There has been a slow increase from the bottom.

----- Restaurants: OpenTable -----
The second graph shows the 7 day average of 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 October 31, 2020.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Note that dining is generally turning down in the northern states - Illinois, Pennsylvania, and New York - but holding up in the southern states.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years.  Data is from BoxOfficeMojo through October 92th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales have picked up slightly over the last couple of months, and were at $12 million last week (compared to usually around $150 million per week in the early Fall).

Some movie theaters have reopened (probably with limited seating).

----- Hotel Occupancy: STR -----
This 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 since the Great Depression for hotels - prior to 2020).

This data is through October 24th. Hotel occupancy is currently down 31.7% year-over-year.

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

Since there is a seasonal pattern to the occupancy rate, we can track the year-over-year change in occupancy to look for any improvement. This table shows the year-over-year change since the week ending Sept 19, 2020:

Week Ending	YoY Change, Occupancy Rate
9/19	-31.9%
9/26	-31.5%
10/3	-29.6%
10/10	-29.2%
10/17	-30.7%
10/24	-31.7%

This suggests no improvement over the last 6 weeks. So far there has been little business travel pickup that usually happens in the Fall.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of .

At one point, gasoline supplied was off almost 50% YoY.

As of October 23rd, gasoline supplied was off about 12.7% YoY (about 87.3% of last year).

Note: I know several people that have driven to vacation spots - or to visit family - and they usually would have flown.   So this might have boosted gasoline consumption in the Summer and early Fall at the expense of air travel.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through October 31st for the United States and several selected cities.

The graph is the running 7 day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 54% of the January level. It is at 44% in Chicago, and 57% in Houston - and declining slightly recently.

----- Office Building Occupancy -----
Note: This graph is from Kastle, and the data isn't available online to do a 7-day average. Here is some interesting data from Kastle Systems on office occupancy.

This is just a screen shot. Here is the interactive data. This data is through October 28th.

Currently Office Occupancy is 27% of normal, with a low of 15% in San Francisco, and a high of 41% in Dallas.

"View the average occupancy rate of commercial properties across 10 major U.S. cities, by each municipality and in aggregate, to show the pace of Americans returning to work based on daily unique access entries in Kastle-secured buildings across the nation."

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is weekly data for the last several years.

This data is through Friday, October 30th.

Schneider has graphs for each borough, and links to all the data sources.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 11/01/2020 07:47:00 PM

Weekend:
• Schedule for Week of November 1, 2020

• FOMC Preview

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for October.  The consensus is for 55.8%, up from 55.4%.

• Also at 10:00 AM, Construction Spending for September.  The consensus is for 0.9% increase in spending.

• All day, Light vehicle sales for October. The consensus is for sales of 16.5 million SAAR, up from 16.3 million SAAR in September (Seasonally Adjusted Annual Rate).

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 12 and DOW futures are down 150 (fair value).

Oil prices were down over the last week with WTI futures at $34.18 per barrel and Brent at $36.36 barrel. A year ago, WTI was at $56, and Brent was at $60 - so WTI oil prices are down about 40% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.11 per gallon. A year ago prices were at $2.58 per gallon, so gasoline prices are down $0.47 per gallon year-over-year.

by Calculated Risk on 11/01/2020 07:35:00 PM

Note: I look forward to when I will not be posting this daily!

The US is now averaging close to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 838,148 test results reported over the last 24 hours.

There were 74,443 positive tests. (New Sunday record)

Over 23,000 Americans deaths from COVID were reported in October. See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 8.9% (red line is 7 day average).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the July high.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.

This is a new record 7-day average for the USA.

by Calculated Risk on 11/01/2020 01:31:00 PM

Expectations are there will be no change to policy when the FOMC meets on Wednesday and Thursday (not the usual Tuesday-Wednesday).

Here are some comments from Goldman Sachs economist David Mericle:

"Without any further discussion of policy changes, the November meeting should be fairly quiet. The economy has continued to recover at a healthy pace since the FOMC last met, but faces risks ahead from the withdrawal of fiscal support and a second virus resurgence. Neither risk is entirely new at this point, and we expect few changes to the FOMC statement.

If a severe winter virus resurgence proved more economically damaging than we expect and the FOMC wanted to respond, its options would be limited. The most likely response would be to adjust the composition or pace of asset purchases, but Fed officials have expressed only lukewarm support for such a move because they see it as unlikely to be particularly effective.

For review, here are the September FOMC projections.

Note that GDP decreased at a 5.0% annual rate in Q1, decreased at a 31.7% annual rate in Q2, and increased at 33.1% annual rate in Q3.   This leaves real GDP down 3.5% from Q4 2019.

Early forecasts are for GDP to increase at a 2% to 3% annual rate in Q4.  These early forecasts would put the economy down around 3% Q4-over-Q4.  That would be at the top end of their September forecast.

The course of the economy will depend on the course of the pandemic, so the FOMC has to factor in their expectations of when the pandemic will subside and end (and no one knows at this time).  The FOMC also has to factor in further disaster relief, and that is unknown.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2020	2021	2022	2023
Sept 2020	-4.0 to -3.0	3.6 to 4.7	2.5 to 3.3	2.4 to 3.0

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 7.9% in September and will probably decrease more in Q4.  This will put the unemployment rate in the middle of the range of September projections.

Note that the unemployment rate doesn't remotely capture the economic damage to the labor market.  Not only are there 12.5 million people unemployed, and 4.5 million people have left the labor force since January.  And millions more are being supported by various provisions of the CARES Act - that hasn't been renewed

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2020	2021	2022	2023
Sept 2020	7.0 to 8.0	5.0 to 6.2	4.0 to 5.0	3.5 to 4.4

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of September 2020, PCE inflation was up 1.4% from September 2019. This was above the September projections for Q4.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2020	2021	2022	2023
Sept 2020	1.1 to 1.3	1.6 to 1.9	1.7 to 1.9	1.9 to 2.0

PCE core inflation was up 1.5% in September year-over-year.  This was at the high end of the September projections for Q4.  Note that inflation will not be a concern for the FOMC for the foreseeable future.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2020	2021	2022	2023
Sept 2020	1.3 to 1.5	1.6 to 1.8	1.7 to 1.9	1.9 to 2.0

by Calculated Risk on 11/01/2020 08:12:00 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 only, 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 October 2020.

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

Update on the Unofficial Problem Bank List for October 2020. During the month, the list decreased by one to 64 banks after a removal. A year ago, the list held 71 institutions with assets of $53.4 billion. First City Bank of Florida, Fort Walton Beach, FL ($135 million) exited the list through failure on October 16, 2020.

On October 7, 2020, the OCC issued a couple of formal actions against Citibank, National Association, Sioux Falls, SD (FDIC Cert#7213, 2q2020 assets -- $1.633 trillion). The formal actions included a Consent Orderand a Civil Money Penalty Order. The Consent Order states that “the OCC intends to intends to initiate cease and desist proceedings against the Bank pursuant to 12 U.S.C. § 1818(b), through the issuance of a Notice of Charges, for deficiencies in its data governance, risk management, and internal controls that constitute unsafe or unsound practices and that contributed to violations of law or regulation” Because of the deficiencies specified in the Consent Order, the OCC issued a $400 million Civil Money Penalty against Citibank. Separately, the Federal Reserve issued a formal enforcement action against the parent bank holding company, Citigroup Inc., that states “… Citigroup has not adequately remediated the longstanding enterprise-wide risk management and control deficiencies …” The substance and nature of these enforcement actions would land most banks on the problem bank list, but our guess is that the FDIC will not designate Citibank as a problem bank. As some observers say, size does have its privileges.

by Calculated Risk on 10/31/2020 06:22:00 PM

The US is now averaging close to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 1,126,064 test results reported over the last 24 hours.

There were 90,058 positive tests. 

Over 23,000 Americans deaths from COVID were reported in October. See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 8.0% (red line is 7 day average).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the July high.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.

This is a new record 7-day average for the USA.

by Calculated Risk on 10/31/2020 08:11:00 AM

The key report this week is the October employment report on Friday.

Other key indicators include the October ISM manufacturing and services indexes, October vehicle sales, and the September trade deficit.

The FOMC meets on Wednesday and Thursday this week, and no change in policy is expected.

----- Monday, November 2nd -----
10:00 AM: ISM Manufacturing Index for October.  The consensus is for 55.8%, up from 55.4%.

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

The PMI was at 55.4% in September, the employment index was at 49.6%, and the new orders index was at 60.2%

10:00 AM: Construction Spending for September.  The consensus is for 0.9% increase in spending.

All day: Light vehicle sales for October.

The consensus is for sales of 16.5 million SAAR, up from 16.3 million SAAR in September (Seasonally Adjusted Annual Rate).

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

----- Tuesday, November 3rd -----
8:00 AM ET: Corelogic House Price index for September.

----- Wednesday, November 4th -----
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 October. This report is for private payrolls only (no government).  The consensus is for 650,000 jobs added, down from 749,000 in September.

8:30 AM: Trade Balance report for September from the Census Bureau.  The consensus is for the deficit to be $64.0 billion in September, from $67.1 billion in August.

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.

10:00 AM: the ISM non-Manufacturing Index for October.  The consensus is for a decrease to 57.5 from 57.8.

----- Thursday, November 5th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is initial claims decreased to 725 thousand from 751 thousand last week.

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

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

----- Friday, November 6th -----
8:30 AM: Employment Report for October.   The consensus is for 600 thousand jobs added, and for the unemployment rate to decrease to 7.6%.

There were 661 thousand jobs added in September, and the unemployment rate was at 7.9%.

This graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms, and the worst in terms of the unemployment rate.

by Calculated Risk on 10/30/2020 07:12:00 PM

The US is now averaging close to 1 million tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections (probably close to 1%), so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 1,077,164 test results reported over the last 24 hours.

There were 97,080 positive tests. This is a new record.

Almost 22,500 Americans deaths from COVID have been reported in October. See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 9.0% (red line is 7 day average).

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the July high.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.

This is a new record 7-day average for the USA.

by Calculated Risk on 10/30/2020 04:12:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 3.20% in September, from 3.32% in August. The serious delinquency rate is up from 0.68% in September 2019.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (2% of portfolio), 5.81% are seriously delinquent (up from 5.79% in August). For loans made in 2005 through 2008 (3% of portfolio), 9.84% are seriously delinquent (up from 9.74%), For recent loans, originated in 2009 through 2018 (95% of portfolio), 2.74% are seriously delinquent (down from 2.86%). So Fannie is still working through a few poor performing loans from the bubble years.

Mortgages in forbearance are counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.

This is very different from the increase in delinquencies following the housing bubble.   Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once they are employed.

Note: Freddie Mac reported earlier.