by Calculated Risk on 2/25/2009 01:10:00 PM

Real Time Economics at the WSJ excerpts some analyst comments about the existing home sales report: Economists React: ‘So Much for Signs of Stability’ in Housing. A few comments from analysts:

"So much for signs of stability."

"The drop back in the number of existing U.S. home sales in January dashes hopes that housing activity had found a floor."

"Overall, the longer housing activity remains in the doldrums, the less likely it is that the economy will see a decent recovery in 2010 as Fed Chairman Ben Bernanke hopes."

"The rate of decline in existing home sales over the last three months suggests that the market has not yet entered a bottoming phase and housing remains under considerable pressure."

I wouldn't look at existing home sales for signs of stability.

A large percentage of existing home sales (45% according to the NAR) are distressed sales: REO sales (foreclosure resales) or short sales. This has created a gap between new and existing sales as shown in the following graph that I've jokingly labeled the "Distressing" gap.

Click on graph for larger image in new window.

This graph shows existing home sales (left axis through January) and new home sales (right axis through December).

Update (Feb 26, 2009): The graph is updated through January now (and right axis label corrected).

For a number of years the ratio between new and existing home sales was pretty steady. After activity in the housing market peaked in 2005, the ratio changed. This change was caused by distressed sales - in many areas home builders cannot compete with REO sales, and this has pushed down new home sales while keeping existing home sales activity elevated.

If we are looking for the first "signs of stability" in the housing market, I think we should look for declining inventory, a bottom in new home sales, and the gap between new and existing home sales closing.

Note: Existing home inventory might be declining, see the 5th graph here. However this might be misleading (see caveats in post).

by Calculated Risk on 2/25/2009 12:23:00 PM

As Bernanke said today, some progress has been made ...

The yield on 3 month treasuries has risen to 0.30%. Better than zero!

The three month LIBOR has increased to 1.25%. The three-month LIBOR rate peaked (for this cycle) at 4.81875% on Oct. 10. Although this has increased recently, this is still very positive for all those adjusted rate mortgage loans tied to the LIBOR (or treasuries).

The TED spread is at 0.96. Although a normal spread is around 0.5, this is still a significant improvement.

The A2P2 spread as at 1.02.

This is a significant improvement from the high of 5.86 after Thanksgiving. The A2P2 spread is at the lowest level since the latest wave of the crisis started in Sept 2008. However this is still fairly high - look at those previous small peaks - those were considered serious at the time.

Note: This is the spread between high and low quality 30 day nonfinancial commercial paper.

Federal Reserve Assets

The Federal Reserve released the Factors Affecting Reserve Balances last Thursday. Total assets increased $72.2 billion to $1.92 trillion. The increase was mostly due to the Federal Reserve buying $57.9 billion in mortgage-backed securities (MBS) guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae.

After spiking last year to $2.31 trillion the week of Dec 18th, the Federal Reserve assets have declined somewhat. Now it looks like the Federal Reserve is starting to expand their balance sheet again.

Note: the graph shows Total Factors Supplying Federal Reserve Funds and is an available series that is close to assets.

These indicators do indicate some progress ...

by Calculated Risk on 2/25/2009 11:48:00 AM

Fed Chairman Ben Bernanke is testifying before the House Financial Services Committee today.

UPDATE: Here is the CNBC feed (opens in new window).

From Gregg Robb at MarketWatch: Bernanke tells Congress Fed knows what it is doing

"We're not making it up," Bernanke told the House Financial Services panel.

"We're working along a program that has been applied in various contexts," he said. "We're not completely in the dark."

I'm not making this up.

by Calculated Risk on 2/25/2009 10:30:00 AM

The NAR press release is in the previous post. Here are some graphs of existing home sales ...

Click on graph for larger image in new window.

The first graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in January 2009 (4.49 million SAAR) were 5.4% lower than last month, and were 8.6% lower than January 2008 (4.91 million SAAR).

It's important to note that about 45% of these sales were foreclosure resales or short sales. Although these are real transactions, this means activity (ex-distressed sales) is under 3 million units SAAR. (edit: fixed typo)

The second graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 3.6 million in January, from an all time record of 4.57 million homes for sale in July 2008.

Usually inventory peaks in mid-Summer, and then declines slowly through November - and then declines sharply in December as families take their homes of the market for the holidays. Typically inventory starts to increase again slightly in January, however this month there was a slight decrease.

Usually most REOs (bank owned properties) are included in the inventory because they are listed - but not all. Recently I've heard a number of stories about lenders holding REOs off the market, but I can't confirm this.

The third graph shows the 'months of supply' metric for the last six years.

Months of supply decreased to 9.6 months.

Even though the inventory level declined, sales fell even more, leading to a higher "months of supply".

Here is another way to look at existing homes sales - monthly, Not Seasonally Adjusted (NSA):

This graph shows NSA monthly existing home sales for 2005 through 2009. Sales (NSA) were slightly lower in January 2009 than in January 2008. This is the fourth straight year of declining sales.

Again - a significant percentage of recent sales were foreclosure resales, and although these are real sales, I think existing home sales could fall even further when foreclosure resales start to decline sometime in the future.

The last graph shows inventory by month starting in 2004.

Inventory levels were flat during the bubble, but started increasing at the end of 2005.

Inventory levels increased sharply in 2006 and 2007, but have been below the year ago level for the last six months. This might indicate that inventory levels are close to the peak for this cycle. Note: there is probably a substantial shadow inventory – homeowners wanting to sell, but waiting for a better market - so existing home inventory levels will probably stay elevated for some time. There is also the possibility of some ghost inventory (REOs being held off the market).

It is important to watch inventory levels very carefully. If you look at the 2005 inventory data, instead of staying flat for most of the year (like the previous bubble years), inventory continued to increase all year. That was one of the key signs that led me to call the top in the housing market!

If the trend of declining year-over-year inventory levels continues in 2009 that will be a positive for the housing market. Prices will probably continue to fall until the months of supply reaches more normal levels (in the 6 to 8 month range), and that might take some time.

by Calculated Risk on 2/25/2009 10:04:00 AM

The NAR site is having problems again (I'll have graphs soon). Here is a story from MarketWatch: Existing-home sales drop 5.3% in January

Sales of pre-owned homes dropped 5.3% to a seasonally adjusted annual rate of 4.49 million in January, the lowest sales pace in 12 years ...

Here is the NAR Press Release: January Existing-Home Sales Fall, Inventory Down

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 5.3 percent to a seasonally adjusted annual rate of 4.49 million units in January from a level of 4.74 million units in December, and are 8.6 percent lower the 4.91 million-unit pace in January 2008.
...
Total housing inventory at the end of January fell 2.7 percent to 3.60 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace. Because sales were down, the January supply is up from a 9.4-month supply in December.
...
“Distressed sales activity appears to be leveling off, although there are wide differences locally. For example, close to 80 percent of all sales are either foreclosed properties or short sales in Santa Ana, Calif., but less than 20 percent in the Chicago region,” Yun said. About a quarter of all inventory is listed as being distressed, but NAR estimates that distressed sales – foreclosed or those requiring a lender-mediated short sale – comprised about 45 percent of all sales in January.

by Calculated Risk on 2/25/2009 12:59:00 AM

Most of the following article is on the stress test, but it does mention that the Citi deal could be announced Wednesday.

From Eric Dash at the NY Times: Stress Test for Banks Exposes Rift on Wall St.

Citigroup, which maintains that it is well capitalized by its regulators’ standards, was nonetheless locked in negotiations with the government on Tuesday over a third rescue. Under the plan, the government is expected to raise its stake in Citigroup to 30 to 40 percent, from about 8 percent now. The deal, which was moving toward completion and could be announced as early as Wednesday, would bolster the level of common stock that investors are focused on.

by Calculated Risk on 2/24/2009 10:00:00 PM

For the late readers, earlier today I graphed the price-to-rent, price-to-income and real prices based on the National Case-Shiller Home Price index.

Here is the monthly Case-Shiller data: Case-Shiller: House Prices Decline Sharply in December

And the Fed released the Q4 delinquency report: Fed: Delinquency Rates Increased Sharply in Q4

And the joke of the day comes from Senator Dodd: "The stress test has introduced stress."

From CNBC: Handicapping the Bank 'Stress Test'

“The outcome of the stress test is not going to be fail or pass [for banks],” Benrnake told legislators, but to “get a clear estimate of their capital needs.”

Thus far, the Treasury has only said that: a) the tests would be applied to banks with assets over a $100 billion, which is essentially the top 20; b) banks found lacking would be told they needed to raise private capital; c) if they were unable to do so, they could apply for government funds under the newly created Capital Access Program, CAP, ... d) funding would come from the second tranche of TARP.

Here is more from Bloomberg: U.S. to Get Bank Ownership Stakes Only as Losses Rise

“I don’t see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn’t necessary,” Bernanke said at the Senate Banking Committee hearing.
...
Bernanke also said the so-called stress tests that regulators will run on the 19 banks will look at potential losses over a two-year horizon if the economy worsens.

The stress tests “will look at the balance sheets and the capital needs of each of our 19 largest $100-billion-dollar-plus banks over the next two-year horizon,” ...

The assessment will use “both a consensus forecast -- where we think the economy is likely to be based on private sector forecasts -- and an alternative which is worse,” Bernanke said.

We will know more tomorrow when Treasury Secretary Geithner speaks tomorrow (Wednesday), but this is definitely different than my original understanding of the purpose of the stress tests.

by Calculated Risk on 2/24/2009 08:01:00 PM

The policy week continues ... Bernanke testifies again tomorrow, President Obama speaks tonight, Geithner discusses the bank bailout tomorrow, and the proposed budget details will be released on Thursday.

Here are some excerpts from President Obama's address to a joint session of Congress tonight at 9 PM ET.

While our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.

"The weight of this crisis will not determine the destiny of this nation. The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.
...
We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.

Well that day of reckoning has arrived, and the time to take charge of our future is here.

Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.
...
The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.

In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future.

by Calculated Risk on 2/24/2009 06:23:00 PM

I don't follow consumer confidence very closely because it is a conincident indicator; it tells us what we already know. But with the record low reading today, here are some comments from Asha Bangalore at Northern Trust:

The Conference Board’s Consumer Confidence Index plunged to 25.0 in February vs. 37.4 in January. This is a new record low for the series which dates back to February 1967. The two subcomponents -- Present Situation Index (21.2 vs. 39.7 in January) and the Expectations Index (27.5 vs. 42.5 in January) -- declined in January. The dire economic news in the media nearly every day is bound to be reflected in the consumers’ evaluation of the economy.

Click on graph for larger image in new window.

This graph shows the overall consumer confidence index from the Conference Board (graph from Northern Trust).

The Present Situation Index (not shown) is low, but not as low as in some earlier recessions (the Present Situation Index is at 21.2, it fell to 16.2 in 1982). What pulled down the overall index was that the Expectations Index was at an all time low. People are really concerned about the future.

More from Bangalore:

The index measuring if jobs are hard to find advanced (47.8 vs. 41.1 in January) and the index tracking whether jobs are plentiful fell (4.4 vs. 7.1 in January). The gap between the two indexes was wider in February vs. January (see chart 8), which is indicative of another grim employment report.

The employment situation remains grim.

A couple of other notes: those making over over $50,000 per year are now as pessimistic as everyone else - that is pretty unusual - and inflation expectations have increased (something the Fed wants a little of - but not too much).

This really tells us that the economic news is depressing - something we already know.

by Calculated Risk on 2/24/2009 05:40:00 PM

From Lisa Ling at KCET. Last year she did an excellent report "Foreclosure Alley". If you missed that one, it is worth watching ... (ht Vincent)

Update: To be clear, below is a new video this month (the link above is for the old video).

by Calculated Risk on 2/24/2009 04:05:00 PM

The opposite of cliff diving today ...

Dow up 3.3%

S&P 500 up 3.9%

NASDAQ up 4%

Krugman writes: Mysterious plans

I’m trying to be sympathetic to the various plans, or rumors of plans, for bank aid; but I keep not being able to understand either what the plans are, or why they’re supposed to work. And I don’t think it’s me.

So the latest is that we’re going to convert preferred stock held by the government to common stock, maybe. James Kwak has a good explanation of what that’s all about. And it’s not at all clear what is accomplished thereby.
...
[See Krugman's post]
...
I just don’t get it. And my sinking feeling that the administration plan is to rearrange the deck chairs and hope the iceberg melts just keeps getting stronger.

by Calculated Risk on 2/24/2009 02:06:00 PM

From Bloomberg: U.S. Will Take Bank ‘Ownership’ Stakes Only as Losses Climb (ht Anthony)

Federal Reserve Chairman Ben S. Bernanke said the ... Treasury will buy convertible preferred stock as needed in the 19 largest U.S. banks after stress tests to determine how much capital is needed to address losses in a “worse” case scenario, Bernanke told lawmakers at a Senate Banking Committee hearing today. The shares will be converted to common only as the extraordinary losses happen, he said.

“It doesn’t have an ownership implication until such time as those losses which are forecast in the bad scenario actually occur,” the Fed chief said. Bernanke also said that the so- called stress tests that regulators will run on the 19 banks will look at potential losses over a two-year horizon if the economy worsens.

If the banks are seriously insolvent, this sounds like the zombie bank approach and rewards existing shareholders at the expense of taxpayers. If the banks are not seriously insolvent, this is a reasonable approach. But how does Bernanke know the solution before the data is available from the stress tests?

by Calculated Risk on 2/24/2009 01:55:00 PM

One more house price post! This one looks at a few selected cities ...

For more, please see:
Case-Shiller: House Prices Decline Sharply in December

House Prices: Real Prices, Price-to-Rent, and Price-to-Income (national data)

Click on graph for larger image in new window.

This graph shows the Case-Shiller house price indices for five cities. These are nominal graphs (not adjusted for inflation).

This shows the incredible bubbles in Los Angeles and Miami (other cities like Las Vegas, Phoenix, San Diego had similar price bubbles). Now the prices in these cities are falling quickly.

I included Denver and Cleveland as examples of cities with smaller price bubbles - and prices are falling in those cities too. New York was a special case. Prices held up longer, but are now starting to fall rapidly.

The second graph shows the price-to-rent ratio for Miami, Los Angeles and New York. This is similar to the national price-to-rent ratio, but uses local prices and local Owners' equivalent rent.

This ratio is getting close to normal for LA and Miami (although rents are now falling!), but still has further to go in NY.

by Calculated Risk on 2/24/2009 12:15:00 PM

UPDATE: Also check out the charge-off rates. The charge-off rate almost doubled for commercial real estate (CRE) from 1.16% in Q3 to 2.04% in Q4. The commercial banks are starting to recognize their CRE losses!

The Federal Reserve reports that delinquency rates rose sharply in Q4 in all categories.

Click on graph for larger image in new window.

This graph shows the delinquency rates at the commercial banks for residential real estate, commercial real estate and consumer credit cards.

Commercial real estate delinquencies are rising rapidly, and are at the highest rate since Q2 '94 (as delinquency rates declined following the S&L crisis).

Residential real estate delinquencies are at the highest level since the Fed started tracking the data (since Q1 '91).

Credit card delinquency rates are now above the previous high in 1991 (the Fed started tracking data in '91).

Although there is credit deterioration everywhere, the rise in these three categories is especially significant. Residential delinquency rates jumped by over 1% from 5.22% to 6.29% - in just Q4! Credit card delinquencies rose from 4.83% to 5.56%, the fastest increase since the Fed started keeping records.

And commercial real estate delinquencies rose from 4.74% to 5.36%. The Fed defines commercial as "construction and land development loans, loans secured by multifamily residences, and loans secured by nonfarm, nonresidential real estate", and many of the problems are probably in the C&D loans. These are the loans that will probably lead to the closure of many regional banks.

Just more evidence of severe credit problems at the commercial banks.

by Calculated Risk on 2/24/2009 10:26:00 AM

Here are three key measures of house prices: Price-to-Rent, Price-to-Income and real prices (including FHFA).

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph through Q4 2008 using the Case-Shiller National Home Price Index:

Click on image for larger graph in new window.

This graph shows the price to rent ratio (Q1 1997 = 1.0) for the Case-Shiller national Home Price Index. For rents, the national Owners' Equivalent Rent from the BLS is used.

Looking at the price-to-rent ratio based on the Case-Shiller index, the adjustment in the price-to-rent ratio is probably 75% to 85% complete as of Q4 2008 on a national basis. This ratio will probably continue to decline.

However it now appears rents are falling too (although this is not showing up in the OER measure yet) and this will impact the price-to-rent ratio.

Price-to-Income:

The second graph shows the price-to-income ratio:

This graph is based off the Case-Shiller national index, and the Census Bureau's median income Historical Income Tables - Households (and an estimate of 2% increase in household median income for 2008).

Using national median income and house prices provides a gross overview of price-to-income (it would be better to do this analysis on a local area). However this does shows that the price-to-income is still too high, and that this ratio needs to fall another 10% or so. A further decline in this ratio could be a combination of falling house prices and/or rising nominal incomes.

In Q2 2008 this index was over 1.25. In Q3 it fell to 1.2. Now the index is just over 1.1. At this pace the index will hit 1.0 in mid-2009. However, during a recession, nominal household median incomes are usually stagnate - so it might take a little longer. And the index might overshoot too.

Real Prices

Here is a look at real house prices using both the Case-Shiller national index and the FHFA purchase only index.

FHFA released their Q4 house price index today showing:

U.S. home prices posted record declines in the fourth quarter of 2008 according to the Federal Housing Finance Agency’s House Price Index (HPI). The FHFA seasonally-adjusted purchase-only house price index, based on data from home sales, was 3.4 percent lower on a seasonally-adjusted basis in the fourth quarter than in the third quarter. This decline was greater than the 2.0 percent decline in the third quarter and the largest in the purchase-only index’s 18-year history. Over the past year, seasonally-adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth quarter of 2008.

Note: there are a number of difference between FHFA (previously OFHEO) and Case-Shiller (See House Prices: Comparing OFHEO vs. Case-Shiller), but the main reason for the difference is FHFA doesn't include many of the really bad loans (subprime and Alt-A) that were sold through Wall Street. FHFA is GSE only loans.

This graph shows the real house prices based on both OFHEO Purchase Only index and the Case-Shiller national index. (Q1 1999 = 100)

Important: Nominal prices are adjusted using CPI less Shelter. Even though the FHFA prices declined significantly in Q4, CPI less Shelter declined even more, and real FHFA prices increased slightly (using this measure of inflation).

Both indices show real prices are still significantly above prices in the '90s and perhaps real prices will decline another 20%.

Summary

These measures are useful, but somewhat flawed. These measures give a general idea about house prices, but there are other important factors like inventory levels and credit issues. We are getting closer on prices, but it appears we still have a ways to go. All of this data is on a national basis and it would be better to use local area price-to-rent, price-to-income and real prices. I'll post some local data for price-to-rent ratios.

One thing is pretty certain - as long as inventory levels are elevated, prices will continue to decline. And right now inventory levels of existing homes (especially distressed properties) are still near all time highs.

by Calculated Risk on 2/24/2009 10:20:00 AM

From Fed Chairman Ben Bernanke: Semiannual Monetary Policy Report to the Congress

In their economic projections for the January FOMC meeting, monetary policy makers substantially marked down their forecasts for real GDP this year relative to the forecasts they had prepared in October. The central tendency of their most recent projections for real GDP implies a decline of 1/2 percent to 1-1/4 percent over the four quarters of 2009. These projections reflect an expected significant contraction in the first half of this year combined with an anticipated gradual resumption of growth in the second half. The central tendency for the unemployment rate in the fourth quarter of 2009 was marked up to a range of 8-1/2 percent to 8-3/4 percent. Federal Reserve policymakers continued to expect moderate expansion next year, with a central tendency of 2-1/2 percent to 3-1/4 percent growth in real GDP and a decline in the unemployment rate by the end of 2010 to a central tendency of 8 percent to 8-1/4 percent. FOMC participants marked down their projections for overall inflation in 2009 to a central tendency of 1/4 percent to 1 percent, reflecting expected weakness in commodity prices and the disinflationary effects of significant economic slack. The projections for core inflation also were marked down, to a central tendency bracketing 1 percent. Both overall and core inflation are expected to remain low over the next two years.

This outlook for economic activity is subject to considerable uncertainty, and I believe that, overall, the downside risks probably outweigh those on the upside. One risk arises from the global nature of the slowdown, which could adversely affect U.S. exports and financial conditions to an even greater degree than currently expected. Another risk derives from the destructive power of the so-called adverse feedback loop, in which weakening economic and financial conditions become mutually reinforcing. To break the adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets. If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability--and only if that is the case, in my view--there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery.
emphasis added

by Calculated Risk on 2/24/2009 09:00:00 AM

Both the monthly indices (20 cities and 2 composites) and the quarterly national index were released this morning. I'll have more on the national index shortly.

Here is the S&P/Case-Shiller monthly Home Price Indices for December.

Click on graph for larger image in new window.

The first graph shows the nominal Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 28.3% from the peak.

The Composite 20 index is off 27.0% from the peak.

Prices are still falling, and will probably continue to fall for some time.

The second graph shows the Year over year change in both indices.

The Composite 10 is off 19.2% over the last year.

The Composite 20 is off 18.5% over the last year.

These are the worst year-over-year price declines for the Composite indices since the housing bubble burst, although only slightly worse (on a year-over-year basis) than November.

The following graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.

In Phoenix, house prices have declined more than 45% from the peak. At the other end of the spectrum, prices in Charlotte and Dallas are only off about 9% from the peak.

Prices fell at least 1% in all Case-Shiller cities in December, with Phoenix off 5.1% for the month alone!

I'll have more on prices including the National Index soon.

by Calculated Risk on 2/24/2009 08:45:00 AM

From the WSJ: Home Depot Posts Loss, Expects Earnings Below Views

Home Depot's sales fell by more than 17% in the fourth quarter and by nearly 8% on the year. The company expects them to fall another 9% in its 2009 fiscal year ...

"We expect the home improvement market in 2009 will remain just as challenging as 2008," Chief Executive Frank Blake said in a release.

Hoocoodanode?

by Calculated Risk on 2/24/2009 12:11:00 AM

From the WSJ: AIG Seeks to Ease Its Bailout Terms

American International Group Inc. is seeking an overhaul of its $150 billion government bailout package ... Under the plan, the government loan of up to $60 billion at the heart of the bailout would be repaid with a combination of debt, equity, cash and operating businesses, such as stakes in AIG's lucrative Asian life-insurance arms. AIG and the government have been discussing the changes since December and plan to announce them by Monday when the insurer is expected to report fourth-quarter results, the people said.

The earnings report is expected to underscore AIG's worsening condition with its total loss for the quarter likely to top $60 billion...

It looks another Sunday announcement coming up. No new info on Citi yet.

Here are the Bloomberg Futures. Futures are basically flat so far.

Barchart.com (active contract has a time, not a date)

CBOT mini-sized Dow

And the Asian markets. Not bad so far.

by Calculated Risk on 2/23/2009 10:10:00 PM

Press Release: General Growth Properties, Inc. Releases Fourth Quarter and Full-Year 2008 Operating Results

We are considering all strategic alternatives and are continuing our discussions with our lenders. In addition, we have suspended our cash dividend, halted or slowed nearly all of our development and redevelopment projects, systematically engaged in certain cost reduction or efficiency programs, reduced our workforce by over 20% and sold certain non-mall assets. We currently have approximately $1.179 billion of past due debt and approximately $4.09 billion of debt that could be accelerated. However, our lenders have not yet exercised any of their remedy rights with respect to such debt. In addition, we have an additional $1.44 billion of consolidated mortgage debt and approximately $595 million of unsecured bonds scheduled to mature in the balance of 2009 that remains to be refinanced, repaid or extended. In the event that we are unable to extend or refinance our near and intermediate term loan maturities, we may be required to seek legal protection from our creditors.

No BK yet for the 2nd largest mall owner.