by Calculated Risk on 6/30/2009 09:30:00 AM

Please see: Case-Shiller: Prices Fall in April for the seasonally adjusted composite indices.

NOTE: I'm now using the Seasonally Adjusted (SA) composite 10 series.

This graph compares the Case-Shiller Composite 10 SA index with the Stress Test scenarios from the Treasury (stress test data is estimated from quarterly forecasts).

Click on graph for larger image in new window.

The Stress Test scenarios use the Composite 10 index and start in December. Here are the numbers:

Case-Shiller Composite 10 Index, April: 151.27

Stress Test Baseline Scenario, April: 152.90

Stress Test More Adverse Scenario, April: 146.95

So far prices are tracking between the two stress test scenarios.

by Calculated Risk on 6/30/2009 09:00:00 AM

S&P/Case-Shiller released their monthly Home Price Indices for April this morning.

This monthly data includes prices for 20 individual cities, and two composite indices (10 cities and 20 cities). Note: This is not the quarterly national index.

Click on graph for larger image in new window.

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

The Composite 10 index is off 33.1% from the peak, and off 1.0% in April.

The Composite 20 index is off 32.0% from the peak, and off 0.9% in April.

NOTE: Some websites are reporting the NSA results (month over month). I'm using the SA data (a better month-to-month comparison)

Prices are still falling and will probably decline for some time.

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

The Composite 10 is off 18.0% over the last year.

The Composite 20 is off 18.1% over the last year.

This is near the worst year-over-year price declines for the Composite indices since the housing bubble burst started.

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

Prices fell in 16 of the 20 Case-Shiller cities in April. In Phoenix, house prices have declined 53.7% from the peak. At the other end of the spectrum, prices in Charlotte and Dallas are off about 11% and 8% respectively from the peak. Prices have declined by double digits almost everywhere.

Denver, Dallas, Washington and Cleveland showed small price gains in April.

I'll compare house prices to the stress test scenarios soon.

by Calculated Risk on 6/30/2009 12:11:00 AM

From the WSJ: Ten States Race to Finish Budgets

Ten states were scrambling Monday to pass budgets before a Tuesday deadline, with a handful -- including Arizona, Indiana and Mississippi -- facing the possibility of partial shutdowns if their legislatures don't act in time.
...
Personal income-tax collections, which account for about 36% of state revenues, dropped 26% in this year's January-April period, according to data collected by the Rockefeller Institute of Government in Albany, N.Y.

Sales-tax revenues also have swooned, leaving 48 states with a combined revenue shortfall of $166 billion in the coming fiscal year, according to a report released Monday by the left-leaning Center on Budget and Policy Priorities.

...States without budgets in hand include California, Pennsylvania, North Carolina, Delaware, Illinois, Ohio and Connecticut ...

Here is a new Center on Budget and Policy Priorities report (released today) with state by state tables.

by Calculated Risk on 6/29/2009 09:24:00 PM

There will be a flood of data released over the next three days, including the June employment numbers on Thursday. Other highlights include Case-Shiller house prices tomorrow and auto sales on Wednesday.

Several analysts expect an increase in auto sales in June, compared to May, on a seasonally adjusted annual rate (SAAR) basis. From the WSJ: Car-Sales Rebound Seen for June

[A]nnualized U.S. sales could hit 10 million this month for the first time in 2009, Ford Motor Co. analyst George Pipas said on Monday. The deep discounts that General Motors Corp. and Chrysler Group LLC have offered to boost sales are also likely to bolster June sales.
...
A GM spokesman also said an annualized 10 million sales rate is possible for June.

J.D. Power and Associates predicts annualized June sales of 10.3 million new cars and trucks, up from 9.9 million in May, while Edmunds.com expects the sales rate to top 10 million, though overall sales will still be 25% lower than a year ago.

But before everyone gets all Green Shootie ...

This graph shows light vehicle sales since the BEA started keeping data in 1967.

Breaking 10 million (SAAR) in June might put sales 10% off the bottom in February, but is is still more than 25% off from June 2008 (13.7 million light vehicle SAAR) and still near the bottom of the cliff.

by Calculated Risk on 6/29/2009 06:39:00 PM

In a 8-K regulatory filing today, Guaranty Financial stated the only "only remaining means by which the Company might possibly raise sufficient capital" is with the help of the FDIC. The Company expects current shareholders to be wiped out.

According to the Houston Business Journal (ht Tim), Guaranty has $14.4 billion in assets, and would be the largest bank to fail this year.

From the SEC filing:

Based on the current status of discussions involving its principal stockholders, other sources of financing, and certain regulatory authorities, the Board of Directors and management of the Company believe that the only remaining means by which the Company might possibly raise sufficient capital for it and its wholly-owned subsidiary, Guaranty Bank (the “Bank”), to comply with the Orders to Cease and Desist issued by the Office of Thrift Supervision (“OTS”) described in the Company’s Current Report on Form 8-K filed on April 8, 2009, is through a plan for open bank assistance (“Open Assistance”). The Open Assistance plan, which the Company is discussing with the Federal Deposit Insurance Corporation (“FDIC”) and the OTS, would involve a significant equity capital infusion from private investors, including the Company’s current principal stockholders, and an agreement under which the FDIC would absorb a portion of any losses associated with a pool of certain of the Company’s assets.

An Open Assistance plan must be approved by the FDIC. Before the FDIC can provide Open Assistance to the Bank, it must establish that the assistance is the least costly to the deposit insurance fund of all possible methods for resolving the financial condition of the Bank. The FDIC may deviate from the least cost requirement only in limited circumstances to avoid “serious adverse effects on economic conditions or financial stability” or “systemic risk” to the banking system. An additional condition to Open Assistance is that the OTS and FDIC must also determine that the Bank’s management is competent, has complied with all applicable laws, rules, and supervisory directives and orders, and has not engaged in any insider dealings, speculative practices, or other abusive activity. The FDIC may not approve an Open Assistance plan if it would benefit any stockholder or affiliate of the Company. As a result, the Company expects that the implementation of any Open Assistance plan would essentially eliminate the value of any of the Company’s currently outstanding equity interests, including shares of the Company’s common stock.

Open Assistance has historically been used extremely rarely by the FDIC, and there is no assurance that it would be available to the Company or the Bank in this case. In addition, while the Company has received expressions of interest from private investors with respect to the necessary capital infusion from private investors, it has not received capital commitments from any of these investors. Accordingly, the Company has not yet formally submitted to the FDIC its plan for Open Assistance, and it may ultimately not be able to do so. If a plan is formally submitted, the FDIC may choose not to approve it.

If the FDIC does not approve a plan for Open Assistance, the Company will no longer have the intent and ability to hold its mortgage-backed securities portfolio to recovery of unrealized losses, and, consequently, there would be substantial doubt that the Company would be able to continue as a going concern. In such case, the Company would be required to take material charges relating to the impairment of assets, in which case the preliminary financial information provided by the Company in previous Forms 12b-25 for the periods ended December 31, 2008 and March 31, 2009 should not be relied upon.