by Calculated Risk on 7/15/2009 09:15:00 AM

The Federal Reserve reported:

Industrial production decreased 0.4 percent in June after having fallen 1.2 percent in May. For the second quarter as a whole, output fell at an annual rate of 11.6 percent, a more moderate contraction than in the first quarter, when output fell 19.1 percent. Manufacturing output moved down 0.6 percent in June, with declines at both durable and nondurable goods producers. ... The rate of capacity utilization for total industry declined in June to 68.0 percent, a level 12.9 percentage points below its average for 1972-2008. Prior to the current recession, the low over the history of this series, which begins in 1967, was 70.9 percent in December 1982.
emphasis added

Click on graph for larger image in new window.

This graph shows Capacity Utilization. This series is at another record low (the series starts in 1967).

In addition to the weakness in industrial production, there is little reason for investment in new production facilities until capacity utilization recovers.

by Calculated Risk on 7/15/2009 08:31:00 AM

From the Census Bureau:

On a seasonally adjusted basis, the CPI-U increased 0.7 percent in June after rising 0.1 percent in May. The acceleration was largely caused by the gasoline index, which rose 17.3 percent in June and accounted for over 80 percent of the increase in the all items index.
...
The index for all items less food and energy rose 0.2 percent in June following a 0.1 percent increase in May.
...
The index for shelter rose 0.1 percent for the second straight month, as did the indexes of two of its major components, rent and owners' equivalent rent.

CPI is now off 1.2% year-over-year (YoY) - the largest YoY decline since the 1950s, but core CPI is up 1.7%.

Meanwhile owners' equivalent rent (OER) is up 1.9% year-over-year, although only up 0.1% in June. I expect OER to decline soon.

by Calculated Risk on 7/15/2009 08:11:00 AM

The MBA reports:

The Market Composite Index, a measure of mortgage loan application volume, was 514.4, an increase of 4.3 percent on a seasonally adjusted basis from 493.1 one week earlier.
...
The Refinance Index increased 17.7 percent to 2009.4 from 1707.7 the previous week and the seasonally adjusted Purchase Index decreased 9.4 percent to 258.8 from 285.6 one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.05 percent from 5.34 percent ...
emphasis added

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 2002.

Note: The increase in 2007 was due to the method used to construct the index: a combination of lender failures, and borrowers filing multiple applications pushed up the index in 2007, even though activity was actually declining.

The Purchase index is somewhat above the recent lows, but the big story is the Refinance index - refinance activity is up sharply as mortgage rates declined.

by Calculated Risk on 7/15/2009 12:41:00 AM

Futures are up tonight ...

Futures from barchart.com

Bloomberg Futures.

CBOT mini-sized Dow

CME Globex Flash Quotes

And the Asian markets are up about 1%.

And Elizabeth Warren, Chair of the Congressional Oversight Panel for TARP.

Note: My personal view is that in a financially literate world, almost all borrowers would pay off their credit card balances monthly (there are exceptions).

Best to all.

by Calculated Risk on 7/14/2009 08:32:00 PM

UPDATE: From the WSJ: CIT, Regulators Negotiate Details of Multipart Aid Package

CIT Group Inc. and federal regulators are working out details of an aid package ...

Under the plan regulators would allow CIT to transfer assets from its holding company to its bank in Utah; the Federal Reserve would let CIT pledge some of those assets at its discount window and the company would take steps to refinance some of its existing debt. ...

One likely concern for regulators is how CIT can fund a steep rise in assets at its Utah bank. Part of the company's strategy is to aggressively seek out deposits through brokers ...

The deal is not done and the FDIC can't be happy with a high level of brokered deposits. Another BFF candidate.