by Calculated Risk on 5/11/2010 08:52:00 AM

From NFIB: Small Business Optimism Index Improves in April

The National Federation of Independent Business Index of Small Business Optimism gained 3.8 points in April, rising to 90.6 and ending seven straight quarters of under 90 readings. The persistence of Index readings below 90 is unprecedented in survey history. Nine of the 10 Index components rose, particularly the outlook for general business conditions and sales, and one was unchanged. Still, job measures barely moved and capital expenditure plans were flat.

“The gains are a step in the right direction, but they are not enough to signal a solid recovery is in place,” said William Dunkelberg, NFIB chief economist. “Owners are feeling a little better about things, but not enough to turn them into concrete action.”

The outlook has improved, and sales and earnings have picked up some, but hiring is "bleak".

“What small businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities,” said Dunkelberg. “Bottom line, the recovery will be sub-par in comparison to the recoveries we experienced following past severe recessions such as 1980-82."

Note: although the press release doesn't mention it, there is a heavy concentration of construction related businesses in the small business sector - and obviously that is one of the weakest areas.

by Calculated Risk on 5/10/2010 10:43:00 PM

Note: this is the employment section of the April survey that will be released Tuesday.

From the WSJ: At Small Businesses, Hiring Still Drags

April marked the 27th consecutive month in which small businesses either shed more or the same number of jobs that they added, according to a monthly survey to be released Tuesday by the National Federation of Independent Business, a trade group in Washington, D.C. Since July 2008, employment per firm has fallen steadily each quarter, logging the largest reductions in the survey's 35-year history. Going forward, more small-business owners say they plan to eliminate jobs compared with those that expect to create new jobs over the next three months.

And from the National Federation of Independent Business: Jobs Picture Still Bleak for Small Business

“The steep recession will unlikely be followed by a steep recovery, the numbers just aren’t moving in that direction. [said William C. Dunkelberg, chief economist for the National Federation of Independent Business] "April marks the 27th consecutive ‘no new jobs’ monthly reading."

“There is little enthusiasm among owners to hire more workers, primarily due to continued weak sales trends.”

by Calculated Risk on 5/10/2010 07:11:00 PM

Here is a 60 Minutes piece on Walking Away, aka 'Strategic Defaults' and as ' Ruthless Defaults' by lenders. (ht Michael).

Just a note - anyone considering this should talk to an attorney, and they should also talk with their lender. If it can be arranged, a short sale is much better than a foreclosure for all parties ...

by Calculated Risk on 5/10/2010 03:55:00 PM

The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA increased by 22% in Q1 2010 from Q4 2009. The REO inventory (foreclosed homes) increased 59% compared to Q1 2009 (year-over-year comparison).

Click on graph for larger image in new window.

This graph (ht Tom Lawler) shows the REO inventory for Fannie, Freddie and FHA through Q1 2010.

Even with all the delays in foreclosure, the REO inventory has increased sharply over the last three quarters, from 135,868 at the end of Q2 2009, to 153,007 in Q3 2009, 172,357 at the end of Q4 2009 and now 209,500 at the end of Q4 2010.

These are new records for all three agencies.

Remember this is just a portion of the total REO inventory. Private label securities and banks and thrifts hold an even larger number of REOs. For more, see Tom Lawler's earlier post: REO: Agencies vs. Private Label and from James Hagerty at the WSJ in March writing about a Barclays Capital report: Supply of Foreclosed Homes on the Rise Again.

by Calculated Risk on 5/10/2010 02:16:00 PM

From the SEC: Statement on Meeting With Exchanges

"This morning, SEC Chairman Mary Schapiro had a constructive meeting with the leaders of six exchanges — the New York Stock Exchange, NASDAQ, BATS, Direct Edge, ISE and CBOE — and the Financial Industry Regulatory Authority to discuss the causes of Thursday's market events, the potential contributing factors, and possible market reforms.

"As a first step, the parties agreed on a structural framework, to be refined over the next day, for strengthening circuit breakers and handling erroneous trades."

Why not use technology to slow down price changes on individual stocks? It is amazing that we still don't have an explanation for the weird price changes last Thursday.