by Calculated Risk on 6/11/2010 08:30:00 AM

On a monthly basis, retail sales decreased 1.2% from April to May (seasonally adjusted, after revisions), and sales were up 6.9% from May 2009 (easy comparison).

Click on graph for larger image in new window.

This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

The red line shows retail sales ex-gasoline and shows the increase in final demand ex-gasoline has been sluggish.

Retail sales are up 8% from the bottom, but still off 4.6% from the pre-recession peak.

The second graph shows the year-over-year change in retail sales (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 5.6% on a YoY basis (6.9% for all retail sales). The year-over-year comparisons are easy now since retail sales collapsed in late 2008. Retail sales bottomed in December 2008.

Here is the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $362.5 billion, a decrease of 1.2 percent (±0.5%) from the previous month, but 6.9 percent (±0.7%) above May 2009.

This is just one month, but this is a weak report.

by Calculated Risk on 6/10/2010 11:59:00 PM

From Dina ElBoghdady at the WaPo: Bill would extend home buyers' deadline for tax credit

Home buyers hoping to take advantage of a lucrative federal tax credit would get three extra months to complete their purchases under a proposal introduced in the Senate on Thursday.

I've wasted enough posts explaining why this was a poor use of taxpayers' money .. but a three month extension to close? Geesh ... that is ridiculous.

by Calculated Risk on 6/10/2010 08:32:00 PM

From HotelNewsNow.com: STR: Economy segment tops occupancy increases

Overall, in year-over-year measurements, the industry’s occupancy increased 1.0 percent to 57.1 percent. Average daily rate dropped 2.3 percent to US$93.93. Revenue per available room decreased 1.3 percent to US$53.61.

Note: This was a difficult comparison because of the timing of Memorial Day.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change.

The graph shows the distinct seasonal pattern for the occupancy rate - higher in the summer because of leisure/vacation travel.

The occupancy rate collapsed in the 2nd half of 2008 (blue line), and 2009 was the worst year since the Great Depression.

For the last three months, the occupancy rate has been running above the same period in 2009 - but still well below the normal level.

Last year leisure travel (summer) held up better than business travel, now it appears business travel is recovering - and we will soon see if leisure travel will also pick up this year.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/10/2010 05:54:00 PM

Here are two graphs from the Atlanta Fed weekly Financial Highlights released today (graph as of June 9th):

UPDATE: As I noted, this data is as of June 9th (or earlier). The spreads narrowed today. Nemo has links to the data on the sidebar of his site. "The 10-year Obligacion del Estado fell to 4.48%, for a spread of 187 bps ... [lower than the] 211 bps the Atlanta Fed cited."

Click on graph for larger image in new window.

From the Atlanta Fed:

Following a decline after the initial reports of the EU/IMF €750 billion package and ECB bond purchases, peripheral euro area bond spreads (over German bonds) have widened.

In particular, the bond spreads for Italy and Spain have widened the most relative to their levels before the rescue package was unveiled.

After initially declining four weeks ago, sovereign debt spreads have begun widening for peripheral euro area countries. As of June 9, the 10-year bond spread stands at 554 basis points (bps) for Greece, 258 bps for Ireland, 265 bps for Portugal, and 211 bps for Spain.

The spread to Italian bonds has increased 76 bps since May 11, from 1% to 1.75%, while Portuguese bond spreads are 112 bps higher during the same period. U.K. bond spreads are essentially unchanged.

Similarly, CDS spreads have widened after the initial response to the stabilization package.

After declining following the policy response, the bond and CDS spreads have resumed their steady climb.

Is this what IMF Managing Director Dominique Strauss-Kahn meant by "contained"?

by Calculated Risk on 6/10/2010 04:00:00 PM

Quote of the day via Bloomberg (ht Bob_in_MA):

We do believe the recovery is strong,” Dominique Strauss-Kahn said in an interview with Bloomberg HT television in Istanbul. While rising debt levels are a risk to growth, mainly in Europe, authorities in the region “are now really committed to solve it” and “the problem has been contained,” he said.

And this reminds us of Fed Chairman Bernanke's testimony on March 28, 2007:

"[T]he impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained."

Uh oh, not another problem "contained"!

Click on graph for larger image in new window.

And a market graph from Doug Short of dshort.com (financial planner).

This graph shows the ups and downs of the market since the high in 2007.

And on short sale fraud, from Bloomberg: Banks Face Short-Sale Fraud as Home ‘Flopping’ Rises (ht Mike in Long Island, Brian, Alex)

Two Connecticut real estate agents ... are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed --known as a short sale -- without disclosing that there were better offers. They then flipped the houses for a profit.

There are many versions of short sale fraud. Here is a story I recently heard from a reliable source:

A homeowner in California's Inland Empire bought for $350,000, refinanced during the boom for over $700,000 (cash out), and put in a pool, fixed up the house, and bought some toys. After house prices collapsed, and his loan reset to the fully amortizing rate, he talked his bank into a short sale (the homeowner is a real estate agent) - to his cousin for $350,000! The previous homeowner is now leasing the home from his cousin ...

The house was listed on the MLS for one minute at midnight (to satisfy the bank). And then listed as pending. These one minute listings are a red flag for possible fraud. Whether the transaction is not arms length (as above), or the listing agent is just trying to get both sides of the commission - this is not the best deal for the lenders (and frequently taxpayers).

This is a classic agency problem. As part of a short sale agreement, I think the bank should hire the listing agent - and also require the property to be listed openly for a minimum period.