by Calculated Risk on 7/13/2011 10:00:00 AM

Note: Testimony starts at 10 AM ET.

Here is the CSpan feed

Here is the CNBC feed.

Prepared testimony from Fed Chairman Ben Bernanke: Semiannual Monetary Policy Report to the Congress

by Calculated Risk on 7/13/2011 09:00:00 AM

This is the new UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: Pulse of Commerce Index^TM

Press Release: Pulse of Commerce Index Rebounds – Up 1.0 Percent In June

The Ceridian-UCLA Pulse of Commerce Index™ (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation rose 1.0 percent in June on a seasonally and workday adjusted basis, a welcome rebound following declines in the previous two months. Despite the stronger performance in June, the economy continues to remain in idle with the PCI remaining below its level at the end of the first quarter.

“Over the past year the U.S. economy has been in ‘she loves me, she loves me not’ mode,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”

Click on graph for larger image in graph gallery.

This graph shows the index since January 2000.

“The June PCI is anticipating industrial production to show modest growth of 0.17 percent for June when the number is released by the Government on July 15, 2011,” [said Craig Manson, senior vice president and Index expert for Ceridian]
...
The Ceridian-UCLA Pulse of Commerce Index™ is based on real-time diesel fuel consumption data for over the road trucking ...

This index has mostly been moving sideways all year. As Leamer noted, this "could be the start of a positive trend, but a one month spike does not make a trend, particularly in light of the many false starts experienced over the last year."

Notes: I've heard from other sources that trucking picked up a little at the end of June - perhaps because of lower fuel prices. This index does appear to track Industrial Production over time (with plenty of noise).

by Calculated Risk on 7/13/2011 07:21:00 AM

The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey

The seasonally adjusted Purchase Index decreased 2.6 percent from one week earlier. ... Refinance Index decreased 6.2 percent from the previous week, and was 42.1 percent lower than a year ago. The Refinance Index has decreased the past four consecutive weeks, reaching its lowest level since April 29, 2011.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.55 percent from 4.69 percent, with points increasing to 0.99 from 0.90 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image in graph gallery.

The four week average is still mostly moving sideways at about 1997 levels.

Of course this doesn't include the large number of cash buyers ... but this suggests purchase activity remains fairly weak.

by Calculated Risk on 7/12/2011 09:35:00 PM

I'm frequently asked why I'm not worried about the debt ceiling, and why the bond market doesn't seem to care.

The answer is the debt ceiling is a joke. It serves no purpose except political posturing.

The budget is about the deficit; the debt ceiling is about paying the bills - and the U.S. will pay its bills.

Here is what I wrote two months ago:

Congress will probably push this to the brink, but they will raise the debt ceiling before the country defaults. The first rule for most politicians is to get re-elected, and the easiest way to guarantee losing in 2012 is to throw the country back into recession. If that happened, I believe the voters would correctly blame the leaders of Congress, and I think Congress knows that too. Therefore it won't happen. I'm not worried and neither are investors.

We are almost to the "brink".

Let me add: In this case, voters would blame the Republican party, and if the debt ceiling is not raised, the "Republican" brand would become toxic and synonymous with fiscal irresponsibility. The leaders of Congress know that and they will scramble to find a solution. I doubt this is the end of the GOP :-)

Earlier I argued the smart thing to do would be to eliminate the debt ceiling. Maybe we are headed in that direction. Today, Senator Mitch McConnell proposed something along those lines (not clean though).

Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a new proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it.

Somehow the debt ceiling will be raised. Of course there is a huge battle ahead over the budget for the next fiscal year (the fiscal year starts on October 1st). It never ends.

by Calculated Risk on 7/12/2011 05:15:00 PM

Special Note: It now appears the NAR will release the benchmark revisions in August (ht Mary Ellen). These revisions are expected to show significantly fewer sales and lower levels of inventory for the last few years. Hopefully the new methodology will be fully disclosed. Also, hopefully the NAR will release sales and inventory for all revisions (not just the last year).

From DataQuick: Southland Home Sales Quicken, Median Price Highest This Year

Southern California home sales last month shot up more than usual from May to the highest level for any month since June 2010, when the market got its last big boost from homebuyer tax credits. Sales of lower-cost homes, driven by investors and first-time buyers, and even high-end sales continued to outshine traditional move-up activity in middle price ranges ...

A total of 20,532 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in June. That was up 11.6 percent from 18,394 in May but down 14.0 percent from 23,871 in June 2010, according to San Diego-based DataQuick.
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Builders continue to suffer on a scale not seen in decades: The 1,395 newly built houses and condos sold last month marked a 36 percent drop from a year earlier and the lowest new-home total for a June in DataQuick’s records.
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Distressed property sales accounted for just over half of the Southland resale market last month. Roughly one out of three homes resold was a foreclosure, while almost one in five was a “short sale.”

This is another report suggesting an increase in existing home sales in June compared to the reported 4.81 million sold in May on a seasonally adjusted annual rate (SAAR) basis (before the benchmark revisions).

On New Home sales: My understanding is DataQuick reports when the escrow closes, and the Census Bureau reports when a contract is signed. It usually takes about 6 months to close (builders usually build to contract with few speculative homes these days). So this low level is related to the Census Bureau reports for 6 months ago. Also, last year, June sales (reported at close) were boosted by the housing tax credit.

National existing home sales for June will be reported on July 20th, and new home sales will reported on July 26th.