by Calculated Risk on 7/14/2011 09:10:00 AM

On a monthly basis, retail sales increased 0.1% from May to June (seasonally adjusted, after revisions), and sales were up 8.1% from June 2010. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $387.8 billion, an increase of 0.1 percent (±0.5%) from the previous month, and 8.1 percent (±0.7%) above June 2010.

Click on graph for larger image in graph gallery.

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

Retail sales have been mostly moving sidways since March.

Retail sales are up 16.6% from the bottom, and now 2.5% above the pre-recession peak.

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

Retail sales ex-gasoline increased by 6.4% on a YoY basis (8.1% for all retail sales).

This was about at expectations for no change in retail sales. Retail sales ex-autos were unchanged, and gas station sales declined 1.3% last month as prices fell. Another weak retail sales report ...

by Calculated Risk on 7/14/2011 08:30:00 AM

The DOL reports:

Special Factor: Minnesota has indicated that approximately 11,500 of their reported initial claims are a result of state employees filing due to the state government shutdown.

In the week ending July 9, the advance figure for seasonally adjusted initial claims was 405,000, a decrease of 22,000 from the previous week's revised figure of 427,000. The 4-week moving average was 423,250, a decrease of 3,750 from the previous week's revised average of 427,000.

This is the 14th straight week with initial claims above 400,000, and the 4-week average is at about the same the level as in January.

The following graph shows the 4-week moving average of weekly claims for the last 40 years.

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased slightly this week to 423,250.

This is just one week, and this series is very volatile (that is why most people follow the 4-week average). Also last week was revised up significantly. Still, the decline to 405,000 is a positive ...

by Calculated Risk on 7/13/2011 09:05:00 PM

The Euro zone summit meeting originally planned for Friday has apparently been delayed - probably until next week or until an agreement can be announced.

Meanwhile the bank stress test results will be released on Friday, and there is already disagreement about the results.

• From Reuters: Euro zone leaders summit on Greece seen next week-diplomats

Leaders of countries in the euro zone are likely to meet next week to discuss a second aid package for Greece as well as private-sector involvement in reducing the country's debt burden, EU diplomats said on Wednesday.

• From the Irish Times: Europe must be decisive on euro crisis, says Kenny

EUROPE HAS to respond “comprehensively and decisively’’ to the economic crisis, Taoiseach Enda Kenny told the Dáil. “Ireland will contribute to that,’’ he said.

Mr Kenny said there was no point in having a EU Council meeting tomorrow unless there was a decision, or set of decisions, on the European situation.

• From Bloomberg: Germany’s Helaba Snubs EU Stress-Test Regulator in Run Up to Publication

Germany’s Landesbank Hessen- Thueringen snubbed the European Union’s bank stress tests two days before the publication of results, refusing to give the European Banking Authority permission to publish all of its data.

The bank, known as Helaba, disputes the EBA’s measurements of Core Tier 1 capital, the factor by which banks are said to have passed or failed the tests, because they don’t include some instruments allowed by German regulators. The lender said it passed the exams with a capital ratio of 6.8 percent, counting contractual changes around state funds of 1.92 billion euros ($2.71 billion), not included in the EBA results.

• From the Irish Times: Irish bond yields soar to record highs on 'junk' status

by Calculated Risk on 7/13/2011 05:07:00 PM

From Moody's: Moody's Places US Aaa Government Bond Rating and Related Ratings on Review for Possible Downgrade

Moody's Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.
...
The review of the US government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default.

Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate.

No surprise.

by Calculated Risk on 7/13/2011 01:00:00 PM

• From Bloomberg: Greece’s Issuer Default Ratings Cut to CCC From B+ by Fitch on Lack of Aid

Greece had its long-term foreign and local currency issuer default ratings cut to CCC from B+ by Fitch Ratings because of the lack of an aid program for the debt-laden country.

• Did Bernanke shift on QE3?

From Binyamin Appelbaum at the NY Times: Bernanke Says Fed Would Consider New Stimulus Effort

The unexpected weakness is forcing the Fed to reconsider its determination early this year to refrain from new efforts to stimulate growth. While no additional actions appear imminent, Mr. Bernanke said in Congressional testimony Wednesday that the Fed would be prepared to act if necessary ...

Mr. Bernanke made clear Wednesday that a resumption of the central bank’s economic revival campaign faces a high hurdle. He said that the Fed would look for two conditions: economic weakness beyond current expectations and a renewed threat of deflation.

The first seems obvious to most people. The second, however, may the more important factor.

From Jon Hilsenrath at the WSJ: Bernanke Shifts Tone on Further Policy Easing

Chairman Ben Bernanke acknowledged in his House testimony today that the Federal Reserve might need to take additional steps to ease monetary policy. “The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” he said.

This represents a slight shift in tone for the Fed chairman. In a press conference in June, Mr. Bernanke, in response to a question, laid out what the Fed COULD do if it saw a need to provide more stimulus to the economy. In his testimony Wednesday, he effectively said more stimulus MIGHT be needed, but only under certain conditions, namely persistent slow growth and a slowdown in inflation that again raises the prospect of Japan-style deflation.

This isn't like Jackson Hole last year when Bernanke telegraphed QE2. If this is a shift in tone, it is slight.