by Calculated Risk on 8/29/2011 10:00:00 AM

From the NAR: Pending Home Sales Slip in July but Up Strongly From One Year Ago

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.
...
The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.

The consensus was for a 1% decrease in the index. This suggests existing home sales will stay weak.

Earlier:
• Personal Income increased 0.3% in July, Spending increased 0.8%
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/29/2011 08:30:00 AM

The BEA released the Personal Income and Outlays report for July:

Personal income increased $42.4 billion, or 0.3 percent ... in July ... Personal consumption expenditures (PCE) increased $88.4 billion, or 0.8 percent.
...
Real PCE increased 0.5 percent ... The price index for PCE increased 0.4 percent in July

The following graph shows real Personal Consumption Expenditures (PCE) through July (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image in graph gallery.

PCE increased 0.8 in July, and real PCE increased 0.5% as the price index for PCE increased 0.4 percent in July.

Note: The PCE price index, excluding food and energy, increased 0.2 percent, the same increase as in June.

The personal saving rate was at 5.0% in July.

Personal saving -- DPI less personal outlays -- was $582.8 billion in July, compared with $638.6 billion in June. Personal saving as a percentage of disposable personal income was 5.0 percent in July, compared with 5.5 percent in June.

This graph shows the saving rate starting in 1959 (using a three month trailing average for smoothing) through the June Personal Income report.

Real PCE was revised up a little for Q2 too. This was a solid increase in spending and above the consensus of 0.5% - however I expect August to be weaker due to the confidence shattering debt ceiling debate.

by Calculated Risk on 8/29/2011 12:00:00 AM

Nothing new, but a summary of some of the headwinds for the large banks face - and the prospects for more layoffs (ht Brian).

From Eric Dash at the NY Times: As Fortunes Dim, Banks Confront a Leaner Future

Battered by a weak economy, the nation’s biggest banks are cutting jobs, consolidating businesses and scrambling for new sources of income ... UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.
...
Lending, the prime driver of revenue, has been depressed for several years and is not expected to pick up anytime soon ... Trading profits have also been waning amid a slowdown in volumes, and Wall Street’s once-lucrative mortgage packaging business is unlikely to bring in the blockbuster fees it earned during the housing boom.

On top of that, the financial regulations enacted by Congress last year are causing banks to add more risk managers and compliance staff ...

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/28/2011 05:21:00 PM

Last week I noted that 1-4 family Real Estate Owned (REO) by FDIC insured institutions declined to an estimated 80,600 in Q2. As Tom Lawler noted, the FDIC does not collect data on the number of properties held by FDIC-insured institutions, instead they aggregate the carrying value of 1-4 family residential REO on FDIC-insured institutions’ balance sheets.

Here is a graph of the 1-4 family REO carrying value for FDIC insured institutions since Q1 2003.

For Q2 2011, the FDIC reported (See Table V-A) the value was $12.09 billion, down from $13.28 billion in Q1, and down from a high of $14.76 billion in Q3 2010.

Click on graph for larger image in new window.

The left scale is the dollars reported in the FDIC Quarterly Banking Profile, and the right scale is an estimate of REOs using an average of $150,000 per unit. Using this estimate for the average per REO, that gives 80.6 thousand REO at the end of Q2, down from 88.5 thousand at the end of Q1. This is about 5 times the carrying value in 2003.

Note: FDIC insured institutions have other REO and this is just the 1-4 family residential REO (other REO includes Construction & Development, Commercial, Farm Land).

Of course this is just a small portion of the total REO. Here is a repeat of the graph I posted last week showing REO inventory for Fannie, Freddie, FHA, Private Label Securities (PLS), and FDIC insured institutions. (economist Tom Lawler has provided some of this data).

Total REO decreased to 493,000 in Q2 from almost 550,000 in Q1.

As Tom Lawler noted: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is around 548,000 in Q2.

Important: REO inventories have declined over the last couple of quarters. This is a combination of more sales and fewer acquisitions due to the slowdown in the foreclosure process. There are many more foreclosures coming - see my earlier post on Mortgage Delinquencies and REOs.

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/28/2011 11:35:00 AM

From CNBC: Major Exchanges in NY Still Expect to Open Monday

Main U.S. stock exchanges Nasdaq, NYSE and BATS expect to open trading on Monday as usual despite Hurricane Irene, although a final decision, especially on opening the Big Board floor, is yet to come.

The main question right now is whether public transportation in New York City will be restored by Monday morning. ... The U.S. Securities and Exchange Commission and market operators NYSE Euronext, Nasdaq OMX Group and others plan a conference call at 1 p.m. ET Sunday to discuss power outages and New York City transportation ...

Best wishes to all in Irene's path.

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th