by Calculated Risk on 9/14/2011 11:41:00 PM

Tomorrow we will see if there is any improvement from the dismal August readings for both the Philly Fed and NY Fed (Empire state) manufacturing surveys. On Friday, the preliminary Reuters/University of Mich Consumer Sentiment for September will be released.

Thursday at 8:30 AM ET: NY Fed Empire Manufacturing Survey for September. The consensus is for a reading of -3.6, up from -7.7 in August (above zero is expansion).

10:00 AM: Philly Fed Survey for September. This index fell off a cliff in August. The consensus is for a reading of -15.0 (above zero indicates expansion), up from -30.7 last month.

Friday at 9:55 AM: Reuters/University of Mich Consumer Sentiment preliminary for September. The consensus is for a slight increase to 56.0 from 55.7 in August.

Last month I argued the sharp decline in sentiment - from an already low level - might be due to the debt ceiling debate. I looked at some of the previous spikes down in sentiment due to fairly short term events - and those events suggested sentiment should recover in 2 to 4 months. So maybe in October or November - but it is too early in September.

Of course sentiment - and the manufacturing surveys - could have declined because of other factors (weak labor market, European financial crisis, etc), and then the surveys might remain weak. We will get our first look tomorrow.

by Calculated Risk on 9/14/2011 06:30:00 PM

The first of two key meetings this week was held earlier today via video conference with German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek prime minister George Papandreou. On Friday, the European finance ministers will meet with Timothy Geithner making an appearance.

From the WSJ: Greece's Future Is With Euro Zone, Say Merkel and Sarkozy

German Chancellor Angela Merkel and French President Nicolas Sarkozy are convinced that Greece's future is within the euro zone, Mrs. Merkel's spokesman said after the two leaders held a three-way conference call with Greek Prime Minister George Papandreou.

But Mrs. Merkel and Mr. Sarkozy also stressed during the call the need for Greece to put into practice in a strict and effective way the already-agreed measures of its austerity program under a current bailout package, the spokesman, Steffen Seibert, said.

From the NY Times: Germany and France Back Greece on Austerity Effort

The Greek prime minister vowed to abide by austere cuts in the struggling country’s budget, and the leaders of France and Germany promised to support Greece as a central part of the euro zone, the three officials said Wednesday in a statement after a joint conference call.
...
Together, they are pushing all euro zone states to ratify as soon as possible decisions made on July 21, which would expand the European Financial Stability Facility and allow it increased flexibility to protect Greece and other heavily indebted members ...

From the Irish Times: Commission prepares plans to introduce euro area bonds

European Commission president José Manuel Barroso said he is close to proposing options on joint euro-area bond sales, putting officials in Brussels on a collision course with Germany.

Speaking this morning, Mr Barroso said the commission is preparing options for the introduction of eurobonds. He called for much closer political integration and said the EU needed a "new federalist moment" to confront the most serious challenge for the union in a generation.

From Reuters: EU warned of credit crunch threat, French banks hit (ht mp)

In a report prepared for ministers meeting in Poland on Friday and Saturday, senior EU officials said the 17-nation currency area faces a "risk of a vicious circle between sovereign debt, bank funding and negative growth."

"While tensions in sovereign debt markets have intensified and bank funding risks have increased over the summer, contagion has spread across markets and countries and the crisis has become systemic," the influential Economic and Financial Committee said.

"A further reinforcement of bank resources is advisable," ministers were told ...

From the Economic Times: Dutch Finance Minister says has not given up on Greece (ht ghostfaceinvestah)

The Dutch government has not given up on the rescue of Greece and is determined to do everything possible to save the euro zone, the Dutch finance minister told members of parliament on Wednesday.

"To be clear ... this Cabinet has the firm will to do everything possible to save the euro or the euro zone," Finance Minister Jan Kees de Jager told members of parliament.

He strongly denied Dutch media reports that the government expected Greece to default ...

From Bloomberg: Credit Agricole Debt Ratings Cut by Moody’s Along With Societe Generale’s

And from Bloomberg: ECB Will Lend Dollars to Two Euro-Region Banks as Market Funding Tightens

The European Central Bank said it will lend dollars to two euro-area banks tomorrow, a sign they are finding it difficult to borrow the U.S. currency in markets.

The ECB allotted $575 million in a regular seven-day liquidity-providing operation at a fixed rate of 1.1 percent. It’s the first time since Aug. 17 that a lender requested dollars from the ECB.

The Greek 2 year yield declined slightly to 74.5%. The Greek 1 year yield is at 142%.

The Portuguese 2 year yield is up to 16.1% and the Irish 2 year yield is at 9.5%.

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 9/14/2011 03:57:00 PM

Existing home sales for August will be released on Weds Sept 21st. Economist Tom Lawler is estimating the NAR will report sales of 4.91 million on a seasonally adjusted annual rate (SAAR) basis. That would be an increase from 4.67 million in July.

Existing home sales are reported at closing, and new home sales are reported when the contract is signed, so the debt ceiling slowdown will negatively impact reported new home sales much more than existing home sales.

From DataQuick: Southland August Home Sales Climb, Median Price Falls Again

A total of 19,654 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in August. That was up 8.6 percent from 18,090 in July and up 6.0 percent from 18,541 in August 2010, according to San Diego-based DataQuick.
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August was the first month since June 2010 to post a year-over-year gain in home sales. Last month was also the first since November 2009 in which all six Southland counties logged higher sales than a year earlier. One reason it’s getting easier to beat the year-ago sales numbers: Home sales fell off sharply last summer after federal and state homebuyer tax credits expired.
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Last month’s sales picture changes when viewed in terms of the average number of homes sold daily. Last month had 23 business days (the most for any August since 2007) on which home sales could be recorded, compared with 20 business days in July and 22 in August 2010. The average number of homes sold daily last month fell about 6 percent from July and rose less than 1 percent compared with a year earlier.
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Foreclosure resales – properties foreclosed on in the prior 12 months – made up 34.6 percent of the Southland resale market in August, up from 34.5 percent in July but down from 37.6 percent a year earlier. Foreclosure resales peaked at 56.7 percent in February 2009.

Short sales, where the sale price fell short of what was owed on the property, made up an estimated 17.9 percent of Southland resales last month. That was up from 17.3 percent in July but down from 18.9 percent a year ago. Two years ago the estimate was 14.5 percent.

So 34.6 percent were foreclosure resales and 17.9 percent were short sales - over 50% were distressed sales in August!

by Calculated Risk on 9/14/2011 01:54:00 PM

Yesterday David Johnson at the Census Bureau wrote: Households Doubling Up

In coping with economic challenges over the past few years, many of us have combined households with other family members or individuals. These “doubled-up” households are defined as those that include at least one “additional” adult – in other words, a person 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder.

The Census Bureau reported today that the number and share of doubled-up households and adults sharing households across the country increased over the course of the recession, which began in December 2007 and ended in June 2009. In spring 2007, there were 19.7 million doubled-up households, amounting to 17.0 percent of all households. Four years later, in spring 2011, the number of such households had climbed to 21.8 million, or 18.3 percent.

David Johnson reported the numbers for spring 2007 and spring 2011. Here are the numbers for all years from spring 2007 through spring 2011. This is based on a survey of "roughly 78,000 households" as part of the Annual Social and Economic Supplement to the Current Population Survey. (Source: Census Bureau research, "Income, Poverty and Health Insurance Coverage in the United States" report)

Year	Doubled-up Households (000s)1	Percent of Households2
2007	19,747	17.0%
2008	19,956	17.1%
2009	20,683	17.7%
2010	22,000	18.7%
2011	21,766	18.3%

It appears the percent of households that are doubled-up peaked in 2010, and is starting to decline. This is probably part of the reason for the pickup last year in demand for rental units since most people leaving a doubled-up household probably rent as opposed to buy.

If there were a strong increase in employment, there would probably be a sharp increase in households - both from normal growth and from people moving out of doubled-up households. And that would help absorb the excess supply of housing units. Of course there probably won't be a strong increase in employment until more of the excess housing supply is absorbed!

Notes:
¹ The increase in the number and percent of doubled-up households between 2007 and 2011 was significant. The increase in the number of doubled up households was significant at the 10% level between 2008 and 2009 and between 2009 and 2010. The change in the number of doubled-up households between 2010 and 2011 was not statistically significant. The number of doubled-up households did not change significantly between either 2007 and 2008 or 2010 and 2011.

² The percentage point increase in doubled up households was significant at the 10% level between 2008 and 2009 and between 2009 and 2010. The percentage point decline in doubled-up households between 2010 and 2011 was also significant at the 10% level. The percentage of doubled-up households as a proportion of all households did not change significantly between 2007 and 2008.

by Calculated Risk on 9/14/2011 11:35:00 AM

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported - and possible hints about the trade report for August. LA area ports handle about 40% of the nation's container port traffic.

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image in graph gallery.

On a rolling 12 month basis, inbound traffic is down 0.9% from July, and outbound traffic is up 0.9%. Inbound traffic is "rolling over" and this suggests that retailers are cautious for the coming holiday season.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of August, loaded inbound traffic was down 9% compared to August 2010, and loaded outbound traffic was up 12% compared to August 2010.

Exports have been increasing, although bouncing around month-to-month. Exports are up from last year, but still below the peak in 2008.

Imports have been soft - this is the 3rd month in a row with a year-over-year decline in imports. This suggests a smaller trade deficit with Asian countries in August.