RSS Feed by Calculated Risk on 10/09/2011 04:13:00 PM
Sunday, October 09, 2011
Report: Merkel, Sarkozy Reach General Agreement on Bank Recapitalization
No details, but a new "deadline": the end of October. There is a meeting of European leaders scheduled for Oct 17th and 18th summit in Brussels.
• From the Financial Times: Merkel and Sarkozy set euro deadline
France and Germany have set themselves a deadline of the end of October to reach agreement on a comprehensive package of measures to stabilise the eurozone, including the recapitalisation of European banks if they need it.• From the WSJ: Merkel, Sarkozy Claim Broad Agreement to Stabilize Euro Zone
excerpt with permission
German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday that they have reached broad agreement on a plan to shore up Europe's battered banks and restore stability to the euro zone. ...Yesterday:
"We are determined to do what is necessary to guarantee the recapitalization of our banks," Mrs. Merkel told reporters. "We will make proposals in a comprehensive package that will enable closer cooperation between euro-zone countries that will include changes to treaties."
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th
Europe Update: Merkel and Sarkozy are meeting today
by Calculated Risk on 10/09/2011 11:51:00 AM
• From the Financial Times: Merkel and Sarkozy hold talks on crisis German Chancellor Angela Merkel and French President Nicolas Sarkozy are holding the talks today in Berlin on the financial crisis. A key point is trying to agree on how to recapitalize European banks. Merkel is pushing for a solution prior to the Oct 17th and 18th summit of European leaders in Brussels.
• From the WSJ: Belgium, France to Nationalize Part of Dexia
The governments of Belgium and France agreed to nationalize the Belgian subsidiary of Dexia SA, paving the way for the embattled Belgian-French lender to be broken up.If Merkel and Sarkozy wait too long, the markets will force an ad-hoc approach.
• From Reuters: Barroso says Greek default would spread crisis: paper
"If we give up on Greece, there is a big danger that the crisis will spread to other countries," [European Commission President Jose Manuel Barroso] told Bild in an interview to be published on Monday ... "This is new territory for us and we are discussing solutions which have not really been tested before," he said.The next two weeks are critical for Europe.
But the European Union was convinced that a Greek bankruptcy was "not cheaper for all participants than the current aid schemes," he said.
Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th
Construction Employment
by Calculated Risk on 10/09/2011 08:57:00 AM
The graph below shows the number of total construction payroll jobs in the U.S., including both residential and non-residential, since 1969.
Construction employment is down 2.175 million jobs from the peak in April 2006, but up 53 thousand this year through the September BLS report.
Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment fairly recently (residential building employees in 1985, and residential specialty trade contractors in 2001).
Click on graph for larger image.
Usually residential investment (and residential construction) lead the economy out of recession, and non-residential construction usually lags the economy. Because this graph is a blend, it masks the usual pickup in residential construction following previous recessions. Of course residential investment didn't lead the economy this time because of the huge overhang of existing housing units.
This table below shows the annual change in construction jobs (total, residential and non-residential) and through September for 2011.
| Annual Change in Payroll jobs (000s) | |||
|---|---|---|---|
| Year | Total Construction Jobs | Residential Construction Jobs | Non-Residential |
| 2002 | -85 | 88 | -173 |
| 2003 | 127 | 161 | -34 |
| 2004 | 290 | 230 | 60 |
| 2005 | 416 | 268 | 148 |
| 2006 | 152 | -62 | 214 |
| 2007 | -198 | -273 | 75 |
| 2008 | -787 | -510 | -277 |
| 2009 | -1053 | -431 | -622 |
| 2010 | -149 | -113 | -36 |
| Through September 2011 | 53 | -6 | 59 |
After five consecutive years of job losses for residential construction (and four years for total construction), it looks like construction employment will increase this year (and residential will be close). However there will not be a strong increase in residential construction until the excess supply of housing is absorbed.
In addition residential investment has made a positive contribution to GDP so far this year for the first time since 2005.
Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th
Saturday, October 08, 2011
Unofficial Problem Bank list declines to 983 Institutions
by Calculated Risk on 10/08/2011 07:22:00 PM
Note: this is an unofficial list of Problem Banks compiled only from public sources.
Here is the unofficial problem bank list for Oct 7, 2011.
Changes and comments from surferdude808:
As anticipated, it was a quiet week for changes to the Unofficial Problem Bank List. This week, there were three removals, which leaves the list with 983 institutions and assets of $404.1 billion. A year ago, there were 877 institutions with assets of $417.3 billion.
The removals include the Federal Reserve terminating an action against State Bank Financial, La Crosse, MN ($303 million) and the two failures this week -- The Riverbank, Wyoming, MN ($417 million); and Sun Security Bank, Ellington, MO ($356 million).
Schedule for Week of Oct 9th
by Calculated Risk on 10/08/2011 02:15:00 PM
Earlier:
• Summary for Week Ending Oct 7th
The key economic releases this week are the September retail sales report on Friday, and the August trade balance report on Thursday. Retail sales should be strong - and possibly above the already strong consensus. Also consumer sentiment might recover some more in October (released on Friday).
The FOMC minutes (released on Wednesday) will be fairly downbeat as participants discuss the "significant downside risks" mostly due to the European crisis.
Monday is a federal government and bank holiday in observance of Columbus Day. The stock market will be open.
7:30 AM: NFIB Small Business Optimism Index for September. Click on graph for larger image in graph gallery.
This graph shows the small business optimism index since 1986. The index decreased to 88.1 in August from 89.9 in July. Small business optimism has declined for six consecutive months now.
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak since early August.
9:00 AM: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for September (a measure of transportation).
10:00 AM: Job Openings and Labor Turnover Survey for August from the BLS. In general job openings have been trending up, however overall labor turnover remains low.
2:00 PM: FOMC Minutes, Meeting of September 20-21, 2011. These minutes will be fairly negative with a discussion of “significant downside risks” and the new program to extend maturities.
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 405,000 from 401,000 last week.
8:30 AM: Trade Balance report for August from the Census Bureau. This graph shows the monthly U.S. exports and imports in dollars through July 2011. The trade deficit declined sharply in July.
The consensus is for the U.S. trade deficit to be around $46 billion, up from from $44.8 billion in July.
8:30 AM: Retail Sales for September. This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).
After a weak August, the consensus is for retail sales to increase 0.8% in September, and for a 0.4% increase ex-auto. Based on retailer reports and auto sales, this will be a fairly strong report.
8:30 AM: Import and Export Prices for September. The consensus is a for a 0.5% decrease in import prices.
9:55 AM: Reuters/University of Mich Consumer Sentiment preliminary for October. Consumer sentiment declined sharply in July and August - from 71.5 in June to 55.7 in August - the August reading was just above the crisis low of 55.3 in November 2008.
The consensus is for a slight increase in October to 60.0 from 59.4 in September.
10:00 AM: Manufacturing and Trade: Inventories and Sales for August. The consensus is for a 0.4% increase in inventories.
