by Calculated Risk on 10/10/2011 01:05:00 PM

From Reuters: EU leaders delay summit to agree crisis plan

European Union leaders will delay a summit meeting planned for next Monday [to until October 23] buying time to agree a crisis strategy to boost struggling banks and cope with debt-laden Greece.
...
"This timing will allow us to finalize our comprehensive strategy on the euro area sovereign debt crisis," said [European Council President Herman Van Rompuy] ...

"Further elements are needed to address the situation in Greece, the bank recapitalization and the enhanced efficiency of stabilization tools (the EFSF bailout fund)."

The delay also means leaders will know whether Greece qualifies to receive the next tranche of aid under its existing rescue program ... Greece was wrapping up talks with EU and IMF officials on the vital aid, Finance Minister Evangelos Venizelos said on Monday.

By the end of the month, the EU will know if Greece will receive the next loan installment, and the EU leaders should announce a plan to recapitalize European banks. Sounds like another exciting Sunday in just under two weeks ...

by Calculated Risk on 10/10/2011 10:51:00 AM

I've been using inventory numbers from HousingTracker / DeptofNumbers to track changes in inventory. Tom Lawler mentioned this back in June (Tom also discussed how the NAR estimates existing home inventory - they don't aggregate data from local boards!)

A few key points:
• In a few months, the NAR is expect to release revisions for their existing home sales and inventory numbers for the last few years. The sales revisions will be down (the NAR has pre-announced this), and the inventory is expected to be revised down too. From the NAR last month: "Publication of the revisions is expected in several months, and we will provide a notice several weeks in advance of the publication date. ... Although there will be a downward revision to sales volume, there will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc."

• Using the deptofnumbers.com for monthly inventory (54 metro areas), it appears inventory will be back to late 2005 / early 2006 levels this month. Unfortunately the deptofnumbers only started tracking inventory in April 2006.

• Existing home inventory surged in the 2nd half of 2005 and that was a key indicator that the housing bubble was about the burst (I was able to call the top in activity mid-2005, and predict prices would start to decline in 2006).

Click on graph for larger image.

This graph shows the NAR estimate of existing home inventory through August (left axis) and the HousingTracker data for the 54 metro areas through early October. The HousingTracker data shows a steeper decline in inventory over the last few years (as mentioned above, the NAR will probably revise down their inventory estimates in a few months).

The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.

HousingTracker reported that the early October listings - for the 54 metro areas - declined 16.4% from last year. Inventory was down 16.7% year-over-year in September.

This is just "visible inventory" (inventory listed for sales). There is a large percentage of distressed inventory, and various categories of "shadow inventory" too. But the decline in listed or "visible" inventory is a key story in 2011 - and listed inventory for October is probably down to the lowest level since October 2005.

by Calculated Risk on 10/10/2011 08:54:00 AM

From the NY Times: Recession Officially Over, U.S. Incomes Kept Falling. A few excerpts:

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

So the inflation-adjusted median household income has continued to decline even after the recession ended.

And for people who lost their jobs - and were lucky enough to find a new job:

In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.

And on education:

Median annual income declined most for households headed by someone with an associate’s degree, dropping 14 percent, to $53,195, in the four-year period that ended in June 2011, the report said.

For households headed by people who had not completed high school, median income declined by 7.9 percent, to $25,157. For those with a bachelor’s degree or more, income declined by 6.8 percent, to $82,846.

Grim numbers. This is no surprise given the high level of unemployment and underemployment.

Weekend:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 11:50:00 PM

From Bloomberg: Merkel, Sarkozy Pledge Bank Recapitalization

Angela Merkel and Nicolas Sarkozy ... gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office.

... Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit.

The Asian markets are mixed tonight (update: Nikkei is closed).

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is up about 10 points, and Dow futures are up about 100 points.

Oil: WTI futures are up to $83.50 and Brent is up to $106 per barrel.

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 04:13:00 PM

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.
excerpt with permission

• From the WSJ: Merkel, Sarkozy Claim Broad Agreement to Stabilize Euro Zone

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. ...

"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."

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th