by Calculated Risk on 10/24/2011 08:30:00 AM

This is a composite index from the Chicago Fed: Index shows economic activity improved in September

Led by improvements in employment-related indicators, the Chicago Fed National Activity Index increased to –0.22 in September from –0.59 in August.
...
The index’s three-month moving average, CFNAI-MA3, edged up to –0.21 in September from –0.28 in August, but remained negative for the sixth consecutive month. September’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. Likewise, the economic slack reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

According to the Chicago Fed:

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

This index suggests the economy was still growing in September, but below trend.

Weekend:
• Schedule for Week of Oct 23rd
• Summary for Week ending Oct 21st

by Calculated Risk on 10/23/2011 11:51:00 PM

From Nick Timiraos at the WSJ: Home Lending Revamp Planned

Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program ... The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value ...

The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments ... Fannie and Freddie have also agreed to waive some fees that made refinancing less attractive for some.
...
Pricing details won't be published until mid-November, and lenders could begin refinancing loans under the retooled program as soon as Dec. 1 ... Loans that exceed the current limit of 125% of the property's value won't be able to participate until early next year. The program's expiration date ... will be extended through 2013. HARP is only open to loans that Fannie and Freddie guaranteed as of June 2009.

This is more aggressive than I expected and there will probably be a significant pickup in refinancing. This only applies to loans that are current and guaranteed by Fannie and Freddie.

Yesterday:
• Schedule for Week of Oct 23rd
• Summary for Week ending Oct 21st

by Calculated Risk on 10/23/2011 05:30:00 PM

• On Tuesday, the S&P/Case-Shiller House Price Index for August will be released (really a 3 month average of June, July and August). The consensus is for prices to increase 0.2% in August. Here is Zillow's forecast of Case-Shiller:

• Case-Shiller 20-City Composite index
... Not-seasonally adjusted: -3.7% year-over-year, -0.1% month-over-month
... Seasonally adjusted: -3.8% year-over-year, -0.3% month-over-month

• Case-Shiller 10-City Composite index
... Not-seasonally adjusted: -3.4% year-over-year, +0.2% month-over-month
... Seasonally adjusted: -3.5% year-over-year, -0.2% month-over-month

Because of seasonally distortions related to foreclosures, S&P reports the NSA numbers. But even with those distortions, I track the SA numbers - and those will probably show a month-over-month decline in August.

• The FHFA is expected to release changes to the HARP refinance plan this week. From Reuters: U.S. readies stronger lifeline for homeowners

Homeowners who owe more than their houses are worth will get new help to refinance in a government plan to be unveiled as early as Monday to support the battered housing sector ... the Federal Housing Finance Agency, intends to loosen the terms of the two-year-old Home Affordable Refinance Program, which helps borrowers who have been making mortgage payments on time but who have not been able to refinance as their home values have dropped.

HARP is currently open to borrowers whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac as long as their loans do not exceed 125 percent of their homes' values.

The sources said FHFA will lift that threshold ... Another change may include the possibility of easing the fees tied to mortgages refinanced under HARP, according to the sources.

• And a rumor: Back in August, the FHFA, Treasury and HUD put out a request for input on the disposition of Fannie, Freddie and FHA REOs. The three entities own about 250,000 properties and approximately 800,000 homes backed by Fannie, Freddie and the FHA are in some stage of foreclosure. I've heard a rumor that an RTC like disposition program for Fannie/Freddie/FHA properties is in the works and might be announced in the next couple of weeks (this is a rumor only!). This would probably involve selling REOs in bulk to investors and include some sort of plan to rent them to the current occupants.

Yesterday:
• Schedule for Week of Oct 23rd
• Summary for Week ending Oct 21st

by Calculated Risk on 10/23/2011 02:10:00 PM

From MarketWatch: Final agreement on package of measures expected Wednesday

“Today, we will not undertake any decisions, but will undertake preparatory work,” German Chancellor Angela Merkel told reporters Sunday in a joint news conference with French President Nicolas Sarkozy after a meeting of heads of state from all 27 European Union nations.

“A broad agreement is taking shape,” Sarkozy said, emphasizing that leaders aim to reach final agreement on a deal on Wednesday.

The fight over the EFSF is seen by economists as the most difficult issue. ... Merkel said European finance ministers on Saturday weighed two options for leveraging the EFSF, but that neither involved the ECB.

Yesterday:
• Schedule for Week of Oct 23rd
• Summary for Week ending Oct 21st

by Calculated Risk on 10/23/2011 08:44:00 AM

The final details will be released on Wednesday. This is just one part of the agreement (details on Greece and the EFSF also need to be worked out).

From the Financial Times: Banks must find €108bn in new capital

According to two people involved with the negotiations, the European Banking Authority’s final emergency stress test identified a total of €108bn to be raised by Europe’s banks ...
excerpt with permission

From the WSJ: Bank Recapitalizations May Reach €108 Billion

European governments likely will seal an agreement to set aside between €107 billion-€108 billion ($150.01 billion) to boost the cash reserves of banks weakened by their exposure to sovereign debt ... there would be no final agreement on the capital ratio and the size of the recapitalization until the full crisis package is worked out. The deadline for that is a European summit Wednesday.

Yesterday:
• Schedule for Week of Oct 23rd
• Summary for Week ending Oct 21st