by Calculated Risk on 10/25/2011 07:59:00 PM

Tomorrow is the announced deadline for a deal, but the meeting of European leaders doesn't start until 7 PM in Brussels (1 PM New York time), so any announcement will be late at night in Brussels.

The only thing that is certain is there won't be an announcement tomorrow morning!

From the Financial Times: Fears euro summit could miss final deal

A draft of the summit communiqué ... described to the FT does not include any wording on a completed deal on Greek bondholder haircuts ...

In addition, a separate “draft terms and conditions” paper on ... the eurozone’s €440bn rescue fund ... makes clear that leaders will be unable to attach a figure to how much firepower the leveraged fund will have. “A more precise number on the extent of leverage can only be determined after contacts with potential investors,” the draft states.
excerpt with permission

From the WSJ: Europe at Odds Over Crisis Package

Prospects for a long-awaited breakthrough deal to stem the worsening euro-zone debt crisis were up in the air on Tuesday, as governments and banks remained at loggerheads over how much pain to inflict on holders of government bonds issued by Greece ... Banks on Tuesday were rebuffing pressure from governments for "voluntary" write-downs of 50% to 60% on their Greek bonds

Earlier:
• Case Shiller: Home Prices increased Seasonally in August
• Real House Prices and House Price-to-Rent

by Calculated Risk on 10/25/2011 03:55:00 PM

From ATA: ATA Truck Tonnage Index Increased 1.6% in September

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.6% in September after falling a revised 0.5% in August 2011. August’s decrease was more than the 0.2% drop ATA reported on September 27, 2011. The latest gain put the SA index at 115.8 (2000=100) in September, up from the August level of 114.
...
Compared with September 2010, SA tonnage was up a solid 5.9%. In August, the tonnage index was 4.9% above a year earlier.

“I continue to believe the economy will skirt another recession because truck tonnage isn’t showing signs that we are in a recession,” ATA Chief Economist Bob Costello said. “Tonnage is suggesting that we are in a weak growth period for the economy, but not a recession.”

Click on graph for larger image in graph gallery.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index. From ATA:

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

Sluggish growth after stalling earlier this year ...

Earlier:
• Case Shiller: Home Prices increased Seasonally in August
• Real House Prices and House Price-to-Rent

by Calculated Risk on 10/25/2011 02:05:00 PM

An update: Case-Shiller, CoreLogic and others report nominal house prices. However it is also useful to look at house prices in real terms (adjusted for inflation), as a price-to-rent ratio, and also price-to-income (not shown here).

Below are three graphs showing nominal prices (as reported), real prices and a price-to-rent ratio. Real prices are back to 1999/2000 levels, and the price-to-rent ratio is also back to 2000 levels.

Nominal House Prices

Click on graph for larger image.

The first graph shows the quarterly Case-Shiller National Index SA (through Q2 2011), and the monthly Case-Shiller Composite 20 SA (through August) and CoreLogic House Price Indexes (through August) in nominal terms (as reported).

In nominal terms, the Case-Shiller National index is back to Q4 2002 levels, the Case-Shiller Composite 20 Index (SA) is back to June 2003 levels, and the CoreLogic index is back to July 2003.

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to Q3 1999 levels, the Composite 20 index is back to July 2000, and the CoreLogic index back to June 2000.

In real terms, all appreciation in the last decade is gone.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller Composite 20 and CoreLogic House Price Index.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Composite 20 index is back to August 2000 levels, and the CoreLogic index is back to July 2000.

In real terms - and as a price-to-rent ratio - prices are mostly back to 2000 levels (nationally) and will probably be back to 1999 levels in the next few months.

Earlier:
• Case Shiller: Home Prices increased Seasonally in August

by Calculated Risk on 10/25/2011 11:59:00 AM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for September 2011. In the past month, the indexes increased in 30 states, decreased in 13, and remained unchanged in seven for a one-month diffusion index of 34. Over the past three months, the indexes increased in 30 states, decreased in 16, and remained unchanged in four (Kentucky, Maryland, Mississippi, and New Mexico) for a three-month diffusion index of 28.

Note: These are coincident indexes constructed from state employment data. From the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In September, 35 states had increasing activity, up from 28 in August. It is important to remember that August was an especially weak month due to the debt ceiling debate, and some rebound in September was expected.

Here is a map of the three month change in the Philly Fed state coincident indicators. Several states have turned red again. This map was all red during the worst of the recession, and all green not long ago - but this is an improvement from August.

Earlier:
• Case Shiller: Home Prices increased Seasonally in August

by Calculated Risk on 10/25/2011 10:17:00 AM

• Richmond Fed: Manufacturing Contraction Persists in October; Employment Turns Negative

In October, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — was unchanged from September's reading of −6. Among the index's components, shipments lost four points to −6, while new orders gained twelve points to finish at −5 and the jobs index turned negative, moving down fourteen points to −7.
...
Labor market conditions weakened at District plants in October. The manufacturing employment index moved down 14 points to −7 — the first negative reading for employment since September 2010. The average workweek index, however, gained six points to −1, while wage growth was virtually unchanged, easing one point to finish at 5.

• From the Conference Board Consumer Confidence Index® Declines

The Conference Board Consumer Confidence Index®, which had slightly improved in September, declined in October. The Index now stands at 39.8 (1985=100), down from 46.4 in September.

This is the lowest reading since 26.9 in March 2009.

• From the FHFA: FHFA House Price Index Falls 0.1 Percent in August, First Monthly Decline Since March

U.S. house prices fell 0.1 percent on a seasonally adjusted basis from July to August, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.8 percent increase in July was revised to reflect no change. For the 12 months ending in August, U.S. prices fell 4.0 percent.

• Via Bloomberg, EU Finance minister meeting cancelled:

While 27 EU leaders convene before the 17 chiefs of the 17 euro nations tomorrow, a meeting of the 27 EU finance ministers scheduled to precede them was cancelled with no explanation.

Earlier:
• Case Shiller: Home Prices increased Seasonally in August