by Calculated Risk on 11/08/2011 07:46:00 AM

From the National Federation of Independent Business (NFIB): Small Business Confidence Has Minor Uptick

NFIB’s Small-Business Optimism Index gained 1.3 points, nudging the Index up to 90.2. This is below the year-to-date average of 91.1, only slightly better than the average since January 2009 of 89.1.

“Consumer sentiment remains at very low levels and is reflected in the 26 percent of small business owners who cite ‘poor sales’ as their biggest problem,” said NFIB Chief Economist Bill Dunkelberg. ...

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy.

Click on graph for larger image.

The first graph shows the small business optimism index since 1986. The index increased to 90.2 in October from 88.9 in September. This is the second increase in a row after declining for six consecutive months.

The second graph shows the net hiring plans for the next three months.

Hiring plans were low in October, but still positive and the trend is up.

According to NFIB: “Over the next three months ... a seasonally adjusted net three percent of owners planning to create new jobs. This is down 1 point from September and 2 points below August, the month that has, thus far, posted the strongest reading for 2011. For some context, in an expansion, this number should exhibit double digit readings."

Twenty six percent of small business owners reported that weak sales continued to be their top business problem in September.

In good times, owners usually report taxes and regulation as their biggest problems.

The optimism index declined sharply in August due to the debt ceiling debate and only rebounded modestly in September and October. This index has been slow to recover - probably due to a combination of sluggish growth, and the high concentration of real estate related companies in the index.

by Calculated Risk on 11/07/2011 10:14:00 PM

From Nick Timiraos at the WSJ: Nevada Foreclosure Filings Dry Up After ‘Robo-Signing’ Law

Foreclosure filings in Nevada plunged in October during the first month of a new state law stiffening foreclosure-processing requirements.
...
Nevada’s state Assembly passed a measure that took effect on Oct. 1 ... the Nevada law makes it a felony—and threatens to hold individuals criminally liable—for making false representations concerning real estate title. Individuals are also subject to civil penalties of $5,000 for each violation.
...
The Nevada law makes an important technical change to those rules by forbidding trustees from handling foreclosures if the trustee is a subsidiary of foreclosing bank.

BofA uses ReconTrust, a wholly owned subsidiary, to handle foreclosures. With this new law, BofA will have to use another trustee.

According to DataQuick, foreclosure resales were about 56% of the Las Vegas market in September - and this probably means Nevada existing home sales will decline sharply in October. Foreclosures will probably pick up again once the lenders feel they are complying with the new law.

by Calculated Risk on 11/07/2011 07:31:00 PM

Another song below from our friends at versusplus.com: "In the Greek Midwinter"

Earlier the Fed released their quarterly Senior Loan Officer survey. This showed banks tightening lending to European banks and firms, but not in the U.S ...

Other earlier posts:
• Sluggish Growth and Payroll Employment
• CoreLogic: House Price Index declined 1.1% in September
• Italy: 10 Year bond yields continue to increase

by Calculated Risk on 11/07/2011 04:40:00 PM

Another update: 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!)

• 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.

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

Click on graph for larger image.

This graph shows the NAR estimate of existing home inventory through September (left axis) and the HousingTracker data for the 54 metro areas through 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 November listings - for the 54 metro areas - declined 16.8% from the same week last year. The graph shows monthly inventory change (this is preliminary for November).

This is just "visible inventory" (inventory listed for sales). There is a large percentage of distressed inventory, and various categories of "shadow inventory" too.

All Existing Home Sales and Inventory graphs

by Calculated Risk on 11/07/2011 02:17:00 PM

The Federal Reserve released the quarterly October 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices today. The survey had a special question on lending to European banks and firms. With regards to banks, the tightening was "considerable", however to European firms the tightening was "moderage":

About one-half of the domestic bank respondents, mostly large banks, indicated that they make loans or extend credit lines to European banks or their affiliates or subsidiaries, and about two-thirds of the foreign respondents indicated the same. Among those domestic and foreign respondents, a large share--about two-thirds--reported having tightened standards on loans to European banks over the third quarter. Many domestic banks indicated that the tightening was considerable.

About three-fifths of the domestic respondents, mostly large banks, and all foreign respondents indicated that they make loans or extend credit lines to nonfinancial firms that have operations in the United States and significant exposures to European economies. Among those domestic and foreign respondents, a moderate fraction indicated that they had tightened standards on C&I loans to such firms.

On the U.S. Commercial and Industrial (C&I):

A small net fraction of domestic banks reported having eased standards on C&I loans during the third quarter, in contrast to more widespread reports of such easing in previous quarters. This moderate net reduction in easing was concentrated in loans to large and middle-market firms rather than in loans to smaller firms. ... Reports of weaker demand for C&I loans outnumbered reports of stronger demand in a reversal from recent quarters, particularly with respect to demand from large and middle-market firms.

For Commercial Real Estate:

Domestic banks continued to report little change in their standards on CRE loans, which were widely described in a special question in the previous survey as being at or near their tightest levels since 2005. In contrast, a large fraction of foreign respondents reported having tightened standards on CRE loans, in a substantial shift from the net easing reported by those institutions in the prior two surveys.

And on consumer lending:

Modest fractions of banks reported having eased standards on consumer credit card loans and on other non-auto loans. As in the previous survey, somewhat larger fractions of banks reported having eased standards on auto loans.

There are several charts here.

So far the European financial crisis hasn't led to tighter lending standards in the U.S., but standards are already pretty tight.