by Calculated Risk on 5/07/2012 09:03:00 AM

Oil and gasoline prices have been falling recently. West Texas Intermediate (WTI) futures are down to $97.80, and Brent is down to $112.84 per barrel.

From Bloomberg: U.S. Gasoline Falls to $3.85 a Gallon, Lundberg Survey Shows

The average price for regular gasoline at U.S. filling stations fell 6.75 cents to $3.8452 a gallon, according to Lundberg Survey Inc.

... The price is 15.49 cents lower than a year earlier, when the average was $3.9998. The highest average this year was $3.9671, during the period ended April 6.

“It is crude oil that has delivered this retail gasoline price decline,” Trilby Lundberg, president of Lundberg Survey, said yesterday in a telephone interview.

The following graph shows the decline in gasoline prices. Gasoline prices are down from the peak in early April, and are down year-over-year.

Note: The graph shows oil prices for WTI; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 5/07/2012 01:25:00 AM

There are no major US economic releases scheduled for Monday (consumer credit for March will be released at 3 PM ET). The discussion on Monday will mostly be about the elections in France and Greece, and what they means for the euro zone economy. The politicians in Greece will try to form a coalition government, and if that is not successful, there will be a new election.

The Asian markets are all red tonight. The Nikkei is down about 2.5%, Hang Seng is down 2.7%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are down 13 points, and Dow futures are down 120.

Oil: WTI futures are down to $97.10 and Brent is down to $112.34 per barrel.

Yesterday:
• Summary for Week Ending May 4th
• Schedule for Week of May 6th

Employment posts on Friday:
• April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
• April Employment Summary and Discussion
• More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Current Employment Graphs

by Calculated Risk on 5/06/2012 06:49:00 PM

From Alejandro Lazo at the LA Times: Rents soar as foreclosure victims, young workers seek housing

The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.

Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC's Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent. ... Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

"It was almost too easy," said Magnotta, who chose another renter. "I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong."

A big driver of rent increases has been demand from young workers who are striking out on their own after doubling up with family members during the worst of the economic downturn.

It makes sense that rental demand has been increasing: Demographics are favorable for rentals right now (see graph below: a large cohort is moving into the 25 to 35 year old age group), people who have lost their homes to foreclosure (or short sales) are turning to renting, and some people have probably stopped "doubling up".

The house price-to-rent ratio is back to normal, and further rent hikes will provide support for house prices. Although, as Lazo notes, only people in "good shape financially" are able to buy.

Click on graph for larger image.

This graphic is from the Census Bureau and shows the number of people by age and sex in the US based on the 2000 and 2010 Census. See: Age and Sex Composition: 2010

The baby boom generation is obvious, but there is also a fairly large cohort moving into the key renting age groups. Note that this graph is from two years ago.

by Calculated Risk on 5/06/2012 01:33:00 PM

Update: 2 PM ET from Le Monde: François Hollande élu président de la République

From the WSJ: Hollande Wins French Runoff, Early Polls Show

French Socialist candidate François Hollande won Sunday's presidential runoff ... according to estimates of preliminary results seen by The Wall Street Journal.

Mr. Sarkozy's defeat makes him the 11th euro-zone leader swept away in the sovereign-debt crisis.

The polls close at 2 PM ET, so this is just preliminary. Hollande is an experienced politician and will push for some growth initiatives as opposed to just austerity.

The polls have closed in Greece and preliminary results will be released soon. The Athens News has a live blog of the results. The big surprise - so far - is it looks like Syriza will finish 2nd with Pasok 3rd. Here are some exit poll numbers (any party with 3% or more of the vote will receive seats):

Public Issue for Skai

(min-max, in %)

New Democracy 20.5-24.5
Radical Left Coalition (Syriza) 14-18
Pasok 13-17
Communist Party 7-10.5
Independent Greeks 7-10
Democratic Left 6-9
Golden Dawn 5-8
Ecogreens 2-4
Popular Orthodox Rally (Laos) 2-4
Drasi 1-3
Democratic Alliance 1-3

The 1st place party gets a 50 seat bonus (out of 300 total seats) and the parties split the remaining seats by the percent of the vote. So New Democracy will probably have around 110 to 120 seats (if I understand correctly), and they need a coalition partner to form a majority (probably Pasok). It is a mess.

by Calculated Risk on 5/06/2012 10:44:00 AM

First, on a sad note, from Mish: My Wife Joanne Has ALS, Lou Gehrig's Disease

Today I'm going to share a personal struggle with you. This is news I've largely kept to a small circle of close friends over the past few years and is difficult to talk about. The time has now come to enlist the support of a wider community, and perhaps together, we can make a difference.

Running this site and publishing commentary as frequently as I do demands a tremendous amount of my attention. However, my blog is not the #1 focus of my life. That would be my wife, Joanne.

Joanne has ALS, more commonly known as Lou Gehrig's disease. More specifically, she has Progressive Bulbar Palsy a particularly aggressive form of the disease.

I've known Mish for years, and he has kept me updated on Joanne's condition. As Mish notes, this is an "extremely cruel" disease. A few years ago, a close friend of mine - Ernie - one of my hiking and climbing partners, died from ALS. In a just a few short years, Ernie went from being a strong climber – we climbed a peak together in a winter white out just before he was diagnosed with the disease (a great adventure) - to barely being able to walk on the beach, and then being confined to a well chair, and finally passing away. Very sad.

For those interested, Mish is sponsoring a raffle for the benefit of ALS research.

Today Mish writes: New American Dream is Renting; Reflections on Renting Houses, Cars, Books, Clothes; Will Rentership Fuel the Next Boom? What About Home Prices?

Housing has now gone full circle. President Bush's "Ownership Society" has morphed into the "Rentership Society". The attitude applies to more than houses as noted in the Wall Street Journal article Renting Prosperity by Daniel Gross.

Americans are getting used to the idea of renting the good life, from cars to couture to homes. Daniel Gross explores our shift from a nation of owners to an economy permanently on the move—and how it will lead to the next boom. ...

Renting cars and textbooks is the start of a trend that makes perfect economic sense. However, Zipcars, textbooks, clothes, and electronics are one thing, and housing is another.

When sentiment on houses reaches the widespread belief "It's Better to Rent", prices are bottoming. I expressed that thought on numerous occasions since 2005.

This is how I currently see things.

Note: The graph was originally for Japan, but Mish is using it to show how sentiment changes. Mish thinks we are now in the lower right "purple" zone and back to "It's better to rent".