by Calculated Risk on 6/09/2012 10:16:00 AM

From the WSJ: Ministers to Discuss $125 Billion in Spain Bank Support

Euro-zone finance ministers will discuss a commitment to provide as much as €100 billion ($125 billion) in support for Spain's ailing banking sector on Saturday afternoon, an official from a euro-zone country said Saturday.

by Calculated Risk on 6/09/2012 08:01:00 AM

Most of the news last week was about either Europe or the Fed, especially comments from Fed Chairman Bernanke. The Fed debate is on the possibility and timing of "QE3". The next FOMC meeting is on June 19th and 20th, just after the election in Greece.

This was a light week for US economic data. The trade deficit declined slightly - and will probably decline further in May with falling oil prices. However the weakness in the euro zone is showing up in the trade data as US exports to the euro area declined from $17.1 billion in April 2011 to $16.3 billion in April 2012.

Other data was a little more positive. Initial weekly unemployment claims declined slightly, and the ISM non-manufacturing index increased in May.

Also CoreLogic reported house prices were up year-over-year in April. This is the first year-over-year increase in prices since the bubble burst - except for a brief increase related to the tax credit.

Here is a summary of last week in graphs:

• Trade Deficit declines in April to $50.1 Billion

The first graph shows the monthly U.S. exports and imports in dollars through April 2012.

Click on graph for larger image.

Exports decreased in April. Imports decreased even more. Exports are 11% above the pre-recession peak and up 4% compared to April 2011; imports are 2% above the pre-recession peak, and up about 6% compared to April 2011.

The second graph shows the U.S. trade deficit, with and without petroleum, through April.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $109.94 per barrel in April, up from $107.95 in March. Import oil prices will probably start to decline in May. The trade deficit with China increased to $24.6 billion in April, up from $21.6 billion in April 2011. Once again most of the trade deficit is due to oil and China.

Exports to the euro area were $16.3 billion in April, down from $17.1 billion in April 2011, so the euro area recession appears to be a drag on US exports.

• ISM Non-Manufacturing Index indicates slightly faster expansion in May

The May ISM Non-manufacturing index was at 53.7%, up from 53.5% in April. The employment index decreased in May to 50.8%, down from 54.2% in April - the lowest level since November 2011. Note: Above 50 indicates expansion, below 50 contraction.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was slightly above the consensus forecast of 53.5% and indicates faster expansion in May than in April.

• CoreLogic: House Price Index increases in April, Up 1.1% Year-over-year

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 2.2% in April, and is up 1.1% over the last year.

The index is off 32% from the peak - and is just above the post-bubble low set two months ago.

Excluding the tax credit period, this is the first year-over-year increase since 2006 (March was revised up to a year-over-year increase too). This "stabilization" of house prices is a significant story.

• Fed's Q1 Flow of Funds: Household Real Estate Value increased in Q1


The Federal Reserve released the Q1 2012 Flow of Funds report this week: Flow of Funds.

The Fed estimated that the value of household real estate increased $372 billion to $16.05 trillion in Q1 2012. The value of household real estate has fallen $6.3 trillion from the peak.

This graph shows household real estate assets and mortgage debt as a percent of GDP.

Mortgage debt declined by $85 billion in Q1. Mortgage debt has now declined by $885 billion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates).

The value of real estate, as a percent of GDP, is near the lows of the last 30 years, however household mortgage debt, as a percent of GDP, is still historically very high, suggesting more deleveraging ahead for households.

• Weekly Initial Unemployment Claims decline to 377,000

This graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 377,750.

The average has been between 363,000 and 384,000 all year, and this is the highest level since early May.

This was close to the consensus forecast of 379,000.

All current Employment Graphs

• Other Economic Stories ...
• Testimony by Chairman Bernanke on economic outlook and policy
• Fed's Beige Book: Economic activity increased at "moderate" pace, Residential real estate "activity improved"
• Comparing Housing Recoveries
• Housing: Dude, Where's my inventory?
• Trulia Reports Flat Asking Prices in May After Three Straight Months of Increases, as Foreclosure Prices Decline

by Calculated Risk on 6/08/2012 10:05:00 PM

Earlier today there were reports that Spain could request a bank bailout this weekend. From the Financial Times: Spain poised to seek bailout and from Reuters: Exclusive: Spain poised to request EU bank aid Saturday

Spain is expected to ask the euro zone for help with recapitalizing its banks this weekend, sources in Brussels and Berlin said on Friday, becoming the fourth country to seek assistance since Europe's debt crisis began.

Five senior EU and German officials said deputy finance ministers from the single currency area would hold a conference call on Saturday morning to discuss a Spanish request for aid, although no figure for the assistance has yet been fixed.

Later the Eurogroup, which consists of the euro zone's 17 finance ministers, will hold a separate call to discuss approving the request, the sources said.

"The announcement is expected for Saturday afternoon," one of the EU officials said.

However, later in the day, from MarketWatch:

Deputy Prime Minister Soraya Saenz de Santamaria told reporters Friday that the government would make no decisions on any aid request before the results of various reports on Spanish banks were known.

“The government has to respect the process before taking any decisions about the data of the banks,” said Sáenz de Santamaría, in the televised press conference. She also said there were no plans for any meetings in the coming days, but sidestepped questions about whether a teleconference call would be held.

The Economics Ministry said Friday that the results of the independent audit and stress-testing of Spanish banks will publish June 21. The government has also hired a second set of independent auditors to value the banks, with results expected July 31. As well, said Sáenz de Santamaría, the government was waiting on results expected next Monday, June 11, from the International Monetary Fund report on the banking sector.

However the IMF released the report today, from the WSJ: Pressure Mounts on Spain to Request a Bailout

In conference calls Saturday, euro-zone finance officials are expected to press Spain's government to request aid before the June 17 Greek elections, according to European officials familiar with the negotiations.

On the eve of those calls, the International Monetary Fund rushed out a report late Friday saying the banks need at least €37 billion ($46 billion); the report had been expected Monday.

And on China from MarketWatch: China data deluge

Chinese data will be closely watched for signs that country’s economy is slowing more dramatically than previously projected. Over the weekend, China is scheduled to release its latest data on inflation, industrial production and retail sales for May, as well as monthly trade results.

From the WSJ headline: "China's consumer price index rose 3.0% in May from the same month a year earlier, slower than April's 3.4% rise."

by Calculated Risk on 6/08/2012 06:08:00 PM

Farmers and Traders?
What the hell’s a Waccamaw?
Carolina too?
by Soylent Green is People
From the FDIC: Bank of North Carolina, Thomasville, North Carolina, Assumes All of the Deposits of Carolina Federal Savings Bank, Charleston, South Carolina

As of March 31, 2012, Carolina Federal Savings Bank had approximately $54.4 million in total assets and $53.1 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $15.2 million. ... Carolina Federal Savings Bank is the 26th FDIC-insured institution to fail in the nation this year, and the second in South Carolina.

From the FDIC: First State Bank, Mendota, Illinois, Assumes All of the Deposits of Farmers and Traders State Bank, Shabbona, Illinois

As of March 31, 2012, Farmers and Traders State Bank had approximately $43.1 million in total assets and $42.3 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $8.9 million. ... Farmers and Traders State Bank is the 27th FDIC-insured institution to fail in the nation this year, and the second in Illinois.

From the FDIC: First Community Bank, Bluefield, Virginia, Assumes All of the Deposits of Waccamaw Bank, Whiteville, North Carolina

As of March 31, 2012, Waccamaw Bank had approximately $533.1 million in total assets and $472.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $51.1 million. ... Waccamaw Bank is the 28th FDIC-insured institution to fail in the nation this year, and the first in North Carolina.

That makes four so far today.

by Calculated Risk on 6/08/2012 05:11:00 PM

First June lead balloon.
Capital base denuded
Bank apprehended.
by Soylent Green is People
From the FDIC: F & M Bank, Edmond, Oklahoma, Assumes All of the Deposits of First Capital Bank, Kingfisher, Oklahoma

As of March 31, 2012, First Capital Bank had approximately $46.1 million in total assets and $44.8 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $5.6 million. ... First Capital Bank is the 25th FDIC-insured institution to fail in the nation this year, and the first in Oklahoma.

The FDIC gets back to work ...