by Calculated Risk on 6/10/2012 01:15:00 PM

Another story on the sharp decline in home inventory ...

From Alejandro Lazo at the LA Times: Shortage of homes for sale creates fierce competition

Housing inventory has sunk to levels not seen since the bubble years. ... In Southern California, inventories have plunged over the last year. The number of homes listed for sale in April fell 35% in Los Angeles County and was down 42% in Orange, 39% in San Bernardino, 42% in Riverside, 53% in Ventura and 43% in San Diego counties, according to online brokerage Redfin.

Many people who bought at the top of the cycle are so deeply underwater, they can't get the price they need to sell and are therefore not bothering to put their homes on the market.

"We know negative equity holds back home sales, but it also holds back the listing of sales," said Sam Khater, an economist with CoreLogic ...

Glenn Kelman, chief executive of Redfin, said the recovery remains tentative but the market has grown competitive because sellers feel they have time on their side, while buyers feel a sense of urgency given low interest rates and relatively cheap prices compared with the bubble years.

"It is a precarious situation, but the real issue is that nobody wants to sell a house right now," Kelman said. "So now we have classes for our real estate agents on how to win a bidding war."

Negative equity is keeping some people from selling, however most homeowners have positive equity (there are about 75 million owner occupied homes, and about 11 million have negative equity). I think a more important driver of the decline in inventory is price expectations. I agree with Redfin's Kelman who pointed out that "sellers feel they have time on their side".

Earlier I argued:

When the expectation is that prices will fall further, marginal sellers will try to sell their homes immediately. And marginal buyers will decide to wait for a lower price. This leads to more inventory on the market.

But when the expectation is that prices are stabilizing (the current situation), sellers will wait until it is convenient to sell. And buyers will start feeling a little more confident.

This leads to less inventory on the market.

Yesterday:
• Summary for Week Ending June 8th
• Schedule for Week of June 10th

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

From the WSJ: China Data Signal Some Strength

A raft of data released over the weekend by the Chinese government present a mixed picture, but overall suggest an economy stronger than many market players feared at the end of last week.

Some of the data from the WSJ article:

Industrial production was up 9.6% year-over-year (YoY) in May, a stronger pace than in April (9.3%) - however that isn't saying much since April saw the slowest YoY growth since 2009.

CPI increased 3.0% YoY in May, the slowest since June 2010.

Both exports and imports were up in May. Exports were up 15.3% YoY, and import up 12.7%.

Auto sales were up 22.6% YoY, increasing at a faster pace than in April (12.5%).

However overall retail sales increased at a slower pace in May; 13.8% year-over-year compared to 14.1% in April.

Overall this was slightly better than expected.

Yesterday:
• Summary for Week Ending June 8th
• Schedule for Week of June 10th

by Calculated Risk on 6/09/2012 07:36:00 PM

This is an unofficial list of Problem Banks compiled only from public sources. (Only US banks).

Here is the unofficial problem bank list for June 8, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Four failures meant four removals from the Unofficial Problem Bank List. The list stands at 923 institutions with assets of $355.7 billion. A year ago, the list held 1,002 institutions with assets of $417.4 billion. After three weeks off, the FDIC got back to closings leading to the following removal s -- Waccamaw Bank, Whiteville, NC ($533 million Ticker: WBNK); Carolina Federal Savings Bank, Charleston, SC ($54 million); First Capital Bank, Kingfisher, OK ($46 million); and Farmers' and Traders' State Bank, Shabbona, IL ($43 million).

F & M Bank, Edmond, Oklahoma paid a 7.65 percent deposit premium to acquire First Capital Bank. This appears to be the highest deposit premium paid to complete an assisted acquisition during this crisis. Although the FDIC likes to receive a deposit premium when selling a failed bank, buyers have only been willing to pay one in about one-third of the 443 failures since 2008 and in four transactions buyers have bid a discount.. When paid, the average deposit premium is 1.09 percent. Thus, the premium paid by F&M Bank is very high at 4.7 standard deviations above the average. In a few months, the FDIC will release bidding information for First Capital Bank, which should allow some insight if the premium paid F&M Bank was necessary to close the deal. There have been some transactions where bidders have been too aggressive. For instance, in January 2010, United Valley Bank, Cavalier, ND, paid a 7.35 percent deposit premium to acquire the failed Marshall Bank, National Association, Hallock, MN with the next highest bid was a 1.32 percent premium.

Next week, we anticipate the OCC will release its actions through mid-June 2012.

Earlier:
• Summary for Week Ending June 8th
• Schedule for Week of June 10th

And on Spain:
• Eurogroup statement on Spain
• WSJ: Spain Asks EU for Aid For Its Banks
• NY Times: Spain to Accept Rescue From Europe for Its Ailing Banks
• Financial Times: Spain seeks eurozone bail out

by Calculated Risk on 6/09/2012 02:09:00 PM

From the Financial Times: Spain to ask EU for bail out

The Spanish government agreed to seek EU bailout aid for its struggling financial sector on a conference call of eurozone finance ministers Saturday evening.

In exchange, the ministers agreed not to attach any new conditions on Madrid other than its current commitments ...
Excerpt with permission

It sounds like the maximum will be €100 billion. Apparently policymakers wanted to get something in place before the Greek election on June 17th.

Earlier:
• Summary for Week Ending June 8th
• Schedule for Week of June 10th

by Calculated Risk on 6/09/2012 01:05:00 PM

Earlier:
• Summary for Week Ending June 8th

The key report this week is the May retail sales report. For manufacturing, the May NY Fed (Empire state) survey, and the May Industrial Production and Capacity Utilization report will be released this week.

For prices, the May Producer Price Index and Consumer Price Index will be released on Wednesday and Thursday, respectively.

----- Monday, June 11th -----
No economic releases scheduled.

----- Tuesday, June 12th -----
7:30 AM: NFIB Small Business Optimism Index for May.

Click on graph for larger image in graph gallery.

The index increased to 94.5 in April from 92.5 in March. This tied February 2011 as the highest level since December 2007

The consensus is for a slight decrease to 94.2 in May.

8:30 AM: Import and Export Prices for April. The consensus is a for a 1.1% decrease in import prices.

----- Wednesday, June 13th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Expect record low mortgage rates and probably an increase in refinance activity.

8:30 AM: Producer Price Index for May. The consensus is for a 0.6% decrease in producer prices (0.2% increase in core).

8:30 AM ET: Retail Sales for May.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales are up 23.1% from the bottom, and now 7.7% above the pre-recession peak.

The consensus is for retail sales to decrease 0.2% in May, and for retail sales ex-autos to decrease 0.1%.

10:00 AM: Manufacturing and Trade: Inventories and Sales for April (Business inventories). The consensus is for 0.3% increase in inventories.

----- Thursday, June 14th -----
8:30 AM: Consumer Price Index for May. The consensus is for headline CPI to decline 0.2% (with the decline in energy prices). The consensus is for core CPI to increase 0.2%.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decline to 375 thousand from 377 thousand last week.

----- Friday, June 15th -----
8:30 AM ET: NY Fed Empire Manufacturing Survey for June. The consensus is for a reading of 13.8, down from 17.1 in May (above zero is expansion).

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for May.

This shows industrial production since 1967.

The consensus is for no change in Industrial Production in May, and for Capacity Utilization to be unchanged at 79.2%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (preliminary for June). The consensus is for sentiment to decline to 77.5 from 79.3 in May.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for May 2012