by Calculated Risk on 12/31/2012 10:30:00 AM

From the Dallas Fed: Texas Manufacturing Activity: Slow Growth and Improved Company Outlook

Texas factory activity edged up in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 1.7 to 2.7, which is consistent with slow growth.

Most other survey measures also indicated manufacturing activity crept up in December. The capacity utilization index returned to positive territory with a reading of 1.8, implying utilization rates ticked up from last month. The shipments index jumped to 11.3 after a reading near zero last month. The new orders index, however, remained near zero, suggesting demand was flat in December.

Perceptions of broader business conditions improved markedly in December. The general business activity index emerged from negative territory, rising sharply to 6.8 as a result of a drop in the share of contacts reporting that conditions worsened. The company outlook index also turned positive, jumping 14 points to 9.2, its best reading since March.

Labor market indicators were flat in December. The employment index came in at -1, its lowest reading in over two years, with about 17 percent of employers reporting hiring and the same share noting layoffs. The hours worked index turned positive after two months in negative territory; however, at a reading of 1, it suggested hours worked barely changed.

This was above (edit) expectations of a reading of 1.0 for the general business activity index.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through December), and five Fed surveys are averaged (blue, through December) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through November (right axis).

This is the first positive reading for the average of the five Fed surveys since May.

The ISM index for December will be released Wednesday, Jan 1st, and these surveys suggest another weak reading - but probably indicating expansion (above 50).

by Calculated Risk on 12/31/2012 09:14:00 AM

According to this report, income taxes would only increase on earnings over $450,000, and the estate tax would be at the GOP requested level. Still no deal.

From the WaPo: Biden, McConnell continue ‘cliff’ talks as clock winds down

Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) continued urgent talks Monday over a deal to avoid the “fiscal cliff” after Democrats offered several significant concessions on taxes, including a proposal to raise rates only on earnings over $450,000 a year.

With a New Year’s Eve deadline hours away, Democrats abandoned their earlier demand to raise tax rates on household income over $250,000 a year.
...
Democrats also relented on the politically sensitive issue of the estate tax, according to a detailed account of the Democratic offer obtained by The Washington Post. They promised instead to hold a vote in the Senate that would guarantee that taxes on inherited estates remain at their current low levels, a key GOP demand.
...
McConnell was holding out to set the income threshold for tax increases even higher, at $550,000, according to people close to the talks in both parties.

Payroll taxes are going up under all proposals.

by Calculated Risk on 12/30/2012 08:52:00 PM

As expected - no progress on the "fiscal cliff".   From the WaPo: Senate negotiators search for deal to avoid the ‘fiscal cliff’

Still no deal.

There were signs of renewed effort in the talks to resolve the “fiscal cliff” crisis late Sunday afternoon. For one thing, direct talks had begun between Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Biden. Republicans exiting a mid-afternoon caucus meeting said that McConnell had excused himself to take a call from the vice president.

Those two Washington veterans have become the capital’s unofficial closers, hammering out the agreement that resolved a fight over tax cuts in late 2010, and the debt-ceiling crisis in August 2011.

But their task could could prove far more difficult this time around.

Update: Most market to close as normal, fixed income will close early. Happy New Year to all!

Monday economic release:
• At 10:30 AM, the Dallas Fed Manufacturing Survey for December will be released. This is the last of the regional surveys for December. The consensus is an increase to 1.0 from -2.8 in November (above zero is expansion).

Weekend:
• Summary for Week Ending Dec 28th
• Schedule for Week of Dec 30th

The Asian markets are mostly red tonight; the Shanghai Composite index is up, and the Hang Seng down.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 8 and DOW futures are down 68.

Oil prices have moved up a recently withWTI futures at $90.65 per barrel and Brent at $110.41 per barrel. Gasoline prices have also increased a little recently.

by Calculated Risk on 12/30/2012 05:03:00 PM

According to housingtracker, median asking prices were up 2.5% year-over-year in December. We can't read too much into this increase because these are just asking prices, and median prices can be distorted by the mix. As an example, the median asking price might have increased just because there are fewer low priced foreclosures listed for sale.

Note: The Trulia asking price index is adjusted for both mix and seasonality, but the housingtracker data is just the median, the 25th percentile and 75th percentile - and is impacted by both changes in the mix and seasonality.

But with those caveats, here is a graph of asking prices compared to the year-over-year change in the Case-Shiller composite 20 index.

Click on graph for larger image.

The Case-Shiller index is in red.  The Case-Shiller Composite 20 index was up 4.3% year-over-year in October, and will probably be up close to 6% in 2012.

The brief period in 2010 with a year-over-year increase in the repeat sales index was related to the housing tax credit.

Also note that the 25th percentile took the biggest hit (that was probably the flood of low end foreclosures on the market).

Now the year-over-year change in median asking prices has been positive for thirteen consecutive months. We have to be careful about the mix (fewer foreclosures on the market), but this suggests year-over-year selling prices will stay positive.

On seasonality, asking prices peaked in June and are down about 4% over the last six months.   I expect this measure of asking prices to start increasing seasonally in February, and to stay positive year-over-year.

Yesterday:
• Summary for Week Ending Dec 28th
• Schedule for Week of Dec 30th

by Calculated Risk on 12/30/2012 11:30:00 AM

From the WaPo (updated): Senators trade proposals into night to avoid ‘fiscal cliff’ (ht black dog)

Reid and McConnell have set a deadline of about 3 p.m. on Sunday for cinching a deal. That’s when they’re planning to convene caucus meetings of their respective members in separate rooms just off the Senate floor. At that point, the leaders will brief their rank and file on whether there has been significant progress and will determine whether there is enough support to press ahead with a proposal.
...
If all goes according to plan, the leaders would roll out the legislation Sunday night and hold a vote by at least midday Monday, giving the House the rest of New Year’s Eve to consider the measure.

According to the article, the sticking points are taxes for high income earners and "how to tax inherited estates".

Note: This type of "deadline" is just a target, and there probably won't be an update until later in the day.