by Calculated Risk on 4/08/2013 09:30:00 AM

From the NY Times: New Trouble for Euro in Portugal

In an address to his beleaguered nation on Sunday, Prime Minister Pedro Passos Coelho warned that his government would be forced to cut spending more and that lives “will become more difficult” after a court on Friday struck down some of the austerity measures put in place after a bailout package two years ago.
...
A critical moment for the latest trouble took place on Friday, when Portugal’s Constitutional Court struck down four of nine contested austerity measures that the government introduced as part of a 2013 budget that included about 5 billion euros, or $6.5 billion, of tax increases and spending cuts. The ruling left the government short about 1.4 billion euros of expected revenue, or more than one-fifth of the 2013 austerity package.

Europe will remain a downside risk to the US and global economy for some time.

And updates from the Telegraph: Eurozone debt crisis: Portugal bail-out under threat - live

The eurozone has been plunged into fresh turmoil as the Portuguese constitutional court blocked four out of nine austerity measures aimed at meeting bail-out conditions.

by Calculated Risk on 4/07/2013 09:45:00 PM

An interesting article from Nick Timiraos at the WSJ: Housing Prices Are on a Tear, Thanks to the Fed

Prices of existing homes rose 10% in February nationally from a year ago. They have been rising during the seasonally slow winter months—and they show signs of jumping further as the spring buying season gets under way. What's going on?

First, inventories of homes available to buy have fallen to 20-year lows. Home builders have added little in the way of new construction since 2008. Banks are selling fewer foreclosures. Investors have scooped up more homes, converting them to rentals.

Many borrowers, meanwhile, aren't willing or able to sell at prices that are down sharply from their 2006 highs, despite a greater inclination among banks to approve short sales. Tight lending standards mean some owners will hold back from selling because they aren't sure they would qualify for a mortgage on their next home.

Demand has also revved up, first from investors ... and later as rising rents and falling interest rates encouraged more first-time buyers to purchase homes ...

Improving home-price expectations have also unleashed pent up demand. The U.S. added around 1.3 million households a year for the 10-year period ending in 2007, after which household formation fell to more than half that level. Household formation was lower in the five years following the housing bust than any period since the 1960s, according to Altos Research, an analytics firm in Mountain View, Calif.

But the population never stopped growing. Households simply doubled up. Between 2008 and 2010, the country had around two million households that "couldn't wait to launch on their own," says Mike Simonsen, chief executive of Altos Research. Many of those new households have been renters, but more are opting to buy.

I'm not sure about the source of the household formation data, but there has definitely been a strong increase in demand.

Weekend:
• Summary for Week Ending April 5th
• Schedule for Week of April 7th

The Asian markets are mixed with the Nikkei up sharply, but the Shanghai composite down.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 2 and Dow futures are down 20 (fair value).

Oil prices are down over the last week with WTI futures at $92.76 per barrel and Brent at $104.43 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are down about 16 cents over the last six weeks after increasing more than 50 cents per gallon from the low last December.

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; 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 4/07/2013 02:27:00 PM

Earlier on the employment report:
• March Employment Report: 88,000 Jobs, 7.6% Unemployment Rate
• Employment Report Comments and more Graphs
• All Employment Graphs


A few more employment graphs ...

Construction Employment
 Construction is now a positive for the economy. 

Construction employment increased by 18,000 in March (up 91,000 in the first quarter).  This still leaves construction with 1.92 million fewer payroll jobs compared to the peak in April 2006, but employment is up 367,000 from the low in January 2011.

I expect residential investment to make a solid positive contribution to GDP growth this year, and for construction employment to continue to increase.

Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

The general trend is down for all categories, but only the less than 5 weeks is back to normal levels.

The long term unemployed is just under 3.0% of the labor force - the lowest since June 2009 - however the number (and percent) of long term unemployed remains a serious problem.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down.

Although education matters for the unemployment rate, it doesn't appear to matter as far as finding new employment (all four categories are only gradually declining).

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 54.3 in March, down from 59.6 in February.

For manufacturing, the diffusion index decreased to 46.3, down from 54.3 in February.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

Job growth for both total private employment was fairly narrow for March.   This is a not good sign and suggests only a few industries were hiring in March.  For manufacturing, more companies were decreasing employment than adding jobs in March.

Earlier:
• Summary for Week Ending April 5th
• Schedule for Week of April 7th

by Calculated Risk on 4/07/2013 10:02:00 AM

I've been posting Jim the Realtor videos for years. The earlier videos were very funny as Jim toured REOs and drug houses. He also posted videos about short sale fraud, and recently on the buying frenzy in San Diego.

Peter Hong at the LA Times called Jim "The Hunter S. Thompson of real estate" and Nightline Truth in Advertising: One Realtor's Strategy to Sell Foreclosed Homes

Here is another story on Jim from Karen Weise at BusinessWeek: The 'Hunter S. Thompson of Real Estate' Chronicles the Bust—and Boom

Jim Klinge sighed as he made his way through a foreclosed home littered with empty bottles of rum and mattresses. It was 2008, and Klinge, a real estate agent, was filming a YouTube (GOOG) video for his blog documenting the housing crash in the cul-de-sacs and condos north of San Diego. As he opened a closet, daylight illuminated walls splattered with black mold spores, like a tie-dye project gone awry. “Oh, lovely,” Klinge said. “People were living in here like this, looks like. They were lucky to make it out alive.”

Five years later, Klinge’s videos tell a different story, one of limited inventory and jampacked open houses, bidding wars, and quick sales. ... He made the videos to shock sellers into lowering their unrealistic asking prices, but most clung to their illusions. Buyers, on the other hand, ate it up, as did economists and the press. The economics blog Calculated Risk began embedding Klinge’s videos, and in April 2009 the Los Angeles Times ran a front-page story calling Klinge “The Hunter S. Thompson of real estate.”

There is much more in the article.

Here is an REO tour from Jim back in early 2009 (check on the difference in the MLS photos and Jim's video):

by Calculated Risk on 4/06/2013 06:56:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Apr 5, 2013.

Changes and comments from surferdude808:

The failure last night is the only change to the Unofficial Problem Bank List this week. The removal leaves the list at 790 institutions with assets of $290.0 billion. A year ago the list held 946 institutions with assets of $376.5 billion. Gold Canyon Bank, Gold Canyon, AZ ($45 million Ticker: GCYO) is the fifth failure this year and the 13th bank to fail in Arizona since the on-set of the financial crisis.

With the first quarter of 2013 ending this past week, it is time for an update of the transition matrix. As seen in the table, there have been a total of 1,624 institutions with assets of $811.2 billion that have appeared on the list. For the first time since publication of the list, more than half of the institutions that have appeared on the list have been removed. Specifically, 833 institutions or 51.3 percent of the total are no longer on the list. Failure is still the primary removal reason as 351 institutions with assets of $290.8 billion have failed since appearing on the list. However, action terminations are rapidly approaching the number of failures. A total of 343 institutions with assets of $153.2 billion have improved enough for their enforcement action to be terminated. Other forms of exit include 129 institutions with assets of $55.9 billion finding a merger partner and 10 institutions with assets of $6.7 billion voluntarily surrendering their banking charters. The slowdown in action terminations noted last quarter reversed as 51 terminations occurred during the first quarter of 2013 compared to 40 in the fourth quarter of 2012. Next quarter, terminations will finally exceed failures.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	104	(31,414,531)
	Unassisted Merger	26	(4,191,282)
	Voluntary Liquidation	3	(4,896,324)
	Failures	148	(182,228,947)
	Asset Change		(14,534,468)
Still on List at 12/28/2012		108	39,047,877
Additions		683	250,947,679
End (12/28/2012)		791	289,995,556
Intraperiod Deletions1
	Action Terminated	239	121,805,500
	Unassisted Merger	103	51,745,000
	Voluntary Liquidation	7	1,760,816
	Failures	203	108,650,455
	Total	552	283,961,771
1Institution not on 8/7/2009 or 3/31/2013 list but appeared on a weekly list.

Earlier:
• Summary for Week Ending April 5th
• Schedule for Week of April 7th