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

This is an actual quote today from the German Finance Minister Wolfgang Schauble:

"Nobody in Europe sees this contradiction between fiscal policy consolidation and growth,” Schauble said. “We have a growth-friendly process of consolidation, and we have sustainable growth, however you want to word it.”

Obviously there is a contradiction between "fiscal policy consolidation and growth". And not everyone is blind to the obvious - some people in Europe see the obvious contradiction (just look at the data).

And a "growth friendly process"? "Sustainable growth"?  Nonsense. Maybe Schauble should look at the data (here is the eurostat data on GDP and unemployment.

Comment: Obviously Schauble is the worst kind of policymaker. He believes in "austerity über alles" and can't be swayed by the results. Very sad.

Wednesday economic releases:
• 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 2:00 PM, the FOMC Minutes for the Meeting of March 19-20, 2013 will be released.

by Calculated Risk on 4/09/2013 05:32:00 PM

Reader Picosec suggests "An interesting graph would be a time series showing both Job Openings and Change in Payroll Jobs. [This] might indicate whether one was predictive of the other, and to what extent."

Sometimes I do requests ... Unfortunately the JOLTS time series for job openings is very limited (released for February this morning) and only has data back to December 2000.

We always have to be extra careful with limited data.

The following graph shows non-farm payroll (left axis) and job openings (right axis).

Click on graph for larger image in graph gallery.

In general the two series move together, although it appears job openings leads non-farm payroll at turning points.  However the JOLTS is a noisy series, so we might not be able to tell at turning points - but if job openings turned down over several months, I'd be concerned about payrolls.  Right now job openings are at the highest level since May 2008.

by Calculated Risk on 4/09/2013 03:10:00 PM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported GLVAR reports increase in local home prices, traditional sales

With local home prices up and inventory down, REALTORS® have been reporting more homes sold by "traditional" sellers – as opposed to lenders, who are responsible for the short sales and foreclosures that have dominated the market in recent years. In fact, for the first time in years, [GLVAR President Dave] Tina said "traditional" sales have accounted for more than half of all local home sales so far in 2013.

In March, 33.3 percent of all existing local home sales were short sales, down from 37.9 percent in February. Meanwhile, another 11.2 percent of all local home sales were bank-owned, up from 10.2 percent in February. The remaining 55.5 percent of all sales are the traditional type, Tina said.

GLVAR said the total number of existing local homes, condominiums and townhomes sold in March was 3,642. That’s up from 3,232 in February, but down from 4,388 total sales in March 2012.
...
As for available homes listed for sale without any sort of pending or contingent offer by the end of March, GLVAR reported 2,839 single-family homes listed without any sort of offer. That’s down 6.8 percent from 3,047 such homes listed in February and down 42.1 percent from one year ago.
emphasis added

A few key points:
1) In March 2012, 67.3% of total sales were distressed.  That declined to 44.5% in March 2013. So even though total sales declined year-over-year from 4,388 in March 2012 to 3,642 in March 2013, conventional sales were up about 40%. That is a sign of an improving market (it would be a mistake to focus only on the decline in total sales and miss the improvement in conventional sales).

2) Inventory of non-contingent homes is down 42.1% from a year ago to 2,839.  That is a sharp decline and less than one months supply (not including homes with offers).  Total inventory (including contingent offers) is down 24%.

3) Most distressed sales are now short sales.  About 3 times as many homes were short sales as foreclosures.

Overall this is an improving distressed market. Note: The median price was up 30.9% from a year ago, but I suggest using the repeat sales indexes because the median is impacted by the mix and there are fewer low end homes being sold.

by Calculated Risk on 4/09/2013 12:00:00 PM

Demand for lumber is increasing, but demand is still far below the levels during the housing bubble. However supply is lower than during the bubble years too. There are several factors impacting supply including a large number of sawmills still idled (it takes time to restart), the impact of the Mountain pine beetle, reduced maximum cuts in parts of Canada, and the permanent closure of high cost mills.

Note: Here is a great series on the mountain pine beetle from the Vancouver Sun: Pine Beetle

The B.C. government estimates that of the 2.3-billion cubic metres of merchantable lodgepole pine in the province, the beetles have claimed 726-million cubic metres over at least 17.5-million hectares.

Last month the WSJ had an article about some producers increasing supply:

Georgia-Pacific, the largest U.S. producer of plywood ... plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

Much more capacity is needed.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now near the housing bubble highs.

by Calculated Risk on 4/09/2013 10:05:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 3.9 million job openings on the last business day of February, up from 3.6 million in January, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.3 percent) and separations rate (3.1 percent) were little changed in February. ...
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... The number of quits (not seasonally adjusted) rose over the 12 months ending in February for total nonfarm and was essentially unchanged for total private and government.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for February, the most recent employment report was for March.

Click on graph for larger image.

Notice that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings increased in February to 3.925 million, up from 3.611 million in January. The number of job openings (yellow) has generally been trending up, and openings are up 11% year-over-year compared to February 2012.  This is most job openings since May 2008.

Quits were unchanged in February, and quits are up 7% year-over-year and at the highest level since 2008. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Not much changes month-to-month in this report, but the trend suggests a gradually improving labor market.