by Calculated Risk on 4/25/2014 05:35:00 PM

From the FDIC: Palmetto State Bank, Hampton, South Carolina, Assumes All of the Deposits of Allendale County Bank, Fairfax, South Carolina

As of December 31, 2013, Allendale County Bank had approximately $54.5 million in total assets and $51.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.1 million. ... Allendale County Bank is the sixth FDIC-insured institution to fail in the nation this year, and the first in South Carolina.

Does anyone remember bank failures? (this is the first failure since February!)

by Calculated Risk on 4/25/2014 01:52:00 PM

Auto sales were clearly impacted by the harsh winter weather in January and February, and then rebounded sharply in March. The rebound in March was predicted by Atif Mian and Amir Sufi Weakening Economy or Just Bad Winter?

Note: The automakers will report April vehicle sales on Thursday, May 1st.  Sales in March were at a 16.3 million seasonally adjusted annual rate (SAAR), and it appears sales in April will be above 16 million (SAAR) too.

Here are a few forecasts:

From J.D. Power: April New-Vehicle Retail Sales Showing Growth, With Consumer Spending at Record-Level Pace

New light-vehicle retail sales are expected to reach their highest levels for the month of April since 2005, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive. ... Total light-vehicle sales in April 2014 are expected to reach 1.4 million units, a 4 percent increase from April 2013. [16.1 million SAAR]

Note: In April 2014, there was one more selling day than in April 2013 (26 days vs. 25 last year).

From Edmunds.com: Car Sales Settle into a Groove in April, Says Edmunds.com

Edmunds.com ... forecasts that 1,401,606 new cars and trucks will be sold in the U.S. in April for an estimated Seasonally Adjusted Annual Rate (SAAR) of 16.2 million. ... The forecast anticipates that the auto industry will enjoy its best April performance since dealers sold 1,444,587 vehicles in April 2006.

From TrueCar: April SAAR to Hit 16.2 Million Vehicles, According to TrueCar; 2014 New Vehicle Sales Expected to be up 8 Percent Year-Over-Year

New light vehicle sales in the U.S. (including fleet) are expected to reach 1,382,000 units, up 7.5 percent from April 2013 and down 10.0 percent from March 2014. ... Seasonally Adjusted Annualized Rate ("SAAR") of 16.2 million new vehicle sales is up 9.2 percent from April 2013 and down 0.5 percent over March 2014.

by Calculated Risk on 4/25/2014 11:01:00 AM

The BEA is scheduled to release the advance estimate for Q1 Gross Domestic Product (GDP) next week on Wednesday, April 30th. The consensus forecast is for real GDP to increase 1.1% in Q1 (from Q4, annualized). Here are a few forecasts:

From Kris Dawsey at Goldman Sachs:

Despite GDP likely growing at an anemic rate of around 1.0% in Q1, we remain optimistic about the rest of 2014. The core narrative for a pickup in growth this year has not changed. The fiscal drag is still lower, consumer spending should still strengthen, and business investment seems poised for a comeback. We see the weakness in Q1 as mainly driven by temporary factors, including a large drag from weather and inventories. The recent encouraging dataflow—with the exception of some of the housing numbers—appears consistent with our forecast for a near-term pickup. For the remainder of 2014, 3%+growth remains our baseline. ...

We forecast 1.8% growth in real final sales in Q1 (GDP growth excluding the effects of the volatile inventories category). ... Inventory investment was a significant positive contributor to growth in 2013, adding 3/4 percentage point to growth over the four quarters of the year. ... In Q1, the rate of real inventory accumulation appears to have moderated based on the incoming data on manufacturing, wholesale, and retail inventories, which will be a drag on Q1 GDP growth.
emphasis added

From Merrill Lynch:

We think the first estimate of 1Q GDP will show sluggish growth of only 1.2% qoq saar. A large part of the weakness owes to the cold weather which held back economic activity in the beginning of the year. Inventories are also being drawn down, albeit gradually, as businesses were caught with excess stockpiles. We estimate that inventories will slice 0.6pp from growth, matching the drag to the economy from a wider trade deficit. Residential investment is also likely to contract, reflecting the decline in home sales and sluggish housing starts. ... We think momentum will improve in the spring, setting the stage for a rebound in 2Q with growth above 3.0%.

For the first release of 1Q GDP, we are looking for relatively soft readings on key inflation metrics in this report. Specifically, we expect both the GDP deflator and the core PCE deflator to rise 1.3% qoq saar for 1Q.

From Nomura:

Disregard the backward-looking Q1 GDP, April data should show the recovery taking off. ... Weather weighed on economic activity early in the year. This should be reflected in a markedly slower pace of GDP growth in Q1. We expect GDP to grow at an annualized rate of 0.9% in Q1, compared with 2.6% in Q4.

And on the April employment report to be released next Friday, the consensus is for 210 thousand payroll jobs added with Merrill forecasting 215 thousand and Nomura forecasting 225 thousand.

by Calculated Risk on 4/25/2014 09:58:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for April increased to 84.1 from the March reading of 80.0, and was up from the preliminary April reading of 82.6.

This was above the consensus forecast of 82.5. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011, and another smaller spike down last October and November due to the government shutdown.

I expect to see sentiment at post-recession highs very soon.

by Calculated Risk on 4/24/2014 08:08:00 PM

From Nick Timiraos at the WSJ: Demand for Home Loans Plunges

Lenders originated $235 billion in mortgage loans during the January-March quarter, down 58% from the same period a year ago and down 23% from the fourth quarter of 2013, according to industry newsletter Inside Mortgage Finance.
...
The decline in mortgage lending last quarter stemmed almost entirely from the slide in refinancing. Loans for home purchases were basically flat from a year earlier and down from the fourth quarter.
...
The top 25 lenders accounted for 63.9% of all originations in the first quarter, also a 14-year low. That is down from 65.3% at the end of last year and a high of 90.9% in 2008, according to Inside Mortgage Finance.

Note: Many of the smaller lenders focus on the home purchase market and many of these small lenders are not included in the weekly MBA index. That is why the MBA purchase index is down about 18% year-over-year, but actual purchase activity is flat (according to Inside Mortgage Finance).

Friday:
• At 9:55 AM ET, the Reuter's/University of Michigan's Consumer sentiment index (final for April). The consensus is for a reading of 82.5, down from the preliminary reading of 82.6, but up from the March reading of 80.0.