by Calculated Risk on 7/08/2014 09:00:00 PM

This never gets old: Years ago, whenever there was a market sell-off, my friend Tak Hallus (Stephen Robinett) would shout at his TV tuned to CNBC "Bring out the bears!".

That was because CNBC would usually interview "bears" whenever there was a sell-off, and interview "bulls" whenever the market rallied.

Today was no exception Marc Faber: The asset bubble has begun to burst

All in all, Faber is looking for a 30 percent drop in the S&P 500.

Here is Faber on April 10th: 2014 crash will be worse than 1987's: Marc Faber

"This year, for sure—maybe from a higher diving board—the S&P will drop 20 percent," Faber said, adding: "I think, rather, 30 percent"

And Faber from August 8, 2013:

Faber expect to see stocks end the year "maybe 20 percent [lower], maybe more!"

And from October 24, 2012:

"I believe globally we are faced with slowing economies and disappointing corporate profits, and I will not be surprised to see the Dow Jones, the S&P, the major indices, down from the recent highs by say, 20 percent," Faber said...

Since the market is up 40% since his 2012 prediction, shouldn't he be expecting something like a 50%+ decline now?

Wednesday:
• At 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 June 17-18, 2014.

by Calculated Risk on 7/08/2014 06:02:00 PM

Using data from other sources than the CPS, Trulia chief economist Jed Kolko writes: Basement-Dwelling Millennials Are For Real

[T]he Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC) counts college students who are living in dorms as living with their parents, and college enrollment has indeed gone up. But it does not follow that basement-dwelling millennials are a myth. The ASEC and other Census data show that after adjusting for college enrollment and for dormitory living, millennials were more likely to live with parents in 2012 and 2013 than at any other time for which data are available.

An interesting discussion!

P.S. Great to be back online. SC Edison performed some electrical upgrades on my block on Monday, and one of the "upgrades" was to sever my cable connection. Oh well ...

by Calculated Risk on 7/08/2014 05:06:00 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 rising local home prices, fewer cash buyers

According to GLVAR, the total number of existing local homes, condominiums and townhomes sold in May was 3,274, up from 3,450 in May, but down from 3,642 one year ago..

GLVAR said 34.7 percent of all existing local homes sold in June were purchased with cash. That’s down from 40.2 percent in May and well short of the February 2013 peak of 59.5 percent, suggesting that investors are accounting for a smaller percentage of local buyers.
...
In June, 10.8 percent of all existing local home sales were short sales. That’s up from 7.9 percent in May. Another 10.1 percent of all June sales were bank-owned properties, up from 9.1 percent in May.
...
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in June was 13,838. That’s up 1.5 percent from 13,637 in May and up 0.6 percent from one year ago.

By the end of June, GLVAR reported 7,126 single-family homes listed without any sort of offer. That’s up 7.7 percent from 6,615 such homes listed in May, and an 86.2 percent jump from one year ago. For condos and townhomes, the 2,333 properties listed without offers in June represented a 3.3 percent increase from 2,258 such properties listed in May and a 59.4 percent jump from one year ago.
emphasis added

There are several key trends that we've been following:

1) Overall sales were down about 10% year-over-year.

2) Conventional (equity, not distressed) sales were up 19% year-over-year.  In June 2013, only 60.0% of all sales were conventional equity.  This year, in June 2014, 79.1% were equity sales. 

3) The percent of cash sales has declined year-over-year from 55.3% in June 2013 to 34.7% in June 2014. (investor buying appears to be declining).

4) Non-contingent inventory is up 86% year-over-year.

Inventory has clearly bottomed in Las Vegas (A major theme for housing last year).  And fewer distressed sales and more inventory (a major theme for 2014) suggests price increases will slow.

by Calculated Risk on 7/08/2014 10:11:00 AM

Note: I have limited internet access until later today.

From the BLS: Job Openings and Labor Turnover Summary

There were 4.6 million job openings on the last business day of May, little changed from 4.5 million in April, the U.S. Bureau of Labor Statistics reported today. ...
...
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) increased over the 12 months ending in May for total nonfarm and total private and was little changed for 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 May, the most recent employment report was for June.

Click on graph for larger image.

Note: graph is from last month (power outage - limited internet access and cannot upload graphs)

Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market 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 May to 4.635 million from 4.464 million in April.   

The number of job openings (yellow) are up 19% year-over-year compared to May 2013.

Quits are up 15%year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

It is a good sign that job openings are over 4 million for the fourth consecutive month, and that quits are increasing.

by Calculated Risk on 7/08/2014 08:46:00 AM

From NFIB: SMALL BUSINESS OPTIMISM CAN’T BE SUSTAINED

" After a promising 3 month run, June’s Optimism Index fell 1.6 points to 95.0. While job components improved ..." 

"NFIB owners increased employment by an average of 0.05 workers per firm in June (seasonally adjusted), the ninth positive month in a row and the best string of gains since 2006."

Job creation plans continued to strengthen and rose 2 percentage points to a seasonally adjusted net 12 percent, approaching  “normal” levels for a growing economy (even with no growth last quarter) and the best reading since 2007.