by Calculated Risk on 1/23/2015 07:01:00 AM

According to Black Knight's First Look report for December, the percent of loans delinquent decreased 7% in December compared to November, and declined 13% year-over-year.

The percent of loans in the foreclosure process declined further in December and were down about 35% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.64% in December, down from 6.08% in November.  The normal rate for delinquencies is around 4.5% to 5%.

The percent of loans in the foreclosure process declined to 1.61% in December from 1.63% in November.

The number of delinquent properties, but not in foreclosure, is down 375,000 properties year-over-year, and the number of properties in the foreclosure process is down 424,000 properties year-over-year.

Black Knight will release the complete mortgage monitor for December in early February.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Dec 2014	Nov 2014	Dec 2013	Dec 2012
Delinquent	5.64%	6.08%	6.47%	7.17%
In Foreclosure	1.61%	1.63%	2.48%	3.44%
Number of properties:
Number of properties that are 30 or more, and less than 90 days past due, but not in foreclosure:	1,736,000	1,925,000	1,964,000	2,031,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:	1,132,000	1,163,000	1,280,000	1,545,000
Number of properties in foreclosure pre-sale inventory:	820,000	829,000	1,244,000	1,716,000
Total Properties	3,688,000	3,917,000	4,488,000	5,292,000

by Calculated Risk on 1/22/2015 06:10:00 PM

More on the ECB from Neil Irwin at the NY Times: Mario Draghi’s Bombshell Is Europe’s Last, Best Hope to Return to Growth

At first glance, Mr. Draghi’s plan emulates the Federal Reserve’s QE3 program: the third round of quantitative easing, or bond buying, announced in the United States in September 2012 and which most likely helped the acceleration in the American economy over the last two years. ...
...
There are two big differences.

First, it is late. When the Fed pulled the trigger on its open-ended bond buying, in 2012, annual inflation was running at 1.6 percent in the United States, not far below its 2 percent target. The economy was growing at a steady if unexceptional rate. The Fed was looking to get ahead of its problem of sluggish growth.

The European Central Bank, by contrast, has spent the last two and a half years seemingly looking for any excuse not to take the action announced Thursday ...

The second big difference with the American program is that the E.C.B. is only dabbling with risk-sharing across Europe.

The ECB is "late", but the real problem is the fiscal authorities (especially in Germany).

Friday:
• At 10:00 AM ET, Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for sales of 5.05 million on seasonally adjusted annual rate (SAAR) basis. Sales in November were at a 4.93 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.15 million SAAR.

by Calculated Risk on 1/22/2015 12:58:00 PM

I think this is the quote of the day via The Daily Telegraph: ECB unveils €1.1 trillion QE program

Mr Draghi rejected any criticism that the vast expansion of the ECB's easy-money policies would stoke inflation down the road, noting that inflation has stayed very low even after several interest rate cuts and abundant ECB loans to banks.

"There must be a statute of limitations for those who say there will be inflation," Mr Draghi said.

Some policymakers have been wrong for years, both on monetary and fiscal policy ("austerity über alles").

And on the ECB's QE, from the WSJ: ECB Unveils Stimulus to Boost Economy

ECB President Mario Draghi said the ECB will buy a total of €60 billion a month in assets including government bonds, debt securities issued by European institutions and private-sector bonds. The purchases of government bonds and those issued by European institutions will start in March and are intended to run through to September 2016, Mr. Draghi said. The risks associated with the bonds of EU institutions will be shared among eurozone central banks, but purchases of other government bonds won’t be subject to loss sharing, he said.

Mr. Draghi said bond purchases might continue beyond September 2016, and until there are clear signs that the annual rate of inflation is rising toward the central bank’s target of just below 2%.

And from the Financial Times: European Central Bank unleashes quantitative easing

Mr Draghi said the bond-buying scheme will commence in March and last until the end of September 2016, or “until we see a sustained adjustment in the path of inflation”. The €60bn monthly asset purchases include government debt, asset-backed securities and covered bonds but not corporate bonds.

This buys more time for policymakers in Germany to change their approach (I doubt they will, there is no "statute of limitations" for bad ideas).

by Calculated Risk on 1/22/2015 11:00:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Expanded at a Slower Pace

Tenth District manufacturing activity expanded at a slower pace in January, but producers’ expectations for future activity remained at solid levels. Most price indexes were lower than last month, especially for finished goods prices.

The month-over-month composite index was 3 in January, down from 8 in December and 6 in November. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The overall slower growth was mostly attributable to declines in some types of durable goods production, particularly electronics, machinery, and metal products, some of which is likely due to lower energy activity. Looking across District states, the weakest activity was in energy-dependent Oklahoma. ... the employment index posted a five-month low.
...
“We saw weaker activity in some energy sector-related manufacturing in January, and that pulled the overall index down somewhat”, said [Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City]. “But firms still reported modest overall growth in regional factory activity".

Future factory indexes continued to remain stable at mostly solid levels. The future composite index was unchanged at 19 ...
emphasis added

Two more regional Fed manufacturing surveys for January will be released this month (the Dallas and Richmond Fed surveys). It appears we are starting to see some impact from lower oil prices.

The over all impact from the decline in oil prices will be positive for the US economy, but as Tim Duy noted a couple of weeks ago about oil prices:

the negative impacts will be fairly concentrated and easy for the media to sensationalize, while the positive impacts will be fairly dispersed. We all know what is going to happen to rig counts, high-yield energy debt, and the economies of North Dakota and at least parts of Texas. "Kablooey," I think, is the technical term. Easy media fodder. Much more difficult to see the positive impact spread across the real incomes of millions of households, with particularly solid gains at the lower ends of the income distribution. This will be most likely revealed in the aggregate data and be much less newsworthy.
emphasis added

by Calculated Risk on 1/22/2015 08:30:00 AM

The DOL reported:

In the week ending January 17, the advance figure for seasonally adjusted initial claims was 307,000, a decrease of 10,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 316,000 to 317,000. The 4-week moving average was 306,500, an increase of 6,500 from the previous week's revised average. The previous week's average was revised up by 2,000 from 298,000 to 300,000.

There were no special factors impacting this week's initial claims.

The previous week was revised up to 317,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 306,500.

This was higher than the consensus forecast of 300,000, and the 4-week average has moved up lately, but the low level still suggests few layoffs.  Note: We might start seeing an increase in unemployment claims due to layoffs in oil producing states.