by Calculated Risk on 2/08/2015 08:59:00 PM

From the WSJ: Air of Optimism Pervades Athens Even as Country Heads for Showdown in Brussels

The defiant, antiausterity position taken by the just-elected government toward Greece’s creditors has given new hope to many Athenians, even those who didn’t vote for the leftist Syriza party, which came out on top in last month’s election.

“People in Greece had to deal with so many difficulties during the last five years that they now feel they have nothing to lose,” says Chrysa Stratou, a 52-year-old psychologist. “The only thing left for Greeks is to battle.”

Elsewhere in Europe, the Greek government’s firm rejection of the terms governing its bailout has been met with a mix of consternation and outright hostility.

Austerity has failed (obvious to almost everyone), and anything else is welcome.  I wrote several years ago that austerity wouldn't survive for too many years in a democracy.

Monday:
• At 10:00 AM ET: the Fed will release the monthly Labor Market Conditions Index (LMCI).

Weekend:
• Schedule for Week of February 8, 2015

• Best Private Sector Job Creation "Ever"?

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 8 and DOW futures are down 60 (fair value).

Oil prices were up sharply over the last week with WTI futures at $52.34 per barrel and Brent at $58.20 per barrel.  A year ago, WTI was at $97, and Brent was at $110 - so prices are a little less than 50% year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $2.18 per gallon (down over $1.00 per gallon from a year ago).  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 2/08/2015 11:41:00 AM

On Friday, I mentioned that private job creation was on pace for the best ever during a presidential term. I received a few emails asking if that was correct.  The answer is "yes".

Here is a table of the top three presidential terms for private job creation (they also happen to be the three best terms for total non-farm job creation).

Note: Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s.  The prime working age labor force was growing more than 3% per year in the '80s with a surge in younger workers and women joining the labor force. Now, the overall population is larger, but the prime working age population has declined this decade and the participation rate is generally declining now.

Clinton's two terms were the best for both private and total non-farm job creation, followed by Reagan's 2nd term.  Public sector job creation increased the most during Reagan's 2nd term.

Currently Obama's 2nd term is on pace to be the best ever for private job creation.  However, with very few public sector jobs added, Obama's 2nd term is only on pace to be the third best for total job creation.

Note: Only 14 thousand public sector jobs have been added during the first two years of Obama's 2nd term (following a record loss of 702 thousand public sector jobs during Obama's 1st term).

This is 1% of the public sector jobs added during Reagan's 2nd term!

Top Employment Gains per Presidential Terms (000s)
Rank	Term	Private	Public	Total Non-Farm
1	Clinton 1	10,885	692	11,577
2	Clinton 2	10,070	1,242	11,312
3	Reagan 2	9,357	1,438	10,795
	Obama 21	5,542	14	5,556
	Pace2	11,084	28	11,112
124 Months into 2nd Term 2Current Pace for Obama's 2nd Term

The second table shows the jobs need per month for Obama's 2nd term to be in the top three presidential terms.

Jobs needed per month (average) for Obama's 2nd Term
to Rank	Private	Total
#1	223	251
#2	189	240
#3	159	218

by Calculated Risk on 2/07/2015 01:09:00 PM

The key economic report this week is January retail sales on Thursday.

----- Monday, February 9th -----
At 10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

----- Tuesday, February 10th -----
7:30 AM ET: NFIB Small Business Optimism Index for January.

Early: Trulia Price Rent Monitors for January. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

10:00 AM: Job Openings and Labor Turnover Survey for December from the BLS.

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

Jobs openings increased in November to 4.972 million from 4.830 million in October.

The number of job openings (yellow) were up 21% year-over-year compared to November 2013, and Quits were up 7% year-over-year.

----- Wednesday, February 11th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, February 12th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 285 thousand from 278 thousand.

8:30 AM ET: Retail sales for January will be released.

This graph shows retail sales since 1992 through December 2014. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). On a monthly basis, retail sales decreased 0.9% from November to December (seasonally adjusted), and sales were up 3.2% from December 2013.

The consensus is for retail sales to decrease 0.5% in January, and to decrease 0.5% ex-autos.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for December.  The consensus is for a 0.2% increase in inventories.

----- Friday, February 13th -----
10:00 AM: University of Michigan's Consumer sentiment index (preliminary for February). The consensus is for a reading of 98.5, up from 98.1 in January.

by Calculated Risk on 2/07/2015 08:11:00 AM

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

Here is the unofficial problem bank list for Feb 7, 2015.

Changes and comments from surferdude808:

One subtraction from the Unofficial Problem Bank List this week that leaves the list at 387 institutions with assets of $121.4 billion. A year ago, the list held 588 institutions with assets of $195.1 billion.

Thanks to reader for catching an action termination against Pacific Mercantile Bank, Costa Mesa, CA ($1.1 billion). The other alternation to this list this week was a name change for Worthington Federal Bank, Huntsville, AL ($130 million) to American Bank of Huntsville.

by Calculated Risk on 2/06/2015 07:56:00 PM

First, from Jon Hilsenrath at the WSJ: Jobs Report Means Fed Could Still Raise Rates in June

Two important milestones now loom for the Fed. First, Fed Chairwoman Janet Yellen is due to deliver her semiannual testimony to Congress later this month. She’ll use that to update lawmakers and the public on the economic outlook.

Second, Fed officials will decide at their March meeting whether to change or drop the language in their policy statement pledging to “be patient” in deciding when to raise their benchmark short-term interest rate from zero.

And from Tim Duy: Upbeat Jobs Report

... I don't think Yellen intended to imply that "patient" always means two meetings. Perhaps I just have too many memories about "considerable time" first meaning six months and then not. Plus, the Fed is aware of its past history, and in 2004 "patient" turned to "moderate" just one meeting before the hike. But it was technically the second meeting after "patient" was dropped, so is that two meetings? Also, as we saw with the "considerable" to "patient" transition, the Fed has its own unique way of wordsmithing that can deliver something for everyone. And finally, Yellen has the press conference to redefine her interpretation of "patient." But maybe I am wrong. In any event, I am not taking a fixed stand on what "patient" means until the press conference.

Bottom Line: The US economy has very real momentum on its side at the moment. It is more resilient to shocks than commonly assumed. This isn't 2011. June is still on the table.

CR Note: My understand was "patient" meant at least two meetings, perhaps more. So removing "patient" at the next meeting would mean June is possible.