by Calculated Risk on 7/27/2015 10:57:00 AM

From the Dallas Fed: Texas Manufacturing Slump Moderates, Outlooks Improve

Texas factory activity declined slightly in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but rose for a second month in a row to -1.9, suggesting further moderation in the decline in manufacturing output.
...
Perceptions of broader business conditions were mixed. The general business activity index remained negative, but it rose for a second month in a row and reached -4.6 in July. Manufacturers expect improved conditions ahead. The company outlook index surged nearly nine points and posted its first positive reading in seven months, coming in at 1.2.

Labor market indicators reflected slight employment declines and shorter workweeks. The July employment index was negative for a third month in a row and edged down to -3.3.
emphasis added

The Dallas region has been especially hard hit by the decline in oil prices. This survey might be more negative in August since oil prices have declined again.

 The Richmond Fed survey (last of the regional Fed surveys for July) will be released tomorrow.

by Calculated Risk on 7/27/2015 09:14:00 AM

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From Black Knight: U.S. Home Prices Up 1.1 percent for the Month; Up 5.1 Percent Year-Over-Year

Today, the Data and Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Home Price Index (HPI​) report, based on May 2015 residential real estate transactions. The Black Knight HPI combines the company’s extensive property and loan-level databases to produce a repeat sales analysis of home prices as of their transaction dates every month for each of more than 18,500 U.S. ZIP codes. The Black Knight HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.

For a more in-depth review of this month’s home price trends, including detailed looks at the 20 largest states and 40 largest metros, please download the full Black Knight HPI Report.

The Black Knight HPI increased 1.1% percent in May, and is off 6.5% from the peak in June 2006 (not adjusted for inflation).

The year-over-year increase in the index has been about the same for the last eight months.

The press release has data for the 20 largest states, and 40 MSAs.

Black Knight shows prices off 39.3% from the peak in Las Vegas, off 32.5% in Orlando, and 28.1% off from the peak in Riverside-San Bernardino, CA (Inland Empire). Prices are at new highs in New York, Tennessee and Texas, and several other cities around the country.

Note: Case-Shiller for May will be released tomorrow.

by Calculated Risk on 7/26/2015 07:49:00 PM

From Ben Leubsdorf and Jon Hilsenrath at the WSJ: Fed Officials May Offer More Clarity on Rates

Federal Reserve officials are likely to emerge from their policy meeting Wednesday with short-term interest rates still pinned near zero, though they could send fresh hints that they’re getting closer to raising rates. ...

This leaves the Fed with a slight signaling challenge at the meeting this week. How aggressively should officials tip their hands about the timing of a rate increase later this year? Fed officials don’t want to take financial markets by surprise by raising the benchmark federal-funds rate for the first time since 2006 with no forewarning. At the same time, they want to keep their options open so they can adjust their stance as the economy evolves.

CR Note: I don't expect an explicit signal at the FOMC meeting this week, instead I expect the FOMC to emphasize that they are data dependent - and that they would like to see further improvement in the labor market, and further evidence of inflation moving back towards 2%.

The September meeting could be interesting!

Weekend:
• Schedule for Week of July 26, 2015

Monday:
• At 8:30 AM, Durable Goods Orders for June from the Census Bureau. The consensus is for a 3.1% increase in durable goods orders.

• At 10:30 AM, Dallas Fed Manufacturing Survey for July.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are up slightly and DOW futures are up 20 (fair value).

Oil prices were down over the last week with WTI futures at $48.04 per barrel and Brent at $54.62 per barrel.  A year ago, WTI was at $103, and Brent was at $106 - so prices are down about 50% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.71 per gallon (down about $0.80 per gallon from a year ago).

by Calculated Risk on 7/26/2015 10:25:00 AM

From Lynn Cook at the WSJ: Sudden Drop in Crude-Oil Prices Roils U.S. Energy Firms’ Rebound

U.S. energy companies are planning more layoffs, asset sales and financial maneuvers to deal with a recent, sudden drop in U.S. crude-oil prices to under $50 a barrel, the lowest level in four months.
...
Nearly 50,000 energy jobs have been lost in the past three months on top of 100,000 employees laid off since oil prices started to tumble last fall, according to Graves & Co., a Houston energy consultancy.

Click on graph for larger image

This graph shows WTI and Brent spot oil prices from the EIA. (Prices Friday added).  According to Bloomberg, WTI was at $48.14 per barrel on Friday, and Brent at $54.62.

Prices are down about 50% year-over-year.

The second graph shows the prices over the last few years.

Some producers stopped cutting when prices started to rebound, but now prices are declining again - and there will probably be more layoffs in the oil sector.

Note: Several oil producing states are already in recession such as North Dakota, Oklahoma and Alaska, but overall lower oil prices will be a positive for the U.S. economy.

by Calculated Risk on 7/25/2015 08:15:00 AM

The key reports this week are Q2 GDP on Thursday, and Case-Shiller house prices on Tuesday.

The FOMC meets on Tuesday and Wednesday, and no change to policy is expected at this meeting.

----- Monday, July 27th -----
8:30 AM: Durable Goods Orders for June from the Census Bureau. The consensus is for a 3.1% increase in durable goods orders.

10:30 AM: Dallas Fed Manufacturing Survey for July.

----- Tuesday, July 28th -----
9:00 AM: S&P/Case-Shiller House Price Index for May. Although this is the May report, it is really a 3 month average of March, April and May prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the April 2015 report (the Composite 20 was started in January 2000).

The consensus is for a 5.6% year-over-year increase in the Comp 20 index for April. The Zillow forecast is for the National Index to increase 4.0% year-over-year in May.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for July.

10:00 AM: Q2 Housing Vacancies and Homeownership survey.

----- Wednesday, July 29th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: Pending Home Sales Index for June. The consensus is for a 1.0% increase in the index.

2:00 PM: FOMC Meeting Announcement. No change is expected to policy.

----- Thursday, July 30th -----
8:30 AM: Gross Domestic Product, 2nd quarter 2015 (advance estimate); Includes historical revisions. The consensus is that real GDP increased 2.9% annualized in Q2.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 272 thousand from 255 thousand.

----- Friday, July 31st -----
8:30 AM: The Q2 Employment Cost Index

9:45 AM: Chicago Purchasing Managers Index for June. The consensus is for a reading of 50.0, up from 49.4 in May.

10:00 AM: University of Michigan's Consumer sentiment index (final for July). The consensus is for a reading of 94.1, up from the preliminary reading of 93.3.