by Calculated Risk on 8/17/2014 08:16:00 PM

From Jon Hilsenrath at the WSJ: The Outlook: Federal Reserve Bets It Won't Wait Too Long on Rates

Will the Fed fall behind the curve and keep interest rates too low for too long as the economy strengthens? The question looms as officials travel this week to their annual gathering in Jackson Hole, Wyo., where they and the world's leading central bankers discuss economic issues.
...
A growing number of economists believe slack in labor markets is diminishing, making the economy prone to inflation and financial markets prone to overshooting with short-term interest rates near zero. The unemployment rate fell to 6.2% in July from 7.3% a year ago, a decline far faster than Fed officials expected.

CR Note: Two key points: 1) in the current environment, my sense is most FOMC members believe the risks are not symmetrical and that the risks from tightening too soon far outweigh the risk from being "behind the curve", and 2) the title of the Jackson Hole economic symposium this year is "Re-Evaluating Labor Market Dynamics" and I think on Friday Fed Chair Yellen will argue - using several employment metrics - that there is still significant slack in the labor markets.

Monday:
• At 10:00 AM ET, the August NAHB homebuilder survey. The consensus is for a reading of 53, unchanged from 53 in July. Any number above 50 indicates that more builders view sales conditions as good than poor.

• Also at 10:00 AM, Regional and State Employment and Unemployment (Monthly) for July 2014

Weekend:
• Schedule for Week of Aug 17th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 6 and DOW futures are up 48 (fair value).

Oil prices were down over the last week with WTI futures at $96.90 per barrel and Brent at $103.01 per barrel.  A year ago, WTI was at $107, and Brent was at $110 - so prices are down year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.49 per gallon (down about a nickel 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 8/17/2014 10:59:00 AM

Gretchen Morgenson writes in the NY Times: In a Bank Settlement, Don’t Forget the Bulldozers

[T]he sheer size of the Bank of America settlement makes it an enormous opportunity, housing experts say, to help the forgotten victims of the mortgage crisis. These are people who still pay their mortgages and property taxes but are caught in the devastating cycle that zombie houses can create in a neighborhood. Many of these homeowners, already poor, are impoverished further by blight on their streets.

“We had hoped that with these settlements we could bring down the number of never-to-be-lived-in houses,” said Jim Rokakis, director of the Thriving Communities Institute, a program of the nonprofit Western Reserve Land Conservancy that works to take over and repurpose vacant properties in the Cleveland area. “Vacancy rates are 15 percent or higher, all as a result of the crisis. Now it’s a matter of burying the dead.”

Mr. Rokakis’s organization also works with 22 county land banks throughout the state, nonprofit entities that take over distressed properties and sell them for nominal amounts to people who will rebuild on them or, more commonly, turn them into gardens or community spaces.

Studies show that bulldozing distressed properties reduces foreclosure rates in the surrounding neighborhoods and can improve the values of nearby homes. An analysis conducted for the Western Reserve Land Conservancy found that demolishing 6,000 homes in and around Cleveland between 2009 and 2013 helped slow the fall in property values, generating a net benefit in retained property values of $1.40 for every dollar spent on demolition.

In January 2009, I proposed adding a demolition plan to the stimulus package. This would have helped remove blight from many areas, and would have employed many idled construction workers.  I think this was a small missed opportunity.

by Calculated Risk on 8/16/2014 01:03:00 PM

The key reports this week are July Housing Starts on Tuesday and Existing Home Sales on Thursday.

For manufacturing, the August Philly Fed survey will be released on Thursday.

For prices, July CPI will be released on Tuesday.

The key focus of the week will probably be on Fed Chair Janet Yellen's speech at Jackson Hole on Friday.

----- Monday, August 18th -----
10:00 AM: The August NAHB homebuilder survey. The consensus is for a reading of 53, unchanged from 53 in July.  Any number above 50 indicates that more builders view sales conditions as good than poor.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for July 2014

----- Tuesday, August 19th -----
8:30 AM: Consumer Price Index for July. The consensus is for a 0.1% increase in CPI in July and for core CPI to increase 0.2%.

8:30 AM: Housing Starts for July.

Total housing starts were at 893 thousand (SAAR) in June. Single family starts were at 575 thousand SAAR in June.

The consensus is for total housing starts to increase to 963 thousand (SAAR) in July.

----- Wednesday, August 20th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

During the day: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).

2:00 PM: FOMC Minutes for the Meeting of July 29-30, 2014.

----- Thursday, August 21st -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 305 thousand from 311 thousand.

10:00 AM: the Philly Fed manufacturing survey for August. The consensus is for a reading of 18.5, down from 23.9 last month (above zero indicates expansion).

10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR).

The consensus is for sales of 5.00 million on seasonally adjusted annual rate (SAAR) basis. Sales in June were at a 5.04 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.09 million SAAR.

A key will be the reported year-over-year increase in inventory of homes for sale.

----- Friday, August 22nd -----
10:00 AM: Speech by Fed Chair Janet Yellen, Labor Markets, At the Federal Reserve Bank of Kansas City Economic Symposium: Re-Evaluating Labor Market Dynamics, Jackson Hole, Wyoming

by Calculated Risk on 8/16/2014 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 Aug 15, 2014.

Changes and comments from surferdude808:

As expected, the OCC provided an update on its enforcement action activities today, which contributed to several changes to the Unofficial Problem Bank List. In all, there were four removals and two additions that leave the list at 447 institutions with assets of $142.1 billion. A year ago, the list held 717 institutions with assets of $253.9 billion.

Actions were terminated against NorStates Bank, Waukegan, IL ($392 million Ticker: NSFC); First National Bank, Ronceverte, WV ($237 million Ticker: FBSW); Bank of Atlanta, Atlanta, GA ($198 million); Pickens Savings and Loan Association, FA, Pickens, SC ($94 million).

Added this week were First Federal Savings and Loan Association of Greensburg, Greensburg, IN ($158 million) and Quontic Bank, Astoria, NY ($126 million). The other notable change was the OCC issuing a Prompt Corrective Action order against The National Republic Bank of Chicago, Chicago, IL ($1.0 billion), which has been laboring under a formal enforcement action since 2010.

Next week will likely be quiet as we do not anticipate the FDIC providing an update until two weeks from now.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 447.

by Calculated Risk on 8/15/2014 04:15:00 PM

Economist Tom Lawler sent me the table below of short sales, foreclosures and cash buyers for several selected cities in July.

Comments from CR: Tom Lawler has been sending me this table every month for several years. I think it is very useful for looking at the trend for distressed sales and cash buyers in these areas. I sincerely appreciate Tom sharing this data with us!

On distressed: Total "distressed" share is down in all of these markets, mostly because of a sharp decline in short sales.

Short sales are down in all of these areas.

Foreclosures are down in most of these areas too, although foreclosures are up a little in few areas like Nevada, Sacramento and the Mid-Atlantic.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors pull back, the share of all cash buyers will probably continue to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	July-14	July-13	July-14	July-13	July-14	July-13	July-14	July-13
Las Vegas	11.5%	28.0%	10.1%	8.0%	21.6%	36.0%	35.6%	54.5%
Reno**	8.0%	21.0%	4.0%	7.0%	12.0%	28.0%
Phoenix	3.7%	11.5%	5.9%	9.4%	9.6%	20.8%	24.8%	35.8%
Sacramento	5.7%	17.9%	6.3%	5.1%	12.0%	23.0%	20.9%	25.5%
Minneapolis	3.0%	5.7%	9.5%	15.0%	12.5%	20.7%
Mid-Atlantic	4.3%	6.6%	7.7%	6.6%	12.1%	13.2%	17.1%	16.1%
Orlando	8.3%	17.9%	24.4%	17.5%	32.7%	35.4%	39.6%	47.8%
California *	6.6%	12.7%	5.6%	8.3%	12.2%	21.0%
Bay Area CA*	4.2%	8.5%	2.7%	4.6%	6.9%	13.1%	20.2%	23.5%
So. California*	5.9%	12.7%	5.2%	7.7%	11.1%	20.4%	24.5%	30.0%
Hampton Roads					19.3%	20.5%
Northeast Florida					30.7%	34.9%
Memphis*			13.4%	16.9%
Georgia***							24.1%	N/A
Toledo							32.9%	35.0%
Wichita							28.0%	24.1%
Des Moines							15.1%	15.1%
Tucson							26.2%	29.1%
Omaha							17.0%	15.9%
Pensacola							32.9%	30.0%
*share of existing home sales, based on property records **Single Family Only ***GAMLS