by Calculated Risk on 1/04/2015 07:47:00 PM

Starting in 2009, there were always a large number of analysts predicting the Fed would raise rates very soon (not me) - until Bernanke and the FOMC stopped that speculation when they included the following phrase in the August 2011 statement: "The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

That was eventually changed to "late 2014", and then to "mid-2015" ... now it seems likely the FOMC will raise rates this year. It has been a long long time!

From the WSJ: As Fed Prepares to Raise Rates, Economists Caution of Potential Bumps

“If we do it right, we don’t put the economy off-kilter,” said Federal Reserve Bank of Boston President Eric Rosengren . But “there are unusual conditions that I think complicate the normalization of rates this time.”

For instance, the current low level of long-term interest rates “indicates that there may be a bumpier ride, just because there needs to be an adjustment at some point along the cycle,” he said.

Still, Mr. Rosengren and others who spoke over the weekend at the American Economic Association’s annual meeting in Boston expressed relief that the U.S. economy has healed to the point where officials can seriously consider their first rate increase since 2006.

It is remarkable, said New York University economist Mark Gertler, that “after six or seven years, we’re finally talking about policy normalization, and it’s not a hypothetical conversation.”

Monday:
• Early: Reis Q4 2014 Office Survey of rents and vacancy rates.

• All day: Light vehicle sales for December. The consensus is for light vehicle sales to decrease to 16.9 million SAAR in December from 17.1 million in November (Seasonally Adjusted Annual Rate).

Weekend:
• Schedule for Week of January 4, 2015

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 14 and DOW futures are down 100 (fair value).

Oil prices were down over the last week with WTI futures at $52.69 per barrel and Brent at $56.42 per barrel.  A year ago, WTI was at $94, and Brent was at $107 - so prices are down 44% and 47% year-over-year respectively.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $2.20 per gallon (down about $1.10 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 1/04/2015 09:53:00 AM

Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand), however prices didn't fall as sharply either.

Click on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through Dec 19th (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are down about 2% from a year ago, and CME futures are down 9% year-over-year. Mostly prices have moved sideways for the last 18 months.

by Calculated Risk on 1/03/2015 11:29:00 AM

The key report this week is the December employment report on Friday.

Other key reports include December vehicle sales on Monday, the December ISM non-manufacturing index on Tuesday, and the November Trade Deficit on Wednesday.

Also, Reis will release their quarterly surveys of rents and vacancy rates for offices, apartments and malls.

----- Monday, January 5th -----
Early: Reis Q4 2014 Office Survey of rents and vacancy rates.

All day: Light vehicle sales for December. The consensus is for light vehicle sales to decrease to 16.9 million SAAR in December from 17.1 million in November (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the November sales rate.

----- Tuesday, January 6th -----
Early: Reis Q4 2014 Apartment Survey of rents and vacancy rates.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for November. The consensus is for a 0.2 decrease in November orders.

10:00 AM: ISM non-Manufacturing Index for December. The consensus is for a reading of 58.2, down from 59.3 in November. Note: Above 50 indicates expansion.

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

8:15 AM: The ADP Employment Report for December. This report is for private payrolls only (no government). The consensus is for 223,000 payroll jobs added in December, up from 207,000 in November.

8:30 AM: Trade Balance report for November from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through October. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $42.0 billion in November from $43.4 billion in October.

Early: Reis Q4 2014 Mall Survey of rents and vacancy rates.

2:00 PM: FOMC Minutes for Meeting of December 16-17, 2014

----- Thursday, January 8th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 300 thousand from 298 thousand.

Early: Trulia Price Rent Monitors for December. 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.

3:00 PM: Consumer Credit for November from the Federal Reserve.  The consensus is for credit to increase $15.0 billion.

----- Friday, January 9th -----
8:30 AM: Employment Report for December. The consensus is for an increase of 240,000 non-farm payroll jobs added in December, down from the 321,000 non-farm payroll jobs added in November.

The consensus is for the unemployment rate to decline to 5.7% in December from 5.8% the previous month.

This graph shows the year-over-year change in total non-farm employment since 1968.

In November, the year-over-year change was 2.73 million jobs, and that should increase further in December.  Barring a huge downside surprise in the December report, 2014 will be the best year since the '90s for both total nonfarm and private sector employment growth.

As always, a key will be the change in real wages - and as the unemployment rate falls, wage growth should eventually start to pickup.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for November. The consensus is for a 0.3% increase in inventories.

by Calculated Risk on 1/02/2015 09:28:00 PM

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

Here is the unofficial problem bank list for Jan 2, 2015.

Changes and comments from surferdude808:

This past Monday, the FDIC released an update on its enforcement action activities through November 2014. The release contributed to several changes to the Unofficial Problem Bank List this week. After three removals and two additions, the list holds 400 institutions with assets of $124.8 billion. A year ago, the list held 618 institutions with assets of $205.6 billion.

The FDIC terminated actions against Legacy Bank of Florida, Boca Raton, FL ($275 million); First Home Bank, Seminole, FL ($76 million); and Bank of Wrightsville, Wrightsville, GA ($52 million).

The FDIC issued actions against The Elkhart State Bank, Elkhart, TX ($53 million) and State Bank of Burnettsville, Burnettsville, IN ($49 million).

Next week likely will be slow in terms of changes to the list.

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 400.

by Calculated Risk on 1/02/2015 06:25:00 PM

A funny quote today from Gluskin Sheff economist David Rosenberg via CNBC: Rosenberg: Perma-bears on the 'lunatic fringe'

"There are segments of the perma-bear community that literally live their lives on the lunatic fringe," Rosenberg wrote ... "This is heavier than religion, the tea party or Red Sox Nation for that matter. To these fanatics, if the market rallies, it is due to some unholy alliance somewhere, and if the market dives, it is a case of good triumphing over evil."

He mentions being attacked by the lunatic fringe. I can relate - the perma-bears thought I was one of their own until I wrote "Looking for the Sun" in early 2009 (my first slightly positive post in four years of blogging).  After that post (first of many more positive posts) I was inundated with angry emails. Oh well ...

As an aside, the market is up about 55% since Rosenberg turned more positive in June 2012.