by Calculated Risk on 6/27/2016 05:42:00 PM

NOTE: Fed Chair Yellen was scheduled to participate in a "Policy Panel" at the ECB Forum on Central Banking in Portugal on Wednesday. She has cancelled.  Mark Carney, Governor of the Bank of England and Chairman of the G20's Financial Stability Board, has also cancelled.

Tuesday:
• At 8:30 AM ET, Gross Domestic Product, 1st quarter 2016 (Third estimate). The consensus is that real GDP increased 1.0% annualized in Q1, revised up from a 0.8% increase.

• At 9:00 AM, S&P/Case-Shiller House Price Index for April. Although this is the April report, it is really a 3 month average of February, March and April prices. The consensus is for a 5.5% year-over-year increase in the Comp 20 index for April. The Zillow forecast is for the National Index to increase 5.1% year-over-year in April.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for June. This is the last of the regional Fed surveys for June.

From Tim Duy: Fed Once Again Overtaken By Events

With global financial markets reeling in the wake of Brexit - Britain's unforced error as a political gamble went too far - the Fed is back on the sidelines. A July hike was already out of the question before Brexit, while September was never more than tenuous, depending on the data falling in place just right. Now September has moved from tenuous to "what are you thinking?" ...
...
Bottom Line. The Fed will stand down for the moment; where they go down the road depends upon the depth and length of current disruption. I think at this point it goes without saying that if you hear a Fed speaker talking about July being on the table or confidently warning about two or three rate hikes this year, you should ignore them. Perhaps we can have that conversation later with regards to the December meeting, but certainly not now. ...

by Calculated Risk on 6/27/2016 03:35:00 PM

From the ATA: ATA Truck Tonnage Index Increased 2.7% in May

American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.7% in May, following a revised 1.7% drop during April. In May, the index equaled 139 (2000=100), up from 135.3 in April. The all-time high was 144 in February.

Compared with May 2015, the SA index jumped 5.7%, which was up from April’s 2.4% year-over-year gain.
...
“Following two consecutive decreases totaling 6 percent, May was a nice increase in truck tonnage,” said ATA Chief Economist Bob Costello. “Better consumer spending in April and May certainly helped, but economic growth remains mixed and I’d expect the recent choppy pattern in tonnage to continue for the next quarter or two.

“We recently received good news on the inventory cycle, with the total business inventory-to-sales ratio declining for the first time in nearly a year. While one month doesn’t make a trend, this was good news for the trucking industry,” he said.
emphasis added

Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index.

The index is now up 5.7% year-over-year.

by Calculated Risk on 6/27/2016 01:34:00 PM

The Census Bureau has released the population estimates for 2015.

Using that data, on Sunday I posted a table ranking the largest 5-year cohorts in 2010, 2015, 2020, and 2030: Largest 5-year Population Cohorts are now "20 to 24" and "25 to 29"

Using the same data, Jed Kolko tweeted the ten most common ages in the U.S. (seven of ten are in the twenties).

Here is a table showing the ten most common ages in 2010, 2015, 2020, and 2030 (projections are from the Census Bureau).

Note the younger baby boom generation dominated in 2010.  By 2015 the millennials are taking over.  And by 2020, the boomers are off the list.

My view is this is positive for both housing and the economy, especially in the 2020s.

Population: Most Common Ages by Year
	2010	2015	2020	2030
1	50	25	29	39
2	49	26	30	40
3	20	24	28	38
4	19	23	27	37
5	47	27	31	36
6	46	56	26	35
7	48	55	32	41
8	51	22	25	30
9	18	52	35	34
10	52	28	34	33

by Calculated Risk on 6/27/2016 10:36:00 AM

From the Dallas Fed: Texas Manufacturing Activity Declines Again

Texas factory activity declined again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a second consecutive negative reading but rose from -13.1 to -7.0, suggesting the pace of contraction eased somewhat from May.

Other measures of current manufacturing activity also reflected continued declines this month. The new orders index held steady at -14.2, while the growth rate of orders index fell four points to -18.6. The capacity utilization and shipments indexes remained negative for a second month but edged up, coming in at -9.3 and -8.6, respectively.

Perceptions of broader business conditions stayed pessimistic in June. The general business activity index has been negative since January 2015 and came in at -18.3 this month, up slightly from its May reading.

Labor market measures indicated a sixth month of contraction in a row in June. The employment index fell to -11.5, its lowest reading since November 2009. The decline in the index was largely due to a falloff in the share of firms adding to headcounts....
emphasis added

Still grim in the Dallas region.  The impact of lower oil prices is still impacting manufacturing.

by Calculated Risk on 6/27/2016 08:01:00 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: Black Knight Home Price Index Report: April Transactions -- U.S. Home Prices Up 1.0 Percent for the Month; Up 5.4 Percent Year-Over-Year

• U.S. home prices were up 1.0 percent for the month, and have gained 5.4 percent from one year ago

• At $260K, the U.S. HPI is up over 30 percent from the market’s bottom and is now just 2.9 percent off its June 2006 peak

• 14 of the nation's 40 largest metropolitan areas hit new peaks in April:
◦Austin, TX ($299K)
◦Boston, MA ($419K)
◦Charlotte, NC ($207K)
◦Dallas, TX ($230K)
◦Denver, CO ($351K)
◦Houston, TX ($225K)
◦Kansas City, MO ($180K)
◦Nashville, TN ($231K)
◦Pittsburgh, PA ($190K)
◦Portland, OR ($346K)
◦San Antonio, TX ($200K)
◦San Francisco, CA ($765K)
◦San Jose, CA ($921K)
◦Seattle, WA ($401K)

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

by Calculated Risk on 6/26/2016 06:34:00 PM

From Goldman Sachs economist Jan Hatzius and Sven Jari Stehn: After the Brexit Shock

Following the UK referendum, we have downgraded our global growth forecast, sharply in the UK and more modestly elsewhere. Increased uncertainty and deteriorating terms of trade are likely to subtract a cumulative 2¾% from UK GDP, and we now expect the economy to enter a mild recession by early 2017. We estimate the cumulative hit to Euro area GDP at ½% and have cut our growth forecast over the next two years to 1¼%. We have also slightly shaved our H2 2016 forecast for US growth to 2%
...
However, the risks to this forecast are significant and further downward adjustments could well follow.

Weekend:
• Schedule for Week of June 26, 2016

• Largest 5-year Population Cohorts are now "20 to 24" and "25 to 29"

• June 2016: Unofficial Problem Bank list declines to 203 Institutions, Q2 2016 Transition Matrix

Monday:
• At 10:30 AM ET, the Dallas Fed Survey of Manufacturing Activity for June.

From CNBC: Pre-Market Data and Bloomberg futures: S&P are down 22 and DOW futures are down 151 (fair value).

Oil prices were down over the last week with WTI futures at $47.54 per barrel and Brent at $48.41 per barrel.  A year ago, WTI was at $59, and Brent was at $60 - so prices are down 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.31 per gallon (down about $0.45 per gallon from a year ago).

by Calculated Risk on 6/26/2016 11:42:00 AM

Two years ago, I wrote: Census Bureau: Largest 5-year Population Cohort is now the "20 to 24" Age Group.

The Census Bureau has just released the population estimates for 2015, and I've updated the table from the previous post (replacing 2013 with 2015 data).

The table below shows the top 11 cohorts by size for 2010, 2015 (released this month), and Census Bureau projections for 2020 and 2030.

By the year 2020, 8 of the top 10 cohorts will be  under 40 (the Boomers will be fading away), and by 2030 the top 11 cohorts will be the youngest 11 cohorts (the reason I included 11 cohorts).

There will be plenty of "gray hairs" walking around in 2020 and 2030, but the key for the economy is the population is the prime working age will be increasing.

This is very positive for housing and the economy.  Demographics are becoming more favorable!

Population: Largest 5-Year Cohorts by Year
Largest Cohorts	2010	2015	2020	2030
1	45 to 49 years	20 to 24 years	25 to 29 years	35 to 39 years
2	50 to 54 years	25 to 29 years	30 to 34 years	40 to 44 years
3	15 to 19 years	50 to 54 years	35 to 39 years	30 to 34 years
4	20 to 24 years	55 to 59 years	Under 5 years	25 to 29 years
5	25 to 29 years	30 to 34 years	55 to 59 years	5 to 9 years
6	40 to 44 years	15 to 19 years	20 to 24 years	10 to 14 years
7	10 to 14 years	45 to 49 years	5 to 9 years	Under 5 years
8	5 to 9 years	10 to 14 years	60 to 64 years	15 to 19 years
9	Under 5 years	5 to 9 years	15 to 19 years	20 to 24 years
10	35 to 39 years	35 to 39 years	10 to 14 years	45 to 49 years
11	30 to 34 years	40 to 44 years	50 to 54 years	50 to 54 years

by Calculated Risk on 6/25/2016 11:29:00 AM

The key economic reports this week are the third estimate of Q1 GDP,  May personal income and outlays, June vehicle sales, the June ISM manufacturing, and Case-Shiller House prices.

----- Monday, June 27th -----
10:30 AM ET: Dallas Fed Survey of Manufacturing Activity for June.

----- Tuesday, June 28th -----
8:30 AM ET: Gross Domestic Product, 1st quarter 2016 (Third estimate). The consensus is that real GDP increased 1.0% annualized in Q1, revised up from a 0.8% increase.

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

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the March 2016 report (the Composite 20 was started in January 2000).

The consensus is for a 5.5% year-over-year increase in the Comp 20 index for April. The Zillow forecast is for the National Index to increase 5.1% year-over-year in April.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for June. This is the last of the regional Fed surveys for June.

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

8:30 AM: Personal Income and Outlays for May. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.2%.

9:30 AM: Discussion, Fed Chair Janet Yellen, Policy Panel, ECB Forum on Central Banking, Linho Sintra, Portugal (CANCELLED: Probably due to Brexit)

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

----- Thursday, June 30th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 266 thousand initial claims, up from 259 thousand the previous week.

9:45 AM: Chicago Purchasing Managers Index for June. The consensus is for a reading of 50.5, up from 49.3 in May.

----- Friday, July 1st -----
10:00 AM: ISM Manufacturing Index for June. The consensus is for the ISM to be at 51.5, up from 51.3 in May.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 51.3% in May. he employment index was at 49.2%, and the new orders index was at 55.7%.

10:00 AM: Construction Spending for May. The consensus is for a 0.6% increase in construction spending.

All day: Light vehicle sales for June. The consensus is for light vehicle sales to decrease to 17.3 million SAAR in June from 17.4 million in May (Seasonally Adjusted Annual Rate).

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

by Calculated Risk on 6/25/2016 08:09:00 AM

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

Here is the unofficial problem bank list for June 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for June 2016. During the month, the list fell from 206 institutions to 203 after four removals and one addition. Assets dropped by only $177 million to an aggregate $60.6 billion. Since the list has been in a net monthly decline starting in July 2012, this is the smallest monthly decline in the list count. A year ago, the list held 309 institutions with assets of $89.8 billion.

This month, actions have been terminated against Georgia Primary Bank, Atlanta, GA ($155 million); South County Bank, National Association, Rancho Santa Margarita, CA ($137 million); First State Bank of Warner, Warner, SD ($64 million); and Independence Bank, East Greenwich, RI ($39 million).

The addition this month was Grand Rivers Community Bank, Grand Chain, IL ($76 million). Also, we returned Gateway Bank, FSB, Oakland, CA, back to the list after it inadvertently was removed as the bank only divested a branch instead of being an entire sale.

With it being the end of the second quarter, we bring an updated transition matrix to detail how banks are moving off the Unofficial Problem Bank List. Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, a total of 1,710 institutions have appeared on a weekly or monthly list at some point. There have been 1,507 institutions that have transitioned through the list. Departure methods include 854 action terminations, 398 failures, 240 mergers, and 15 voluntary liquidations. The second quarter of 2015 started with 222 institutions on the list, so the 17 action terminations during the quarter reduced the list by 7.7 percent, which is the lowest quarterly termination rate since the 6.9 percent in the fourth quarter of 2014. Of the 389 institutions on the first published list, 23 or 5.9 percent still remain more than six years later. The 398 failures represent 23.3 percent of the 1,710 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

At the start of the month, the FDIC provided updated figures on the Official Problem Bank List with the change during the quarter being a bit perplexing. The FDIC said the official list stood at 165 institutions with assets of $30.9 billion, down from 183 institutions with assets $46.8 billion at year-end. Thus, during the first quarter, the official list declined by 18 institutions and $15.9 billion in assets, which results in the 18 removals having an average asset size of $883 million. The average asset size of institutions on the official list at the start of the first quarter was only $256 million ($46.8 billion/183 institutions). In comparison, the average asset size of institutions currently on the unofficial list is higher at $299 million ($60.6 billion/203 institutions), which includes the $13.7 billion Flagstar Bank and six other institutions that range between $1-2.3 billion. Removing Flagstar Bank from the unofficial list reduces the list's average institution asset size to $232 million and aggregate assets drop to $46.9, much closer to the official figures at the end of the first quarter. In the preceding three quarters, the FDIC reported quarterly asset declines for the official list of $3.8 billion in the second quarter of 2015, $5.4 billion in the third quarter of 2015, and $4.3 billion in the fourth quarter of 2015. So it is unclear how the FDIC was able to ramp-up the asset removal rate to $15.9 billion during the first quarter absent the removal of Flagstar Bank, which is an SEC registrant that would be required to file an 8-K notice if its enforcement action had been terminated. While the FDIC closely guards the institutions on the official list, some banking industry participants believe the FDIC will manipulate the official list to mask the identity of large banks entering/exiting the list.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	166	(63,507,432)
	Unassisted Merger	39	(9,713,878)
	Voluntary Liquidation	4	(10,584,114)
	Failures	157	(184,803,449)
	Asset Change		(1,602,381)
Still on List at 6/30/2016		23	6,102,381
Additions after 8/7/2009		180	54,508,542
End (6/30//2016)		203	60,610,923
Intraperiod Deletions1
	Action Terminated	688	279,432,438
	Unassisted Merger	201	79,734,581
	Voluntary Liquidation	11	2,389,500
	Failures	241	119,769,682
	Total	1,141	481,326,201
1Institution not on 8/7/2009 or 6/30/2016 list but appeared on a weekly list.

by Calculated Risk on 6/24/2016 04:52:00 PM

From Matthew Graham at Mortgage News Daily: Single Best Day For Mortgage Rates in More Than a Year

From yesterday's most prevalent conventional 30yr fixed quote of 3.625%, we're now easily down to 3.5% for most lenders. A few of the most aggressive lenders are already down to 3.375% on top tier scenarios. Back in 2012, 3.375% was the lowest rate that was maintained for more than a few days, although there were a few windows of opportunity for 3.25% and 3.125%. Considering some of the higher costs associated with today's mortgages (government guarantee fees and servicing costs), we're effectively back in line with all-time lows.
emphasis added

Here is a table from Mortgage News Daily:

Home Loan Rates

View More Refinance Rates