by Calculated Risk on 8/23/2016 02:59:00 PM

Here is an indicator that I'm following that appears to be a leading indicator for industrial production.

From the American Chemistry Council: Chemical Activity Barometer Suggests Accelerated Business Activity; Notches Sixth Consecutive Gain

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), expanded 0.4 percent in August following an upward revision for July. This marks the barometer’s sixth consecutive monthly gain. Accounting for adjustments, the CAB is up 3.2 percent over this time last year, the strongest year over year growth since January 2015. All data is measured on a three-month moving average (3MMA). On an unadjusted basis the CAB climbed 0.3 percent in August, following a 0.6 percent jump in July.

"The CAB is signaling higher, and possibly accelerating, U.S. business activity into 2017. The services sectors have begun to improve and likely accelerated during recent months, and manufacturing appears to be gathering momentum," said ACC’s Chief Economist Kevin Swift.
emphasis added

Currently CAB has increased over the last three months, and this suggests an increase in Industrial Production over the next year.

by Calculated Risk on 8/23/2016 10:10:00 AM

CR Note: I'm in NYC for a few days and having a great time. Sorry - no graphs until I return home.

The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 654 thousand.

The previous three months were revised down by a total of 12 thousand (SAAR).

"Sales of new single-family houses in July 2016 were at a seasonally adjusted annual rate of 654,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.4 percent (±12.7%)* above the revised June rate of 582,000 and is 31.3 percent (±19.9%) above the July 2015 estimate of 498,000."
emphasis added

The months of supply decreased in July to 4.3 months.

The all time record was 12.1 months of supply in January 2009.

This is now in the normal range (less than 6 months supply is normal).

"The seasonally adjusted estimate of new houses for sale at the end of July was 233,000. This represents a supply of 4.3 months at the current sales rate"

This was well above expectations of 580,000 sales SAAR in July.   This was a strong report.  I'll have more later this week when I return home.

by Calculated Risk on 8/22/2016 04:52:00 PM

Note: I'm in New York and posting will not be frequent (too much to do and see).

Tuesday:
• At 10:00 AM ET, New Home Sales for July from the Census Bureau. The consensus is for a decrease in sale to 580 thousand SAAR in July from 592 thousand in June.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for August.

by Calculated Risk on 8/22/2016 08:17:00 AM

CR Note: The month-to-month increase in delinquencies is mostly seasonal (happens every July). I'm in NYC, and posting will be intermittent. Best to all.

From Black Knight: Black Knight Financial Services’ First Look at July Mortgage Data: Delinquencies Continue Seasonal Climb; Prepayments Defy Historically Low Interest Rates, Growing Refinanceable Population

JACKSONVILLE, Fla. – Aug. 22, 2016 -- The Data & Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) reports the following “first look” at July 2016 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 4.51% Month-over-month change: 4.78% Year-over-year change: -3.38%

Total U.S. foreclosure pre-sale inventory rate: 1.09% Month-over-month change: -1.68% Year-over-year change: -28.36%

Total U.S. foreclosure starts: 61,300 Month-over-month change: -11.54% Year-over-year change: -14.27%

Monthly Prepayment Rate (SMM): 1.26% Month-over-month change: -11.98% Year-over-year change: -1.00%

Foreclosure Sales as % of 90+: 1.99% Month-over-month change: -13.65% Year-over-year change: 1.05%

Number of properties that are 30 or more days past due, but not in foreclosure: 2,286,000 Month-over-month change: 108,000 Year-over-year change: -70,000

Number of properties that are 90 or more days past due, but not in foreclosure: 695,000 Month-over-month change: 3,000 Year-over-year change: -147,000

Number of properties in foreclosure pre-sale inventory: 550,000 Month-over-month change: -8,000 Year-over-year change: -214,000

Number of properties that are 30 or more days past due or in foreclosure: 2,836,000 Month-over-month change: 100,000 Year-over-year change: -284,000Ca

by Calculated Risk on 8/21/2016 07:15:00 PM

Weekend:
• Schedule for Week of Aug 21, 2016

Monday:
• At 8:30 AM ET, Chicago Fed National Activity Index for July. This is a composite index of other data.

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

Oil prices were up over the last week with WTI futures at $48.11 per barrel and Brent at $50.88 per barrel.  A year ago, WTI was at $40, and Brent was at $44 - so prices are up 15% or so year-over-year. Yes, UP year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.16 per gallon (down about $0.50 per gallon from a year ago).

by Calculated Risk on 8/21/2016 10:07:00 AM

Note: I'm in the Boston area (Wonderful wedding last night). Off to New York soon ...

A few comments from Steven Kopits of Princeton Energy Advisors LLC:

"US horizontal oil rigs gained 4 to 318.
...
The takeaway: At $45 WTI, the Bakken, Eagle Ford and Niobrara are more or less able to hold rig counts steady, but not more. However, the Permian looks entirely viable at this number, with 20 rigs added even with WTI in the $40-45 range. "

CR Note: This is horizontal rig count only (not vertical).

by Calculated Risk on 8/20/2016 08:15:00 AM

The key economic reports this week are July New and Existing Home Sales.

Also the second estimate of Q2 GDP will be released.

Fed Chair Janet Yellen is scheduled to speak at the Jackson Hole annual economic symposium.

For manufacturing, the August Richmond and Kansas City manufacturing surveys will be released this week.

----- Monday, Aug 22nd -----
8:30 AM ET: Chicago Fed National Activity Index for July. This is a composite index of other data.

----- Tuesday, Aug 23rd -----
10:00 AM ET: New Home Sales for July from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the June sales rate.

The consensus is for an decrease in sales to 580 thousand Seasonally Adjusted Annual Rate (SAAR) in July from 592 thousand in June.

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

----- Wednesday, Aug 24th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

9:00 AM: FHFA House Price Index for June 2016. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.3% month-to-month increase for this index.

10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for 5.52 million SAAR, down from 5.57 million in June.

Housing economist Tom Lawler expects the NAR to report sales of 5.41 million SAAR in July, down 2.9% from June’s preliminary pace.

----- Thursday, Aug 25th -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 265 thousand initial claims, up from 262 thousand the previous week.

8:30 AM: Durable Goods Orders for June from the Census Bureau. The consensus is for a 3.7% increase in durable goods orders.

11:00 AM: Kansas City Fed Survey of Manufacturing Activity for August.

----- Friday, Aug 26th -----
8:30 AM ET: Gross Domestic Product, 2nd quarter 2016 (Second estimate). The consensus is that real GDP increased 1.1% annualized in Q2, down from 1.2% in the advance estimate.

10:00 AM: University of Michigan's Consumer sentiment index (final for August). The consensus is for a reading of 90.5, up from the preliminary reading 90.4.

11:00 AM: Fed Chair Janet Yellen will speak at the annual economic symposium in Jackson Hole, Wyoming. The symposium topic is “Designing Resilient Monetary Policy Frameworks for the Future”.

by Calculated Risk on 8/19/2016 04:11:00 PM

Note: I'm flying to Boston today to attend a wedding this weekend. There will be a few posts on Tanta today.

Every finance and economics blogger owes Tanta a debt of gratitude. Before Tanta wrote the following essay, newspapers would "borrow" ideas and subjects from bloggers, and never mention the source. In March 2007 - with a powerful essay - she changed the way the main street media treated bloggers.

 In the week following publication of this piece, Tanta or myself were mentioned in just about every major newspaper in the US!

Sadly the media has trouble distinguishing between informed commentary and nonsense (like Zero Right) ... but at least bloggers now get mentioned.

From March 2007: Media Inquiries Policy

Calculated Risk is a hobby blog, created and maintained by a retired executive, with occasional assistance from a former bank officer and mortgage lending specialist who is currently on extended medical leave. Both of these people get endless questions, answers, hat tips, links, analysis, and overall inspiration from a very diverse group of commenters, regulars and occasional de-lurkers, all of whom are beloved except some of them.

CR regularly gets emails and comments from paid reporters who wish to know if CR or Tanta would like to be interviewed, or would simply like to answer one or several questions that the reporter has about economic or housing or mortgage issues. Because, so far, the answer has always been something on the order of “no,” we would like to explain to you why this is the case.
...
Dear reporters, we quote your stuff periodically, giving credit both to the reporter and the publication, under fair use terms. We have no objection to your returning the favor. If you have an editor who will not allow that, and you think that the problem can be solved by getting one of us to drop our online personas, give you our real names, and say the same thing to you over the phone, so that you can get your editor to accept it as something other than just blogging, which everybody knows is untrustworthy ranting by anonymous nuts, you are making a faulty assumption about the relationship among us, our birthdays, and yesterday. Neither CR nor Tanta wishes to play into a set of assumptions that render what we say on the blog as unworthy of coverage by the Big Media, but what we might say on the phone to Intrepid Reporter as good dirt and straight skinny.

by Calculated Risk on 8/19/2016 11:15:00 AM

Note: I'm flying to Boston today to attend a wedding this weekend. There will be a few posts on Tanta today.

In December 2006, my friend Doris "Tanta" Dungey started writing for Calculated Risk.

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. While on medical leave she wrote for this blog, and her writings received widespread attention and acclaim.

If you want to understand the mortgage industry, read Tanta's posts (here is The Compleat UberNerd and a Compendium of Tanta's Posts).

As an example, here is a brief excerpt from Foreclosure Sales and REO For UberNerds

The following is not an exhaustive discussion of all of the issues involved in foreclosures and REO. It’s a start at unpacking some of the concepts and definitions. We have been seeing, and are going to continue to see, a lot of information presented on foreclosure sales, REO sales, and their impacts on existing home transaction volumes and prices in various market areas. As always with “UberNerd” posts, this is long and excruciating. Proceed with typical motivation as you may consider your own best interest in an open market in blog postings.

And an excerpts from Mortgage Servicing for UberNerds

StillLearning asked in the comments about mortgage servicing, and since y’all are nerds, not dummies, here’s my highly-selective occasionally-oversimplified summary for you that skips the boring parts like how your check gets out of the “lockbox” and that stuff. We can discuss extra-credit issues like “excess servicing” and “subservicing” and “SFAS 144 meets MSR” and “negative convexity” and other kinds of inside baseball in the comments. There is a lot that can be said about loan servicing, but let’s start with the basics:

Servicers have two major types of servicing portfolio: loans they service for themselves and loans they service for other investors. In accounting terms, the “compensation” is the same, meaning that even if you are the noteholder, you pay yourself to service the loans in the same way that an outside investor would pay you, and it shows on the books that way. The differences in compensation stem from the basic fact that one is generally more motivated to do a good job servicing (particularly collecting and efficiently liquidating REO) for one’s own investment than for someone else’s.

Also see In Memoriam: Doris "Tanta" Dungey for photos, links to obituaries in the NY Times, Washington Post and much more.

by Calculated Risk on 8/19/2016 08:05:00 AM

Note: I'm flying to Boston today to attend a wedding this weekend. There will be a few posts on Tanta today.

In December 2006, my friend Doris "Tanta" Dungey started writing for Calculated Risk.

When some people say that here are few women bloggers in finance and economics, I remind them that Tanta was the best of all of us!

From December 2006, until she passed away from ovarian cancer on Nov 30, 2008, Tanta was my co-blogger. Tanta worked as a mortgage banker for 20 years, and we started chatting in early 2005 about the housing bubble and the changes in lending practices. In 2006, Tanta was diagnosed with late stage cancer, and she took an extended medical leave while undergoing treatment. While on medical leave she wrote for this blog, and her writings received widespread attention and acclaim.

Here are excerpts from her first two posts:

From December 2006: Let Slip the Dogs of Hell

I still haven’t gotten over the fact that there’s a “capital management” group out there having named itself “Cerberus”. Those of you who were not asleep in Miss Buttkicker’s Intro to Western Civ will recognize Cerberus; the rest of you may have picked up the mythological fix from its reprise as “Fluffy” in the first Harry Potter novel. Wherever you get your culture, Cerberus is the three-headed dog who guards the gates of Hell. It takes three heads to do that, of course, because it’s never clear, in theology or finance, whether the idea is to keep the righteous from falling into the pit or the demons from escaping out of it (the third head is busy meeting with the regulators). Cerberus is relevant not just because it supplies me with today’s metaphor, but because it was the Biggest Dog of three (including Citigroup and Aozora, a Japanese bank) who in April bought a 51% stake in GMAC’s mega-mortgage operation, GM having, of course, once been renowned as one of the Big Three Automakers until it became one of the Big Three Financing Outfits With A Sideline In Cars. I tried to find a link for you to Aozora Bank’s announcement of the purchase, but the only press release I could find for that day involved the loss of customer data. They must have been so busy letting GMAC into the underworld that the dog head keeping the deposit tickets from getting out got distracted.
...
Now, I’m just a Little Mortgage Weenie, not a Big Finance Dog, but bear with me while I ask some stupid questions. Like: how do the Big Dogs maintain “diverse and flexible production channels” (i.e., little mortgage banker Puppies to sell you correspondent business and little broker Puppies to sell you wholesale business) when “market share currently held by top-tier players” expands to two-thirds (meaning less diverse off-load strategies for the Little Puppies in the “production channels,” putting them at further pipeline/counterparty risk unless they become Bigger Puppies, which makes them competitors instead of “channels,”), while at the same time watching some of the Little Puppies (in whom the Big Dogs have a major equity stake) crawl under the porch to die? I know Citi doesn’t seem to have noticed that the “increased regulatory scrutiny” is not just of “products” but of “wholesale operational/management controls,” but I did.

And from December 2006: On Hybrids, Teasers, and Other Mortgage Guidance Problems

First of all, a “hybrid ARM” is called a “hybrid” because it is, basically, a cross between a fixed rate and adjustable rate mortgage. Before the early 90s, an “ARM” basically meant a one-year ARM. The initial interest rate was set for one year, and the rate adjusted every year. The only real variations on this theme involved shortening the adjustment frequency: you could get an ARM that adjusted every six months instead of one year.

Around the early 90s, the “hybrid ARM” was introduced. It had an initial period in which the rate was “fixed” that didn’t match the subsequent adjustment frequency: this is the classic 3/1, 5/1, 7/1, and even 10/1 ARM. The whole idea of the hybrid ARM was to provide a kind of medium-range risk/reward tradeoff for borrowers and lenders.

CR Note: If you want to understand the mortgage industry, read Tanta's posts (here is The Compleat UberNerd and a Compendium of Tanta's Posts).

Also see In Memoriam: Doris "Tanta" Dungey for photos, links to obituaries in the NY Times, Washington Post and much more.