by Calculated Risk on 1/23/2018 02:29:00 PM

Note: This appears to be a leading indicator for industrial production.

From the American Chemistry Council: Business, Economic Activity Show No Signs of Winter Freeze as 2018 Gets off to Robust Start

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), expanded 0.5 percent in January on a three-month moving average (3MMA) basis and 0.7 percent on an unadjusted basis. This follows an upwardly revised 3MMA gain of 0.7 percent in December and 0.5 percent in November. The CAB is up 4.0 percent compared to a year earlier, indicating a robust economy well into the third-quarter of 2018.
...
Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
emphasis added

Click on graph for larger image.

This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue).

The year-over-year increase in the CAB has been solid over the last year, suggesting further gains in industrial production in 2018.

by Calculated Risk on 1/23/2018 11:54:00 AM

Earlier from the Richmond Fed: Fifth District Manufacturing Firms Reported Slowing Growth in January

According to the latest survey by the Federal Reserve Bank of Richmond, Fifth District manufacturing firms saw slower growth in January, even as each of the expansion metrics remained positive. The composite index moved down from 20 to 14. This decrease resulted from a decline in the metrics for both shipments and employment [declined from 20 to 10]. The third component, new orders, held steady. However, manufacturing firms saw an increase in backlogs in January, after a decrease in December, as the index rose from −4 to 5. Firms reported that they expect growth to strengthen in the coming months.
emphasis added

CR note: All of the regions that have reported so far for January have shown slowing, but still solid, growth.

by Calculated Risk on 1/23/2018 10:18:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in December in 6 states and the District of Columbia, higher in 1 state, and stable in 43 states, the U.S. Bureau of Labor Statistics reported today. Twenty-five states had jobless rate decreases from a year earlier, 2 states had increases, and 23 states and the District had little or no change. The national unemployment rate was unchanged from November at 4.1 percent but was 0.6 percentage point lower than in December 2016.
...
Hawaii had the lowest unemployment rate in December, 2.0 percent. The rates in California (4.3 percent), Hawaii (2.0 percent), and Mississippi (4.6 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.3 percent.

emphasis added

Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.

Fourteen states have reached new all time lows since the end of the 2007 recession.  These fourteen states are: Alabama, Arkansas, California, Colorado, Hawaii, Idaho, Maine, Mississippi, North Dakota, Oregon, Tennessee, Texas, Washington, and Wisconsin.

The states are ranked by the highest current unemployment rate. Alaska, at 7.3%, had the highest state unemployment rate.

The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently one state has an unemployment rate at or above 7% (light blue); Only two states and D.C. are at or above 6% (dark blue). The states are Alaska (7.3%) and New Mexico (6.0%).  D.C. is at 6.0%.

by Calculated Risk on 1/23/2018 09:22:00 AM

From Black Knight: Black Knight’s First Look at December 2017 Mortgage Data: 90-Day Delinquencies Jump Again as Hurricane Fallout Continues

• An additional 60,000 mortgages became 90 days delinquent in December, driven by both continued hurricane-related fallout as well as upward seasonal and calendar-related pressures

• There are now 142,700 90+ days delinquent loans attributed to Hurricanes Harvey and Irma, representing 20 percent of all severely delinquent loans nationwide

• 102,500 severely delinquent loans in affected areas of Florida and Georgia can be attributed to Hurricane Irma, while another 40,200 are the result of Hurricane Harvey in southeastern Texas

• The overall delinquency rate (representing loans 30 or more days past due, but not yet in active foreclosure) also rose another 3.47 percent to its highest level since early 2016

• December’s 6.54 percent year-over-year rise marked the fourth consecutive month of annual increases to the national delinquency rate

• The inventory of loans in active foreclosure continues to improve, falling 152,000 from last year for a 32 percent annual decline

According to Black Knight's First Look report for December, the percent of loans delinquent increased 3.5% in December compared to November, and increased 6.5% year-over-year.

The percent of loans in the foreclosure process declined 2.2% in December and were down 32% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.71% in December, up from 4.55% in November.

The percent of loans in the foreclosure process declined in December to 0.65%.

The number of delinquent properties, but not in foreclosure, is up 44,000 properties year-over-year, and the number of properties in the foreclosure process is down 152,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Dec 2017	Nov 2017	Dec 2016	Dec 2015
Delinquent	4.71%	4.55%	4.42%	4.78%
In Foreclosure	0.65%	0.66%	0.95%	1.37%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	2,412,000	2,324,000	2,248,000	2,408,000
Number of properties in foreclosure pre-sale inventory:	331,000	337,000	483,000	689,000
Total Properties	2,743,000	2,661,000	2,731,000	3,097,000

by Calculated Risk on 1/22/2018 05:05:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Set Another 9-Month High

Mortgage rates pushed up to yet another 9-month high today--something that's become all too common in the past few weeks. Just as troubling is the fact that 10yr Treasury yields--the bigger, more important neighbor that shares the street with mortgage rates--are operating at their highest levels since early 2014. Mortgage rates aren't directly tied to Treasury yields, but big momentum in Treasuries tends to spill over. [30YR FIXED - 4.25-4.375%]
emphasis added

Tuesday:
• At 10:00 AM ET, Richmond Fed Survey of Manufacturing Activity for January.

• Also at 10:00 AM, State Employment and Unemployment (Monthly) for December 2017 (might be delayed)

by Calculated Risk on 1/22/2018 01:54:00 PM

This article from Prashant Gopal at Bloomberg quotes me. But I'm NOT warning that "Housing is too hot again" (that is someone else). This Rare Bear Who Called the Crash Warns Housing Is Too Hot Again

Stack, 66, who manages $1.3 billion for people with a high net worth, predicted the housing crash in 2005, just before prices reached their peak. Now, from his perch in Whitefish, Montana, he says his “Housing Bubble Bellwether Barometer” of homebuilder and mortgage company stocks, which jumped 80 percent in the past year, once again is flashing red.

“It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial,” said Stack, whose fireproof files of newspaper articles on bear markets date back to 1929. “People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish.”

Prices might be a little too high in some areas, but nothing like in 2005. And we aren't seeing the speculation and loose lending that was rampant in 2005.  

by Calculated Risk on 1/22/2018 11:54:00 AM

This is a key housing market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in December were up 0.7% year-over-year (including homes, condos and manufactured homes).

2) Active inventory is now down 12.6% year-over-year. 

More inventory (a theme in most of 2014) - and less investor buying - suggested price increases would slow in 2014.  And prices increases did slow in 2014, only increasing 2.4% according to Case-Shiller.

In 2015, with falling inventory, prices increased a little faster.  Prices were up 6.3% in 2015 according to Case-Shiller.

With flat inventory in 2016, prices were up 4.8%.

This is the fourteenth consecutive month with a YoY decrease in inventory, and prices are rising a little faster in 2017 (4.9% through October or 5.9% annual rate).

December Residential Sales and Inventory, Greater Phoenix Area, ARMLS
	Sales	YoY Change Sales	Cash Sales	Percent Cash	Active Inventory	YoY Change Inventory
Dec-08	5,524	---	1,665	30.1%	53,7921	---
Dec-09	7,661	38.7%	3,008	39.3%	39,709	-26.2%1
Dec-10	8,401	9.7%	3,939	46.9%	42,463	6.9%
Dec-11	7,843	-6.6%	3,635	46.3%	24,712	-41.8%
Dec-12	7,071	-9.8%	3,211	45.4%	21,095	-14.6%
Dec-13	5,930	-16.1%	2,053	34.6%	25,511	20.9%
Dec-14	6,475	9.2%	1,893	29.2%	25,052	-1.8%
Dec-15	6,756	4.3%	1,617	23.9%	23,053	-8.0%
Dec-16	7,154	5.9%	1,655	23.1%	22,388	-2.9%
Dec-17	7,204	0.7%	1,626	22.6%	19,570	-12.6%
1 December 2008 probably includes pending listings

by Calculated Risk on 1/22/2018 09:53:00 AM

From the Chicago Fed: Index Points to a Pickup in Economic Growth in December

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved up to +0.27 in December from +0.11 in November. Two of the four broad categories of indicators that make up the index increased from November, and three of the four categories made positive contributions to the index in December. The index’s three-month moving average, CFNAI-MA3, ticked down to +0.42 in December from +0.43 in November.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was above the historical trend in December (using the three-month average).

According to the Chicago Fed:

The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.
...
A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

by Calculated Risk on 1/21/2018 08:58:00 PM

We might see a short term continuing resolution tonight to end the government shutdown.

Weekend:
• Schedule for Week of Jan 21, 2018

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

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are down 3, and DOW futures are down 50 (fair value).

Oil prices were up over the last week with WTI futures at $63.47 per barrel and Brent at $68.70 per barrel.  A year ago, WTI was at $52, and Brent was at $54 - so oil prices are up solidly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.53 per gallon. A year ago prices were at $2.31 per gallon - so gasoline prices are up 22 cents per gallon year-over-year.

by Calculated Risk on 1/21/2018 12:11:00 PM

If the shutdown doesn't end quickly, several agencies will probably not release regular government reports. For the coming week, the December new home sales, the durable goods, and advance Q4 GDP reports will probably be delayed.

If the shutdown continues, the following week the January employment report will be delayed (fortunately the data has already been gathered).

Private data - like the existing home sales report this week - will still be released. All Federal Reserve data will continue to be released (separate funding).

Also, the DOL will continue to process unemployment claims and release the weekly initial unemployment claims report.

If the shutdown lasts through this week, we should a spike in claims in the report released the following week.

The following graph shows the 4-week moving average of weekly claims since January 2000 with various event driven spikes labeled.

Click on graph for larger image.

Note the spike related to the 2013 government shutdown. Weekly claims jumped 66,000 in the week following the shutdown in 2013. We will probably see a similar spike in the report released the week of January 28th (if the shutdown does not end quickly).

Another impact from the shutdown will be on mortgage lending.

In 2013, the IRS stopped processing 4506-T forms (the required two years of tax returns for mortgage lending). For loans ready to close, this will not be a problem. And lenders can still accept applications, but this could slow closings a few weeks depending on the duration of the shutdown.

There are many other impacts from the shutdown, and hopefully it will be resolved soon.