Schedule for Week of May 1, 2016

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

Other key indicators include April vehicle sales, the April ISM manufacturing and non-manufacturing indexes, and the March trade deficit.

----- Monday, May 2nd -----
10:00 AM: ISM Manufacturing Index for April. The consensus is for the ISM to be at 51.5, down from 51.8 in March.

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

The ISM manufacturing index indicated expansion at 51.8% in March. The employment index was at 48.1%, and the new orders index was at 58.3%.

10:00 AM: Construction Spending for March. The consensus is for a 0.5% increase in construction spending.

2:00 PM ET: the April 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

----- Tuesday, May 3rd -----
All day: Light vehicle sales for April. The consensus is for light vehicle sales to increase to 17.3 million SAAR in April from 16.6 million in March (Seasonally Adjusted Annual Rate).

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

----- Wednesday, May 4th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for April. This report is for private payrolls only (no government). The consensus is for 193,000 payroll jobs added in April, down from 200,000 added in March.

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

This graph shows the U.S. trade deficit, with and without petroleum, through February. 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 $41.4 billion in March from $47.1 billion in February.

10:00 AM: the ISM non-Manufacturing Index for April. The consensus is for index to increase to 54.7 from 54.5 in March.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for March. The consensus is a 0.6% increase in orders.

----- Thursday, April 5th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 262 thousand initial claims, up from 257 thousand the previous week.

----- Friday, April 6th -----
8:30 AM: Employment Report for April. The consensus is for an increase of 200,000 non-farm payroll jobs added in April, down from the 215,000 non-farm payroll jobs added in March.

The consensus is for the unemployment rate to decline to 4.9%.

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

In March, the year-over-year change was 2.80 million jobs.

A key will be the change in real wages.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $15.8 billion increase in credit.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/jV-Yhls_reg/schedule-for-week-of-may-1-2016.html

April 2016: Unofficial Problem Bank list declines to 214 Institutions

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

Here is the unofficial problem bank list for April 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for April 2016. During the month, the list fell from 222 institutions to 214 after nine removals and one addition. Assets dropped by $2.2 billion to an aggregate $62.4 billion. A year ago, the list held 342 institutions with assets of $105.1 billion.

Actions have been terminated against U.S. Century Bank, Doral, FL ($910 million); Community Bank of Florida, Inc., Homestead, FL ($485 million); Florida Capital Bank, National Association, Jacksonville, FL ($341 million); Advantage Bank, Loveland, CO ($265 million); Transcapital Bank, Sunrise, FL ($169 million); Mountain Valley Bank, Dunlap, TN ($96 million); Bank of Newington, Newington, GA ($87 million); and Rocky Mountain Bank & Trust, Florence, CO ($65 million).

Trust Company Bank, Memphis, TN ($21 million) exited the list via failure becoming the second bank to fail in 2016.

Added this month was First Community National Bank, Cuba, MO ($207 million). Also, the FDIC issued a Prompt Corrective Action order against Proficio Bank, Cottonwood Heights, UT ($110 million), which has been on the list since March 2014.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/kUddU3-V1Pw/april-2016-unofficial-problem-bank-list.html

Fannie Mae: Mortgage Serious Delinquency rate declined in March, Lowest since June 2008

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in March to 1.44%, down from 1.52% in February. The serious delinquency rate is down from 1.78% in March 2015.

This is the lowest rate since June 2008.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Note: Freddie Mac has not reported for March yet.

Click on graph for larger image

The Fannie Mae serious delinquency rate has only fallen 0.34 percentage points over the last year - the pace of improvement has slowed - and at that pace the serious delinquency rate will not be below 1% until 2017.

The "normal" serious delinquency rate is under 1%, so maybe Fannie Mae serious delinquencies will be close to normal some time in late 2017.  This elevated delinquency rate is mostly related to older loans - the lenders are still working through the backlog.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/m7pBcBv_IbQ/fannie-mae-mortgage-serious-delinquency.html

Lawler:Updated Table of Distressed Sales and All Cash Sales for Selected Cities in March

Economist Tom Lawler sent me an updated table below of short sales, foreclosures and all cash sales for selected cities in March.

On distressed: Total "distressed" share is down in all of these markets.

Short sales and foreclosures are down in all of these areas.

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

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015	Mar- 2016	Mar- 2015
Las Vegas	5.9%	8.3%	7.1%	9.3%	13.0%	17.6%	27.7%	32.4%
Reno**	3.0%	5.0%	3.0%	8.0%	6.0%	13.0%
Phoenix	2.1%	3.2%	2.3%	4.2%	4.5%	7.4%	24.6%	27.5%
Sacramento	4.5%	5.4%	5.5%	6.9%	10.0%	12.4%	17.3%	19.3%
Minneapolis	2.5%	3.0%	10.9%	12.4%	13.4%	15.4%
Mid-Atlantic	4.4%	4.7%	13.6%	14.0%	18.0%	18.8%	18.3%	18.2%
So. California*	3.1%	4.0%	3.9%	5.1%	7.0%	9.1%	22.7%	25.2%
Bay Area CA*	2.2%	2.8%	2.5%	2.9%	4.7%	5.7%	24.0%	24.3%
Riverside	2.4%	3.5%	3.2%	5.0%	5.6%	8.5%	18.2%	19.2%
San Bernardino	2.4%	4.1%	3.2%	5.2%	5.6%	9.3%	20.7%	21.8%
Florida SF	2.7%	3.9%	12.0%	21.0%	14.7%	25.0%	32.0%	38.8%
Florida C/TH	1.6%	2.5%	9.5%	15.3%	11.1%	17.8%	62.0%	66.2%
Miami MSA SF	3.9%	6.6%	13.9%	19.6%	17.7%	26.2%	32.9%	40.0%
Miami MSA C/TH	1.9%	3.0%	12.6%	19.1%	14.5%	22.1%	64.2%	69.6%
Spokane					11.5%	18.1%
Chicago (city)					19.6%	21.9%
Hampton Roads					18.2%	22.7%
Spokane					11.5%	18.1%
Northeast Florida					19.9%	30.9%
Spokane					11.5%	18.1%
Rhode Island					14.0%	17.3%
Toledo							30.6%	32.7%
Tucson							25.8%	32.0%
Knoxville							22.1%	22.9%
Peoria							21.6%	23.7%
Georgia***							21.0%	23.2%
Omaha							16.3%	16.1%
Pensacola					17.0%	28.0%	28.3%	33.4%
Richmond VA MSA			9.8%	11.9%			17.3%	18.0%
Memphis****			15.0%	15.3%			32.3%	37.6%
Springfield IL**			11.2%	12.1%			18.1%	N.A.
*share of existing home sales, based on property records **Single Family Only ***GAMLS

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/QR0L1drtHcQ/lawlerupdated-table-of-distressed-sales.html

Chicago PMI declines in April, Final April Consumer Sentiment at 89.0

Chicago PMI: April Chicago Business Barometer Down 3.2 Points to 50.4

The Chicago Business Barometer decreased 3.2 points to 50.4 in April from 53.6 in March led by a fall in New Orders and a sharp drop in Order Backlogs. It marks a slow start to the second quarter, with most measures down from levels seen a year earlier.
...
The decline in the Barometer was led by a fall in New Orders, leaving it at the lowest level since December 2015.
...
Chief Economist of MNI Indicators Philip Uglow said, “This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.”
emphasis added

This was below the consensus forecast of 53.4.


Click on graph for larger image.

The final University of Michigan consumer sentiment index for April was at 89.0, down from 91.0 in March:

"Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive. All of the April decline was in the Expectations component, which fell by 4.8% from one month ago and by 12.6% from a year ago and by 14.7% from its January 2015 peak. The retreat from the 2015 peaks was evident across a wide range of expectations about prospects for the national economy. The size of the decline, while troublesome, is still far short of indicating an impending recession. The decline is all the more remarkable given that consumers' assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year."
emphasis added

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/3ad9kTjmJUA/chicago-pmi-declines-in-april-final.html

Personal Income increased 0.4% in March, Spending increased 0.1%

The BEA released the Personal Income and Outlays report for March:

Personal income increased $57.4 billion, or 0.4 percent, ... according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $12.8 billion, or 0.1 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased less than 0.1 percent in March, compared with an increase of 0.3 percent in February. ... The price index for PCE increased 0.1 percent in March, in contrast to a decrease of 0.1 percent in February. The PCE price index, excluding food and energy, increased 0.1 percent, compared with an increase of 0.2 percent.

The March PCE price index increased 0.8 percent from March a year ago. The March PCE price index, excluding food and energy, increased 1.6 percent from March a year ago.

On inflation: The PCE price index increased 0.8 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.6 percent year-over-year in March (slightly lower than in February).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/v-R9QU6CPzc/personal-income-increased-04-in-march.html

Friday: Personal Income and Outlays, Chicago PMI, Consumer Sentiment

From Merrill Lynch on April NFP:

Nonfarm payroll growth likely posted a solid 200,000 in April, driven once more by service-providing firms. Of this, government hiring likely contributed 5,000, which is a more modest clip than the 20,000 pop in March. ...

We look for the unemployment rate to hold at 5.0%, assuming the participation rate holds steady. However, there is a risk it heads higher, following the recent trend, which could boost the unemployment rate. The participation rate has seen an impressive recovery since September of last year, rising to 63% from 62.4%. A robust labor market has attracted many workers back into the labor market, and it is more likely than not that this trend generally continues in the near term. However, increased labor supply also means delayed wage pressures: we are looking for only 0.2% monthly growth in average hourly earnings. This would leave the yoy growth rate unchanged at 2.3%, though this is still greater than the 2% pace seen earlier in this cycle. ...

Friday:
• At 8:30 AM ET, Personal Income and Outlays for March. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 9:45 AM, Chicago Purchasing Managers Index for April. The consensus is for a reading of 53.4, down from 53.6 in March.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for April). The consensus is for a reading of 90.4, up from the preliminary reading 89.7.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/RaWfcJsp6KA/friday-personal-income-and-outlays.html

HVS: Q1 2016 Homeownership and Vacancy Rates

Earlier today, the Census Bureau released the Residential Vacancies and Homeownership report for Q1 2016.

This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  However, there are serious questions about the accuracy of this survey.

This survey might show the trend, but I wouldn't rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.

Click on graph for larger image.

The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate decreased to 63.5% in Q1, from 63.8% in Q4.

I'd put more weight on the decennial Census numbers - and given changing demographics, the homeownership rate is probably close to a bottom.

The HVS homeowner vacancy declined to 1.7% in Q1. 

Once again - this probably shows the general trend, but I wouldn't rely on the absolute numbers.

The rental vacancy rate was unchanged at 7.0% in Q1.

I think the Reis quarterly survey (large apartment owners only in selected cities) is a much better measure of the rental vacancy rate, but this does suggest the rental vacancy rate might have bottomed.

The quarterly HVS is the most timely survey on households, but there are many questions about the accuracy of this survey.

Overall this suggests that vacancies and the homeownership rate are probably close to the bottom.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/z9KTQMVbymc/hvs-q1-2016-homeownership-and-vacancy.html

Q1 GDP: Investment

The graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.

In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue.

The dashed gray line is the contribution from the change in private inventories.

Click on graph for larger image.

Residential investment (RI) increased at a 14.8% annual rate in Q1.  Equipment investment decreased at a 8.6% annual rate, and investment in non-residential structures decreased at a 10.7% annual rate.   On a 3 quarter trailing average basis, RI (red) is positive,  equipment (green) is close to zero, and nonresidential structures (blue) is negative.

Nonresidential investment in structures typically lags the recovery, however investment in energy and power provided a boost early in this recovery - and is now causing a decline.  Other areas of nonresidential are now increasing significantly.  I'll post more on the components of non-residential investment once the supplemental data is released.

I expect investment to be solid going forward (except for energy and power), and for the economy to continue to grow at a steady pace.


The second graph shows residential investment as a percent of GDP.

Residential Investment as a percent of GDP has been increasing, but is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next few years.

I'll break down Residential Investment into components after the GDP details are released.

Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

The third graph shows non-residential investment in structures, equipment and "intellectual property products".  Investment in equipment - as a percent of GDP - has been moving sideways.  Other investment is generally trending up as a percent of GDP, except for nonresidential structures due to less investment in energy and power.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/RIays4X3voo/q1-gdp-investment.html

Kansas City Fed: Regional Manufacturing Activity "declined modestly" in April

From the Kansas City Fed: Tenth District Manufacturing Activity Declined Modestly

The Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined modestly.

“Factories reported a modest decline in activity in April, but expectations for future activity increased to their highest reading of the year”, said Wilkerson.
...
Tenth District manufacturing activity continued to decline modestly, while producers’ expectations for future activity improved considerably. Most price indexes moved slightly higher in April, but remained at low levels.

The month-over-month composite index was -4 in April, up from -6 in March and -12 in February ...
emphasis added

The Kansas City region was hit hard by lower oil prices and the stronger dollar, but the impact is fading.

This was the last of the regional Fed surveys for April.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through April), and five Fed surveys are averaged (blue, through April) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through March (right axis).

It seems likely the ISM manufacturing index will show slow expansion again in April.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/INeichi1KtM/kansas-city-fed-regional-manufacturing.html

Weekly Initial Unemployment Claims increase to 257,000, Lowest 4-Week Average since 1973

The DOL reported:

In the week ending April 23, the advance figure for seasonally adjusted initial claims was 257,000, an increase of 9,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 247,000 to 248,000. The 4-week moving average was 256,000, a decrease of 4,750 from the previous week's revised average. This is the lowest level for this average since December 8, 1973 when it was 252,250. The previous week's average was revised up by 250 from 260,500 to 260,750.

There were no special factors impacting this week's initial claims. This marks 60 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The previous week was revised up by 1,000.

Note: The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 256,000.

This is the lowest level for the four-week average since 1973.

This was below the consensus forecast of 260,000. The low level of the 4-week average suggests few layoffs.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/6IgqwJalRQs/weekly-initial-unemployment-claims_28.html

BEA: Real GDP increased at 0.5% Annualized Rate in Q1

From the BEA: Gross Domestic Product: First Quarter 2016 (Advance Estimate)

Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.
...
The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.
emphasis added

The advance Q1 GDP report, with 0.5% annualized growth, was below expectations of a 0.7% increase.

Personal consumption expenditures (PCE) increased at a 1.9% annualized rate in Q1, down from 2.4% in Q4.   Residential investment (RI) increased at a 14.8% pace. However equipment investment decreased at a 8.6% annualized rate, and investment in non-residential structures decreased at a 10.7% pace (due to the decline in oil prices).

The key negatives were investment in inventories (subtracted 0.33 percentage point), trade (subtracted 0.34 percentage point), nonresidential investment (subtracted 0.76 percentage points) and Federal government spending (subtracted 0.11 percentage points).

I'll have more later ...

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/wy4Vg4hGMus/bea-real-gdp-increased-at-05-annualized.html

Thursday: GDP, Unemployment Claims

Atlanta Fed GDP Now:

The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.6 percent on April 27, up from 0.4 percent on April 26.

New York Fed Nowcasting:

GDP growth prospects remain moderate for the first half of the year: the nowcasts stand at 0.8% for 2016:Q1 and 1.2% for 2016:Q2.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released.  The consensus is for 260 thousand initial claims, up from 247 thousand the previous week.

• Also at 8:30 AM, Gross Domestic Product, 1st quarter 2016 (Advance estimate). The consensus is that real GDP increased 0.7% annualized in Q1.

• At 11:00 AM, Kansas City Fed Survey of Manufacturing Activity for April. This is the last of the regional Fed manufacturing surveys for April.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/S-KmsJS5vrE/thursday-gdp-unemployment-claims.html

Analysis: Rate Hike in June depends mostly on Inflation

The April FOMC statement was very similar to the March statement. There was less emphasis on "global" risks in the April statement, and there was more emphasis on low inflation. Here are excepts from the April and March statements on inflation:

From the April FOMC statement:

Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports.
emphasis added

This was changed from the March FOMC statement:

Inflation picked up in recent months; however, it continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports.

Note: I was expecting a change in the statement characterizing risks as "nearly balanced", but that wasn't included (I think that would have suggested a rate hike in June was more likely).

To hike in June, it seems the FOMC will be looking for decent employment reports for April and May, and for inflation to pickup (especially core PCE).

Click on graph for larger image.

This graph shows the year-over-year change for four key measures of inflation: Core PCE, core CPI, trimmed-mean CPI and median CPI (the last two from the Cleveland Fed). 

On a year-over-year basis in March, the median CPI rose 2.4%, the trimmed-mean CPI rose 2.0%, and the CPI less food and energy rose 2.2%.

Core PCE (green) is for February and increased 1.7% year-over-year.

Using these measures, inflation has been moving up, and most measures are close to the Fed's target - only core PCE is still below.

Core PCE for March will be released this Friday, and core PCE for April will be released on May 31st.  If core PCE moves up further, a rate hike in June would be more likely.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/UiDqGwnCJkI/analysis-rate-hike-in-june-depends.html

FOMC Statement: No Change to Policy, Less Global Concern

Not much change. Less mention of "global" risks.

FOMC Statement:

Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed. Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.
emphasis added

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/TqM4cCcLuwg/fomc-statement-no-change-to-policy-less.html

You Can Do WHAT On My Property? Know Your Easement Rights

Picture this: You’ve fallen in love with a gorgeous home on a corner lot in Fort Lauderdale, FL, but on the day of your home inspection, you’re shocked when your new neighbor drives right through your property on their way to work. A chat with the home inspector and an investigation of property records reveals… Continue reading →

The post You Can Do WHAT On My Property? Know Your Easement Rights appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/property-right-and-easements/

Zillow Forecast: Expect Slower Growth in March for the Case-Shiller Indexes

The Case-Shiller house price indexes for February were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow: March Case-Shiller Forecast: Expect the Slowdown to Continue

All three headline S&P/Case-Shiller Home Price Indices grew at a slightly slower pace in February compared to January, and the slowdown should extend into March, according to Zillow’s March Case-Shiller forecast.

The March Case-Shiller National Index is expected to gain another 0.3 percent in March from February, down from 0.4 percent growth in February from January. We expect the 10-City Index to grow 4.3 percent year-over-year in March, and the 20-City Index to grow 5 percent over the same period, down from annual growth of 4.6 percent and 5.4 percent in February, respectively. The National Index looks set to rise 5.3 percent year-over-year in March, equal to February’s annual growth.

Zillow’s March Case-Shiller forecast is shown in the table below. These forecasts are based on today’s February Case-Shiller data release and the March 2016 Zillow Home Value Index (ZHVI). The March Case-Shiller Composite Home Price Indices will not be officially released until Tuesday, May 31.

The year-over-year change for the 10-city and 20-city indexes will probably be lower in the March report than in the February report.  The change for the National Index will probably be about the same.



from
http://feedproxy.google.com/~r/CalculatedRisk/~3/-pAWZ0Wwh-8/zillow-forecast-expect-slower-growth-in.html

NAR: Pending Home Sales Index increased 1.4% in March, up 1.4% year-over-year

From the NAR: Pending Home Sales Maintain Momentum in March

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.4 percent to 110.5 in March from an downwardly revised 109.0 in February and is now 1.4 percent above March 2015 (109.0). After last month’s slight gain, the index has increased year-over-year for 19 consecutive months and is at its highest reading since May 2015 (111.0).
...
The PHSI in the Northeast increased 3.2 percent to 97.0 in March, and is now 18.4 percent above a year ago. In the Midwest the index inched up 0.2 percent to 112.8 in March, and is now 4.0 percent above March 2015.

Pending home sales in the South rose 3.0 percent to an index of 125.4 in March but are still 0.6 percent lower than last March. The index in the West declined 1.8 percent in March to 95.3, and is now 7.9 percent below a year ago.
emphasis added

This was above expectations of a 0.5% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in April and May.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/MLlRCpDL3Zc/nar-pending-home-sales-index-increased.html

MBA: "Mortgage Applications Decrease in Latest MBA Weekly Survey"

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 22, 2016.
...
The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent higher than the same week one year ago.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.85 percent from 3.83 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

Refinance activity was higher in 2015 than in 2014, but it was still the third lowest year since 2000.

Refinance activity has increased a little with lower rates.


The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is 14% higher than a year ago.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/x0a52Zr5qdE/mba-mortgage-applications-decrease-in.html

Wednesday: FOMC Announcement, Pending Home Sales

A few FOMC previews ...
From Tim Duy: The Fed Is Meeting in April to Talk About June

From Goldman Sachs: Goldman: Expect FOMC statement next week to say risks are "nearly balanced"

From me: FOMC Preview: No Rate Hike, Risks "Nearly Balanced"

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Pending Home Sales Index for March. The consensus is for a 0.5% increase in the index.

• At 2:00 PM, the FOMC Meeting Announcement.  The FOMC is expected to make no change to policy at this meeting.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/q_f--TQOuJk/wednesday-fomc-announcement-pending.html

Duy: Fed Is Meeting Today, Talking About June

From Professor Tim Duy writing at Bloomberg: The Fed Is Meeting in April to Talk About June

The Fed will stand pat this week. We know it, they know it. So what then will the Fed talk about[?]
...
The April meeting of the Federal Open Market Committee (FOMC) will be about the June meeting. Policymakers' fundamental challenge is that the FOMC doesn't want to rule out a June hike, but the markets already have.
...
Bottom Line: Look for the Fed to hold steady this meeting, but be aware it is probably not comfortable with the market’s assessment of potential rate hikes this year. It will likely want to increase the uncertainty surrounding the June meeting in particular. The improving financial situation gives it room to do so by moving to a balanced assessment of risks. ...

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/ISCtxKGLoSU/duy-fed-is-meeting-today-talking-about.html

Chemical Activity Barometer "Accelerated" in April

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 Accelerated in April; Signaling Increased U.S. Business Activity Into Fourth Quarter

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), expanded 0.6 percent in April following a revised 0.1 percent increase in March and 0.2 percent decline in February. All data is measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB remains up 1.8 percent over this time last year, a marked deceleration of activity from one year ago when the barometer logged a 2.7 percent year-over-year gain from 2014. On an unadjusted basis the CAB jumped 1.4 percent, following a solid 0.8 percent gain in March.
...
Applying the CAB back to 1919, it has been shown to provide a lead of two to 14 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).

Currently CAB is up slightly year-over-year, and this suggests an increase in Industrial Production over the next year is possible.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/8XozicTr_Os/chemical-activity-barometer-accelerated.html

Real Prices and Price-to-Rent Ratio in February

Here is the earlier post on Case-Shiller: Case-Shiller: National House Price Index increased 5.3% year-over-year in February

Note: There was an error in the Case-Shiller press release this morning. From the press release:

"Fourteen of 20 cities reported increases in February before seasonal adjustment; after seasonal adjustment, only 10 cities increased for the month."

The NSA count is correct (14 of 20 cities increased before seasonal adjustment), but the SA number is incorrect. After seasonal adjustment, all 20 cities increased in February (not 10).

The year-over-year increase in prices is mostly moving sideways now around 5%. In February, the index was up 5.3% YoY.

In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $273,000 today adjusted for inflation (36%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

It has been almost ten years since the bubble peak.  In the Case-Shiller release this morning, the National Index was reported as being 3.0% below the bubble peak.   However, in real terms, the National index is still about 17% below the bubble peak.

Nominal House Prices


The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through February) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) is back to November 2005 levels, and the Case-Shiller Composite 20 Index (SA) is back to April 2005 levels, and the CoreLogic index (NSA) is back to July 2005.

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to February 2004 levels, the Composite 20 index is back to November 2003, and the CoreLogic index back to February 2004.

In real terms, house prices are back to early 2004 levels.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to August 2003 levels, the Composite 20 index is back to May 2003 levels, and the CoreLogic index is back to August 2003.

In real terms, and as a price-to-rent ratio, prices are back to late 2003 and early 2004 levels - and the price-to-rent ratio maybe moving a little more sideways now.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/pTdv4uaHz0k/real-prices-and-price-to-rent-ratio-in.html

Case-Shiller: National House Price Index increased 5.3% year-over-year in February

S&P/Case-Shiller released the monthly Home Price Indices for February ("February" is a 3 month average of December, January and February prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: Home Price Increases Slow Down in February According to the S&P/Case-Shiller Home Price Indices

The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 5.3% annual gain in February, unchanged from the previous month. The 10-City Composite increased 4.6% in the year to February, compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.4%, down from 5.7% the prior month.
...
Before seasonal adjustment, the National Index posted a gain of 0.2% month-over-month in February. The 10-City Composite recorded a 0.1% month-over-month increase while the 20-City Composite posted a 0.2% increase in February. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase. The 10-City Composite posted a 0.6% increase and the 20-City Composite reported a 0.7% month-over-month increase after seasonal adjustment. Fourteen of 20 cities reported increases in February before seasonal adjustment; after seasonal adjustment, only 10 cities increased for the month.
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 11.4% from the peak, and up 0.6% in February (SA).

The Composite 20 index is off 9.7% from the peak, and up 0.7% (SA) in February.

The National index is off 3.0% from the peak, and up 0.4% (SA) in February.  The National index is up 31.0% from the post-bubble low set in December 2011 (SA).

The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 4.6% compared to February 2015.

The Composite 20 SA is up 5.3% year-over-year..

The National index SA is up 5.3% year-over-year.

I'll have more on house prices later.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/ZKsKDqO90gY/case-shiller-national-house-price-index.html

Tuesday: Case-Shiller House Prices, Durable Goods

Earlier from the Dallas Fed: Texas Manufacturing Activity Expands Again

Texas factory activity increased for a second month in a row in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 3.3 to 5.8, suggesting a slight pickup in output growth.

Most other indexes of current manufacturing activity also reflected growth this month. The new orders index rebounded into positive territory after four months of negative readings, coming in at 6.2. ...

Labor market indicators reflected persistent weakness in April. The employment and hours worked indexes remained negative for the fourth straight month but rose to -3.7 and -1.0, respectively. Fourteen percent of firms noted net hiring, and 18 percent noted net layoffs in April.

This is the second consecutive month of manufacturing growth in Texas.

• At 8:30 AM ET, Durable Goods Orders for March from the Census Bureau. The consensus is for a 1.6% increase in durable goods orders.

• At 9:00 AM, S&P/Case-Shiller House Price Index for February. Although this is the February report, it is really a 3 month average of December, January and February prices. The consensus is for a 5.5% year-over-year increase in the Comp 20 index for February. The Zillow forecast is for the National Index to increase 5.3% year-over-year in February.

• At 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for April.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/bhkYHkZqaJU/tuesday-case-shiller-house-prices.html

Tuesday: Case-Shiller House Prices, Durable Goods

Earlier from the Dallas Fed: Texas Manufacturing Activity Expands Again

Texas factory activity increased for a second month in a row in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 3.3 to 5.8, suggesting a slight pickup in output growth.

Most other indexes of current manufacturing activity also reflected growth this month. The new orders index rebounded into positive territory after four months of negative readings, coming in at 6.2. ...

Labor market indicators reflected persistent weakness in April. The employment and hours worked indexes remained negative for the fourth straight month but rose to -3.7 and -1.0, respectively. Fourteen percent of firms noted net hiring, and 18 percent noted net layoffs in April.

This is the second consecutive month of manufacturing growth in Texas.

• At 8:30 AM ET, Durable Goods Orders for March from the Census Bureau. The consensus is for a 1.6% increase in durable goods orders.

• At 9:00 AM, S&P/Case-Shiller House Price Index for February. Although this is the February report, it is really a 3 month average of December, January and February prices. The consensus is for a 5.5% year-over-year increase in the Comp 20 index for February. The Zillow forecast is for the National Index to increase 5.3% year-over-year in February.

• At 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for April.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/bhkYHkZqaJU/tuesday-case-shiller-house-prices.html

Vehicle Sales Forecast: "April Sales to Return to 17 Million SAAR Trend"

The automakers will report April vehicle sales on Tuesday, May 3rd.

Note:  There were 27 selling days in April, up from 26 in April 2015.

From WardsAuto: Forecast: April Sales to Return to 17 Million SAAR Trend

WardsAuto forecast calls for U.S. automakers to deliver 1.52 million light vehicles in April, a record-high volume for the month.

The report puts the seasonally adjusted annual rate of sales for the month at 17.6 million units, well above last month’s 16.5 million and year-ago’s 16.7 million.
...
The monthly volume will be 5.0% above last year. Beyond an extra selling day, this April lacks the Easter holiday, allowing full sales over five weekends.
emphasis added

From J.D. Power: New-Vehicle Retail Sales Won’t Grow in April; Revised Full-Year Forecast Calls For Modest Increase Over 2015

Total light-vehicle sales in April are expected to reach 1,523,000, up 1% on a selling-day adjusted basis from 1,452,241 from a year ago and the strongest total sales in April on record.

The SAAR for total sales is projected at 17.6 million units in April 2016, up 0.8 million units from 16.7 million a year ago.

Looks like a strong month for vehicle sales.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/btCNDU6g1FY/vehicle-sales-forecast-april-sales-to.html