Thursday: Unemployment Claims, ISM Mfg Index, Construction Spending, Auto Sales

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 265 thousand initial claims, up from 261 thousand the previous week.

• At 10:00 AM, the ISM Manufacturing Index for August. The consensus is for the ISM to be at 52.2, down from 52.6 in July. The employment index was at 49.4% in July, and the new orders index was at 56.9%.

• Also at 10:00 AM, Construction Spending for July. The consensus is for a 0.6% increase in construction spending.

• All day, Light vehicle sales for August. The consensus is for light vehicle sales to decrease to 17.1 million SAAR in August, from 17.8 million in July (Seasonally Adjusted Annual Rate).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/nd6WBzE1mlU/thursday-unemployment-claims-ism-mfg.html

Police Academies in Texas

There are 71 police academies in Texas. To find out more about law enforcement training, requirements, and career opportunities near you, visit our website.

from
http://policeacademies.info/texas/

Restaurant Performance Index increased slightly in July

Here is a minor indicator I follow from the National Restaurant Association: RPI ticks up slightly

Although same-store sales and customer traffic levels remain somewhat uneven, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a modest increase in July. The RPI stood at 100.6 in July, up 0.3 percent from June.

“The primary driver of the modest RPI gain in July was positive capital expenditure levels,” said Hudson Riehle, senior vice president of research for the National Restaurant Association.

“While there is some volatility among index components, especially when looking at the current situation, operators’ plans for capital expenditures six months out remain solid. This fits in with how operators’ outlook for the future remains overall positive despite general economic choppiness,” Riehle said.
emphasis added

Click on graph for larger image.

The index increased to 100.6 in July, up from 100.3 in June. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/PekuV0KM5so/restaurant-performance-index-increased.html

9 Homes Under $150K That Deliver Bang For Your Buck

Captain Obvious here with some breaking news: Not everyone can afford a home that costs seven figures. In fact, the vast majority of us can’t: The median value of the owner-occupied American home is $175,700. Not that we’re above ogling or drawing inspiration from those multimillion-dollar dream homes — far from it. Who doesn’t enjoy […]

The post 9 Homes Under $150K That Deliver Bang For Your Buck appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/affordable-houses-under-150k/

NAR: Pending Home Sales Index increased 1.3% in July, up 1.4% year-over-year

From the NAR: Pending Home Sales Tick Up in July

Pending home sales expanded in most of the country in July and reached their second highest reading in over a decade, according to the National Association of Realtors®. Only the Midwest saw a dip in contract activity last month.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.3 percent to 111.3 in July from a downwardly revised 109.9 in June and is now 1.4 percent higher than July 2015 (109.8). The index is now at its second highest reading this year after April (115.0).
...
he PHSI in the Northeast moved up 0.8 percent to 96.8 in July, and is now 1.1 percent above a year ago. In the Midwest the index decreased 2.9 percent to 105.8 in July, and is now 1.1 percent lower than July 2015.

Pending home sales in the South inched higher (0.8 percent) to an index of 123.9 in July and are now 0.4 percent higher than last July. The index in the West surged 7.3 percent in July to 108.7, and is now 6.2 percent above a year ago.
emphasis added

This was above expectations of a 0.6% 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 August and September.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/A6fmvQQ3jVM/nar-pending-home-sales-index-increased.html

10 Uncommon Home Inspections To Consider Before Selling

Selling your home can be a frightening idea even if your market is booming. In particular, the home inspection can keep you up at night with fear. What will the inspector discover inside your home for sale in Atlanta, GA? What hidden home flaws will end up costing you? However, a savvy seller knows to […]

The post 10 Uncommon Home Inspections To Consider Before Selling appeared first on Trulia's Blog.

from
http://www.trulia.com/blog/10-uncommon-home-inspections-to-consider-before-selling/

ADP: Private Employment increased 177,000 in August

From ADP:

Private sector employment increased by 177,000 jobs from July to August according to the August ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
...
Goods-producing employment was down by 6,000 jobs in August, following July losses of 5,000. The construction industry lost 2,000 jobs, following July losses of 5,000 jobs. Meanwhile, manufacturing jobs were flat in August, after gaining 5,000 in the previous month.

Service-providing employment rose by 183,000 jobs in August, fewer than July’s 199,000 jobs.
...
Mark Zandi, chief economist of Moody’s Analytics, said, “The American job machine continues to hum along. Job creation remains strong, with most industries and companies of all sizes adding solidly to their payrolls. The U.S. economy will soon be at full employment.”

This was close to the consensus forecast for 175,000 private sector jobs added in the ADP report. 

The BLS report for August will be released Friday, and the consensus is for 175,000 non-farm payroll jobs added in August.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/EL3VUOE0Ncc/adp-private-employment-increased-177000.html

MBA: "Mortgage Applications Increase in Latest Weekly Survey"

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

Mortgage applications increased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 26, 2016.

... The Refinance Index increased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 5 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) remained unchanged at 3.67 percent, with points decreasing to 0.33 from 0.34 (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 has increased this year since rates have declined.

However it would take another significant move down in mortgage rates to see a large increase in refinance activity.


The second graph shows the MBA mortgage purchase index.

The purchase index is "5 percent higher than the same week one year ago".

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/d4mFH4gVVa0/mba-mortgage-applications-increase-in_31.html

Wednesday: ADP employment, Pending Home Sales, Chicago PMI

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

• At 8:15 AM, The ADP Employment Report for August. This report is for private payrolls only (no government). The consensus is for 175,000 payroll jobs added in August, down from 179,000 added in July.

• At 9:45 AM, Chicago Purchasing Managers Index for August. The consensus is for a reading of 55.2, down from 55.8 in July.

• At 10:00 AM, Pending Home Sales Index for July. The consensus is for a 0.6% increase in the index.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/e2Uq1_uyTxo/wednesday-adp-employment-pending-home.html

Fannie Mae: Mortgage Serious Delinquency rate declined in July, Lowest since May 2008

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in July to 1.30%, down from 1.32% in June. The serious delinquency rate is down from 1.63% in July 2015.

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

This is the lowest rate since May 2008.

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

Click on graph for larger image

Although the rate is generally declining, the "normal" serious delinquency rate is under 1%. 

The Fannie Mae serious delinquency rate has fallen 0.33 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until next summer.

Note: Freddie Mac reported last week.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/2gRZGIOzLq0/fannie-mae-mortgage-serious-delinquency.html

FDIC: Fewer Problem banks, Residential REO Declined in Q2

The FDIC released the Quarterly Banking Profile for Q2 today:

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $43.6 billion in the second quarter of 2016, up $584 million (1.4 percent) from a year earlier. The increase in earnings was mainly attributable to a $5.2 billion (4.8 percent) increase in net interest income and a $981 million decline in expenses for litigation reserves at a few large banks. Banks increased their loan-loss provisions by $3.6 billion (44.2 percent) compared to a year ago, partly in response to rising levels of troubled loans to commercial and industrial borrowers, particularly in the energy sector.
...
“Income and revenue both increased from a year ago, loan growth remained strong, the number of unprofitable banks was at an 18-year low, and there were fewer banks on the problem list. Community banks reported strong net income, revenue, and loan growth,” Chairman Gruenberg said.

“However, challenges continue,” he said. “Revenue growth remains sluggish as a prolonged period of low interest rates has put downward pressure on net interest margins. This has led some institutions to reach for yield, increasing their exposure to interest-rate risk.

“More recently, persistent stress in the energy sector has resulted in asset quality deterioration at banks that lend to oil and gas producers. We likely have not yet seen the full impact of low energy prices on the banking industry, particularly for consumer and commercial and industrial loans in energy-producing regions of the country.

“We will continue to closely monitor the environment in which banks operate, and we will remain vigilant as we conduct our supervision of the industry.”
...
“Problem List” Continues to Shrink: The number of banks on the FDIC’s Problem List fell from 165 to 147 during the second quarter. This is the smallest number of problem banks in more than seven years and is down significantly from the peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $30.9 billion to $29.0 billion during the second quarter. Two banks failed during the quarter.

Deposit Insurance Fund’s Reserve Ratio Surpasses 1.15 Percent Benchmark: The DIF increased $2.8 billion during the second quarter, from $75.1 billion at the end of March to $77.9 billion at the end of June, largely driven by $2.3 billion in assessment income. The DIF reserve ratio rose from 1.13 percent to 1.17 percent during the quarter. Under previously approved FDIC regulations, once the reserve ratio exceeds 1.15 percent, lower regular assessment rates will go into effect. As a result of lower rates, the FDIC estimates that regular assessments paid by banks to the FDIC will decline by about one-third.
emphasis added

Click on graph for larger image.

The FDIC reported the number of problem banks declined (Note: graph shows problem banks for Q1 and Q2 2016, and year end prior to 2016):

The number of FDIC-insured commercial banks and savings institutions reporting quarterly financial results declined to 6,058 from 6,122 in the second quarter. During the quarter, mergers absorbed 57 insured institutions, two banks failed, and no new charters were added. The number of banks on the FDIC’s “Problem List” declined from 165 to 147, and total assets of problem banks fell from $30.9 billion to $29 billion. This is the smallest number of problem banks in eight years

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) declined from $4.38 billion in Q1 2016 to $4.12 billion in Q2. This is the lowest level of REOs since Q1 2007.

This graph shows the nominal dollar value of Residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value and not the total number of REOs.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/S_Pv3yfdTh0/fdic-fewer-problem-banks-residential.html

Real Prices and Price-to-Rent Ratio in June

Here is the earlier post on Case-Shiller: Case-Shiller: National House Price Index increased 5.1% year-over-year in June

The year-over-year increase in prices is mostly moving sideways now around 5%. In June, the index was up 5.1% 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 $275,000 today adjusted for inflation (37%).  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 2.6% below the bubble peak.   However, in real terms, the National index is still about 17.0% 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 June) 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 June 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.

CPI less Shelter has declined over the last two years pushing up real house prices.

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

In real terms, house prices are back to late 2003 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 July 2003 levels, the Composite 20 index is back to April 2003 levels, and the CoreLogic index is back to June 2003.

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

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/LimszRA3zPg/real-prices-and-price-to-rent-ratio-in.html

Case-Shiller: National House Price Index increased 5.1% year-over-year in June

S&P/Case-Shiller released the monthly Home Price Indices for June ("June" is a 3 month average of April, May and June 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 Gains in June Concentrated in South and West According to the S&P CoreLogic Case-Shiller Indices

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.1% annual gain in June, unchanged from last month. The 10-City Composite posted a 4.3% annual increase, down from 4.4% the previous month.The 20-City Composite reported a year-over-year gain of 5.1%, down from 5.3% in May.
...
Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% while both the 10-City Composite and the 20-City Composite posted a 0.8% increase in June. After seasonal adjustment, the National Index recorded a 0.2% month-over-month increase, and both the 10-City Composite and 20-City Composite posted 0.1% month-over-month decreases. After seasonal adjustment, nine cities saw prices rise, two cities were unchanged, and nine cities experienced negative monthly prices changes.
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 11.1% from the peak, and down 0.1% in June (SA).

The Composite 20 index is off 9.1% from the peak, and down 0.1% (SA) in June.

The National index is off 2.6% from the peak, and up 0.2% (SA) in June.  The National index is up 31.6% 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 4.3% compared to June 2015.

The Composite 20 SA is up 5.1% year-over-year.

The National index SA is up 5.1% year-over-year.

Note: According to the data, prices increased in 10 of 20 cities month-over-month seasonally adjusted.

I'll have more later.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/hi2fQIDmPhI/case-shiller-national-house-price-index.html

Tuesday: Case-Shiller House Prices

Tuesday:
• At 9:00 AM ET, b>S&P/Case-Shiller House Price Index for June. Although this is the June report, it is really a 3 month average of April, May and June prices. The consensus is for a 5.2% year-over-year increase in the Comp 20 index for June. The Zillow forecast is for the National Index to increase 5.1% year-over-year in June.

From Matthew Graham at Mortgage News Daily: Mortgage Rates Battle Back From Recent Highs

Mortgage Rates were briefly at their highest levels in several weeks on Friday afternoon. This followed comments from the Fed's Jackson Hole symposium. Markets interpreted those comments as the Fed being more likely to hike rates in 2016--possibly even twice! While mortgage rates are based on MBS (mortgage-backed-securities), as opposed to the Fed Funds Rate (the thing the Fed is talking about hiking), if investors think the Fed is more likely to hike, MBS tend to lose some ground.
emphasis added

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

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

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

On distressed: Total "distressed" share is down year-over-year in all of these markets (except Springfield).

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
	July- 2016	July- 2015	July- 2016	July- 2015	July- 2016	July- 2015	July- 2016	July- 2015
Las Vegas	5.7%	7.1%	5.9%	7.7%	11.6%	14.8%	25.8%	27.1%
Reno**	3.0%	3.0%	1.0%	2.0%	4.0%	5.0%
Phoenix	1.6%	2.8%	2.2%	3.4%	3.8%	6.3%	19.7%	21.9%
Sacramento	2.6%	4.7%	2.1%	4.6%	4.7%	9.3%	14.4%	18.1%
Minneapolis	1.0%	2.0%	3.6%	5.5%	4.6%	7.5%	11.3%	11.7%
Mid-Atlantic	2.7%	3.4%	7.6%	9.4%	10.4%	12.8%	15.0%	15.8%
So. California*					4.9%	7.1%	19.6%	21.6%
Bay Area CA*					3.2%	4.7%	18.6%	20.1%
Florida SF	2.4%	3.4%	8.0%	16.3%	10.4%	19.7%	26.6%	32.6%
Florida C/TH	1.6%	2.4%	7.0%	15.2%	8.6%	17.6%	53.7%	59.1%
Miami MSA SF	3.8%	5.1%	9.5%	16.5%	13.4%	21.6%	27.9%	31.8%
Miami MSA C/TH	1.7%	3.5%	9.5%	18.8%	11.2%	22.2%	56.7%	61.9%
Tampa MSA SF	2.8%	3.6%	8.3%	16.4%	11.1%	20.0%	25.7%	33.9%
Tampa MSA C/TH	1.6%	2.0%	6.7%	14.8%	8.3%	16.8%	50.2%	56.1%
Chicago (city)					10.5%	13.5%
Northeast Florida					12.8%	26.3%
Spokane					5.7%	9.1%
Tucson							21.6%	23.7%
Orlando							28.4%	34.5%
Toledo							24.3%	27.0%
S.C. Wisconsin							14.4%	15.2%
Knoxville							20.6%	21.8%
Peoria							22.7%	15.6%
Georgia***							18.5%	20.3%
Omaha							13.0%	13.2%
Pensacola							28.0%	28.5%
Rhode Island							7.8%	8.8%
Richmond VA					6.0%	8.4%	15.9%	18.1%
Memphis					8.1%	12.8%
Springfield IL**					6.3%	4.7%
*share of existing home sales, based on property records **Single Family Only ***GAMLS

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/VGjuoafLkSc/lawler-table-of-distressed-sales-and.html

Black Knight: House Price Index up 0.8% in June, Up 5.3% year-over-year

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: June 2016 Transaction

• U.S. Home Prices Up 0.8 Percent for the Month; Up 5.3 Percent Year-Over-Year

• At $265K, the U.S. HPI is up 32.6 percent from the market's bottom and is within just 1.1 percent of a new national peak

• Home prices in six of the nation's 20 largest states and 14 of the 40 largest metros hit new peaks in June

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

Note that house prices are close to the bubble peak in nominal terms, but not adjusted for inflation.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/0kpTWMQEJ-o/black-knight-house-price-index-up-08-in.html

Dallas Fed: Regional Manufacturing Activity Increases in August

From the Dallas Fed: Texas Manufacturing Activity Increases

Texas factory activity increased in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 4.5 after a near-zero reading in July, suggesting output picked up this month.

Other measures of current manufacturing activity also reflected expansion. Demand bounced back, with the new orders index rising from -8.0 to 5.3 in August and the growth rate of orders index pushing up to 2.1, its first positive reading in nearly two years. The capacity utilization index remained only barely positive at 0.9, while the shipments index rose nearly 10 points to 9.9, with nearly a third of manufacturers reporting higher volumes of shipments this month.

Perceptions of broader business conditions remained fairly pessimistic. The general business activity index was negative for a 20th month in a row and moved down from -1.3 to -6.2. The company outlook index was largely unchanged at -2.8.

Labor market measures indicated slight employment declines and shorter workweek length. The employment index came in at -5.0, down from -2.6 last month. ...
emphasis added

The impact of lower oil prices is still impacting manufacturing.

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

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

It seems likely the ISM manufacturing index will be lower in August than in July.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/Tsg0PSFnCDE/dallas-fed-regional-manufacturing.html

Personal Income increased 0.4% in July, Spending increased 0.3%

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

Personal income increased $71.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis ... personal consumption expenditures (PCE) increased $42.0 billion (0.3 percent).
...
Real PCE increased 0.3 percent. The PCE price index was unchanged from June. Excluding food and energy, the PCE price index increased 0.1 percent in July.

The July PCE price index increased 0.8 percent year-over-year and the July PCE price index, excluding food and energy, increased 1.6 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through July 2016 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Both the increase in personal income and the increase in PCE was at consensus expectations.

A solid start for Q3.




from
http://feedproxy.google.com/~r/CalculatedRisk/~3/S9FuTWiq_So/personal-income-increased-04-in-july.html

Monday: Personal Income and Outlays

Weekend:
• Schedule for Week of Aug 28, 2016

Monday:
• At 8:30 AM ET, Personal Income and Outlays for July. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for August.

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

Oil prices were down over the last week with WTI futures at $47.14 per barrel and Brent at $49.46 per barrel.  A year ago, WTI was at $45, and Brent was at $48 - so prices are mostly unchanged year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.21 per gallon (down about $0.30 per gallon from a year ago).

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/AuT3dRxxOV4/monday-personal-income-and-outlays.html

Freddie Mac: Mortgage Serious Delinquency rate unchanged in July

Freddie Mac reported that the Single-Family serious delinquency rate was unchanged in July at 1.08%, the same as in June.  Freddie's rate is down from 1.48% in July 2015.

This ties the lowest rate since July 2008.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

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

Click on graph for larger image

Although the rate is generally declining, the "normal" serious delinquency rate is under 1%. 

The Freddie Mac serious delinquency rate has fallen 0.40 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will be below 1% in two or three months.

Note: Fannie Mae will report in the next few days.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/nqfufPDPs20/freddie-mac-mortgage-serious.html

Schedule for Week of Aug 28, 2016

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

Other key indicators include Personal Income and Outlays for July, the Case-Shiller House Price Index for June, the August ISM manufacturing and non-manufacturing indexes, August auto sales, and the July trade deficit.

----- Monday, Aug 29th -----
8:30 AM: Personal Income and Outlays for July. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%.

10:30 AM ET: Dallas Fed Survey of Manufacturing Activity for August.

----- Tuesday, Aug 30th -----
9:00 AM: S&P/Case-Shiller House Price Index for June. Although this is the June report, it is really a 3 month average of April, May and June prices.

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

The consensus is for a 5.2% year-over-year increase in the Comp 20 index for June. The Zillow forecast is for the National Index to increase 5.1% year-over-year in June.

----- Wednesday, Aug 31st -----
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 August. This report is for private payrolls only (no government). The consensus is for 175,000 payroll jobs added in August, down from 179,000 added in July.

9:45 AM: Chicago Purchasing Managers Index for August. The consensus is for a reading of 55.2, down from 55.8 in July.

10:00 AM: Pending Home Sales Index for July. The consensus is for a 0.6% increase in the index.

----- Thursday, Sept 1st -----
8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 265 thousand initial claims, up from 261 thousand the previous week.

10:00 AM: ISM Manufacturing Index for August. The consensus is for the ISM to be at 52.2, down from 52.6 in July.

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

The ISM manufacturing index indicated expansion at 52.6% in July. The employment index was at 49.4%, and the new orders index was at 56.9%.

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

All day: Light vehicle sales for August. The consensus is for light vehicle sales to decrease to 17.1 million SAAR in August, from 17.8 million in July (Seasonally Adjusted Annual Rate).

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

----- Friday, Sept 2nd -----
8:30 AM: Employment Report for August. The consensus is for an increase of 175,000 non-farm payroll jobs added in August, down from the 255,000 non-farm payroll jobs added in July.

The consensus is for the unemployment rate to decrease to 4.8%.

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

In July, the year-over-year change was 2.45 million jobs.

A key will be the change in wages.

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

This graph shows the U.S. trade deficit, with and without petroleum, through June. 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 $41.3 billion in July from $44.5 billion in June.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for July. The consensus is a 2.0% increase in orders.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/u5E0XE5WN9I/schedule-for-week-of-aug-28-2016.html

August 2016: Unofficial Problem Bank list declines to 184 Institutions

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

Here is the unofficial problem bank list for August 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for August 2016. During the month, the list declined by a net 12 institutions from 196 to 184. The net change of 12 institutions results from 14 removals and two additions. Assets dropped by $2.3 billion to an aggregate $56.5 billion, with $350 million of the decline coming from updated figures for the second quarter. A year ago, the list held 282 institutions with assets of $82.7 billion. This week, we were anticipating for the FDIC to release second quarter industry results and an update on the Official Problem Bank List, but that will have to wait until next month's update.

Actions have been terminated against SpiritBank, Tulsa, OK ($767 million); Tennessee State Bank, Pigeon Forge, TN ($641 million); First American State Bank, Greenwood Village, CO ($279 million); First National Bank, Camdenton, MO ($206 million); Cornerstone Bank, Overland Park, KS ($159 million); Friends Bank, New Smyrna Beach, FL ($104 million Ticker: FRIE); New Jersey Community Bank, Freehold, NJ ($103 million); GSL Savings Bank, Guttenberg, NJ ($91 million); RepublicBankAZ, N.A., Phoenix, AZ ($90 million); and FirstSecure Bank and Trust Co., Palos Hills, IL ($61 million).

Several banks merged to find their way off the problem bank list including Hopkins Federal Savings Bank, Baltimore, MD ($229 million); Harvard Savings Bank, Harvard, IL ($142 million); and The Bank of Oswego, Lake Oswego, OR ($61 million).

In the very hard to believe category, another bank headquartered in Georgia -- The Woodbury Banking Company, Woodbury, GA ($22 million) – found its way off the list through failure. Since the on-set of the Great Recession, 91 institutions headquartered in Georgia have failed. Of the 352 institutions open at year-end 2007 in Georgia, 91 or nearly 26 percent have failed, which is more than four times the national failure rate of 6 percent. It begs the question, how is it possible for there to be any banks left in the state that could fail.

Nationwide, since the on-set of the Great Recession, 533 institutions with assets of nearly $4 trillion have failed or received open-bank assistance. To put this in context, there were 8,544 institutions with assets of $13.1 trillion open in the U.S. at year-end 2007. Thus, 6.2 percent of institutions that held 30.3 percent of assets have failed or received open-bank assistance. In comparison, from 1980 through 1994, a period most consider as the most severe banking crisis since the Great Depression, 9.1% of institutions holding nearly 9.0% of assets failed or received open-bank assistance. So while the failure rate is lower in this episode, the share of assets is significantly greater. In the 1990s, the FDIC produced comprehensive research (“History of the Eighties”) to understand the causes of that crisis and identify ways to limit a future crisis. In response, FDIC Chairman Ricki Helfer spearheaded the formation of a new division to identify emerging systemic risks in the industry. In a 1996 speech, FDIC Chairman Helfer said “Neither we nor the industry we supervise can afford being so wrong again. The speed of technology and the rapid innovations in the marketplace mean that trouble could come quickly and in large numbers. We need to avoid being that wrong again by monitoring trends more broadly and taking specific action on the information we receive.” But somehow the FDIC’s division designed specifically to identify a widespread banking crisis got it way wrong. The lack of a major research effort by the FDIC to understand what went wrong in this current episode should be concerning to all industry observers.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/N7JTYdz40ao/august-2016-unofficial-problem-bank.html

Vehicle Sales Forecast: Sales to Weaken in August, Still Around 17 Million SAAR

The automakers will report August vehicle sales on Thursday, Sept 1st.

Note:  There were 26 selling days in August, the same as in August 2015.

From WardsAuto: Forecast: U.S. Light Vehicles Sales Weaken in August

A WardsAuto forecast calls for August U.S. light-vehicle sales to reach a 17.4 million-unit seasonally adjusted annual rate, less than like-2015’s 17.7 million and July’s 17.8 million, but ahead of the 17.2 million recorded over the first seven months of this year.
emphasis added

From J.D. Power: August Decline in New-Vehicle Sales Fourth in Last Six Months

The SAAR for total sales is projected at 16.8 million units in August 2016, down from 17.7 million units a year ago.

Vehicle sales are moving more sideways now.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/W06oYrqV2y8/vehicle-sales-forecast-sales-to-weaken.html

Comments on Home Sales in July

CR Note: When the New and Existing home sales reports were released this week, I was out of town and didn't post any graphs. Here are a few graphs and comments on the reports.

The new home sales report for July was very strong at 654,000 on a seasonally adjusted annual rate basis (SAAR) - the highest since October 2007 - however combined sales for April, May and June were revised down by 12 thousand SAAR.

Sales were up 31.3% year-over-year (YoY) compared to July 2015. And sales are up 12.4% year-to-date compared to the same period in 2015.

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

As always, I wouldn't read too much into data for any one month - this series is volatile and the revisions are frequently significant.

However it does appear new home sales are approaching normal levels (I've been expecting sales to increase to at least 800 thousand - but I expected the recovery to be slow).

The second graph shows new home sales for 2015 and 2016 by month (Seasonally Adjusted Annual Rate).  Sales to date are up 12.4% year-over-year, mostly because of the solid growth starting in Q2.

There will probably be solid year-over-year growth in Q3 this year too.

Overall  I expected lower growth this year, in the 4% to 8% range.  Slower growth seemed likely this year because Houston (and other oil producing areas) will have a problem this year.

So far new home sales have been stronger than my forecast.

The third graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in July (5.39 million SAAR) were 3.2% lower than last month, and were 1.6% below the July 2015 rate.

For existing homes, inventory is still key.  I expected some increase in inventory last year, but that didn't happened.  Inventory is still very low and falling year-over-year (down 5.8% year-over-year in June). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases.

Two of the key reasons inventory is low: 1) A large number of single family home and condos were converted to rental units. Last year, housing economist Tom Lawler estimated there were 17.5 million renter occupied single family homes in the U.S., up from 10.7 million in 2000. Many of these houses were purchased by investors, and rents have increased substantially, and the investors are not selling (even though prices have increased too). Most of these rental conversions were at the lower end, and that is limiting the supply for first time buyers. 2) Baby boomers are aging in place (people tend to downsize when they are 75 or 80, in another 10 to 20 years for the boomers). Instead we are seeing a surge in home improvement spending, and this is also limiting supply.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through July 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.

Another way to look at this is a ratio of existing to new home sales.

This ratio was fairly stable from 1994 through 2006, and then the flood of distressed sales kept the number of existing home sales elevated and depressed new home sales. (Note: This ratio was fairly stable back to the early '70s, but I only have annual data for the earlier years).

In general the ratio has been trending down, and this ratio will probably continue to trend down over the next several years.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/zXH2yTFfk-I/comments-on-home-sales-in-july.html

Yellen: "Case for an increase in the federal funds rate has strengthened"

From Fed Chair Janet Yellen: The Federal Reserve's Monetary Policy Toolkit: Past, Present, and Future. Excerpt:

Looking ahead, the FOMC expects moderate growth in real gross domestic product (GDP), additional strengthening in the labor market, and inflation rising to 2 percent over the next few years. Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives. Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months. Of course, our decisions always depend on the degree to which incoming data continues to confirm the Committee's outlook.
...
And, as ever, the economic outlook is uncertain, and so monetary policy is not on a preset course. Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy. In addition, the level of short-term interest rates consistent with the dual mandate varies over time in response to shifts in underlying economic conditions that are often evident only in hindsight. For these reasons, the range of reasonably likely outcomes for the federal funds rate is quite wide ...
emphasis added

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/6B08jGf-0Ug/yellen-case-for-increase-in-federal.html

Q2 GDP Revised Down to 1.1% Annual Rate

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

Real gross domestic product increased at an annual rate of 1.1 percent in the second quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.2 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; revisions to the components of GDP are small ...
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 4.2% to 4.4%. (Solid PCE).  Residential investment was revised down from -6.1% to -7.7%. This was close to the consensus forecast.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/7lX-dS1uPbk/q2-gdp-revised-down-to-11-annual-rate.html

Friday: Yellen, GDP

Yellen time updated (ht SBG)

CR Note: It was an awesome trip, but it is great to be home. I'll be posting some catch-up graphs and comments on new and existing home sales tomorrow. Best to All.

Friday:
• At 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.

• At 10:00 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”.

• At 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.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/WgSDbeOp-sw/friday-yellen-gdp.html

Back in Town, Earlier: Weekly Initial Unemployment Claims decreased to 262,000

CR Note: I'm back from NYC. Had a great time!

The DOL reported:

In the week ending August 20, the advance figure for seasonally adjusted initial claims was 261,000, a decrease of 1,000 from the previous week's unrevised level of 262,000. The 4-week moving average was 264,000, a decrease of 1,250 from the previous week's unrevised average of 265,250.

There were no special factors impacting this week's initial claims. This marks 77 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

The previous week was unrevised.

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 264,000.

This was lower than the consensus forecast of 265,000. The low level of claims suggests relatively few layoffs.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/jCwdYZ-xgNA/back-in-town-earlier-weekly-initial.html