Earlier:
' Summary for Week Ending March 15th
There are three key housing reports that will be released this week: February housing starts on Tuesday, February Existing home sales on Thursday, and the March homebuilder confidence survey on Monday.
A key event this week is the two day FOMC meeting on Tuesday and Wednesday. Note: the time has changed for the FOMC announcement and quarterly news conference.
Also, for manufacturing, the Philly Fed survey will be released on Thursday.
Note: Several people sent me links early this morning on the Cyprus bailout (thanks jb and others). This bailout was expected to eventually happen, but the surprise was forcing losses on depositors, even small depositors - and that leads to the question of possible contagion to other distressed countries (Greece, Spain, etc).
For a detailed discussion, see Joseph Cotterill piece at Alphaville: A stupid idea whose time had come
Earlier:
' Summary for Week Ending March 15th
' Schedule for Week of March 17th
Economist Tom Lawler sent me the updated table below of short sales and foreclosures for several selected cities in February.
In every area that has reported distressed sales so far (two right columns), the share of distressed sales is down year-over-year - and down significantly in many areas.
Also there has been a decline in foreclosure sales just about everywhere. Also there has been a shift from foreclosures to short sales. In most of these areas, short sales now out number foreclosures (Minneapolis and Orlando are exceptions).
Another interesting point: short sales are now declining in many areas. This might be related to sellers rushing short sales last year - before the one year extension of the Mortgage Debt Relief Act of 2007 was announced, and sales declining early in 2013. Or it might indicate that short sales activity has peaked in some areas (this will be interesting to watch).
From economist Tom Lawler:
Based on reports I've seen so far from various state and local realtor association/board/MLS reports (and a few reports based on property records), it seems highly likely that the YOY growth rate in unadjusted existing home sales as measured by the National Association of Realtors slowed substantially in February relative to January's reported YOY sales gain of 11.9%. Almost all areas reporting so far showed slower YOY growth in February relative to January, and several states/areas showed YOY declines (including but not limited to California, Michigan, Iowa, Minnesota, Long Island, Phoenix, Tucson, Las Vegas, and Reno). Based on what I've seen so far, I estimate that February existing home sales as measured by the NAR will show a YOY increase of about 4.3%. Of course, the YOY gain in seasonally adjusted sales will be higher, reflecting the lower business day count this February vs. last February (last year was a leap year). Based on my estimated seasonal factor, I expect that the NAR will report that existing home sales in February ran at a seasonally adjusted annual rate of about 4.87 million, down about 1% from January's pace, and up about 7.7% from last February's pace.
On the inventory front, it's a bit challenging of late to estimate the NAR's existing home inventory, as it hasn't been 'tracking' various trackers of overall home listings. E.g., realtor.com said that daily residential listings on realtor.com during January averaged 1,477,266, down 16.5% from last January's average, and during February listings averaged 1,494,218, down 16.0% from last February (December showed a YOY decline of 17.3%). Zillow said that residential listings on Zillow.com on January 23, 2013 were 17.5% lower than listings on January 23, 2012, and listings on February 24, 2013 were down 16.6% from February 24, 2012. The NAR, however, estimated that the number of existing homes for sale at the end of January was 25.3% lower than the number of existing homes for sale a year earlier! And the monthly drop in the NAR's inventory estimate for January of 4.9% substantially exceeded that of all listings trackers, as well as what local realtor/MLS reports would have suggested.
Based on listings trackers as well as the local realtor/MLS reports I've seen so far, I'd expect that 'actual' existing home inventories increased by a modest 1% or so in February. How that will translate in the NAR's estimate, however, is not clear: a 1% increase in the NAR's estimate in February, combined with no revision in the January estimate, would imply an implausibly large YOY drop of 26.7%. In looking at admittedly limited historical data, however, there has been a tendency for the NAR inventory number in February to show a bigger gain than other measure, so I'm 'guessing' that the NAR inventory estimate will show a monthly gain of 3% or so.
CR Note: The NAR will report February existing home sales on Thursday, March 21st. The early consensus is the NAR will report sales of 4.99 million on a seasonally adjusted annual rate (SAAR) basis. However Lawler's analysis suggests the NAR will report sales of around 4.87 million SAAR.
Based on Lawler's estimates, the NAR will report inventory at around 1.8 million units for February, and months-of-supply around 4.4 months (up from 4.2 months in January, but still very low).
Here is the unofficial problem bank list for Mar 15, 2013.
This is an unofficial list of Problem Banks compiled only from public sources.
Changes and comments from surferdude808:
As anticipated, the OCC released its recent actions this week, which contributed to several change to the Unofficial Problem Bank List. In all, there were seven removals and three additions that leave the list at 801 institutions with assets of $295.6 billion. A year ago, the list held 952 institutions with assets of $379.1 billion.CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining since then.Actions were terminated against Winona National Bank, Winona, MN ($258 million); Amfirst Bank, National Association, McCook, NE ($237 million); The First National Bank of Wahoo, Wahoo, NE ($206 million); The University National Bank of Lawrence, Lawrence, KS ($71 million); and The First National Bank of Germantown, Germantown, OH ($52 million). The other removals were Pacific International Bank, Seattle, WA ($182 million) and Borrego Springs Bank, National Association, La Mesa, CA ($142 million), which merged on an unassisted basis.
The additions this week were Illinois-Service Federal Savings and Loan Association, Chicago, IL ($136 million); Home Federal Savings and Loan Association of Collinsville, Collinsville, IL ($97 million); and Community Savings, Caldwell, OH ($77 million).
Next week will likely be quiet one for the list.
This was another week of solid economic data. Retail sales were strong even after removing the impact of higher gasoline prices. Industrial production is at a new post-recession high and nearing the pre-recession peak. And the four-week average of initial weekly unemployment claims is at the lowest level since March 2008.
One negative was a fairly sharp decline in consumer sentiment, but that survey indicated that the decline was mostly dissatisfaction with policymakers and that buying plans were essentially unchanged.
The recent good news - even without any housing data (the key driver) - has led to some upgraded forecasts for Q1 GDP. I've excerpted a from a few research notes below. All of these analysts are upgrading their Q1 forecasts, but are still cautious about Q2 and Q3 due to fiscal policy and inventory adjustments.
From Goldman Sachs:
The US consumer has proven more resilient to the increase in payroll and income taxes than we had expected, and we are lifting our near-term GDP growth forecast slightly. Our tracking estimate for Q1 has already climbed to 2.9% and we are raising Q2 from 1.5% to 2%, primarily via stronger consumption.From Merill Lynch:Our upgrade is modest for three reasons. First, the growth pickup in Q1 is partly due to faster inventory accumulation. Second, while consumption is holding up better than expected, it is unlikely to be strong in absolute terms. Third, we still expect the 'sequester' to weigh on growth in the near term.
One of the key elements of our below-consensus forecast is that consumer spending will slow amid higher taxes and fiscal cuts. The data continue to challenge this view. February retail sales jumped 1.1% and 'core control' sales, which net out the volatile components of autos, building materials and gasoline, increased 0.4%. Coupled with stronger inventory growth, this led us to revise up our forecast for 1Q GDP growth to 3.0%. We are also taking up 2Q GDP to 1.3% from 1.0% to reflect stronger momentum. This leaves full year growth at 1.8%, versus our prior forecast of 1.5%. That said, we are not entirely capitulating on our forecast ' we still believe growth will slow in coming months as the sequester kicks in, but from a higher level.From Nomura:
Incoming data point to faster-than-expected growth in the first quarter. The need to replenish inventories and an apparent delay by households to adjustment to higher tax burdens at the start of the year has lifted current quarter growth tracking to an annual rate of 2.5%. However, it now appears that the 1 March spending cuts (sequester) will be in place until at least the end of September. These new cuts in spending will slow growth in Q2 and Q3 (previously we assumed that only half of these cuts would be implemented).Here is a summary of last week in graphs:
' Retail Sales increased 1.1% in February
Click on graph for larger image.
On a monthly basis, retail sales increased 1.1% from January to February (seasonally adjusted), and sales were up 4.6% from February 2012. Sales for December were revised up to a 0.2% gain.
This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).
Retail sales are up 27.2% from the bottom, and now 11.2% above the pre-recession peak (not inflation adjusted)
Retail sales ex-autos increased 1.0%. Retail sales ex-gasoline increased 0.6%.
This was above the consensus forecast of a 0.5% increase. Although higher gasoline prices boosted sales, retail sales ex-gasoline increased 0.6% - suggesting some pickup in the economy in February.
' Fed: Industrial Production increased 0.7% in February
"The capacity utilization rate for total industry increased to 79.6 percent."
This graph shows Capacity Utilization. This series is up 12.8 percentage points from the record low set in June 2009 (the series starts in 1967).
Capacity utilization at 79.6% is still 0.6 percentage points below its average from 1972 to 2010 and below the pre-recession level of 80.6% in December 2007.
Note: y-axis doesn't start at zero to better show the change.
The second graph shows industrial production since 1967.
"Industrial production increased 0.7 percent in February after having been unchanged in January". Industrial production increased in February to 99.5. This is 19.2% above the recession low, but still 1.2% below the pre-recession peak.
The monthly change for both Industrial Production and Capacity Utilization were above expectations.
' Weekly Initial Unemployment Claims decrease to 332,000
This graph shows the 4-week moving average of weekly claims since January 2000.
The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 346,750 - this is the lowest level since early March 2008.
Weekly claims were below the 350,000 consensus forecast.
Claims might increase over the next few months due to the "sequestration" budget cuts, but right now initial unemployment claims suggest an improving labor market.
' Key Measures of inflation in February
This graph shows the year-over-year change for four key measures of inflation: the median Consumer Price Index, 16% trimmed-mean Consumer Price Index, core CPI and core PCE.
On a year-over-year basis, the median CPI rose 2.2%, the trimmed-mean CPI rose 1.9%, and the CPI less food and energy rose 2.0%. Core PCE is for January and increased 1.3% year-over-year.
On a monthly basis, median CPI was at 2.9% annualized, trimmed-mean CPI was at 2.6% annualized, and core CPI increased 2.1% annualized. Also core PCE for January increased 1.8% annualized.
The Fed will meet next week, and with this level of inflation and the current high level of unemployment, I expect the Fed will keep the "pedal to the metal".
' BLS: Job Openings "little changed" in January
From the BLS: Job Openings and Labor Turnover Summary
This graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.
This series started in December 2000.
Jobs openings increased in January to 3.693 million, up from 3.612 million in December. The number of job openings (yellow) has generally been trending up, and openings are up 8% year-over-year compared to January 2012.
Quits increased in January, and quits are up 13% year-over-year and at the highest level since 2008. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").
Not much changes month-to-month in this report, but the trend suggests a gradually improving labor market.
' Preliminary March Consumer Sentiment declined to 71.8
The preliminary Reuters / University of Michigan consumer sentiment index for March declined to 71.8 from the February reading of 77.6.
This was well below the consensus forecast of 77.7, and very low. There are a number of factors that impact sentiment including unemployment, gasoline prices and, for 2013, the payroll tax increase and even politics (sequestration, default threats, etc).
In this case, the decline was probably related to both high gasoline prices and policy concerns. According to Reuters, a record 34 percent of those surveyed were negative about government economic policies (sequestration, etc.). Reuters also reports that buying plans were essentially unchanged.
From Freddie Mac today: Mortgage Rates up on Signs of Improving Economy
The 30-year fixed averaged 3.63 percent, its highest reading since the week of August 23, 2012. The 30-year fixed hit its average all-time record low of 3.31 percent the week of November 21, 2012. ...30-year fixed-rate mortgage (FRM) averaged 3.63 percent with an average 0.8 point for the week ending March 14, 2013, up from last week when it averaged 3.52 percent. Last year at this time, the 30-year FRM averaged 3.92 percent.
15-year FRM this week averaged 2.79 percent with an average 0.8 point, up from last week when it averaged 2.76 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.
Click on graph for larger image.This graph shows the MBA's refinance index (monthly average) and the the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey®.
The Freddie Mac survey started in 1971 and mortgage rates are currently near the record low for the last 40 years.
This shows the recent small increase in mortgage rates. This probably means refinance activity will slow in 2013. Note: There has been an increase in refinance activity due to HARP.
Here is an update to an old graph - by request - that shows the relationship between the 10 year Treasury Yield and 30 year mortgage rates.
Currently the 10 year Treasury yield is 2.02% and 30 year mortgage rates are at 3.63%. If the ten year yield stay in this range, 30 year mortgage rates might move up a little from here.
The third graph shows the 15 and 30 year fixed rates from the Freddie Mac survey since the Primary Mortgage Market Survey® started in 1971 (15 year in 1991).
The recent increase in rates is pretty small on this long term graph.
Note: Mortgage rates were at or below 5% back in the 1950s.
First, here is a price index for commercial real estate that I follow. CoStar reported that their value weighted index is up 4.8% year-over-year, and the equal weighted index is up 5.5% from January 2012. Also the volume of distressed sales is continuing to decline.
From CoStar: Commercial Real Estate Pricing Levels Off In January Following Year-End Surge
The U.S. Value-Weighted Composite Index, which weights each repeat-sale by transaction size or value (and therefore is heavily influenced by larger transactions), ticked up by 0.7% in January, and has now increased 38% from its trough in 2010. The U.S. Equal-Weighted Composite Index, which weights each repeat-sale by transaction equally (and therefore is heavily influenced by numerous smaller transactions), began 2013 with a 2.9% monthly loss, largely due to a seasonal slowdown in trading activities after the year-end sales surge. However, thanks to its steady recovery throughout 2012, the equal-weighted index has increased 5.5% since January 2012.
...
Distressed sales as a percentage of total transactions have been following a declining trend since the start of 2011. Although this percentage ticked up in January 2013 due to the seasonal slowdown in total transactions, the number of repeat sales involving distress assets was the lowest in January 2013 since the summer of 2009.
emphasis added
Click on graph for larger image.This graph from CoStar shows the Value-Weighted and Equal-Weighted indexes. As CoStar noted, the Value-Weighted index is up 38.5% from the bottom (showing the demand for higher end properties) and up 4.8% year-over-year. However the Equal-Weighted index is only up 9.0% from the bottom, and up 5.5% year-over-year.
Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.
Friday economic releases:
' At 8:30 AM ET, the Consumer Price Index for February will be released. The consensus is for a 0.5% increase in CPI in February (due to higher gasoline prices) and for core CPI to increase 0.2%.
' Also at 8:30 AM, the NY Fed Empire Manufacturing Survey for March. The consensus is for a reading of 8.5, down from 10.0 in February (above zero is expansion).
' At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for February. The consensus is for a 0.3% increase in Industrial Production in February, and for Capacity Utilization to increase to 79.3%.
' At 9:55 AM, the preliminary March Reuter's/University of Michigan's Consumer sentiment index will be released. The consensus is for a reading of 77.5, down from 77.6.
