by Calculated Risk on 6/14/2017 11:10:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in May. The 16% trimmed-mean Consumer Price Index rose 0.1% (1.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.1% (-1.5% annualized rate) in May. The CPI less food and energy rose 0.1% (0.8% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for May here. Motor fuel declined 55% in May annualized.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 1.9%, and the CPI less food and energy rose 1.7%. Core PCE is for April and increased 1.5% year-over-year.

On a monthly basis, median CPI was at 2.2% annualized, trimmed-mean CPI was at 1.2% annualized, and core CPI was at 0.8% annualized.

Using these measures, inflation was soft again in May.  Overall these measures are mostly below the Fed's 2% target (Median CPI is slightly above).

by Calculated Risk on 6/14/2017 08:39:00 AM

On a monthly basis, retail sales decreased 0.3 percent from April to May (seasonally adjusted), and sales were up 3.8 percent from May 2016.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for May 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $473.8 billion, a decrease of 0.3 percent from the previous month, and 3.8 percent above May 2016. ... The March 2017 to April 2017 percent change was unrevised at 0.4 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline were down 0.1% in May.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by3.7% on a YoY basis.

The decrease in May was below expectations. A disappointing report.

by Calculated Risk on 6/14/2017 07:00:00 AM

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 June 9, 2017. Last week’s results included an adjustment for the Memorial Day holiday.

... The Refinance Index increased 9 percent from the previous week to the highest level since November 2016. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 19 percent compared with the previous week and was 8 percent higher than the same week one year ago. ...

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 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 increased as rates declined, but will not increase significantly unless rates fall well below 4%.


The second graph shows the MBA mortgage purchase index.

Even with the increase in mortgage rates late last year, purchase activity is still up 8% year-over-year.

by Calculated Risk on 6/13/2017 07:04:00 PM

• My FOMC preview.

• Excerpts from Goldman's FOMC preview.

• Excerpts from Merrill Lynch's FOMC preview.

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

• At 8:30 AM, Retail sales for May will be released.  The consensus is for a 0.2% increase in retail sales.

• Also at 8:30 AM, The Consumer Price Index for May from the BLS. The consensus is for no change in CPI, and a 0.2% increase in core CPI.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for April.  The consensus is for a 0.1% decrease in inventories.

• At 2:00 PM, FOMC Meeting Announcement. The FOMC is expected to increase the Fed Funds rate 25 bps at this meeting.

• At 2:00 PM, FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

• At 2:30 PM, Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.

by Calculated Risk on 6/13/2017 02:45:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 0.2% compared to the rolling 12 months ending in April.   Outbound traffic was down 0.4 compared to 12 months ending in April.

The downturn in exports in 2015 was probably due to the slowdown in China and the stronger dollar.  Now exports are picking up again,

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.  

In general both exports and imports have been increasing.

by Calculated Risk on 6/13/2017 12:05:00 PM

Way back in 2005, I posted a graph of the Real Estate Agent Boom. Here is another update to the graph.

The graph shows the number of real estate licensees in California.

The number of agents peaked at the end of 2007 (housing activity peaked in 2005, and prices in 2006).

The number of salesperson's licenses is off 30% from the peak, and is increasing again (up 5.2% from low). The number of salesperson's licenses has increased to July 2004 levels.

Brokers' licenses are off 12.4% from the peak and have only fallen to March 2006 levels, but are still slowly declining (down almost 1% year-over-year).

Click on graph for larger image.

We are seeing a pickup in Real Estate licensees in California, although the number of Brokers is still declining.

by Calculated Risk on 6/13/2017 09:25:00 AM

From the National Federation of Independent Business (NFIB): May 2017 Report: Small Business Optimism Index

The Index for May matched its strong performance in April of 104.5. That means the Index has been at a historically high level for six straight months. Five of the Index components posted a gain, four declined, and one remained unchanged.

The average employment change per firm was 0.34, which puts hiring activity in May near the highest levels in the 43-year history of the Index. Fifteen percent of owners reported hiring three workers per firm, 9 percent reported cutting 2.3 workers per firm.

A strong majority of owners, 59 percent, reported hiring or trying to hire in May, although 51 percent said they found few or no qualified workers. Remarkably, that was a problem for 86 percent of owners who said they tried to hire. Nineteen percent of all owners in the survey said finding qualified workers was their top concern, making it the second-biggest problem for small business. ...
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index was unchanged at 104.5 in May.

by Calculated Risk on 6/12/2017 06:55:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Steady-to-Higher as Busy Week Begins

Mortgage rates were either flat or slightly higher, depending on the lender today. [30 Year fixed at 3.875% to 4.00%].
...
Keep in mind that we're talking about extraordinarily small variations in loan pricing.  Few, if any borrowers would see a change in the actual interest rate quote applied to their prospective loan balance.  Rather, the weakness would only be seen in the form of slightly higher upfront costs for the same rates quoted today and late last week (which are still among the lowest of 2017).

True volatility could show up later in the week as the calendar of events gets crowded.  There are several important economic reports in the mornings.  In particular, Wednesday has a potent combination of economic data in the morning and the Fed Announcement in the afternoon.  While a rate hike from the Fed is a foregone conclusion, markets can still react forcefully to any changes in the Fed's rate hike outlook.
emphasis added

Tuesday:
• At 6:00 AM ET: NFIB Small Business Optimism Index for May.

• At 8:30 AM, The Producer Price Index for May from the BLS. The consensus is for 0.1% increase in PPI, and a 0.2% increase in core PPI.

by Calculated Risk on 6/12/2017 11:47:00 AM

From Merrill Lynch:

We revised down our official 2Q GDP forecast to 2.5%, essentially marking-to market. 1Q is tracking a tenth higher to 1.1%.

From the Altanta Fed: GDPNow

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.0 percent on June 9, down from 3.4 percent on June 2. The forecast for second-quarter real GDP growth fell from 3.4 percent to 3.1 percent on June 5 after the U.S. Census Bureau's manufacturing report and the incorporation of motor vehicle sales estimates released by the U.S. Bureau of Economic Analysis on the prior business day.
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.3% for 2017:Q2 and 1.8% for 2017:Q3.

by Calculated Risk on 6/12/2017 09:47:00 AM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on June 9, 2017:

• smallest number of horizontal oil rigs added – one – since January

• Total US oil rigs were up 8 to 741

• This week’s horizontal rig additions are consistent with slowing activity in the sector – but one week does not a trend make

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.