by Calculated Risk on 2/24/2019 07:35:00 PM

Weekend:
• Schedule for Week of February 24, 2019

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

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

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 7 and DOW futures are up 63 (fair value).

Oil prices were up over the last week with WTI futures at $57.36 per barrel and Brent at $67.25 per barrel.  A year ago, WTI was at $62, and Brent was at $65 - so WTI oil prices are down year-over-year, although Brent is up slightly.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.40 per gallon. A year ago prices were at $2.50 per gallon, so gasoline prices are down 10 cents per gallon year-over-year.

by Calculated Risk on 2/24/2019 12:51:00 PM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for February 2019.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for February 2019. During the month, the list decreased by a net of two institutions to 76 banks after three removals and one addition. Aggregate assets dropped to $52.8 billion from $55.2 billion at month earlier, with $1.9 billion of the $2.4 billion decline due to the release of updated financials. A year ago, the list held 101 institutions with assets of $20.5 billion.

Removals included Beach Community Bank, Fort Walton Beach, FL ($468 million) because of action termination; Gunnison Valley Bank, Gunnison, UT ($71 million) because of an unassisted merger; and Maryland Financial Bank, Towson, MD ($42 million) because of voluntary liquidation.

Added this month was Fort Gibson State Bank, Fort Gibson, OK ($61 million) because the FDIC issued it a Prompt Corrective Action order on January 9, 2019. Strange, the FDIC has yet to provide public notice of a safety & soundness consent order against this bank.

On February 21, 2019 the FDIC released industry results for the fourth quarter of 2018. In that release, the FDIC disclosed that the Official Problem Bank List includes 60 institutions with assets of $48.5 billion, down from 71 institutions with assets of $53.3 billion in the third quarter of 2018.

by Calculated Risk on 2/23/2019 08:11:00 AM

Some key catch up reports this week!  The key reports are Q4 GDP and December Housing Starts.

Other key reports include Case-Shiller house prices, and Personal Income and Outlays for December, and Personal Income for January.

For manufacturing, the February Dallas, Richmond and Kansas City manufacturing surveys will be released.

Fed Chair Jerome Powell will provide the semi-annual Monetary Policy report to Congress this week.

----- Monday, Feb 25th -----
8:30 AM ET: Chicago Fed National Activity Index for January. This is a composite index of other data.

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

----- Tuesday, Feb 26th -----
8:30 AM ET: Housing Starts for December.

This graph shows single and total housing starts since 1968.

The consensus is for 1.256 million SAAR, unchanged from 1.256 million SAAR.

9:00 AM: FHFA House Price Index for December 2018. This was originally a GSE only repeat sales, however there is also an expanded index.

9:00 AM: S&P/Case-Shiller House Price Index for December.

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

The consensus is for a 4.5% year-over-year increase in the Comp 20 index for December.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for February.

10:00 AM: Testimony by Fed Chair Jerome Powell, Semiannual Monetary Policy Report to the Congress, Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate

----- Wednesday, Feb 27th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: Pending Home Sales Index for January. The consensus is for a 3.0% decrease in the index.

10:00 AM: Testimony by Fed Chair Jerome Powell, Semiannual Monetary Policy Report to the Congress, Before the Committee on Financial Services, U.S. House of Representatives

----- Thursday, Feb 28th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 225 thousand initial claims, up from 216 thousand the previous week.

8:30 AM: Gross Domestic Product, 4th quarter 2018 (Initial estimate). The consensus is that real GDP increased 2.4% annualized in Q4, down from 3.4% in Q3.

9:45 AM: Chicago Purchasing Managers Index for February. The consensus is for a reading of 55.8, down from 56.7 in January.

10:00 AM: the Q4 2018 Housing Vacancies and Homeownership from the Census Bureau.

11:00 AM: the Kansas City Fed manufacturing survey for February. This is the last of regional manufacturing surveys for February.

----- Friday, Mar 1st -----
8:30 AM ET: Personal Income and Outlays for December, and Personal Income for January. The consensus is for a 0.4% increase in personal income, and for a 0.2% decrease in personal spending. And for the Core PCE price index to increase 0.2%. This release also includes Personal Income for January. The consensus is for a 0.4% increase in personal income.

10:00 AM: ISM Manufacturing Index for February. The consensus is for the ISM to be at 55.0, down from 56.6 in January.

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

The PMI was at 56.6% in January, the employment index was at 55.5%, and the new orders index was at 58.2%.

10:00 AM: University of Michigan's Consumer sentiment index (Final for February). The consensus is for a reading of 95.5.

by Calculated Risk on 2/22/2019 02:01:00 PM

The BEA has announced that the Q4 advanced GDP report will be combined with the 2nd estimate of GDP, and will be released on Feb 28th.

From Merrill Lynch:

Weak retail sales data and inventory build caused a 0.8pp decline in our 4Q GDP tracking estimate to 1.5% from 2.3% [Feb 14 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.3% for 2018:Q4 and 1.2% for 2019:Q1. [Feb 22 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 1.4 percent on February 21, down from 1.5 percent on February 14. [Feb 21 estimate]

CR Note: These estimates suggest GDP in the high 1s for Q4.

Using the middle of these three forecasts (about 1.8% real GDP growth in Q4), that would put 2018 annual GDP growth at around 2.8%.  This would be the best year since 2015, but lower than many forecasts.

by Calculated Risk on 2/22/2019 01:48:00 PM

Fannie and Freddie reported results for Q4 2018. Here is some information on Real Estate Owned (REOs).

Freddie Mac reported the number of REO declined to 7,100 at the end of Q4 2018 compared to 8,299 at the end of Q4 2017.

For Freddie, this is down 91% from the 74,897 peak number of REOs in Q3 2010.

Fannie Mae reported the number of REO declined to 20,156 at the end of Q4 2018 compared to 26,311 at the end of Q4 2017.

For Fannie, this is down 88% from the 166,787 peak number of REOs in Q3 2010.

Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in 2018, and combined inventory is down 21% year-over-year.

This is close to normal levels of REOs.

by Calculated Risk on 2/22/2019 09:52:00 AM

An interesting chart from the Mortgage Bankers Association’s (MBA):

Last week, MBA Research released fourth quarter of 2018 results of its National Delinquency Survey (NDS). The delinquency rate for mortgage loans on one‐to‐four‐unit residential properties was 4.06 percent – down 41 basis points from the previous quarter, 111 basis points from the fourth quarter of 2017 and at its lowest level since the first quarter of 2000.

In this week’s chart, we show the relationship between the unemployment rate, supplied by the U.S. Bureau of Labor Statistics (BLS), and the mortgage delinquency rate for all loans over a 30‐year period.

Nine years ago (the first quarter of 2010) during the aftermath of the Great Recession, the unemployment rate reached 9.83 percent, and the mortgage delinquency rate was at its peak of 10.06 percent. Fast forward to last year’s fourth quarter, the unemployment rate was 3.80 percent and nearing 50‐year lows, and the mortgage delinquency rate (4.06 percent) was at an 18‐year low.

Click on graph for larger image.

The close tracking between unemployment and mortgage delinquency rates from the period 1988‐2008 appears less pronounced than from 2008‐2018. For example, the unemployment rate reached 7.63 percent in the third quarter of 1992, while the mortgage delinquency rate was relatively low in comparison, at 4.58 percent. Possible factors influencing this change include differences in mortgage product mix and criteria, borrower behavior and recession severity.

CR Note: The mortgage delinquency rate is currently near all time lows for this series.

by Calculated Risk on 2/21/2019 05:34:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 16 February

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 10-16 February 2019, according to data from STR.

In comparison with the week of 11-17 February 2018, the industry recorded the following:

• Occupancy: +0.7% to 63.5%
• Average daily rate (ADR): +2.7% to US$131.99
• Revenue per available room (RevPAR): +3.4% to US$83.88
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2019, dash light blue is 2018, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

A decent start for 2019.

Seasonally, the occupancy rate will increase over the next month or so into the Spring travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 2/21/2019 12:41:00 PM

Earlier: NAR: Existing-Home Sales Decreased to 4.94 million in January

A few key points:

1) The key for housing - and the overall economy - is new home sales, single family housing starts and overall residential investment. Unfortunately this key data has been delayed due to the government shutdown.  However, overall, this is still a somewhat reasonable level for existing home sales, and the weakness at the end of 2018 and early 2019 was no surprise given the increase in mortgage rates.

2) Inventory is still low, but was up 4.6% year-over-year (YoY) in January. This was the sixth consecutive month with a year-over-year increase in inventory, although the YoY increase was slightly smaller in January than in December.

3) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus. See: Lawler: Early Read on Existing Home Sales in January .   The consensus was for sales of 5.05 million SAAR, Lawler estimated the NAR would report 4.92 million SAAR in January, and the NAR actually reported 4.94 million SAAR.

Click on graph for larger image.

The current YoY increase in inventory is nothing like what happened in 2005 and 2006. In 2005 (see red arrow), inventory kept increasing all year, and that was a sign the bubble was ending.  This winter (light blue arrow), inventory is following the normal seasonal pattern.

Although I expected inventory to increase YoY in 2019, I also expected inventory to once again follow the normal seasonal pattern.

Also inventory levels remain somewhat low, and could increase more and still be at normal levels. No worries.

The second graph shows existing home sales Not Seasonally Adjusted (NSA).

Sales NSA in January (285,000, red column) were below sales in January 2018 (313,000, NSA), and sales were the lowest for January since 2015.

by Calculated Risk on 2/21/2019 10:12:00 AM

From the NAR: Existing-Home Sales Drop 1.2 Percent in January

Existing-home sales experienced a minor drop for the third consecutive month in January, according to the National Association of Realtors®. Of the four major U.S. regions, only the Northeast saw an uptick in sales activity last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.2 percent from December to a seasonally adjusted annual rate of 4.94 million in January. Sales are now down 8.5 percent from a year ago (5.40 million in January 2018).
...
Total housing inventory at the end of January increased to 1.59 million, up from 1.53 million existing homes available for sale in December, and represents an increase from 1.52 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.7 months in December and from 3.4 months in January 2018.
emphasis added

Click on graph for larger image.

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

Sales in January (4.94 million SAAR) were down 1.2% from last month, and were 8.5% below the January 2018 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.59 million in January from 1.53 million in December.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 4.6% year-over-year in January compared to January 2018.

Months of supply was at 3.9 months in January.

For existing home sales, a key number is inventory - and inventory is still low, but appears to have bottomed. I'll have more later ...

by Calculated Risk on 2/21/2019 09:11:00 AM

From the Philly Fed: February 2019 Manufacturing Business Outlook Survey

Manufacturing conditions in the region weakened this month, according to firms responding to the February Manufacturing Business Outlook Survey. The indicators for general activity, new orders, and shipments fell into negative territory, but the indicator for employment remained positive. Input prices also moderated notably this month. The survey’s indexes for future conditions were mostly steady, with firms remaining generally optimistic about growth over the next six months.

The index for current manufacturing activity in the region decreased from a reading of 17.0 in January to -4.1 this month. This is the index’s first negative reading since May 2016. Both the new orders and shipments indexes also fell this month. The current new orders index decreased nearly 24 points to -2.4, and the current shipments index decreased 17 points to -5.3.

The firms continued to add to their payrolls this month. The current employment index improved from a reading of 9.6 in January to 14.5 this month.
emphasis added

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

This suggests the ISM manufacturing index will show expansion again in February, but at a level than in January.