by Calculated Risk on 6/17/2019 08:34:00 AM

From the NY Fed: Empire State Manufacturing Survey

Business activity took a sharp turn downward in New York State, according to firms responding to the June 2019 Empire State Manufacturing Survey. The headline general business conditions index plummeted twenty-six points, its largest monthly decline on record, to -8.6. New orders receded, while shipments increased modestly. Unfilled orders fell, and delivery times and inventories moved slightly lower. Labor market indicators pointed to small declines in employment and hours worked.

The index for number of employees fell eight points to -3.5, its first negative value in over two years, pointing to a small decline in employment levels. The average workweek index also fell below zero, to -2.2, pointing to a slightly shorter workweek.
emphasis added

This was well below the consensus forecast.

by Calculated Risk on 6/16/2019 07:59:00 PM

Weekend:
• Schedule for Week of June 16, 2019

Monday:
• At 8:30 AM, The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of 10.0, down from 17.8.

• At 10:00 AM, The June NAHB homebuilder survey. The consensus is for a reading of 67, up from 66. Any number above 50 indicates that more builders view sales conditions as good than poor.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 7 and DOW futures are up 56 (fair value).

Oil prices were down over the last week with WTI futures at $52.60 per barrel and Brent at $62.15 per barrel.  A year ago, WTI was at $68, and Brent was at $75 - so oil prices are down about 15% to 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.67 per gallon. A year ago prices were at $2.90 per gallon, so gasoline prices are down about 8% year-over-year.

by Calculated Risk on 6/16/2019 08:20:00 AM

From SacRealtor.org: May sees increase in sales, inventory

The month ended with 1,630 total sales, a 9% increase from the 1,496 sales of April. Compared to the same month last year (1,730), the current figure is down 5.8%.
...
The Active Listing Inventory increased 10.5% from 2,094 to 2,314 units. The Months of Inventory, however, remained at 1.4 Months. [Note: Compared to May 2018, inventory is down 7.8%] .
...
The Median DOM (days on market) dropped for the third month, decreasing from 11 to 10 from April to May. The Average DOM also decreased, dropping from 29 to 25. “Days on market” represents the days between the initial listing of the home as “active” and the day it goes “pending.”
emphasis added

1) Overall sales decreased to 1,630 in May, down from 1,730 in May 2018. Sales were up 9.0% from April 2019 (last month), and down 5.8% from May 2018.

2) Active inventory was at 2,314, down from 2,509 in May 2018. That is down 7.8% year-over-year.  This is the first YoY decline in 20 months.

Inventory is still low - months of inventory is at 1.4 months, probably closer to 4 months would be normal.

by Calculated Risk on 6/15/2019 08:11:00 AM

The key reports this week are May housing starts and existing home sales.

For manufacturing, the June New York and Philly Fed manufacturing surveys will be released.

The FOMC meets this week, and no change to policy is expected at this meeting.

----- Monday, June 17th -----
8:30 AM: The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of 10.0, down from 17.8.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 67, up from 66. Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Tuesday, June 18th -----
8:30 AM ET: Housing Starts for May.

This graph shows single and total housing starts since 1968.

The consensus is for 1.240 million SAAR, up from 1.235 million SAAR in April.

----- Wednesday, June 19th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

During the day: The AIA's Architecture Billings Index for May (a leading indicator for commercial real estate).

2:00 PM: FOMC Meeting Announcement. No change to policy is expected at this meeting.

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.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, June 20th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 217 thousand initial claims, down from 222 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 14.0, down from 16.6.

----- Friday, June 21st -----
10:00 AM: Existing Home Sales for May from the National Association of Realtors (NAR). The consensus is for 5.29 million SAAR, up from 5.19 million.

The graph shows existing home sales from 1994 through the report last month.

by Calculated Risk on 6/14/2019 08:51:00 PM

From Compass chief economist Selma Hepp: Plenty of Bay Area buyers, but why are they hesitant?

• While April’s momentum is slightly slower in May, May sales are still only 2 percent below last year’s highs after double-digit declines earlier in the year.

• Home sales momentum remains solid in East Bay. Napa sales finally jumped 6 percent after a 6-month losing streak, averaging 20 percent annual declines.

• Affordable sales picked up again with sales of homes priced below $1 million up 3 percent year-over-year, the first two-month consecutive annual increase in the last four years.

• For-sale inventory growth is slowing after the winter jump with homes averaging seven days longer on the market.

• San-Francisco continues to see significant inventory declines with May down 19 percent YOY (four months of declines averaging 20 percent).

• Buyer competition picks up again with 58 percent of homes selling over the asking price.

• Bay Area housing market correction resembles “Table Top” with prices remaining flat, compared to “Mountain Top” seen in the last cycle when prices fell significantly following the peak.

by Calculated Risk on 6/14/2019 06:52:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Just Had Another Awesome Week

While we can't say that this week's best mortgage rate offerings were quite as good as last week's best, they were pretty darn close. In fact, quite a few lenders have simply been quoting the same rates for the entire 2-week period. [30YR FIXED - 3.875%]
emphasis added

Click on graph for larger image.

This is a graph from Mortgage News Daily (MND) showing 30 year fixed rates from three sources (MND, MBA, Freddie Mac).   Go to MND and you can adjust the graph for different time periods.

by Calculated Risk on 6/14/2019 11:37:00 AM

From Merrill Lynch:

Core retail sales popped 0.5% mom in May with positive revisions. Industrial production and inventories were also solid. The data lifted 2Q GDP tracking by 0.4pp to 2.5% qoq saar. 1Q GDP tracking was unchanged at 3.2%.[June 14 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 1.4% for 2019:Q2 and 1.7% for 2019:Q3 [June 14 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2019 is 2.1 percent on June 14, up from 1.4 percent on June 7. After this morning's retail sales release from the U.S. Census Bureau, and this morning's industrial production report from the Federal Reserve Board of Governors, the nowcast of second-quarter real personal consumption expenditures growth increased from 3.2 percent to 3.9 percent. [June 14 estimate]

CR Note: These estimates suggest real GDP growth will be around 2% annualized in Q2.

by Calculated Risk on 6/14/2019 09:29:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production rose 0.4 percent in May after falling 0.4 percent in April. The indexes for manufacturing and mining gained 0.2 percent and 0.1 percent, respectively, in May; the index for utilities climbed 2.1 percent. At 109.6 percent of its 2012 average, total industrial production was 2.0 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector moved up 0.2 percentage point in May to 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2018) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up 11.4 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 78.1% is 1.7% below the average from 1972 to 2017 and below the pre-recession level of 80.8% 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 in May to 109.2. This is 26% above the recession low, and 4.0% above the pre-recession peak.

The increase in industrial production and increase in capacity utilization were above consensus.

by Calculated Risk on 6/14/2019 08:41:00 AM

On a monthly basis, retail sales increased 0.5 percent from April to May (seasonally adjusted), and sales were up 3.2 percent from May 2018.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for May 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $519.0 billion, an increase of 0.5 percent from the previous month, and 3.2 percent above May 2018. ... The March 2019 to April 2019 percent change was revised from down 0.2 percent to up 0.3 percent.
emphasis added

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 up 0.6% 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 by 3.0% on a YoY basis.

The increase in May was below expectations, however sales in March and April were revised up.  Overall a solid report.

by Calculated Risk on 6/13/2019 07:54:00 PM

Friday:
• At 8:30 AM, Retail sales for May is scheduled to be released.  The consensus is for 0.7% increase in retail sales.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 78.0%.

• At 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for June).