by Calculated Risk on 6/23/2019 11:04:00 AM

By request, here is an update to the chart showing market performance under Presidents Trump and Obama.

Note: I don't think the stock market is a great measure of policy performance, but some people do - and I'm having a little fun with them.

There are some observers who think the stock market is the key barometer of policy success.  My view is there are many measures of success - and that the economy needs to work well for a majority of the people - not just stock investors.

However, for example, Treasury Secretary Steven Mnuchin was on CNBC on Feb 22, 2017, and was asked if the stock market rally was a vote of confidence in the new administration, he replied: "Absolutely, this is a mark-to-market business, and you see what the market thinks."

And Larry Kudlow wrote in 2007: A Stock Market Vote of Confidence for Bush: "I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today's stock market message is an unmistakable vote of confidence for the president."

Note: Kudlow's comments were made a few months before the market started selling off in the Great Recession. For more on Kudlow, see: Larry Kudlow is usually wrong

And from White House chief economic advisor Gary Cohn on December 20, 2017:

"I think there is a lot more momentum in the stock market. ... "The stock market is reflecting the reality of what's going in the business environment today," said Cohn, director of the National Economic Council. "There is going to be a continuation [of the] rally in the equity markets based on real underlying fundamentals of the U.S. economy ... as well as companies having more earnings power because of lower tax rates."

For fun, here is a graph comparing S&P500 returns (ex-dividends) under Presidents Trump and Obama:

Click on graph for larger image.

Blue is for Mr. Obama, Orange is for Mr. Trump.

At this point, the S&P500 is up 30% under Mr. Trump - compared to up 58% under Mr. Obama for the same number of market days.

by Calculated Risk on 6/22/2019 08:11:00 AM

The key reports this week are the third estimate of Q1 GDP, May New Home Sales, Case-Shiller house prices, and Personal Income and Outlays for May.

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

On Tuesday, Fed Chair Jerome Powell speaks on the Economic Outlook and Monetary Policy.

----- Monday, June 24th -----
8:30 AM ET: Chicago Fed National Activity Index for May. This is a composite index of other data.

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

----- Tuesday, June 25th -----
9:00 AM: S&P/Case-Shiller House Price Index for April.

This graph shows the year-over-year change in the 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 2.5% year-over-year increase in the Comp 20 index for April.

9:00 AM: FHFA House Price Index for April 2019. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: New Home Sales for May from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the sales rate for last month.

The consensus is for 680 thousand SAAR, up from 673 thousand in April.

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

1:00 PM: Speech by Fed Chair Jerome H. Powell, Economic Outlook and Monetary Policy Review, At C. Peter McColough Series on International Economics: A Conversation with Jerome H. Powell, New York, N.Y.

----- Wednesday, June 26th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Durable Goods Orders for May from the Census Bureau. The consensus is for no change in durable goods orders.

----- Thursday, June 27th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 218 thousand initial claims, up from 216 thousand last week.

8:30 AM: Gross Domestic Product, 1st quarter 2019 (Third estimate). The consensus is that real GDP increased 3.1% annualized in Q1, unchanged from the second estimate of 3.1%.

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

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

----- Friday, June 28th -----
8:30 AM ET: Personal Income and Outlays, May 2019. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.1%.

9:45 AM: Chicago Purchasing Managers Index for June.

10:00 AM: University of Michigan's Consumer sentiment index (Final for June). The consensus is for a reading of 97.9.

by Calculated Risk on 6/21/2019 07:50:00 PM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in May in 6 states, higher in 2 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today.
...
Vermont had the lowest unemployment rate in May, 2.1 percent. The rates in Texas (3.5 percent) and Vermont (2.1 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 6.4 percent.
emphasis added

Click on graph for larger image.

This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976.

At the worst of the great recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently only one state, Alaska, has an unemployment rate at or above 6% (dark blue).  Note that the series low for Alaska is above 6%.  Three states and the D.C. have unemployment rates above 5%; Alaska, Mississippi and New Mexico.

A total of nine states are at the series low.

by Calculated Risk on 6/21/2019 03:22:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 15 June

The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 9-15 June 2019, according to data from STR.

In comparison with the week of 10-16 June 2018, the industry recorded the following:

• Occupancy: -0.6% to 73.7%
• Average daily rate (ADR): +1.9% to US$134.59
• Revenue per available room (RevPAR): +1.3% to US$99.22
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 (record year), blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

Occupancy has been solid in 2019, close - to-date - compared to the previous 4 years.

Seasonally, the occupancy rate will now increase during the Summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 6/21/2019 12:26:00 PM

From Merrill Lynch:

1Q GDP is likely to be revised slightly higher to 3.2% in the final release next week, up from the second estimate of 3.1%. We continue to track 2.5% for 2Q GDP. [June 21 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 1.4% for 2019:Q2 and 1.3% for 2019:Q3. [June 21 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 2.0 percent on June 18, down from 2.1 percent on June 14. [June 18 estimate]

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

by Calculated Risk on 6/21/2019 11:15:00 AM

Earlier: NAR: Existing-Home Sales Increased to 5.34 million in May

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.

Overall, this is still a somewhat reasonable level for existing home sales.  No worries.

2) Inventory is still low, but was up 2.7% year-over-year (YoY) in May. This was the tenth consecutive month with a year-over-year increase in inventory, although the YoY increase was fairly small in May.

Click on graph for larger image.

3) Year-to-date sales are down about 3.3% compared to the same period in 2018.   On an annual basis, that would put sales around 5.15 million in 2019.  Sales slumped at the end of 2018 and in January 2019 due to higher mortgage rates, the stock market selloff, and fears of an economic slowdown.

The comparisons will be easier towards the end of the year.

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

Sales NSA in May (540,000, red column) were above sales in May 2018 (535,000, NSA), but sales were lower than in May 2017.

by Calculated Risk on 6/21/2019 10:09:00 AM

From the NAR: Existing-Home Sales Ascend 2.5% in May

Existing-home sales rebounded in May, recording an increase in sales for the first time in two months, according to the National Association of Realtors®. Each of the four major U.S. regions saw a growth in sales, with the Northeast experiencing the biggest surge last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 2.5% from April to a seasonally adjusted annual rate of 5.34 million in May. Total sales, however, are down 1.1% from a year ago (5.40 million in May 2018).
...
Total housing inventory3 at the end of May increased to 1.92 million, up from 1.83 million existing homes available for sale in April and a 2.7% increase from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, up from both the 4.2 month supply in April and from 4.2 months in May 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 May (5.34 million SAAR) were up 2.5% from last month, and were 1.1% below the May 2018 sales rate.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.92 million in May from 1.83 million in April.   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 2.7% year-over-year in May compared to May 2018.

Months of supply increased to 4.3 months in May.

This was above the consensus forecast.  For existing home sales, a key number is inventory - and inventory is still low. I'll have more later …

by Calculated Risk on 6/20/2019 05:27:00 PM

Friday:
• At 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.

Housing economist Tom Lawler expects the NAR to report sales of 5.40 million SAAR for May.

by Calculated Risk on 6/20/2019 12:47:00 PM

The next Federal Open Market Committee (FOMC) meeting is scheduled for July 30th and 31st. Depending on the data - and other events - the committee might cut the Fed Funds rate at the July meeting.

Here are some key economic releases to watch:

• June Employment report scheduled for July 5th at 8:30 AM.

• Gross Domestic Product, 2nd quarter 2019 (advance estimate), and annual update, July 26th at 8:30 AM.

And on inflation:
• May Personal Income and Outlays, June 28th at 8:30 AM

• June Personal Income and Outlays, July 30th at 8:30 AM

• June Consumer Price Index, July 11th at 8:30 AM

And on housing:
• May New Home Sales, June 25th at 10:00 AM

• June Housing Starts, July 17th at 8:30 AM

• June New Home Sales, July 24th at 10:00 AM

Other key event:
• Trade Talks at G20 Meeting, on June 28th and 29th

by Calculated Risk on 6/20/2019 09:52:00 AM

From Black Knight: Black Knight’s First Look: Continued Improvement Pushes Mortgage Delinquencies to New Record Low in May; Prepayment Activity Doubles Over Past Four Months

• The national delinquency rate has fallen for the third consecutive month, hitting 3.36% in May, its lowest level since Black Knight began reporting the metric in January 2000

• Both early-stage and serious delinquencies fell from April, as did loans in active foreclosure, bringing total non-current inventory – all loans past due, including foreclosures – to its lowest point since early 2005

• Foreclosure starts also fell month-over-month to 39,000, the fewest of any month in more than 18 years

• Prepayment activity jumped another 24% in May, more than doubling over the past four months to reach its highest level in more than two years

According to Black Knight's First Look report for May, the percent of loans delinquent decreased 3.0% in May compared to April, and decreased 7.5% year-over-year.

The percent of loans in the foreclosure process decreased 1.6% in May and were down 17.4% over the last year.

Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.36% in May, down from 3.47% in April.

The percent of loans in the foreclosure process decreased in May to 0.49% from 0.50% in April.

The number of delinquent properties, but not in foreclosure, is down 107,000 properties year-over-year, and the number of properties in the foreclosure process is down 48,000 properties year-over-year.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	May 2019	Apr 2019	May 2018	May 2017
Delinquent	3.36%	3.47%	3.64%	3.79%
In Foreclosure	0.49%	0.50%	0.59%	0.83%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	1,760,000	1,812,000	1,867,000	1,972,000
Number of properties in foreclosure pre-sale inventory:	255,000	259,000	303,000	421,000
Total Properties	2,015,000	2,072,000	2,171,000	2,348,000