by Calculated Risk on 9/30/2019 12:41:00 PM

From the Chicago PMI: Chicago Business Barometer™ – Drifts to 47.1 in September

The Chicago Business BarometerTM, produced with MNI, fell 3.3 points to 47.1 in September, following August’s rebound to 50.4.

Business confidence dropped below the 50-mark to 47.3 in Q3, leaving the index at the lowest level on a quarterly basis since Q3 2009. The index fell 4.9 points compared to the previous quarter.
...
Labor demand improved slightly to 45.6 in September, but the quarterly average fell to 44.1, recording the weakest quarter since Q4 2009. br /> emphasis added

CR Note: This was below the consensus forecast, and is another weak reading.

by Calculated Risk on 9/30/2019 10:36:00 AM

From the Dallas Fed: Texas Manufacturing Expansion Continues

Texas factory activity continued to expand in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell four points to 13.9, suggesting output growth continued but at a slightly slower pace than in August.

Other measures of manufacturing activity also suggested slightly slower expansion in September. The new orders index edged down two points to 7.1, while the shipments index fell three points to 14.7. Similarly, the capacity utilization index fell four points to 12.0. A bright spot this month was the growth rate of orders index, which edged up to 4.4, a five-month high.

Perceptions of broader business conditions remained positive in September. The general business activity index came in at 1.5, a second positive reading in a row after three months in negative territory. The company outlook index inched up to 7.4, its highest reading since February. The index measuring uncertainty regarding companies’ outlooks remained elevated at 13.3.

Labor market measures suggested stronger growth in employment and work hours in September. The employment index jumped 13 points to 18.8, its highest reading in nearly a year.
emphasis added

This was the last of the regional Fed surveys for September.

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

Based on these regional surveys, it seems likely the ISM manufacturing index for September will be weak again.

by Calculated Risk on 9/30/2019 09:27:00 AM

From JD Power: Record Q3 Spending Accelerates Auto Sales After Year's Slow Start

New-vehicle retail sales in September are expected to fall from a year ago, according to a forecast developed jointly by J.D. Power and LMC Automotive. Retail sales are projected to reach 1,007,000 units, a 15.2% decrease compared with September 2018. Controlling for the number of selling days, this translates to a decline of 7.8% from last year on two fewer selling days. (Note: This year excludes the Labor Day holiday and has one fewer weekend than September 2018.)
...
Total sales in September are projected to reach 1,244,000 units, a 13.3% decrease compared with September 2018. Adjusting the results for two fewer selling days results in a decline of 5.8%. The seasonally adjusted annualized rate (SAAR) for total sales, which normalizes sales for the exclusion of the Labor Day holiday and one fewer weekend this year, is expected to be 16.8 million units.
…
“After delivering record sales results in August, when retail sales rose 6.2% on a selling-day adjusted basis, the decline in September sales was expected and reflects a quirk in how the industry reports sales. The large decline in sales this month is driven primarily by the timing of the Labor Day holiday. Unlike most years, sales from the Labor Day holiday weekend were included in August sales reporting instead of September. With close to 250,000 new vehicles sold during the holiday weekend, the exclusion from September reporting is significant.”
emphasis added

This forecast is for sales be solid in September, but down from 17.0 million SAAR in August, and down from 17.3 million SAAR in September 2018.

by Calculated Risk on 9/29/2019 08:43:00 PM

Weekend:
• Schedule for Week of September 29, 2019

• Sept 2019: Unofficial Problem Bank list decreased to 74 Institutions, Q3 2019 Transition Matrix

Monday:
• At 9:45 AM ET, Chicago Purchasing Managers Index for September. The consensus is for a reading of 50.4, unchanged from 50.4 in August.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for September. This is the last of the Fed regional manufacturing surveys for September.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 8 and DOW futures are up 64 (fair value).

Oil prices were down over the last week with WTI futures at $56.07 per barrel and Brent at $62.12 barrel.  A year ago, WTI was at $73, and Brent was at $83 - so oil prices are down about 25% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.64 per gallon. A year ago prices were at $2.87 per gallon, so gasoline prices are down 23 cents year-over-year.

by Calculated Risk on 9/29/2019 08:19:00 AM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for September 2019.

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

Update on the Unofficial Problem Bank List for September 2019. During the month, the list decreased by two to 74 institutions after four removals and two additions. Assets increased by $1.1 billion to $55.7 billion. A year ago, the list held 79 institutions with assets of $56.9 billion.

This month, actions were terminated against Interamerican Bank, A FSB, Miami, FL ($200 million); First Covenant Bank, Commerce, GA ($136 million); Homestead Savings Bank, Albion, MI ($66 million); and The First National Bank of Lacon, Lacon, IL ($65 million). Added this month was Metropolitan Capital Bank & Trust, Chicago, IL ($230 million). We give thanks to a reader that identified that Carver Federal Savings Bank, New York, NY ($575 million) should be added to the list, which we did this month based on an action issued in May 2016.

With the conclusion of the third quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, 1,753 institutions have appeared on a weekly or monthly list since the start of publication. Only 4.2 percent of the banks that have appeared on a list remain today as 1,679 institutions have transitioned through the list. Departure methods include 992 action terminations, 406 failures, 262 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 5 or 1.3 percent, are still designated as being in a troubled status more than ten years later. The 406 failures represent 23.2 percent of the 1,753 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	180	(68,469,804)
	Unassisted Merger	41	(10,072,112)
	Voluntary Liquidation	5	(10,672,586)
	Failures	158	(186,397,337)
	Asset Change		511,796
Still on List at 9/30/2019		5	1,213,386
Additions after 8/7/2009		69	54,532,883
End (9/30/2019)		74	55,746,269
Intraperiod Removals1
	Action Terminated	812	326,376,223
	Unassisted Merger	221	82,691,403
	Voluntary Liquidation	14	2,558,186
	Failures	248	125,152,210
	Total	1,295	536,778,022
1Institution not on 8/7/2009 or 9/30/2019 list but appeared on a weekly list.

by Calculated Risk on 9/28/2019 08:11:00 AM

The key report this week is the September employment report on Friday.

Other key indicators include the September ISM manufacturing and non-manufacturing indexes, September auto sales, and the August trade deficit.

----- Monday, Sept 30th -----
9:45 AM: Chicago Purchasing Managers Index for September. The consensus is for a reading of 50.4, unchanged from 50.4 in August.

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

----- Tuesday, Oct 1st -----
10:00 AM: ISM Manufacturing Index for September. The consensus is for a reading of 50.0, up from 49.1 in August.

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

The PMI was at 49.1% in August, the employment index was at 47.4%, and the new orders index was at 47.2%.

10:00 AM: Construction Spending for August. The consensus is for a 0.3% increase.

Early: Reis Q3 2019 Office Survey of rents and vacancy rates.

----- Wednesday, Oct 2nd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 152,000 jobs added, down from 195,000 in August.

All day: Light vehicle sales for September.

The consensus is for sales of 17.0 million SAAR, unchanged from 17.0 million SAAR in August (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the current sales rate.

----- Thursday, Oct 3rd -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 215,000 initial claims, up from 213,000 last week.

10:00 AM: the ISM non-Manufacturing Index for September.

Early: Reis Q3 2019 Mall Survey of rents and vacancy rates.

----- Friday, Oct 4th -----
8:30 AM: Employment Report for September.

The consensus is for 145,000 jobs added, up from 130,000 in August (including temporary Census hires). The consensus is the unemployment rate will be unchanged at 3.7%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In August, the year-over-year change was 2.074 million jobs.

A key will be the change in wages.

8:30 AM: Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $54.5 billion in August, from $54.0 billion in July.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

2:00 PM: Speech, Fed Chair Jerome Powell, Opening Remarks, At Fed Listens: Perspectives on Maximum Employment and Price Stability, Federal Reserve Board, Washington, D.C.

by Calculated Risk on 9/27/2019 02:14:00 PM

Reis reported that the apartment vacancy rate was at 4.7% in Q3 2019, unchanged from 4.7% in Q2, and unchanged from 4.7% in Q3 2018. The vacancy rate peaked at 8.0% at the end of 2009, and bottomed at 4.1% in 2016.

From economist Barbara Byrne Denham at Reis:

The apartment vacancy rate was flat in the quarter at 4.7%. In the third quarter of 2018 it was also 4.7%. Overall vacancy has changed 0.3% in last two years.

Both the national average asking rent and effective rent, which nets out landlord concessions, increased 0.8% in the third quarter. At $1,484 per unit (asking) and $1,413 per unit (effective), the average rents have increased 3.8% from the third quarter of 2018.
...
Apartment occupancy growth was subdued in the third quarter, although fundamentals remain healthy. That is, demand growth increased in line with supply growth, and rent growth held steady at just below 1% in the quarter. Despite a deceleration in the overall economy, the demand for apartments should continue at this pace as the housing market takes the brunt of any and all uncertainty. New and existing homes sales have improved in the last month, but condo and coop sales were lower than a year ago. The back-and-forth in the two markets should continue this year and next as consumers exercise caution given so much uncertainty on the trade war and global front. Still, the housing vs. apartment markets are not a zero-sum game. As long as job growth remains healthy, the demand for both will stay positive shoring up home prices and rents equally.
emphasis added

Click on graph for larger image.

This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Reis is just for large cities.

The vacancy rate had mostly moved sideways for the last two years - after increasing from the low in 2016..

Apartment vacancy data courtesy of Reis.

by Calculated Risk on 9/27/2019 11:19:00 AM

From Merrill Lynch:

The data sliced 0.3pp from 3Q GDP tracking, bringing us down to 1.9% qoq saar. [Sept 27 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.1% for 2019:Q3 and 1.8% for 2019:Q4. [Sept 27 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 2.1 percent on September 27, up from 1.9 percent on September 18. [Sept 27 estimate]

CR Note: These estimates suggest real GDP growth will be around 2.0% annualized in Q3.

by Calculated Risk on 9/27/2019 10:41:00 AM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for August 2019. Over the past three months, the indexes increased in 46 states and decreased in four, for a three-month diffusion index of 84. In the past month, the indexes increased in 40 states, decreased in six states, and remained stable in four, for a one-month diffusion index of 68.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and all or mostly green during most of the recent expansion.

The map is mostly green on a three month basis, but there are some red states.

Source: Philly Fed.

Note: For complaints about red / green issues, please contact the Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In July, 41 states had increasing activity (graph includes minor increases).

by Calculated Risk on 9/27/2019 08:38:00 AM

The BEA released the Personal Income and Outlays report for August:

Personal income increased $73.5 billion (0.4 percent) in August according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $77.7 billion (0.5 percent) and personal consumption expenditures (PCE) increased $20.1 billion (0.1 percent).

Real DPI increased 0.4 percent in August and Real PCE increased 0.1 percent. The PCE price index increased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

The August PCE price index increased 1.4 percent year-over-year and the August PCE price index, excluding food and energy, increased 1.8 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2019 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was at expectations,  and the increase in PCE was below expectations.

Note that core PCE inflation was up 1.8% YoY.

Using the two-month method to estimate Q2 PCE growth, PCE was increasing at a 2.8% annual rate in Q3 2019. (using the mid-month method, PCE was increasing at 2.3%). This suggests slower PCE growth in Q3 than in Q2.