by Calculated Risk on 3/23/2020 11:05:00 AM

From Black Knight: Black Knight’s First Look: Foreclosure Starts Hit Lowest Level on Record; Mortgage Delinquencies Edge Slightly Upward from January’s Record Low

• Foreclosure starts fell 25% from January 2020, and 20% from the year prior, hitting their lowest level on record since Black Knight began publicly reporting the metric in January 2000

• The national foreclosure rate also ticked lower in February, falling to 0.45%; the lowest it’s been since 2005, and within one basis point of an all-time low

• Delinquencies were up slightly from January, but remain more than 15% below last year’s levels

• Prepayment activity rose by nearly 8% month-over-month as early 2020 rate declines have begun to impact refinance activity

According to Black Knight's First Look report for February, the percent of loans delinquent increased 2.0% in February compared to January, and decreased 15.6% year-over-year.

The percent of loans in the foreclosure process decreased 2.5% in February, and were down 11.2% 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 3.28% in February, up from 3.22% in January.

The percent of loans in the foreclosure process was decreased to 0.456% from 0.46% in January.

Black Knight: Percent Loans Delinquent and in Foreclosure Process
	Feb 2020	Jan 2020	Feb 2019	Feb 2018
Delinquent	3.28%	3.22%	3.89%	4.30%
In Foreclosure	0.45%	0.46%	0.51%	0.65%
Number of properties:
Number of properties that are delinquent, but not in foreclosure:	1,737,000	1,705,000	2,019,000	2,198,000
Number of properties in foreclosure pre-sale inventory:	239,000	246,000	264,000	331,000
Total Properties Delinquent or in foreclosure	1,976,000	1,951,000	2,284,000	2,528,000

by Calculated Risk on 3/23/2020 09:19:00 AM

From the Federal Reserve: Federal Reserve announces extensive new measures to support the economy. There are several actions in the announcement including:

The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.
emphasis added

This is especially important for the mortgage market. The Fed will buy whatever it takes to stabilize MBS.

There is much more in the announcement (including supporting large and small businesses). This is a "whatever it takes" moment for the Fed.

by Calculated Risk on 3/23/2020 09:04:00 AM

From the Chicago Fed: Chicago Fed National Activity Index Index Suggests Economic Growth Picked Up in February

The data through February were unlikely to have been affected much by the COVID-19 outbreak. Economic data for March will be incorporated in the next CFNAI released on April 20, 2020.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.16 in February from –0.33 in January. Two of the four broad categories of indicators that make up the index increased from January, and three of the four categories made positive contributions to the index in February. The index’s three-month moving average, CFNAI-MA3, decreased to –0.21 in February from –0.11 in January.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was below the historical trend in February (using the three-month average).

According to the Chicago Fed:

The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.
...
A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

by Calculated Risk on 3/22/2020 07:39:00 PM

Weekend:
• Schedule for Week of March 22, 2020

• A few Comments on Weekly and Continued Unemployment Claims

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

From CNBC: Pre-Market Data and Bloomberg futures are limit down: S&P 500 are down 119 and DOW futures are down 962 (fair value).

Oil prices were down over the last week with WTI futures at $21.31 per barrel and Brent at $25.12 barrel.  A year ago, WTI was at $59, and Brent was at $66 - so oil prices are down more than 60% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.08 per gallon. A year ago prices were at $2.60 per gallon, so gasoline prices are down 52 cents per gallon year-over-year.

by Calculated Risk on 3/22/2020 05:16:00 PM

Tests per day is a key number to track (along with actual cases and, sadly, deaths). But total tests were a key for South Korea slowing the spread of COVID-19. South Korea has been conducting 15,000 tests per day with a 51 million population, so the US needs to test around 100,000 per day.

Note: NYC and LA have stopped testing mild cases due to resource constraints. Hopefully testing will continue to improve, and we can test more people - this is important for test-and-trace.

The US conducted 44,668 tests in the last 24 hours.

Note: About 19% of tests were positive in the most recent report (some are still pending). The high percentage of positives indicates limited testing.

Click on graph for larger image.

This data is from the COVID Tracking Project.   Some states could do a better job of reporting the number of tests - so this is probably low.

Testing is improving, but needs to more than double from here (maybe three times this much to be sufficient for test-and-trace).

Test. Test. Test. But protect our healthcare workers first!

by Calculated Risk on 3/22/2020 11:56:00 AM

On Thursday, the Department of Labor will release Unemployment Insurance Weekly Claims.   The consensus is initial claims will increase to 750,000, but that is way too low.

Based on early reporting from various states, initial weekly claims will probably be several million this week.

The all time high for initial weekly unemployment claims, Seasonally Adjusted, was 695,000 in Oct 82. The high during the great recession was 665,000 in Mar 09.

The previous record will be obliterated this week due to the sudden economic stop.

The extremely high level of claims will probably continue for several weeks.    But it will be important to track Continued Claims too - since many of these people won't be returning to work for some time.

Click on graph for larger image.

Here is a graph of continued claims since 1967.

If we look at Hurricane Katrina in 2005, weekly claims jumped up immediately, and then declined fairly quickly back to normal levels - but continued claims stayed high for a few months (since it took some time for people in New Orleans and along the Gulf coast to return to work).

This pandemic sudden stop is like Hurricane Katrina for unemployment claims, but all across the country.

This week initial claims will skyrocket, and the following week continued claims will follow.

At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.    Over the next few weeks, continued claims will increase rapidly, and then will likely stay at that high level until the crisis abates.

by Calculated Risk on 3/21/2020 04:43:00 PM

Tests per day is a key number to track (along with actual cases and, sadly, deaths). But total tests were a key for South Korea slowing the spread of COVID-19. South Korea has been conducting 15,000 tests per day with a 51 million population, so the US needs to test around 100,000 per day.

Note: NYC and LA have stopped testing mild cases due to resource constraints. Hopefully testing will continue to improve, and we can test more people - this is important for test-and-trace.

The US conducted 44,186 tests in the last 24 hours.  That is progress.

Note: About 14% of tests were positive in the most recent report (some are still pending).

Click on graph for larger image.

This data is from the COVID Tracking Project.   Some states could do a better job of reporting the number of tests - so this is probably low.

Testing is improving, but needs to more than double from here (maybe three times this much to be sufficient for test-and-trace).

Test. Test. Test. But protect our healthcare workers first!

by Calculated Risk on 3/21/2020 08:11:00 AM

The key reports this week are the third estimate of Q4 GDP, February New Home Sales and February Personal Income and Outlays.

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

----- Monday, Mar 23rd -----
8:30 AM ET: Chicago Fed National Activity Index for February. This is a composite index of other data.

----- Tuesday, Mar 24th -----
10:00 AM: New Home Sales for February 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 750 thousand SAAR, down from 764 thousand in January.

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

----- Wednesday, Mar 25th -----
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 February from the Census Bureau. The consensus is for a 0.9% decrease in durable goods orders.

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

----- Thursday, Mar 26th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a huge number of initial claims, up from 281 thousand the previous week.

8:30 AM: Gross Domestic Product, 4th quarter 2019 (Third estimate). The consensus is that real GDP increased 2.1% annualized in Q4, the same as the second estimate of 2.1%.

11:00 AM: the Kansas City Fed manufacturing survey for March.

----- Friday, Mar 27th -----
8:30 AM ET: Personal Income and Outlays, February. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.2%.

10:00 AM: University of Michigan's Consumer sentiment index (Final for March). The consensus is for a reading of 94.0.

10:00 AM: State Employment and Unemployment (Monthly), February 2020

by Calculated Risk on 3/20/2020 04:35:00 PM

Tests per day is a key number to track (along with actual cases and, sadly, deaths). But total tests were a key for South Korea slowing the spread of COVID-19. South Korea has been conducting 15,000 tests per day with a 51 million population, so the US needs to test around 100,000 per day.

The US conducted 34,644 tests in the last 24 hours.  That is progress.

Note: About 12% of tests were positive in the most recent report (some are still pending).

Click on graph for larger image.

This data is from the COVID Tracking Project.   Some states could do a better job of reporting the number of tests - so this is probably low.

Testing it getting better, but needs to triple from here.

I'll be changing the y-axis scale soon.

Test. Test. Test.

Stay Healthy!

by Calculated Risk on 3/20/2020 02:39:00 PM

It appears that sometime next week the US will be conducting 70,000+ COVID-19 tests per day.

Currently the priority is to test people with symptoms, those with close contact to an infected person, healthcare providers and first responders. That should remain our priority until we have excess testing capacity above those needs.

However we must plan ahead.  We need a plan in place to dramatically expand tracking and surveillance testing - Test and Trace - and we need to look for the asymptomatic carriers. Finding and quarantining the asymptomatic carriers is key to getting the economy back on track (and not just slowing the spread, but preventing another surge in cases).

The government should be training thousands of trackers right now to do this job safely. And the government needs to quarantine (probably in their home) anyone testing positive.  Note: the priority on personal protective equipment (PPE) is the healthcare workers. South Korea calls these quarantined people twice a day until they test negative twice.

Everyone can do their part.   Stay at home if you can, and minimize contact with other people.   Everyone should keep track of where they go, and who they talk with, over the next few weeks. That way, if someone becomes sick with COVID-19 they can tell the trackers who to test.

We can't test everyone.  South Korea is testing the equivalent of about 100,000 people per day and that is only a small fraction of their 50 million total population. We have to be smart in who we test, and that is why tracking is important.

I'd like someone to be named head of tracking, and provide daily updates on the number of surveillance tests being performed, and the number of people under quarantine.   This should happen NOW, so we are ready when excess testing is finally available.

Soon the US will have 50,000+ cases and more.   There are two ways to stop the spread - shutting down (shelter in place) and a strong Test and Trace program.