by Calculated Risk on 10/03/2022 06:37:00 PM

Wards Auto released their estimate of light vehicle sales for September. Wards Auto estimates sales of 13.49 million SAAR in September 2022 (Seasonally Adjusted Annual Rate), up 2.3% from the August sales rate, and up 9.8% from September 2021. 

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards Auto's estimate for September (red).

The impact of COVID-19 was significant, and April 2020 was the worst month.  After April 2020, sales increased, and were close to sales in 2019 (the year before the pandemic).  

However, sales decreased late last year due to supply issues.  It appears the "supply chain bottom" was in September 2021.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Sales in September were at the consensus forecast of 13.5 million SAAR.

by Calculated Risk on 10/03/2022 03:56:00 PM

The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

DISCLAIMER: This is an unofficial list, the information is from public sources only, 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.

NOTE: I'm no longer updating the spreadsheet.

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

Update on the Unofficial Problem Bank List through September 30, 2022. Since the last update at the end of June 2022, the list decreased by one to 51 institutions after an addition and two removals. Assets decreased by $2.9 billion to $51.5 billion, with the change primarily resulting from a $2.2 billion decrease from updated asset figures through June 30, 2021. A year ago, the list held 59 institutions with assets of $54.9 billion. Added during the third quarter was Unity National Bank of Houston, Houston, TX ($246 million). Removals during the quarter because of action termination included Southwestern National Bank, Houston, TX ($884 million) and Amory Federal Savings and Loan Association, Amory, MS ($74 million).

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 we first published the Unofficial Problem Bank List on August 7, 2009 with 389 institutions, 1,785 institutions have appeared on a weekly or monthly list since then. Only 2.9 percent of the banks that have appeared on a list remain today as 1,734 institutions have transitioned through the list. Departure methods include 1,024 action terminations, 411 failures, 280 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 3 or less than 1.0 percent, still have a troubled designation more than ten years later. The 411 failures represent 23 percent of the 1,785 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.

On September 8, 2022, the FDIC released second quarter results and provided an update on the Official Problem Bank List. While FDIC did not make a comment within its press release on the Official Problem Bank List, they provided details in an attachment that listed 40 institutions with assets of $170 billion. In its 2022 first quarter release, the FDIC list had a material $119 billion increase in assets. Since that release, none of the prudential banking regulators – FDIC, Federal Reserve, and OCC – have publicly released an enforcement action detailing an enforcement action against a large institution. The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) passed by Congress in 1989 requires publication of enforcement actions. See “Supervisory Enforcement Actions Since FIRREA and FDICIA,” published by the Federal reserve Bank of Minneapolis for further details. Prior to FIRREA, enforcement actions were not published by the prudential banking regulators. Section 913 of FIRREA requires public disclosures of enforcement actions. Section 913(2) does allow a delay in the enforcement action publication if “exceptional circumstances” exist. The prudential regulator must make a written determination that publication “would seriously threaten the safety & soundness of an insured depository institution.” The prudential regulator “may delay the publication of such order for a reasonable time.” The section does not define “a reasonable time.” It has been more than six months since that enforcement action was issued, so it seems the primary regulator considers this a “reasonable time” before it informs the public of a large, troubled institution.

Regulators still haven't disclosed the "whale" (that added close to $120 billion to problem assets).

by Calculated Risk on 10/03/2022 11:13:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Black Knight Mortgage Monitor: "Home Prices Down Again in August ... Now 2% Off June Peak"

A brief excerpt:

Here is a graph of the Black Knight HPI. The index is still up 12.1% year-over-year but was down almost 1% in August (after a similar decline in July).

• According to the Black Knight HPI, median home prices fell 0.98% in August, only marginally better than July's upwardly revised 1.05% monthly decline

• July and August 2022 mark the largest single-month price declines seen since January 2009 and rank among the eight largest on record

• The housing market has not seen such a significant two-month drop in prices since shortly after the collapse of Lehman Brothers in the winter of 2008

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 10/03/2022 10:19:00 AM

From the Census Bureau reported that overall construction spending increased:

Construction spending during August 2022 was estimated at a seasonally adjusted annual rate of $1,781.3 billion, 0.7 percent below the revised July estimate of $1,793.5 billion. The August figure is 8.5 percent above the August 2021 estimate of $1,641.6 billion.
emphasis added

Both private spending and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,426.0 billion, 0.6 percent below the revised July estimate of $1,435.2 billion. ...

In August, the estimated seasonally adjusted annual rate of public construction spending was $355.3 billion, 0.8 percent below the revised July estimate of $358.3 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential (red) spending is 35% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential (blue) spending is 24% above the bubble era peak in January 2008 (nominal dollars).

Public construction spending is 9% above the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 12.5%. Non-residential spending is up 5.5% year-over-year. Public spending is up 3.3% year-over-year.

This was below consensus expectations of a 0.3% decrease in spending; however, construction spending for the previous two months combined were revised up sharply.

by Calculated Risk on 10/03/2022 10:05:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion. The PMI® was at 50.9% in September, down from 52.8% in August. The employment index was at 48.7%, down from 54.2% last month, and the new orders index was at 47.1%, down from 51.3%.

From ISM: Manufacturing PMI® at 50.9% September 2022 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector grew in September, with the overall economy achieving a 28th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The September Manufacturing PMI® registered 50.9 percent, 1.9 percentage points lower than the 52.8 percent recorded in August. This figure indicates expansion in the overall economy for the 28th month in a row after contraction in April and May 2020. The Manufacturing PMI® figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders Index returned to contraction territory at 47.1 percent, 4.2 percentage points lower than the 51.3 percent recorded in August. The Production Index reading of 50.6 percent is a 0.2-percentage point increase compared to August’s figure of 50.4 percent. The Prices Index registered 51.7 percent, down 0.8 percentage point compared to the August figure of 52.5 percent. This is the index’s lowest reading since June 2020 (51.3 percent). The Backlog of Orders Index registered 50.9 percent, 2.1 percentage points lower than the August reading of 53 percent. After a single month of expansion, the Employment Index contracted at 48.7 percent, 5.5 percentage points lower than the 54.2 percent recorded in August. The Supplier Deliveries Index reading of 52.4 percent is 2.7 percentage points lower than the August figure of 55.1 percent. This is the index’s lowest reading since before the coronavirus pandemic (52.2 percent in December 2019). The Inventories Index registered 55.5 percent, 2.4 percentage points higher than the August reading of 53.1 percent. The New Export Orders Index contracted at 47.8 percent, down 1.6 percentage points compared to August’s figure of 49.4 percent. This is the index’s lowest reading since June 2020, when it registered 47.6 percent. The Imports Index remained in expansion territory at 52.6 percent, 0.1 percentage point above the August reading of 52.5 percent.”
emphasis added

This suggests manufacturing expanded at a slower pace in September than in August.  This was below the consensus forecast.

by Calculated Risk on 10/03/2022 08:49:00 AM

Active inventory increased for the 3rd consecutive week, increasing 0.8% last week, and hitting a new peak for the year.  Here are the same week inventory changes for the last four years (usually inventory is declining at this time of year):

2022: +4.3K

2021: -4.6K

2020: -4.9K

2019: -7.7K

Inventory bottomed seasonally at the beginning of March 2022 and is now up 133% since then.  Altos reports inventory is up 31.1% year-over-year. 

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of September 30th, inventory was at 561 thousand (7-day average), compared to 557 thousand the prior week. 

Compared to the same week in 2021, inventory is up 31.1% from 428 thousand, and compared to the same week in 2020 inventory is down only 0.3% from 563 thousand.  Compared to 3 years ago, inventory is down 41.3% from 963 thousand.

Here are the inventory milestones I’m watching for with the Altos data:

1. The seasonal bottom (happened on March 4th for Altos) ✅

2. Inventory up year-over-year (happened on May 13th for Altos) ✅

3. Inventory up compared to two years ago (currently down 0.3% according to Altos)

4. Inventory up compared to 2019 (currently down 41.3%).

Here is a graph of the inventory change vs 2021, 2020 (milestone 3 above) and 2019 (milestone 4).

The blue line is the year-over-year data, the red line is compared to two years ago, and dashed purple is compared to 2019.

Two years ago (in 2020) inventory was declining all year.  Based on the recent changes in inventory, my current estimate is inventory will be up next week compared to 2020!

A key will be if inventory increases in the Fall this year.  Inventory was up in September.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/03/2022 08:33:00 AM

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

This data is as of October 2nd.

Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Black), 2021 (Blue) and 2022 (Red).

The dashed line is the percent of 2019 for the seven-day average.

The 7-day average is down 10.9% from the same day in 2019 (89.1% of 2019).  (Dashed line) 

Air travel - as a percent of 2019 - had picked up towards the end of Summer, but is now, off about 10% from 2019 like earlier in the year.  

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Black is 2020, Blue is 2021 and Red is 2022.  

The data is from BoxOfficeMojo through September 29th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.  

Movie ticket sales were at $83 million last week, down about 41% from the median for the week.

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

The red line is for 2022, black is 2020, blue is the median, and dashed light blue is for 2021. Dashed purple is 2019 (STR is comparing to a strong year for hotels).

This data is through Sept 24th. The occupancy rate was down 1.5% compared to the same week in 2019. 

The 4-week average of the occupancy rate is above the median rate for the previous 20 years (Blue).

Notes: Y-axis doesn't start at zero to better show the seasonal change.

----- Gasoline Supplied: Energy Information Administration -----

This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Purple is for 2021, and Red is for 2022.

As of September 23rd, gasoline supplied was down 5.6% compared to the same week in 2019.

Recently gasoline supplied has been running below 2019 and 2021 levels - and sometimes below 2020.

by Calculated Risk on 10/02/2022 07:42:00 PM

Weekend:
• Schedule for Week of October 2, 2022

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for September. The consensus is for a reading of 52.2, down from 52.8 in August. 

• Also, at 10:00 AM, Construction Spending for August. The consensus is for a 0.3% decrease.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 1 and DOW futures are up 42 (fair value).

Oil prices were up over the last week with WTI futures at $79.49 per barrel and Brent at $85.14 per barrel. A year ago, WTI was at $76, and Brent was at $79 - so WTI oil prices are up 5% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.76 per gallon. A year ago, prices were at $3.18 per gallon, so gasoline prices are up $0.58 per gallon year-over-year. NOTE: Gasoline prices in Los Angeles have spiked to near record $6.28 per gallon due to refinery issues.

by Calculated Risk on 10/02/2022 12:04:00 PM

Here is another monthly update on framing lumber prices.

This graph shows CME random length framing futures through September 30th.

Lumber was at $425 per 1000 board feet on Friday.  

This is down from the peak of $1,733, and down 34% from $643 a year ago.

Prices are close to the pre-pandemic levels of around $400.

Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices usually peak in April or May, although peaked much earlier this year.

It is unlikely we will see a runup in prices as happened at the end of last year due to the housing slowdown.

by Calculated Risk on 10/01/2022 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Goldman Sees US House Prices Falling 5% to 10%

• Case-Shiller: National House Price Index "Continued its Deceleration" to 15.8% year-over-year increase in July

• Inflation Adjusted House Prices Declined Further in July

• New Home Sales Increased in August; Completed Inventory Increased

• Pace of Rent Increases Continues to Slow

• New Home Sales and Cancellations: Net vs Gross Sales


This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

You can subscribe at https://calculatedrisk.substack.com/

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