by Calculated Risk on 4/16/2009 08:13:00 AM

From the WSJ: Mall Titan Enters Chapter 11

Mall owner General Growth Properties Inc. sought bankruptcy protection early Thursday in one of the largest real-estate failures in U.S. history ...

The bankruptcy will have far-reaching implications for the mall industry, including putting pressure on already declining property values of U.S. malls ...

The Mall is Flattened ...

by Calculated Risk on 4/16/2009 12:58:00 AM

From MarketWatch: China's economy expands 6.1% in first quarter

Gross domestic product expanded 6.1% in the first quarter from a year earlier, after expanding 6.8% in the fourth quarter, government data showed Thursday.
...
The Chinese government said Thursday that recent economic data showed "positive changes with better performance than expected."

A spokesman for the National Bureau of Statistics in a statement Thursday cited improvement in agriculture and a steady increase in industrial production, despite falling profits.

However, the bureau also warned that problems remain, including a fall in demand for Chinese exports, reduced government revenue and increased difficulties on employment.

"The national economy is confronted with the pressure of slowdown," the spokesman said.

China reports GDP growth on a year-over-year basis, so this is the growth from Q1 2008 (as opposed to quarterly growth annualized like in the U.S.). Since growth was fairly robust early last year, this suggest GDP is probably slightly positive in the most recent quarter.

by Calculated Risk on 4/15/2009 09:43:00 PM

From CNNMoney: Obama launches mortgage rescue plan

The Treasury Department announced Wednesday the first six participants to sign up for President Obama's plan. They include three of the nation's largest banks: JPMorgan Chase (JPM, Fortune 500), which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo (WFC, Fortune 500), $2.9 billion; and Citigroup (C, Fortune 500), $2 billion. The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.
...
The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.

Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. Also, Treasury will not provide subsidies to reduce rates to levels below 2%.

This is the Making Home Affordable plan.

by Calculated Risk on 4/15/2009 05:46:00 PM

From Zach Fox at the North County Times: Mortgage defaults hit new high, spread to upscale neighborhoods

Mortgage delinquencies hit a new high in March ... according to a report released Tuesday.

The report also showed that notices of default, the first step in the foreclosure process, have spiked in the region's tonier neighborhoods ---- places that, until now, have avoided the mass foreclosures elsewhere ---- while appearing to have reached a plateau in lower-end regions, which have already been hammered.

In fact, areas such as Valley Center and Rancho Bernardo shot up to be among the leaders in North County for most foreclosure notices per 1,000 houses.
...
Default notices shot to new highs in areas of Carlsbad, Rancho Bernardo and Rancho Penasquitos. On the other hand, notices in foreclosure-prone neighborhoods such as Oceanside and Escondido were below peaks reached earlier.

In fact, one region of Rancho Bernardo saw more default notices in March per 1,000 homes than Oceanside's 92057 ZIP code ---- the most foreclosure-prone neighborhood in North County over the last two years.

Defaults: Movin' on up!

by Calculated Risk on 4/15/2009 04:01:00 PM

From Zero Hedge blog:

Some very ugly credit card charge-off data just out from Capital One. The February annualized rate of 8.06% has spiked by over 1% month-over-month to the current 9.33%, a very troubling deterioration ...

Allow me to add a graph ...

Click on graph for larger image in new window.

This graph shows the COF annualized credit card charge-off rate since January 2005.

Notice the spike in 2005 associated with a surge in bankruptcy filings ahead of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Credit card charge-offs in March (annualized) were almost as high as the peak in 2005 (9.33% in March compared to 9.75% in October 2005)

And a market graph too from Doug Short of dshort.com (financial planner): "Four Bad Bears".

This is the 2nd worst S&P 500 / DOW bear market in the U.S. in 100 years.

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

by Calculated Risk on 4/15/2009 02:56:00 PM

From Reuters: US to release bank stress data in May-White House

... "Early in May, you will see in a systematic and coordinated way the transparency of determining and showing to all involved some of the results of these stress tests," White House spokesman Robert Gibbs said.

The tests will assess how much of a "capital cushion" the banks are likely to need to stay healthy, given the current economic environment, he said.

"Our hope is that banks that are not healthy, or need help, will first and foremost seek that help privately, and then we'll take steps from there to assist them," Gibbs said.
...
U.S. regulators are preparing a guide to explain to the public the bank stress tests and how to interpret the results, sources have told Reuters.

"[T]he transparency of determining and showing"? What does that mean? "Some of the results"?

And a guide on how to interpret the results? We don't need no stinkin' guide! Just show us the data.

Update: The orginal "any stinkin' badges" from The Treasure of the Sierra Madre (ht Eli)

by Calculated Risk on 4/15/2009 02:04:00 PM

From the Fed: Beige Book

Reports from the Federal Reserve Banks indicate that overall economic activity contracted further or remained weak. However, five of the twelve Districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.
emphasis added

On Real Estate and construction:

Housing markets remained depressed overall, but there were some signs that conditions may be stabilizing. Many Districts said factors such as homebuyer tax credits, low mortgage rates, and more affordable prices led to a rising number of potential buyers. The Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts noted a modest improvement in sales in some areas.

New home construction activity fell further, however, as inventories remained elevated. Nonetheless, several Districts, including Atlanta and Kansas City, said that inventories of unsold homes had turned down slightly.

Home prices continued to decline in most Districts, although a few reports noted that prices were unchanged or that the pace of decline had eased. Low mortgage rates were fueling refinancing activity. Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales.

Nonresidential real estate conditions continued to deteriorate over the past six weeks. Demand for office, industrial and retail space continued to fall, and there were reports of increases in sublease space. Rental concessions were rising. Property values moved lower as reality "set in." Construction activity continues to slow, and several Districts noted increased postponement of both private and public projects. Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement.

Commercial real estate investment activity weakened further. Contacts said a decline in credit availability and markdowns on commercial property were keeping buyers and sellers on the sidelines.

It appears residential real estate is at or near a bottom in activity (but not in prices). However commercial real estate (CRE) is following residential off the cliff (this is the typical pattern - CRE follows residential). CRE will be crushed this year and into 2010.

by Calculated Risk on 4/15/2009 01:26:00 PM

From DataQuick: Southland home sales up; median levels off

Home sales in Southern California increased again last month, led by strong foreclosure resale activity in the Inland Empire. ...

A total of 19,486 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 27.9 percent from 15,231 for the prior month, and up 52.1 percent from 12,808 for March 2008, according to MDA DataQuick of San Diego.

An increase from February to March is normal for the season. Last month was the ninth in a row with a year-over-year sales increase. March last year was the slowest March in DataQuick's statistics, which go back to 1988. The March average is 25,138.

"We're still waiting for the upper half of the mortgage market to open up. We know that sales of lower-cost housing, especially foreclosure resales in Riverside and San Bernardino counties, are driving today's market. What we don't know is how the recession has affected the more expensive neighborhoods," said John Walsh, MDA DataQuick president.

... a common form of financing used by first-time home buyers in more affordable neighborhoods is near record levels. Government- insured, FHA mortgages made up 37.8 percent of all purchase loans in March, up slightly from a revised 37.5% in February and up from 10.1% in March last year.

Regionwide, foreclosure resales accounted for 55.4 percent of March's resales activity, down from a revised 56.7 percent in February and up from 35.7 percent in March 2008.
...
Indicators of market distress continue to move in different directions. Foreclosure activity is nearing its 2008 peak ...
emphasis added

Sales are being driven by foreclosure resales (55.4% of all sales) in the less expensive areas. There are two problems for the mid-to-high end: limited financing with jumbo loans, and prices haven't fallen enough (but foreclosure activity is now increasing in the higher priced areas and that will push down prices).

As always, ignore the median price. Note that foreclosure activity is picking up again (after the moratorium).

by Calculated Risk on 4/15/2009 01:00:00 PM

Click on graph for larger image in new window.

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) increased to 14 in April from 9 in March. The record low was 8 set in January.

The increase in April follows five consecutive months at either 8 or 9.

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

Press release from the NAHB (added): April Data Suggests Market At or Near Bottom

Builder confidence in the market for newly built, single-family homes rose five points in April to the highest level since October 2008, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This gain was the largest one-month increase recorded since May of 2003, and brings the HMI out of single-digit territory for the first time in six months – to 14. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months.
...
“This is a very encouraging sign that we are at or near the bottom of the current housing depression,” said NAHB Chief Economist David Crowe. “With the prime home buying season now underway, builders report that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates and the introduction of the $8,000 first-time home buyer tax credit.”
...
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations in the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI’s component indexes recorded substantial gains in April. The largest of these gains was a 10-point surge in the component gauging builder sales expectations for the next six months, which brought that index to 25. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points, to 13 and 14, respectively.

The HMI also rose in every region in April, with an eight-point gain to 16 in the Northeast, a six-point gain to 14 in the Midwest, a five-point gain to 17 in the South and a 4-point gain to 9 in the West.

by Calculated Risk on 4/15/2009 09:16:00 AM

How about this headline from Rex Nutting at MarketWatch: Biggest drop in industrial output since VE Day

Industrial production is down 13.3% since the recession began in December 2007, the largest percentage decline since the end of World War II. ... Factory output has fallen 15.7% during the recession, also the largest decline since 1945-1946.

Click on graph for larger image in new window.

Here is some serious cliff diving. Also - since capacity utilization is at a record low (the series starts in 1967), there is little reason for investment in new production facitilies.

The Federal Reserve reported:

Industrial production fell 1.5 percent in March after a similar decrease in February. For the first quarter as a whole, output dropped at an annual rate of 20.0 percent, the largest quarterly decrease of the current contraction. At 97.4 percent of its 2002 average, output in March fell to its lowest level since December 1998 and was nearly 13 percent below its year-earlier level. Production in manufacturing moved down 1.7 percent in March and has registered five consecutive quarterly decreases. Broad-based declines in production continued; one exception was the output of motor vehicles and parts, which advanced slightly in March but remained well below its year-earlier level. Outside of manufacturing, the output of mines fell 3.2 percent in March, as oil and gas well drilling continued to drop. After a relatively mild February, a return to more seasonal temperatures pushed up the output of utilities. The capacity utilization rate for total industry fell further to 69.3 percent, a historical low for this series, which begins in 1967.
emphasis added

by Calculated Risk on 4/15/2009 08:42:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The index has decreased 0.4 percent over the last year, the first 12 month decline since August 1955.

On a seasonally adjusted basis, the CPI-U decreased 0.1 percent in March after rising 0.4 percent in February. The decrease was due to a downturn in the energy index ... The index for all items less food and energy increased 0.2 percent for the third month in a row.

But for some reason, owners' equivalent rent increased again in March:

The shelter index was virtually unchanged in March. The indexes for rent and owners' equivalent rent [OER] both rose 0.2 percent, but these increases were offset by a 2.4 percent decrease in the index for lodging away from home. This was the sixth straight monthly decline in that index, which has fallen 7.8 percent over the past year.

So CPI is picking up the decline in hotel room rates, but the survey is apparently missing the widespread decline in residential rents.

This is important because OER accounts for almost one-fourth of CPI. CPI ex-OER is off -0.2% in March.

by Calculated Risk on 4/14/2009 10:30:00 PM

A couple of article on revealing the stress tests results ...

From the WSJ: Banks Await Stress-Test Results

The Obama administration is considering making public some results of the stress tests being conducted on the country's 19 largest banks, said people familiar with the matter, a move that could help more clearly separate healthy banks from the weaklings.
...
It isn't clear precisely what information the government might disclose. ... But some within the administration believe a certain amount of information needs to be released in order to provide assurance about the validity and rigor of the assessments. In addition, these people also are concerned that the tests won't be able to fulfill their basic function of shoring up confidence unless investors are able to see data for themselves.

And from the NY Times: U.S. Planning to Reveal Data on Health of Top Banks

The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials ... The administration has decided to reveal some sensitive details of the stress tests now being completed after concluding that keeping many of the findings secret could send investors fleeing from financial institutions rumored to be weakest.
...
“The purpose of this program is to prevent panics, not cause them,” said one senior official ... “And it’s becoming clearer that we and the banks are going to have to explain clearly where each bank falls in the spectrum.”

Two senior government officials said on Tuesday that they were now likely to encourage the banks to reveal a range of information, perhaps including the size of losses the banks could suffer under each of the stress assumptions.

Yes, the results have to be bank specific ... otherwise the doubts will remain.

by Calculated Risk on 4/14/2009 08:46:00 PM

From the WSJ: Banks Ramp Up Foreclosures

J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums which temporarily halted foreclosures.
...
Citigroup Inc. says it stopped all foreclosures until March 12, at the Obama administration's request, on loans serviced for Fannie and Freddie. Since then, says a spokesman, it has "reverted to our previous business-as-usual moratorium."
...
Wells Fargo has also increased foreclosure actions since the expiration of its foreclosure moratorium ...

Both Fannie and Freddie have stepped up sales of foreclosed properties since their moratoriums ended on March 31.
...
More than 2.1 million homes will be lost this year because borrowers can't meet their loan payments, up from about 1.7 million in 2008, according to Moody's Economy.com.

Just something to be aware as foreclosure activity picks up again - the lull was because of the moratorium, not market fundamentals.

by Calculated Risk on 4/14/2009 06:28:00 PM

More conference call comments (ht Brian). A little long, but provides some insight into how Intel views inventory levels. Note the comment about the "industry's at a new baseline".

Analyst: What do you expect your internal inventory to do and any comment on the channel.

Intel: Those two things are obviously related. I'll start with the channel inventory question first. As we look and do our checks of channel inventory levels, we saw a significant burn-off of the overhang of inventory that we had seen in Q4 and in the beginning of Q1. If anything, that burned off a little more quickly than we thought. That's what allowed us to start loading our factories. And you can see in our inventory levels we dropped significantly from Q4 to Q1. And actually I'd say for our inventory levels, we're probably a little lower than we would like. In general, when we look at channel inventories, they look generally lean across the supply chain. If anything, as we thing about a seasonal second half on the back of a pretty weak first quarter, we'll probably grow inventories a little bit as we get into Q2. I don't think it will be significant but I think it will be up a little bit.

Analyst: How much of what you are seeing at the moment [is inventory adjustments] and when do you think that process will end? I know you mentioned Q2, but just to scale it, when do you think -- how much of that is, there is weak underlying demand and when do you think that process will be done?

Intel: I think there was some replenishment of Intel chips at our OEM's customers in the first quarter but certainly not a number that I think would reflect full inventory levels. I think everyone is still running very lean. We actually have seen some expedites in the March time frame of can you get us product real fast, we're running out of end user built products, et cetera. So I think you're still seeing that. My sense is it will stay that way until the second half of this year when you start seeing normal seasonal growth return into the business.

Analyst: Beginning in the second quarter, would you expect sequential sales [growth] in your overall server, two way server processors in the second quarter?

Intel: The question mark we would have is the overall strength of the enterprise market going forward and what we're seeing is that enterprise budgets are locked down pretty tight and CIOs are going to let their fleets age a bit until they get a little more clarity on what the economy looks like.

Analyst: I was wondering if you might have been able to give some color on how you perceive sort of broader visibility and how you might have compared that to the conversation from January. You talked about a bottom in the PC market and possibly some month over month improvement as you went through the quarter. On the other side of that, your guidance was sort of flat or somewhat similar although it's not formal but just general color on how you see the marketplace and to what extent there is any visibility.

Intel: I think that first of all, when we said that we were planning our business flat in this environment, you have to remember that traditionally the second quarter is seasonally below the first quarter so that alone is at least internally is a sign of how we view the world. In terms of visibility, three months ago we were sitting in a fragile global economic environment and we had just come off of a horrendous Q4 and we weren't sure where sales were of PCs. Three months later, we're still sitting in a fragile global economic environment but we've got three or four months of fairly good trending in terms of where the business is, what the inventory levels are, what geographies are still buying product, what segments are still buying product and so the -- the global environment hasn't changed but our ability to look and plot some points, historical points, has given us the confidence to essentially say that we've seen the bottom, the industry's seen the bottom and I feel pretty comfortable in that, having done this for more than a few years.

Analyst: Do you feel, then that the seasonality is likely to be somewhat similar to broader seasonal patterns in the second half, do you have any color there?

Intel: Well, that goes back to the pipeline. Desktops are a business which is very, very quick. Most of them are assembled to order. 40% of our desktop chips go through our industrial distribution channel. They're sold in white boxes for the most part. There is essentially no inventory on those. When we saw that stabilizing in the early part of the quarter, that was the first stake in the ground in terms of trying to figure out where the business was. The notebook business, we talked about this last time, not only has a longer supply chain and most of it is branded, much of it was put on boats in the third and fourth quarter to save fuel costs and there was a lot of inventory built ahead of the holiday season in Q4 that had to burn off. We now believe that the vast majority of that has burned off. All the patterns we've seen on chip sets for mobile and on microprocessors for mobile are consistent with that in terms of our customers and the Taiwanese mother board manufacturers now beginning to buy again for product that is reflecting end user consumption.

Analyst: So you're confident that you're seeing normal seasonal patterns return but not sure sort of to what degree, perhaps. Is that the main issue that you think that in the second half we do get that uptick but we just don't know how big it is yet and that's why you're being conservative about guidance?

Intel: I think you have it exactly right. Everything I've seen suggested that the industry's at a new baseline. We're starting to see the normal seasonality adjusted a little bit for the inventory. Replenishment we talked about earlier for Q2. And then every sign we see in terms of markets recovering and here's the time phased deal, suggests that we're likely to see typical seasonality in the second half. I talked about Europe being weak. My sense is everything we've seen is that Europe was like the United States except two or three months later. And so Europe is sitting today where we all were two or three months ago, which was still a bit more frozen than we are today. And our recent channel checks in Europe suggest that consumers are now starting to open their wallets for notebooks again.
emphasis added

by Calculated Risk on 4/14/2009 05:44:00 PM

From Intel CEO Paul Otellini (ht Brian):

As we indicated in our last earnings call, we made significant reductions in our wafer starts to bring inventory in line with the new demand environment. These actions resulted in an inventory reduction of 19%, below the fourth quarter levels. Our spending is being controlled and the number of employees declined by 1400 from Q4 levels. Almost all of the headcount reductions in Q1 and in 2009 will be focused on aligning our factory network to the new demand levels while accelerating our conversion to newer silicon technologies. Our product development machine is in high gear, delivering a new generation of products in all segments. We believe that these products extend our lead in our core businesses and position us for significant growth in the new markets we are targeting. In terms of demand, we saw a few important trends play out this quarter. First, we are seeing signs that a bottom in the PC market segment has been reached. I believe the worst is now behind us from an inventory correction and demand level adjustment perspective. We saw order patterns strengthen throughout the quarter. Desktop sales appear to have hit bottom first and have followed a more normal patterns since early February. In notebooks, the length of the supply chain and higher levels of inventory took longer to work through but now have returned to normal levels. In terms of end user consumption, the consumer segment has held up much better than the enterprise. This is particularly true in consumer notebooks, which continue to be the volume-driver in this segment. Netbook sales continue to grow as anticipated, and are clearly incremental volume for us in a difficult market. In the enterprise segment, the server portion is in reasonable shape. Partially reflecting demand for our newly released dual processor products. The client portion remains weak reflecting constrained budgets and redeployment of older equipment. The installed base of enterprise notebooks is now over three years average age and will need to be upgraded as capital budgets free up. Lastly, in terms of end markets, we saw the US and China demonstrate relative strength while Europe, Japan and the emerging markets showed continuing weakness.

... In closing, while it is clear that our end markets are still impacted by the global financial conditions, we are comfortable with our investment levels and capacity profile. We expect business conditions in Q2 to mirror those of Q1, with some gradual recovering of demand and replenishment of inventories occurring as the industry sees increasing signs of stabilization and a return to more normal seasonal trends.
emphasis added

It sounds like the Q1 inventory correction was very significant, and this could subtract a point or two from Q1 GDP.

Brian comments: [Intel] has historically ... had a poor forecasting track record, so take it with a grain of salt

by Calculated Risk on 4/14/2009 03:46:00 PM

Up or down more than 1% is just a normal day these days ...

DOW down 1.8%

S&P 500 down 2.0%

NASDAQ down 1.7%

Click on graph for larger image in new window.

The first graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

This is the 2nd worst S&P 500 / DOW bear market in the U.S. in 100 years.

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

The second graph compares four significant bear markets: the Dow during the Great Depression, the NASDAQ, the Nikkei, and the current S&P 500.

See Doug's: "The Mega-Bear Quartet and L-Shaped Recoveries".

And since I haven't posted this for awhile, here are a few credit crisis indicators ...

From The Times: Libor falls at fastest rate since January

This morning, three month dollar Libor continued a fortnight-long fall, going down one basis point to 1.122 per cent ... has fallen from 1.33 per cent a month ago.

The LIBOR peaked at 4.81875% on Oct. 10th, and hit a cycle low of 1.0825% on Jan. 14th.

There has been more improvement in the A2P2 spread. This has declined to 0.62. This is far below the record (for this cycle) of 5.86 after Thanksgiving, but still somewhat above the normal spread.

This is the spread between high and low quality 30 day nonfinancial commercial paper.

Meanwhile the TED spread is holding just below 100 at 96.97. This is the difference between the interbank rate for three month loans and the three month Treasury. The peak was 463 on Oct 10th and a normal spread is around 50 bps. The TED spread has been relatively flat for months (and is being impacted by the Fed and other Central Banks).

by Calculated Risk on 4/14/2009 02:54:00 PM

Update note: this is just one month of data, and not seasonally adjusted.

Port traffic gives us an early hint of changes in the trade deficit. Usually I wait until both Los Angeles and Long Beach ports report monthly traffic, but this rebound might be significant. (I'll add Long Beach when the data is released)

Click on graph for larger image in new window.

This graph shows the loaded inbound and outbound traffic at the port of Los Angeles in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Inbound traffic was 6% below last March and 35% above last month.

Outbound traffic was 9.8% below March 2008, and 25% above February.

We have to be careful because of the impact of the Chinese New Year on trade in February, but there does appear to be a significant rebound after trade collapsed in February.

by Calculated Risk on 4/14/2009 12:19:00 PM

That was fast ...

From Bloomberg: Goldman Sachs Raises $5 Billion to Repay TARP Funds

Goldman Sachs Group Inc. ... raised $5 billion in the largest stock sale this year to help repay $10 billion in government rescue funds.

The bank sold 40.65 million shares at $123 each ... The price was the same as when Goldman Sachs last sold shares in September.
...
While many analysts and investors applauded Goldman Sachs’s plan to repay the TARP money, others said it may pressure other banks to follow suit or risk appearing dependent on the government.

The government favors letting banks return money if they fare well on stress tests completed by the end of this month and can get private capital, according to people familiar with the matter.

Looks like TARP will have more money for AIG and Citi ...

by Calculated Risk on 4/14/2009 10:35:00 AM

President Obama will speak at 11:30 AM ET.

Here is the CNBC feed.

Here are some excerpts from the WSJ:

... All of these actions – the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 – have been necessary pieces of the recovery puzzle. They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress. Because of our recovery plan, schools and police departments have cancelled planned layoffs. Clean energy companies and construction companies are re-hiring workers to build everything from energy efficient windows to new roads and highways. Our housing plan has helped lead to a spike in the number of homeowners who are taking advantage of historically-low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your in pocket. Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks. And small businesses are seeing a jump in loan activity for the first time in months.

This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America’s economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. ...

There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.

by Calculated Risk on 4/14/2009 08:30:00 AM

On a monthly basis, retail sales decreased 1.1% from February to March (seasonally adjusted), but sales are off 10.7% from March 2008 (retail and food services decreased 9.4%). Automobile and parts sales declined 2.3% in March (compared to February), but excluding autos, all other sales declined -0.9%.

The following graph shows the year-over-year change in nominal and real retail sales since 1993.

Click on graph for larger image in new window.

To calculate the real change, the monthly PCE price index from the BEA was used (March PCE prices were estimated as the same increase from January to February).

Although the Census Bureau reported that nominal retail sales decreased 10.7% year-over-year (retail and food services decreased 9.4%), real retail sales declined by 11.6% (on a YoY basis).

The second graph shows real retail sales (adjusted with PCE) since 1992. This is monthly retail sales, seasonally adjusted.

NOTE: The graph doesn't start at zero to better show the change.

This shows that retail sales fell off a cliff in late 2008, but have been somewhat stable the last four months.

Here is the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $344.4 billion, a decrease of 1.1 percent (±0.5%) from the previous month and 9.4 percent (±0.7%) below March 2008. Total sales for the January through March 2009 period were down 8.8 percent (±0.5%) from the same period a year ago. The January 2009 to February 2009 percent change was revised from -0.1 percent (±0.5%)* to +0.3 percent (±0.3%).

Gasoline stations sales were down 34.0 percent (±1.5%) from March 2008 and motor vehicle and parts dealers sales were down 23.5 percent (±2.3%) from last year.

Seasonally adjusted Q1 retail sales are still about 1.5% below sales in Q4, but have been at about the same level since December.

Although Q1 GDP will be very weak - because investment fell off a cliff and there was apparently a significant inventory correction - Q1 PCE will probably be close to neutral.