RSS Feed by Calculated Risk on 11/14/2010 09:41:00 PM
Sunday, November 14, 2010
Ireland Minister: Reports of Bailout Talks are "Fiction"
Earlier posts:
From the Irish Times: Ministers claim fiscal plan and budget negate need for bailout
Minister for Justice Dermot Ahern also said there was no foundation to media reports that the country is close to availing of the bailout. “It is fiction ..."A number of media outlets have reported that bailout talks were ongoing ... the European bond markets might be interesting later tonight.
...
"We have not applied. There are no negotiations going on. If there were, Government would be aware of it, and we are not aware of it,” said Mr Ahern
Ireland: Talks Continue
by Calculated Risk on 11/14/2010 06:17:00 PM
Earlier posts:
Not much new. Ireland officials are insisting they don't need help, and other European governments apparently pushing for Ireland to ask for a bail-out.
From the Telegraph: Ireland fights to stave off £77 billion bail-out
Talks went on into the night as Irish ministers insisted that they could manage their stricken finances but other Governments expressed concerns that an emergency bail-out may be required as early as today.Here are the Bloomberg links to check later for the Ireland, Portugal and Spain 10-year bonds. And Greece too.
...
The key period, said officials, would be the reaction of the international market today to Irish and other eurozone bonds, especially Portuguese and Spanish government debt. Any sign of panic will lead to fears of so-called market contagion spreading from Ireland to Portugal, Spain and the wider eurozone.
Schedule for Week of November 14th
by Calculated Risk on 11/14/2010 01:24:00 PM
The previous post is the Summary for Week ending November 14th
Two key housing reports will be released this week: October housing starts (Wednesday) and November homebuilder confidence (Tuesday). Also October retail sales will be released on Monday, and the Fed will release the October industrial production and capacity utilization report (Tuesday).
7:40 PM ET: Richmond Fed President Jeffrey Lacker speaks on "Unemployment and Monetary Policy: Lessons from Half a Century Ago" before the 2010 International Conference for Advanced Placement Economics teachers
8:30 AM ET: Retail Sales for October. The consensus is for a 0.7% increase from September. (0.4% increases ex-auto).
8:30 AM: Empire Manufacturing Survey for November. The consensus is for a reading of 15.0, about the same level as in October (15.7). These regional surveys have shown a slight pickup following the slowdown in Q3.
10:00 AM: Monthly Wholesale Trade: Sales and Inventories for September. The consensus is for a 0.8% increase in inventories.
8:30 AM: Producer Price Index for October. The consensus is for a 0.8% increase in producer prices.
9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for October. The consensus is for a 0.3% increase in Industrial Production, and an increase to 74.9% (from 74.7%) for Capacity Utilization. Both Industrial Production and Capacity Utilization surprised to the downside in September.
10 AM: The November NAHB homebuilder survey. This index collapsed following the expiration of the home buyer tax credit. The consensus is for a slight increase to 17 from 16 in October (still very depressed).
Early: The AIA's Architecture Billings Index for October will be released (a leading indicator for commercial real estate). This showed slight expansion in September (50.4) for the first time since January 2008. This index usually this leads investment in non-residential structures (hotels, malls, office) by 9 to 12 months.
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index declined sharply following the expiration of the tax credit, and the index has only recovered slightly over the last few months - suggesting reported home sales will be very weak through the end of the year.
8:30 AM: Housing Starts for October. Housing starts also collapsed following the expiration of the home buyer tax credit. The consensus is for a decrease to 590,000 (SAAR) in October from 610,000 in September.
8:30 AM: Consumer Price Index for September. The consensus is for a 0.4% increase in prices. The consensus for core CPI is an increase of 0.1%.
9:15 AM: St. Louis Fed President James Bullard speaks on the "Past, Present, and Future of the Government Sponsored Enterprises (GSE's)"
8:30 AM: The initial weekly unemployment claims report will be released. Initial claims declined to 435,000 last week, and initial claims are expected to increase to 445,000 this week.
10:00 AM: Philly Fed Survey for November. This survey showed slight expansion last month after showing contraction for the previous two months. The consensus is for an increase to 5.6 from 1.0 in October.
10:00 AM: Conference Board's index of leading indicators for October. The consensus is for a 0.5% increase in this index.
5:15 AM: Fed Chairman Ben S. Bernanke speaks on Global Rebalancing at the Sixth European Central Bank Central Banking Conference, Frankfurt am Main, Germany
After 4:00 PM: Perhaps the FDIC will have another busy Friday afternoon ...
CoreLogic House Price Index for September. This release will probably show further declines in house prices. The index is a weighted 3 month average for July, August and September.
Making Home Affordable Program (HAMP) for October and the “Housing Scorecard”
Summary for Week ending November 14th
by Calculated Risk on 11/14/2010 08:55:00 AM
A summary of last week - mostly in graphs. Note: A key story all week concerned the possible bailout of Ireland.
The Census Bureau reported:
[T]otal September exports of $154.1 billion and imports of $198.1 billion resulted in a goods and services deficit of $44.0 billion, down from $46.5 billion in August, revised.
Click on graph for larger image.This graph shows the monthly U.S. exports and imports in dollars through September 2010.
After trade bottomed in the first half of 2009, imports increased much faster than exports. Over the last five months, both exports and imports have been relatively flat.
The trade deficit will probably increase in October since oil prices increased, and China reported a higher trade surplus for October.
This graph shows the index since January 1999.Press Release: Over the Road Trucked Shipping Decline Signals Weaker Holiday Season, Reports Latest Ceridian-UCLA Pulse of Commerce Index™
The Ceridian-UCLA Pulse of Commerce Index™ (PCI), a real-time measure of the flow of goods to U.S. factories, retailers, and consumers, fell 0.6 percent in October following a decline of 0.5 percent in September and a decline of 1.0 percent in August. ... “We have had a recovery ‘time out,’” summarized [Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast].
From National Federation of Independent Business (NFIB): Small Business Optimism improves slightly Optimism rose again in October, but the index remains stuck in the recession zone established over the past two years, not a good reading even with a 2.7 point improvement over September. This is still a recession level reading based on Index values since 1973. However, job creation plans did turn positive and job reductions ceased.The above graph shows the small business optimism index since 1986. Although the index increased to 91.7 in October (highest since May), it is still at recessionary level according to NFIB Chief Economist Bill Dunkelberg.
The next graph shows the net hiring plans over the next three months.Hiring plans have turned slightly positive again. According to NFIB: "Average employment growth per firm was 0 in October, one of the best performances in years. ... Over the next three months, eight percent plan to increase employment (unchanged), and 13 percent plan to reduce their workforce (down three points), yielding a seasonally adjusted net one percent of owners planning to create new jobs, a four point gain from September."
And the third graph shows the percent of small businesses saying "poor sales" is their biggest problem.Usually small business owners complain about taxes and regulations (that usually means business is good!), but now their self reported biggest problem is lack of demand.
The preliminary Reuters / University of Michigan consumer sentiment index increased slightly in November to 69.3 from 67.7 in October.This was a big story in when consumer sentiment collapsed again in July. Since then this measure of consumer sentiment has mostly moved sideways at a fairly low level.
In general consumer sentiment is a coincident indicator.
Best wishes to all.
Saturday, November 13, 2010
Labor Force Participation Trends, Over 55 Age Groups
by Calculated Risk on 11/13/2010 09:59:00 PM
On Thursday I asked: What will happen to the Labor Force Participation Rate?
I posted a series of graphs trying to show the trends in participation - and one of the graphs I posted showed two projections for the labor force participation rate through 2050 (using population projections from the Census Bureau). Here is that graph again:
Click on graph for larger image.
This graph shows the calculated participation rate (blue) through 2050, and the actual participation rate since 1950 (red). The calculated participation rate, using 2007 data, is far too high for the earlier periods. This is mostly because of women joining the labor force (see the previous post for more on women joining the labor force).
The blue line would indicate the participation rate over the next 40 years if the participation rate per age group stayed static at 2007 levels. The participation rate would be expected to decline as the population ages. This simple analysis suggests the participation rate would be at about the same level in 2015 as today.
I added the dashed purple line to show the impact of a 5 percentage point increase in the 'over 55' labor force participation rate. I pointed out that the participation rate for the 'over 55' age group has been trending up. If the trend continues for the 'over 55' group - perhaps because of necessity, perhaps because of fewer "back breaking" jobs - then the overall participation rate will not fall as quickly as the blue line indicates. With just a 5 percentage point increase in participation for the 'over 55', the participation rate will be back to 66% in 2015.
A couple of readers asked if this was possible? The answer is yes.
The second graph shows the participation rate for several over 55 age groups. The red line is the '55 and over' total seasonally adjusted. All of the other age groups are Not Seasonally Adjusted (NSA).
The participation rate is trending up for all age groups. And another five percentage point increase is very possible over the next 5 to 10 years. After that the 'over 55' participation rate might start to decline as the oldest baby boomers move into the 'over 75' age group.
All of this suggests to me that the participation rate will probably move back towards 66% over the next few years, even with an aging population.
Reports: Ireland bailout talks continue
by Calculated Risk on 11/13/2010 05:30:00 PM
The Financial Times "Eurozone in talks on Ireland bail out" reports that European ministers are currently deliberating whether Ireland needs a bailout before the markets open on Monday. The FT notes that the "the discussions ... are expected to intensify on Sunday".
And from Bloomberg: Ireland Urged to Take Aid by Officials Amid Debt Crisis
Irish Prime Minister Brian Cowen said he is working with fellow European leaders as his nation’s sovereign debt crisis threatens the stability of European markets.Leaders in Ireland want to avoid asking for aid from the IMF or using the EFSF, however other European leaders are apparently pushing Ireland to accept aid to contain the financial turbulence.
While reiterating that his debt-strapped country has not sought to tap an EU rescue fund, Cowen told reporters today that “there are issues affecting the wider euro area of which we are a member” and that he and his counterparts were working to “ensure that the bond markets respond positively to the euro.”
My guess is if Ireland accepts aid, then Ireland's bonds will rally (and the yield will fall sharply) - however this will probably lead to a "buyers strike" for Portugal's bonds. And then Portugal will have to ask for aid. Then Spain and / or Italy would be next in line ... and I think that is the real concern.
