Monday , September 16 2019
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FOMC Preview

23 hours ago

The consensus is the FOMC will cut the Fed Funds rate 25 bps to a range of 1.75% to 2.0% at the meeting this week.  A 50 bps cut is not impossible, but seems unlikely at this meeting.A key will be if the FOMC signals another rate cut in October.  The hints could be in the press conference, or in the dot plot.Revisions to the economic projections will probably be minor, and the statement will probably be mostly unchanged from July.Here are the June FOMC projections.Q1 real GDP growth was at 3.1% annualized, and Q2 at 2.0%.   Currently most analysts are projecting around 1.5% to 2% in Q3.  So the GDP projections will probably be little changed.GDP projections of Federal Reserve Governors and Reserve Bank presidentsChange inReal GDP1201920202021Jun 20192.0 to 2.21.8 to 2.01.8 to 2.0Mar

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Schedule for Week of September 15, 2019

2 days ago

The key economic reports this week are August Housing Starts and Existing Home Sales.For manufacturing, August Industrial Production, and the September New York and Philly Fed surveys, will be released this week.The FOMC is expected to cut the Fed Funds rate 25bps on Wednesday, and the Fed’s Q2 Flow of Funds report will be released on Friday.—– Monday, Sept 16th —–8:30 AM ET: The New York Fed Empire State manufacturing survey for September. The consensus is for a reading of 4.9, up from 4.8.—– Tuesday, Sept 17th —–9:15 AM: The Fed will release Industrial Production and Capacity Utilization for August.This graph shows industrial production since 1967.The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to be unchanged at 77.5%.10:00 AM:

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"Mortgage Rates’ Week Goes From Bad to Worse"

3 days ago

From Matthew Graham at MortgageNewsDaily: Mortgage Rates’ Week Goes From Bad to WorseMortgage rates were already having their worst week since 2016 as of yesterday afternoon. Rather than help to heal some of the damage, today’s bond market momentum only made things worse. Whether we’re looking at 10yr Treasury yields a broad indicator of longer-term rates or average mortgage lender offerings, this week now ranks among the top 3 in the past decade in terms of the overall move higher. At this point, we’d have to go back to the trauma of 2013’s ‘taper tantrum’ to see anything bigger. [Today’s Most Prevalent Rates 30YR FIXED – 3.875%] Click on graph for larger image.This graph from Mortgage News Daily shows mortgage rates since 2014. This graph is interactive at the Mortgage News Daily

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Q3 GDP Forecasts: Around 1.5% to 2.0%

3 days ago

From Merrill Lynch: 3Q and 2Q GDP tracking remain at 2.0% qoq saar. [Sept 13 estimate]emphasis addedFrom Goldman Sachs: Following this morning’s data, we boosted our Q3 GDP tracking estimate by one tenth to +2.0% (qoq ar). [Sept 13 estimate]From the NY Fed Nowcasting ReportThe New York Fed Staff Nowcast stands at 1.6% for 2019:Q3 and 1.1% for 2019:Q4. [Sept 13 estimate].And from the Altanta Fed: GDPNowThe GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 1.8 percent on September 13, down from 1.9 percent on September 11. [Sept 13 estimate]CR Note: These early estimates suggest real GDP growth will be around 1.5% to 2.0% annualized in Q3.

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Sacramento Housing in August: Sales Down 6.5% YoY, Active Inventory DOWN 22% YoY

3 days ago

From SacRealtor.org: Median sale price, sales volume decrease for AugustAugust ended with 1,567 sales, a 7.4% decrease from the 1,693 sales last month. Compared to the same month last year (1,676), the current figure is down 6.5%. …The Active Listing Inventory increased 1.4% from 2,425 to 2,460 units. The Months of Inventory increased from 1.4 to 1.6 Months. This figure represents the amount of time (in months) it would take for the current rate of sales to deplete the total active listing inventory. [Note: Compared to August 2018, inventory is down 22.3%] ….The Median DOM (days on market) increased from 11 to 12 and the Average DOM increased from 23 to 25. “Days on market” represents the days between the initial listing of the home as “active” and the day it goes “pending.” Of the

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Retail Sales increased 0.4% in August

3 days ago

On a monthly basis, retail sales increased 0.4 percent from July to August (seasonally adjusted), and sales were up 4.1 percent from August 2018.From the Census Bureau report:Advance estimates of U.S. retail and food services sales for August 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $526.1 billion, an increase of 0.4 percent from the previous month, and 4.1 percent above August 2018. emphasis added Click on graph for larger image.This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).Retail sales ex-gasoline were up 0.5% in August.The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail

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Friday: Retail Sales

3 days ago

Friday:• At 8:30 AM ET, Retail sales for August will be released.  The consensus is for a 0.3% increase in retail sales.• At 10:00 AM, University of Michigan’s Consumer sentiment index (Preliminary for September).

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LA area Port Traffic Down Year-over-year in August

4 days ago

Special note: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. Click on graph for larger image.On a

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Early Look at 2020 Cost-Of-Living Adjustments and Maximum Contribution Base

4 days ago

The BLS reported this morning:The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.5 percent over the last 12 months to an index level of 250.112 (1982-84=100). For the month, the index was unchanged prior to seasonal adjustment.CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).• In 2018, the Q3 average of CPI-W was 246.352.The 2018 Q3 average was the highest Q3 average, so we only have to

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Cleveland Fed: Key Measures Show Inflation Above 2% YoY in August, Core PCE below 2%

4 days ago

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.6% annualized rate) in August. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.3% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (0.7% annualized rate) in August. The CPI less food and energy rose 0.3% (3.1% annualized rate) on a seasonally adjusted basis.Note: The Cleveland Fed released the median CPI details for

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BLS: CPI increased 0.1% in August, Core CPI increased 0.3%

4 days ago

From the BLS: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in August on a seasonally adjusted basis after rising 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment….The index for all items less food and energy rose 0.3 percent in August, the same increase as in June and July….The all items index increased 1.7 percent for the 12 months ending August; the 12-month increase has remained in the range of 1.5 to 2.0 percent since the period ending December 2018. The index for all items less food and energy rose 2.4 percent over the last 12 months, its largest 12-month increase since July 2018.emphasis addedCore inflation was above expectations

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Weekly Initial Unemployment Claims decreased to 204,000

4 days ago

The DOL reported:In the week ending September 7, the advance figure for seasonally adjusted initial claims was 204,000, a decrease of 15,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 217,000 to 219,000. The 4-week moving average was 212,500, a decrease of 4,250 from the previous week’s revised average. The previous week’s average was revised up by 500 from 216,250 to 216,750. emphasis addedThe previous week was revised up.The following graph shows the 4-week moving average of weekly claims since 1971.Click on graph for larger image.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 212,500.This was lower than the consensus forecast.

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Thursday: CPI, Unemployment Claims

5 days ago

Thursday:• At 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for 215 thousand initial claims, down from 217 thousand the previous week.• At 8:30 AM, The Consumer Price Index for August from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.

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Merrill on Retail "Consumer demand pulled back in August"

5 days ago

A few excerpts from two BofA Merrill Lynch research notes: Consumer demand pulled back in AugustBased on the aggregated BAC credit and debit card data, retail sales ex-autos fell 0.5% month-over-month (mom) seasonally adjusted (sa). This reversed the 0.9% mom gain in July. As always, there were a number of "special factors" which we decipher in this note.Amazon Prime Day and other retailers’ summer promotions in mid-July provided a significant boost to spending, as we showed last month. In our view, these promotions effectively pulled forward demand into July and out of August. …Outside of the promotion distortions, we also think spending was dampened by weakening sentiment.emphasis addedAnd on confidence: The uneasy consumerThe consumer is beginning to worry. Since our last update in

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Houston Real Estate in August: Sales up 4% YoY, Inventory Up 8%

5 days ago

From the HAR: Houston Home Sales Sizzle in AugustTemperatures weren’t the only thing soaring in August. Home sales registered another hot month, as low mortgage interest rates kept consumers in a buying mood. According to the latest monthly report from the Houston Association of Realtors (HAR), August sales of single-family homes throughout greater Houston totaled 8,679. That is up 3.9 percent year-over-year and marks the second largest one-month sales volume of all time; the record of 8,930 was set just last month. On a year-to-date basis, home sales are running 3.1 percent ahead of 2018’s record volume….Housing inventory still remains ahead of 2018 levels. It reached a 4.2-months supply in August compared to 4.0 months a year earlier. So far in 2019, June and July marked the peak of

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Employment: August Diffusion Indexes

5 days ago

I haven’t posted this in a few months.The BLS diffusion index for total private employment was at 53.5 in August, down from 57.8 in July.For manufacturing, the diffusion index was at 51.3, down from 53.9 in August.Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.  From the BLS: Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.Overall both total private and manufacturing job growth were not widespread in August.Both indexes have been trending down in 2019 – indicating job growth is

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MBA: Mortgage Applications Increased in Latest Weekly Survey

5 days ago

From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 6, 2019. This week’s results include an adjustment for the Labor Day holiday…. The Refinance Index increased 0.4 percent from the previous week and was 169 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 9 percent higher than the same week one year ago….“Mortgages rates continued to decline over the holiday-shortened week, with the 30-year fixed rate

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Wednesday: PPI

6 days ago

Wednesday:• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.• At 8:30 AM, The Producer Price Index for August from the BLS. The consensus is for a 0.1% increase in PPI, and a 0.2% increase in core PPI.

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Port of Los Angeles: Imports increased, Exports decreased in August

6 days ago

From the Port of Los Angeles: August Cargo Another Record Breaker at Port of Los AngelesFor the fifth consecutive month, the Port of Los Angeles has set a new single-month cargo record. In August, the Port moved 861,081 Twenty-Foot Equivalent Units (TEUs), the busiest August in the Port’s 112-year history and a 4.2% increase over the same period last year.Eight months into 2019 overall volumes have increased 5.7% compared to 2018, when the Port set an all-time cargo record.…“The final months of 2018 ended with an extraordinary influx of imports to beat expected tariffs on China-origin goods,” Seroka added. “We don’t expect to see those kind of volumes in the months ahead. We need a negotiated settlement of the U.S.-China trade war to restore global trade stability.”August 2019 imports

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Seattle Real Estate in August: Sales up 5.1% YoY, Inventory up 25% YoY from Low Levels

6 days ago

The Northwest Multiple Listing Service reported Home Buyers Seeking Affordability Are Expanding Search Outside Greater Seattle Job CentersDepleted inventory continues to frustrate would-be buyers in Western Washington. Many of these potential homeowners are expanding their search beyond the major job centers in King County, according to market watchers who commented on the latest statistics from Northwest Multiple Listing Service.The MLS report summarizing August activity shows less than two months of supply system-wide, and only about 1.6 months of supply in the four-county Puget Sound region. The sparse selection is pushing up prices. For last month’s sales of single family homes and condos across the 23 counties served by Northwest MLS, prices rose nearly 6.2% compared to a year

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BLS: Job Openings "Little Changed" at 7.2 Million in July

6 days ago

Notes: In July there were 7.217 million job openings, and, according to the July Employment report, there were 6,063 million unemployed. So, for the seventeenth consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (4+ years).From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 7.2 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Over the month, hires edged up to 6.0 million and separations increased to 5.8 million. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.4 percent and 1.2 percent, respectively. … The number of quits

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Small Business Optimism Index Decreased in August

6 days ago

CR Note: Most of this survey is noise, but there is some information, especially on the labor market and the "Single Most Important Problem".From the National Federation of Independent Business (NFIB): August 2019 Report: Small Business Optimism IndexThe NFIB Small Business Optimism Index fell 1.6 points to 103.1, remaining within the top 15 percent of readings. Overall, August was a good month for small business. However, optimism slipped because fewer owners said they expect better business conditions and real sales volumes in the coming months. ..Job creation picked up in August, with an average addition of 0.19 workers per firm compared to 0.12 in July. Finding qualified workers is becoming more and more difficult with a record 27 percent reporting finding qualified workers as their

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Tuesday: Job Openings

7 days ago

From Matthew Graham at Mortgage News Daily: Mortgage Rates Moving Quickly HigherMortgage rates moved higher today at the fastest pace in several months today.  [Most Prevalent Rates 30YR FIXED – 3.5% – 3.625%]emphasis addedTuesday:• At 6:00 AM, NFIB Small Business Optimism Index for August.• At 10:00 AM ET, Job Openings and Labor Turnover Survey for July from the BLS.

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Las Vegas: Convention Attendance and Visitor Traffic up Slightly in 2019 Through July

7 days ago

During the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas. Since then Las Vegas visitor traffic recovered to new record highs.However, in 2018, visitor traffic declined 0.2% compared to 2017, but was still 7.5% above the pre-recession peak.Convention attendance declined 2.2% in 2018 from the record high in 2017.  Here is the data from the Las Vegas Convention and Visitors Authority.   Click on graph for larger image. The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale).  2019 is estimate based on data through July 2019.Convention attendance was up 3.3% in 2019 compared to the same period in 2018.Visitor traffic was up 0.6% in 2019 compared to the first seven

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Update on Decennial Census Hiring

7 days ago

In the August employment report, the BLS reported In August, employment in federal government increased by 28,000. The gain was mostly due to the hiring of 25,000 temporary workers to prepare for the 2020 Census.emphasis addedEarlier, on August 12th, from the Census Bureau: U.S. Census Bureau Announces the Start of First Major Field Operation for 2020 Census “We were able to verify 65% of addresses using satellite imagery — a massive accomplishment for us,” said Census Bureau Geography Division Chief Deirdre Bishop during the briefing. “In 2010 we had to hire 150,000 people to verify 100% of the addresses in the field, this decade we will only have to hire about 40,000 employees around the nation to verify the remaining 35% of addresses.”…Census Bureau employees (listers) have started

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AAR: August Rail Carloads down 4.6% YoY, Intermodal Down 5.4% YoY

7 days ago

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. It seems clear that U.S. railroads are facing a freight recession. Total originated U.S. rail carloads fell 4.6% in August 2019 from August 2018, their seventh straight year-over-year decline. The average decline over those seven months was 4.2%, a not-insignificant amount. Meanwhile, U.S. intermodal volume fell 5.4% in August, also the seventh straight monthly decline. … Why? The parts of the economy that generate much of the freight that railroads carry — manufacturing and goods trading — have weakened significantly over the past several months.emphasis added Click on graph for larger image.This graph from the Rail Time Indicators report shows the year-over-year changes

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Black Knight Mortgage Monitor for July: National Delinquency Rate near Series Low

7 days ago

Black Knight released their Mortgage Monitor report for July today. According to Black Knight, 3.46% of mortgages were delinquent in July, down slightly from 3.61% in July 2018. Black Knight also reported that 0.49% of mortgages were in the foreclosure process, down from 0.57% a year ago.This gives a total of 3.95% delinquent or in foreclosure.Press Release: Black Knight Mortgage Monitor: Servicer Retention Rates Improve Significantly Among Rate-Driven Refinance Transactions; Cash-Out Refi Retention Still LacklusterToday, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. This month’s report returned to the subject of servicer retention rates –

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Sunday Night Futures

7 days ago

Weekend:• Schedule for Week of September 8, 2019Tuesday:• At 3:00 PM, Consumer Credit from the Federal Reserve.From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 4 and DOW futures are up 25 (fair value).Oil prices were up over the last week with WTI futures at $56.82 per barrel and Brent at $61.76 barrel.  A year ago, WTI was at $68, and Brent was at $77 – so oil prices are down about 20% year-over-year. Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.55 per gallon. A year ago prices were at $2.85 per gallon, so gasoline prices are down 30 cents year-over-year.

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Hotels: Occupancy Rate Decreased Year-over-year

8 days ago

From HotelNewsNow.com: STR: US hotel results for week ending 31 AugustThe U.S. hotel industry reported mostly positive year-over-year results in the three key performance metrics during the week of 25-31 August 2019, according to data from STR.In comparison with the week of 26 August through 1 September 2018, the industry recorded the following:• Occupancy: -0.4% to 66.7%• Average daily rate (ADR): +1.4% to US$127.26• Revenue per available room (RevPAR): +1.0% at US$84.87Orlando, Florida, saw the steepest declines in occupancy (-21.6% to 52.4%) and RevPAR (-24.1% to US$52.84).Miami/Hialeah, Florida, posted the largest drop in ADR (-6.6% to US$137.27) and the only other double-digit decreases in occupancy (-10.9% to 60.1%) and RevPAR (-16.8% to US$82.56).Due to the anticipation of Hurricane

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Schedule for Week of September 8, 2019

9 days ago

The key economic reports this week are August Retail sales, and the August Consumer Price Index (CPI).—– Monday, Sept 9th —–3:00 PM: Consumer Credit from the Federal Reserve.—– Tuesday, Sept 10th —–6:00 AM: NFIB Small Business Optimism Index for August.10:00 AM ET: Job Openings and Labor Turnover Survey for July from the BLS. This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. Jobs openings decreased in June to 7.348 million from 7.384 million in May.The number of job openings (yellow) were down 1% year-over-year, and Quits were up 2% year-over-year.—– Wednesday, Sept 11th —–7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage

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