Slow day, but the first bit of news is a big one, in that the GDP grew at a 3.2% annual rate in the 1st quarter, though this is somewhat tempered by the fact that half of this was an increase in inventory, not increased consumption.
Also, Greece is still figuring in commodities and currencies, with the expectation of that the details of the bailout will be showing up shortly, driving oil up and the dollar down.
It was jobless Thursday, and the news is generally good, with applications for initial unemployment claims falling again, falling by 11k to a seasonally adjusted 448K, though the 4 week moving average rose slightly, and the continuing claims fell slightly to 4.65 million.
Additionally, the The Federal Reserve Bank of Chicago’s national activity index rose in March, foreclosures fell in the 1st quarter, though things like foreclosure moratoriums and mandatory arbitration may have contributed to this, and Japanese consumer spending and wages rose in March, though prices continue to fall.
Also, 30 year mortgage rates fell slightly this week, which moderates concerns about increasing interest rates.
Additionally, US treasurys rose, and yields fell slightly in the latest 7-year auction, implying that rates remain stable.
Energy and currency are largely being driven by Greece.
People are less concerned about a Greek default, which has reduced demand for the dollar as safe haven, driving the dollar lower, and the lower dollar has drive oil prices higher.
More good news, with the Conference Board’s consumer confidence index rising in April, and home prices falling in February.
I bet you are wondering how home prices falling in February is a good thing. Well, it’s simple, it fell month to month, but rose on a year over year basis, for the first time since December, 2006.
It may mean that things are bottoming out.
Certainly, it’s better than the alternative.
Still, the financial crisis looks to remain with us for some time, with Greece and Portugal’s sovereign debt downgraded by Standard & Poors, with some of Greece’s debt now rated as junk bonds.
Unsurprisingly, this has led to a flight to safety and concerns about the recovery, which has driven the dollar higher and oil lower.
Well, we have absolutely boffo numbers on the new home sales front, with sales climbing 27% from February to March, though as Barry Ritholtz notes, “In February 2010, new Home Sales reached a record low. Bouncing off of those depressed levels is not a big deal.”
I call a dead cat bounce, with a 3 cushion shot because of the February snowpocalypse, though it is still good news, as is the durable goods order number, which were down overall, but up when aircraft sales are factored out.
As to currency and energy, the reduced fears over Greece following their request for external aid pushed the dollar down, and the housing numbers drove oil higher.
Not a bunch of news, but is news is good news, with the Conference Board’s index of leading economic indicators rising sharply.
Additionally, defaults and foreclosures fell in California, though one wonders whether this is a real improvement, or if it’s just that we’ve basically run out of non-delinquent/foreclosed houses.
L’affaire Goldman seems to the primary mover in oil, with strong Goldman earnings driving oil prices higher, while the juxtaposition of the Goldman numbers and the uncertainty about Greece left the dollar mixed.
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The Canadian Ddollar has broken the 1:1 ratio with the US dollar, hitting $1.0012 U.S today.
Beyond L’affaire Goldman, it’s a slow news day
We have the Reuters/University of Michigan consumer confidence survey falling, and applications for building permits up sharply in March.
The oil and currency numbers are really about the Goldman Sachs enforcement action by the SEC, which raised concerns about the economy, and this uncertainty has pushed oil down, and the dollar up, on a concern about demand and demands for safe havens respectively.
Well, so much for a recovery in employment, initial unemployment claims rose by 24,000 to 484,000, with the 4-week moving average rising by 7,5000 to 457,750, and continuing claims rose by 73,000 to 4.64 million.
Additionally, real estate is looking grim, with foreclosures rising by 7% in the 1st quarter of2010over the 4th quarter of 2009, and by 16% year over year, which implies over 1 million foreclosures over the next year.
On the brighter side of real estate, mortgage rates fell for the first time in 5 weeks, and builder confidence rose, though the latter is largely driven by the insane home buyer tax credits.
In consumer credit, credit card delinquencies fell in March, though Capital One is doing worse. (What’s in your wallet?)
In more general metrics, the Philadelphia Federal Reserve Bank’s Business Activity Index beat expectations, rising to 20.2, beating forecasts of 20, and factory production grew by 0.9%.
Meanwhile in currency and energy, concerns about Greece drove the dollar up, and oil down.
Well, we have mostly good news today, with the Summary of Commentary on Current Economic Conditions, aka “The Beige Book”, showed the economy picking up steam in March.
Additionally, the retail sales report for March rose more than expected, and diesel fuel consumption rose indicating increased transportation activities, and the US trade deficit rose, which also indicates an increase in demand.
On the down side, the National Federation of Independent Business’ index of small business optimism fell in March, and since this is where most jobs are created, it does not bode well for jobs in the near term.
In real estate, mortgage applications fell for the 6th straight week, which is not surprising, as mortgage rates have been trending higher and the FHA has started to charge more for mortgage insurance to replenish its depleted reserves.
Finally, inflation seems to remain well under control with the March CPI rising by only 0.1%
Well, it’s kind of a slow news day, as the big news was the Euro loans to Greece, but we do have another sign of a recovery, which is that business orders are on an upswing worldwide.
All in all, I think that we are truly in recovery, unless another shoe drops in high end finance, but I’m kind of expecting another shoe to drop there, causing another panic and another bailout.
The National Bureau of Economic Research (NBER) continues to take a conservative approach, saying that, “The determination of the trough date on the basis of current data would be premature.”
This is not surprising. The folks at the NBER typically take more than a year after the trough bottom to announce that they have determined a trough date.
In energy, gasoline is up nearly 4¢/gallon this over the last three weeks, to $2.85/gallon, and it’s not unreasonable to assume that it will break $3/gallon by the start of the summer driving season.
As to oil, it fell today, as and so did the dollar, largely in reaction to the Greek bailout.
Both wholesale inventories and sales rose in February, giving another sign that there is some sort of recovery on the way.
Also, it looks like the EU has dotted its “I”s and crossed its “T”s on an aid plan for Greece, which means that someone has gotten the Germans generally, and Angela Merkel in particular, to STFU, to the tune of about €30 billion in loans and guarantees.
Well, today is jobless Thursday, and the the new unemployment numbers disappointed big time, with initial claims rising to 460,000, as opposed to falling slightly to 435,000, with the 4-week moving average rising 2,250 to 450,250.
On the bright side, continuing claims fell by 131K to 4.55 M, though one wonders how much of that was because of Tom Coburn’s petulant filibuster against extended unemployment benefits, which likely has depressed the number, which (full disclosure) has effected me directly. (Will no one rid me of ……… Oh, never mind.)
Meanwhile in consumer spending, February consumer borrowing fell at a -5.6% annual rate, wiping out, and then some, the growth in consumer borrowing in January that had economists crowing, though the Institute for Supply Management’s service sector index grew faster than it has since July 2004 in March.
On the brighter side, delinquencies in consumer loans fell in the 4th quarter of 2009.
In the world of national finance and central banks, we have a few developments with the 3-year, 10 year, and 30 year treasury notes falling and their yields rising, which implies that investors expect interest rates to increase, at least a bit.
Meanwhile, in central bank land, the Bank of England has left its benchmark interest rate and its quantitative easing unchanged, and the Bank of Korea also left rates unchanged.
In real estate, it’s been a pretty busy few days with the 30 year fixed rate mortgage hitting an 8 month high, which, unsurprisingly has depressed mortgage applications.
In residential real estate, foreclosures are still rising, and distressed home sales hit a new high of 29% in January, though delinquencies on sub-prime mortgages fell for the first time since 2006.
I’m thinking that the sub-prime delinquency rate fell because we have finally run out of people who have those mortgages who haven’t yet been forced out of their homes.
In commercial real estate, mall vacancies have hit an at least 10 year high, there are no records prior to this, and office vacancies hit 17.4%, the highest since 1994.
Meanwhile, in energy and currency, the bad job numbers drove crude prices down, and new concerns about Greece have driven the dollar higher.
Employment/Population Ratio Still at 1983 Levels
Long-term unemployment is still at a 40+ Year high
Personal bankruptcies on level with pre-bankruptcy reform numbers (H/t Calculated Risk)
Well, we have the employment numbers for March out now, and the March non-farm payroll numbers (NFP) rose by 162,000, with unemployment (U3)remaining at 9.7%, and the broader U6 unemployment number remained basically flat, increasing from 16.8% to 16.9% (seasonally adjusted).
This is an improvement. It’s the largest NFP jump in 3 years.
That being said, some things to note:
About 8 million people have lost jobs in this recessions, and at a NFP payroll increase of 162K a month, it would take more than 50 years for everyone who lost their jobs to get another job, so while it is an improvement, things are at best treading water, but the trend does appear to be getting better.
Still, the employment/population ratio is at a 27 year low, and long term unemployment is at a 40+ year high.
Also, we have
Still, all in all, I have to say that we are seeing a recovery, but it’s a feeble and fragile recovery.
We still have some areas of concern, most notably that construction spending fell once again, and personal bankruptcies rose sharply.
Philly Fed 1st Q: 25 states down, 18 up, 7 unchanged
The official non-farm payroll (NFP) number comes out on Friday, but today we have the private report from ADP, which shows a loss of 23,000 jobs, but the payroll withholding taxes numbers imply an increase in total jobs of something in the 300,000 range.
Meanwhile, the Philadelphia Bank of the Federal Reserve has released its State Coincident Indexes, which show that half of the states contracted over the past 3 months, and 23 decreased in the past month.
It’s better than it was a year ago, but it’s still not good.
In the consumer sector, consumer spending rose in February, and the Conference Board’s Consumer Confidence Index rose in March.
On the production side, factory orders rose for the 6th month, though the data was not good in the Midwest, with the, with the Chicago purchasing managers index falling.
In real estate, mortgage application, including purchases, rose last week, and Fannie Mae has reported that mortgage delinquencies rose to 5.52% in January.
Note that because of the different times covered, these numbers may be consistent.
Across the ponds, Euro zone inflation rose to 1.5% year over year, and unemployment broke 10%, while in China, manufacturing grew faster than forecast in March.
Meanwhile, for reasons that I do not understand, oil rose, though the Chinese manufacturing data might have led to concerns over additional demand, and both the dollar and the Yen fell on reduced demand for safe havens.
Well, they just revised down the 4th quarter GDP numbers down again, to a 5.6% annual rate, the earlier estimate had been 5.9%.
On the brighter side, incomes rose faster than GDP, which gives a boost to the idea that some sort of recovery is going on.
Meanwhile, in high fiance, Ambac’s dance of death continues, with the International Swaps and Derivatives Association, Inc. (ISDA) ruling that the regulator action yesterday constitutes a trigger for bankruptcy CDS contracts.
Meanwhile, the apparrent resolution of the Greek crisis has pushed the US dollar down on reduced demand for safe havens, and oil prices fell marginally.
It’s jobless Thursday, and initial jobless claims fell by 14K to 442,000, though it should be noted that a change to seasonal adjustments accounted for 11K of that 14 K.
The less noisy 4 week moving average fell by 11K to 453,750, and continuing claims fell by 54K to 4.65 million, the lowest number in 1¼ years.
All in all, good news, but we are still not at a number where we would see real job growth.
In the intersection of real estate and finance, we have 13.6% of US mortgages being delinquent in the 4th quarter of 2009, up by 0.9% from the 3rd quarter.
In a blast from the past, we have a development in the slow motion immolation of the monoliner insurers with the largest of the bond insurers, Ambac, had the Wisconsin Office of the Commissioner of Insurance take control of roughly $35 billion of insurance contracts on residential mortgages.
They have direct the troubled insurance company to segregate these contracts into separate accounts.
You arrogant ass. You’ve killed us!Just so you know, it appears that the financial weapon of mass destruction, the Credit Default Swap is rearing its ugly head once again, as the segregation of accounts may constitute a “default” under the terms of the credit default swap contracts on these assets.
Seriously, this sh%$ is going to destroy us if we don’t get a handle on it. (Cue captain Tupolev)
Finally, in currency the Euro has rebounded slightly off its low on reports of an imminent solution for the Greek crisis, though these concerns were still enough to push oil prices down.
Well, it looks like real estate will be the suck for some time to come, as new home sales falling to an all time low, while inventory rose to 9.2 months, up from January’s 8.9 months.
The snowpocalypse might have had a little to do with this, but it has nothing to do with the fact that the Architecture Billings Index falling, since that is all about future residential construction.
On the brighter side, durable orders rose, largely on civil aircraft purchases.
In the “why the hell is this happening?” division, treasuries fell and yields rose in the most recent bond auction, despite the fact that the Greek meltdown would normally encourage a flight to safety, which would bid T-bills up.
In any case, the Greek problems have driven the dollar up and oil down.
On the other hand, things are good in New Zealand, if you don’t mind all the rain, with Kiwi GDP growing 0.8% (about a 3.2% annual rate) last quarter.
H/t Calculated Risk
The news in in real estate so far this week, with U.S. commercial real e3state prices rising for the 3rd straight month, though, as the Graph pr0n clearly shows, if you own commercial property, and you need to roll over your 5 year mortgage, you are still in a world of hurt, as you are at least 30% under water.
In residential real estate though, it was just plain grim, with existing home sales falling, though the snopocalypse might have something to do with that, and the number of homes for sale jumped by nearly 10%.
In more general economic news, the Chicago Bank of the Federal Reserve’s national activity index fells last month, which might also be snow related.
Meanwhile, on the other side of the pond, prices fell in the UK for the first time on 6 months, indicating that the pressures toward deflation continue apace.
In currency, we have the problems with Greece pushing the Euro lower, while in energy, oil rose slightly, to $81.91/bbl, and the price of retail gasoline continues to climb, to $2.81/gallon, up about 80¢ from a year ago.
H/t Calculated Risk
It’s Jobless Thursday, and initial jobless claims fell by 5,000 to 457,000, which is less bad, you need to be under 400K for any real job growth, and the less volatile 4 week moving average fell, though continuing claims fell slightly.
Meanwhile, the CPI was flat in February, with a 0.1% increase in the core inflation rate, which omits food and energy.
In real estate, the 30-year fixed mortgage rate is basically unchanged, at 4.96%.
It will start going up once the TALF expires in a few months.
Finally, oil fell and the dollar rose, probably as a correction for the large swings in response to yesterday’s Federal Reserve statement.
The decades long downward trend is improvements inventory tracking, largely from automation
It appears that stability looms
Again, abbreviated, because in addition to not fullying balancing work and blogging, I’m feeling a bit off today.
The lede is obviously that the Thomson Reuters/University of Michigan survey showed a decline in consumer sentiment.
On the other side of the coin is that economics retail sales retail sales rose unexpectedly in February, confounding economists who thought that the snowpocalypse would push the numbers down.
Sales rose by 0.3%, which is beat expectations, but this is off a January where the delta in retail sales was revised from 0.5% to 0.1%, so the delta from is .3%-.4%=-.1%, so the total picture at the end of February is actually down from what it was on February 1.
Finally, Calculated Risk points out (see chart pr0n) that inventories are now basically in line with sales, which means that inventory replenishment bumps to GDP are pretty much done.
Yeah, I know, It’s no longer daily. A new job does that, and it’s de rigeur on Thursday, because that’s when the unemployment data comes out.
In this case, it’s down 6k to 642K, but the 4 week moving average rose 5,000 to 475,500, and continuing claims, which I am no longer a part of were flat at 4.56 million.
Basically, dropping jobless claims don’t mean rising employment until some point below 400K a week, so don’t get your hopes up.
BTW, not getting their hopes up is what small businesses are doing right now, with the National Association of Independent businesses’ index of small business optimism falling to the 2nd lowest level ever recorded, and the Manpower Survey of hiring managers was down slightly, though their Asian numbers were somewhat improved.
In real estate, foreclosure rose by “only” 6% year over year, leading to paroxysms of prodigious positivism by the Panglossian press, but it means that foreclosures are still rising.
Meanwhile, in China, they are freaking out over their inflation levels, which have risen to a 2.7% annual rate (merciful heavens, get me the smelling salts).
Actually, if the PBC raises rates to reign in inflation, I don’t see how they could keep their peg against the dollar, because higher rates push just about any currency up.
