Category: Recession

Economics Update

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Bad news from the Euro Zone, with Eurozone employment falling by 0.5% in the 3rd quarter, and Euro zone industrial output fell by 0.6% in October, and by 11.1% year over year.(!)

We are also looking at a spike in food prices over the next year, leading to an increase in inflation that all the economists and the economic journalists ignore, because, after all, it’s not core, because it’s just food.

In currency, Abu Dhabi has agreed to bail out Dubai, which has made people feel more secure, so they are selling dollars, which pushes the currency down.

In energy, crude oil fell for the 9th straight day largely on demand concerns.

Economics Update

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Surprise! Geithner and Bernanke:
As popular as a case of the Clap.
H/t Calculated Risk


And ore Americans than ever are on food stamps, h/t Naked Capitalism

Well, we have a bunch of good news on the consumer front, with retail sales growing by 1.3% in November, more than the 0.6% forecast, and the Reuters/University of Michigan Consumer Sentiment Index rose to 73.4 in early December, up from 67.4 last month, and well above the forecast of 69.0, which is all very good, since the holiday season is a huge part of retail sales, but the Discover Financial Services survey is showing that consumers are looking to slash their spending by 15%.

Yeah, I’m confused too.

I would also note that the number of people collecting food stamps hit a record, 37.2 million, which raises the question if, “food stamps are the soup lines of this Great Depression?”

We are now seeing some rumblings of inflation on the other side of the pond, with UK factory input prices rising at fastest pace in a year, 4%:

Input prices gained by 4% last month from November 2008, and by 0.4% from October.

Output prices – the prices of goods leaving UK factories – rose 2.9% on the year, the fastest pace since February.

Output prices – the prices of goods leaving UK factories – rose 2.9% on the year, the fastest pace since February.

So we are likely going to have some of the central banks out there, most likely the ECB, panicking and jacking up rates at just the wrong time.

Still, the retail sales numbers drove the dollar rises to a 2-month high, though interestingly enough, oil fell for the 8th straight day, to $69.87/bbl, which is kind of odd, increased consumer sales implies increased demand, but a rising dollar may trump that in the mind of oil speculators.

Economics Update

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There is no wealth creation for ordinary folk, just bubble creation, h/t Calculated Risk


Crude prices, h/t OilEnergy

So, today is “Jobless Thursday, and initial unemployment claims spiked unexpectedly to 474,000.

Truth be told, it’s not a surprise. Non-farm payrolls need to rise at about 300,000 a month, so the “really good” NFP numbers in November, which had a -11,000 number indicates that things still really suck.

We have seen a drop in the U.S. trade deficit in November, which has been driven by export growth, though falling oil prices (see lower pic), and the fact that US consumers are still not in the mood to buy anything, including imports.

We have some good news on household net worth which grew by $2.7 trillion in the 3rd quarter, largely on the recent stock market bubble rally.

In real estate, the 30-year fixed mortgage rate rose this week, and
foreclosures fell in November, though, as the article notes, this may be a a pause more than anything else:

“They’re artificially low because of underlying causes,” said Rick Sharga, vice president of RealtyTrac.

He cites three reasons why foreclosures have dropped in certain states: The holiday season, when foreclosures typically slow down; the government’s mortgage modification program, which has created a slowdown in delinquent loans; and mandatory mediation in more states between homeowners and lenders before going into foreclosure.

In the world of central banks, the Bank of England left its benchmark rate unchanged at ½%, while maintaining its asset purchase (printing money) program.

Something interesting occurring in the world of US Treasurys though, the yield curve is the steepest since 1980.

The nickel tour is that when you buy a 2-year bond, you get less interest than if you buy a 30-year bond, because the risks of a 30-year bond are higher, not in terms of default, but because your money is locked up, and interest rates can go up, or you can need the money in a hurry, etc.

The difference is now 373 basis points (3.73%), with average over the past 5 years being 132 basis points.

It may be a market burp, or it may be inflationary concerns.

In currency, the dollar was essentially unchanged, while in energy, oil fell for the 7th day in a row on economic concerns.

Economics Update

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H/t New York Observer

We have another sign of “green shoots,” with wholesale inventories rising for the first time in 13 months.

I’m not sure if this is a trend, or if wholesale inventories are hitting a kind of “zero bound”, where it just cannot go any lower.

We also saw treasurys falling, and yields rising, after a weak auction of 10 year treasuries.

In real estate, mortgage applications hit a 2-month high, largely on people refinancing to lock in lower rates, but more significant is the fact that the best estimate of losses in home value in 2009 was $500 billion, which, surprisingly enough is a major improvement, as home values fell $3.6 trillion.

In currency, the dollar fell today, most likely on profit taking after 3 straight days of gains, and in energy, oil fell on more reports of strengthening inventories.

Economics Update

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The Conference Board’s Index of Leading Economic Indicators rose for 7th straight month in November, as did the Japanese coincident indicator index for the month of October.

On the other side of the coin, the National Federation of Independent Businesses is reporting that small business optimism fell in November, and a recent poll is showing that Americans are becoming more pessimistic about the economy, and the Australian consumer is in a foul mood too.

In real estate, by dint of many government efforts to reinflate the bubble, Freddie Mac is reporting that home prices are up for the 2nd straight quarter.

So, we can expect more tax credits and suchlike in order to put off a final day of reckoning.

We had a major monkey wrench thrown into the the works of international finance today, when Fitch’s downgraded Greece’s credit rating from A- to BBB+, which has spooked the markets generally, most notably this news has pushed the Euro lower, with investors moving to the dollar and Yen, mostly the Yen, the dollar was up vs the € and down vs the ¥, looking for a safe haven.

Additionally, an update on Japan’s GDP numbers for the 3rd quarter slashed growth from the initial reading of 4.8% to 1.3%.

The rising dollar, along with reports of strong inventories, drove oil to below $73/bbl.

Economics Update

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Falling Consumer Credit, H/t Calculated Risk

So, consumer credit continues its decline, down $3.51 billion in October, a 1.7% annual rate, so the 70% of the economy that is consumer spending is still contracting in what exonomists call the “paradox of thrift.”

In energy, oil fell to less than $74/bbl, while in currency, the dollar hit a 5-week high, largely on the employment numbers from last week.

Economics Update (Yeah, Way Late)

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Unemployment h/t Calculated Risk


Unemployment over recessions h/t Calculated Risk


Back to where we started before Congress gave the credit card companies a big wet kiss.

I think that this is the first time that I’ve tot this since Thanksgiving. Sorry, it’s been hectic.

The lede, of course, it the unemployment numbers, and we now have the official numbers for November, and they are surprisingly not bad (using the phrase “good” for double digit unemployment is an absurdity): Non Farm Payroll fell by only 11,000 in November, and the Unemployment rate fell by 0.2% to 10.0%. (The ADP prediction from earlier this week was way off)

Initial unemployment claims fell by 5K, to 457,000, with the 4-week moving average falling 14,250 to 481,250, both of which are the lowest since the 3rd quarter of last year.

On the other hand, continuing claims rose by 28K to 5.47 million, and the number of people who were collecting extended (emergency) unemployment benefits the number of people collecting extended benefits under federal programs rose by 327K to 4.53 million for the week ending November 14, when the bill that Congress passed extending benefits kicked in, so there are more people collecting benefits now than there were last week….A lot more.

Seeing as how the US Economy needs to add roughly 150,000 jobs a month just to account for a growing workforce, at best we are in a “getting crappy less quickly” stage, and at worst, it could be a dead cat bounce.

In non-employment related metrics, we have the both the ISM Non-Manufacturing Index and the ISM Manufacturing Index falling, though the latter is still indicating expansion, just very slow expansion, though the November Chicago Purchasing Managers Index rose to a 15-month high, and the Fed’s Beige Book is showing improvement.

The reason that I am not optimistic, in addition to being bearish by temperament, is because retail sales fell below estimates for the start of the holiday season, and because personal bankruptcy filings are still horrific, (see pic) they were down in November from October, but still up 12% from Year over Year.

In real estate, 30-year fixed mortgages fell.

And in the world of central banks, the European Central Bank has kept its benchmark rate at 1%, though it gave indications that it would be walking away from its quantitative easing, which drove both oil and the dollar down.

Economics Update (Catching Up)

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H/t Calculated Risk

The lede here is that the corrected numbers for US GDP are out, and it’s way down, to +2.8%, down from the initial estimate of 3.5%.

Even more worrying is that the primary reason for the drop is that that consumer demand is way down, which does not bode well for the holiday season.

Some things to note on this:
GDP is still down year over year, and at this won’t be back to the pre-recession level until sometime in 2011.

Also, the credit card data has more evidence of consumer deleveraging, with late payments on credit cards falling in the 3rd quarter, though delinquencies were up in October.

The Conference Boards Consumer Confidence index roses in November, but still at levels indicating contraction, 49.5, where 90 is more or less neutral.

The Federal Reserve Bank of Chicago also released its National Activity Index, and it fell slightly (PDF), to -1.08, which indicates that things are still moving in a recessionary direction.

In real estate, the 3rd quarter numbers are in, and the S&P/Case-Shiller Home Price Index showed home prices increasing 3.1%, though it’s still down 9% year over year, and existing home sales rose an astounding 10% in October.

The timing here shows why this housing “recovery” is a mirage. Existing home sales rose in October because these were people scrambling to get in under the wire for the new home tax credit.

Some quick math shows that the median existing home prices in the US is $173,100, and $8000 is 4.62% of that, so the the degree to which the tax credit is driving price deltas is probably pretty significant.

Meanwhile, we are having some significant movement in the bond/central bank world, both nationally and internationally, with Fitch cutting its rating Mexico’s sovereign debt, the Bank of Israel yesterday raising its overnight lending rate by a 25 basis points (¼%), and Colombia’s central bank cutting its rate by 50 basis points (½%), because inflation is below expectations, and they want to give their economy a boost.

My guess is also that Columbia wants to push its currency down to help with its trade balance.

US Treasuries rose in their most recent auction, probably because investors are looking for safe havens following the downward GDP revision.

Certainly the GDP revision pushed oil down, though interestingly enough the dollar fell against both the Yen and Euro.

Economics Update

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The Number Needs to be Under 400,000
H/t Calculated Risk

The Index of Leading Economic Indicators rose for the 7th straight month, indicating that a recovery is underway, as does the Philadelphia Bank of the Federal Reserve’s survey of manufacturing hitting 16.7, the highest level since June, 2007.

Unemployment though, is not cooperating, with initial unemployment claims unchanged from last week, they are still 505,000, unemployed is still on a pace to increase.

Basically, if it is above 400K, it still sucks, and this applies to the 4 week moving average too, which fell to 514,000, down 6,500

The continuing claims numbers are better, down 39,000 to 5.61 million, but still pretty grim too.

I would note that the continuing claims number does not count people who have moved to extended benefits, and that jumped 119,000 to 4.16 million.

You do the math 39,000 on the up side, 119,000 on the down side, gives us 80,000 of ugly.

In any case, concerns about continued growth, which I think were driven by the lack of improvement in first time claims, has people fleeing to safety again, with yields on 3-month Treasury Bill maturing in January going negative for the first time since December of last year, because people are willing to pay to keep their money safe for the next month or so..

Additionally, we have the Bank of Japan sending out signals that it will be keeping rates low, because it is concerned about deflation.

These concerns have driven oil down and the dollar and yen up.

An Interesting Concept

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From the Classic WKRP Episode

If we are in a deflationary spiral, aka a “liquidity trap,” and I believe that we are, then one of the questions is how does one get us out.

suggests that it is essential for the Federal Reserve to engage in actions that make it blindingly clear that holding to cash will be long term disastrous.

The problem right now is that, with inflation being negative, people are all too willing to sit on their cash.

John Hempton has a most unorthodox proposal, that we literally drop large amounts of currency onto the streets of American cities:

You need to convince people not to hold money. You need to convince them that cash is trash.
And to do that you need to convince the public that there will be inflation (the above gross leverage argument notwithstanding).
To do that the Federal Reserve has to be credibly irresponsible. It is not enough to print a couple of trillion dollars (which they have) because everyone thinks (with some justification) that they will suck back the money supply when the crisis is over.
No – you have to be more visibly reckless than that. You have to really convince people that there will be inflation.
So the suggestion in my title is literal. The Federal Reserve should hire a couple of hundred helicopters and load each one 10 million dollars in neatly bound parcels of $1000 each. Total cost $2 billion plus trivial helicopter hire.

Well, running the numbers, a dollar bill weighs about a gram, so let’s bundle 10 $100 bills together, so as not to create an “As God as my witness, I thought turkeys could fly,” issue.

So, $1000.00 would weigh about 11 grams (adding 1g for the wrapper), which means that if you have a helicopter carrying 4400kg in currency, they would be carrying $400,000,000.00.

So he’s wrong. You would only need 5 medium to heavy lift helicopters, or 1 Mi-26, which has a payload of 22 metric tonnes.

You probably want to spread it a bit further out, but still you are well under 100 helicopters, particularly if you allow them to make multiple trips.

Heck, even a Robinson R22 helicopter could carry more than $10 million per sortie.

Economics Update (Yesterday Too)

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H/t Calculated Risk


Empire State Manufacturing Index


H/t Calculated Risk


The Power of Computers Over Inventory


H/t Calculated Risk

Sorry about missing yesterday, life intervened.

Well, retail sales rose in October, (1st pic)up 1.4% from September’s anemic post “cash for clunkers” numbers.

September was down 2.3%, so you can do the math.

We also had the Federal Reserve Bank of New York’s Empire State Manufacturing Index falling in November, though it is still above zero, indicating continued growth. (2nd pic)

This is consistent with the small rise in industry capacity utilization. (3rd Pic)

Additionally, we have business inventories falling September, (4th Pic) and it looks like inventory restocking won’t be the thing that makes this a v-shaped recovery.

One interesting note on this graph: You can see a generally downward trend in the ratio of inventory to sales, and it is likely a result of the increasing computerization of retail.

Once you have a better picture of what you need, and when, you need to keep less as a backup.

In real estate, today’s news was grim, with delinquencies on commercial mortgage backed securities (CMBS) rising 28 basis points (0.28%) in October, to 3.86%, or about 1 in 30.

In home mortgages, delinquencies hit a new record, with 6.25%, or about 1 in 16 mortgages being 60 days or further delinquent, which is a very scary number.

We also have the National Association of Home Builders/Wells Fargo Housing Market Index flat in November, at 17, which is a pretty awful number. (5th Pic)

Finally, in currency and energy, the dollar rose on comments by Ben Bernanke which imply support of a strong dollar policy by the fed, and oil rose, largely on the expectation of more demand to support retail activity during the holiday season.

Economics Update (a Day Late)

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TIPS Spread


US Trade Deficit, h/t Calculated Risk

Notwithstanding all the chest pounding by folks claiming that the, “recession is over,” consumer sentiment is continuing to fall, with the Reuters/University of Michigan Surveys of Consumers falling to 66.0 in November, from 70.6 in October.

It also looks like real estate is in the same bind, with the US Home Purchase Index falling to a 9-year low last week, on concerns that the about what was going on with the new home buyer tax credit.

Basically, this is showing that the only thing keeping the home market from falling further, is massive government support.

We have some good news on inflation, unless you are like me, and see a period of sustained inflation as a way to monetize debts paralyzing our economy.

Paul Krugman has looked at the TIPS Spread, (top pic) basically the spread between the interest demanded by bond buyers on Treasury Inflation Protected Securities (TIPS), and regular Tressuries, and notes that recent widening of the gap between the two interest rates is because the rates for TIPS has fallen, as opposed to the rates for normal treasuries having gone up, which is kind of the opposite of what you would expect if the bond market was pricing in inflation.

In terms of international trade, we are seeing that the GDP of the Euro Zone has gone positive, and the US trade deficit jumped in September, (bottom pic) both of which indicate improvements in international commerce.

Basically, this news drove the dollar down, because traders were less interested in a safe haven, and oil fell to $76.35/bbl on Thursday’s strong inventory numbers.

Economics Update

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Unemployment, H/t Calculated Risk

Today is Jobless Thursday, and new jobless claims fell to 503,000, down from 514,000 (revised from 512K_) the lowest since January, with the 4 week moving average falling to 519,750 from last week’s 524,250, and continuing claims fell to 5.63 million.

This is good news, but we need to be down to about 400K a week to be in jobless recovery, as opposed to “job-loss recovery”, mode, (see graph pr0n, right) so there is still a way to go.

I would note that the metrics that involve moving physical objects, like port and truck traffic, and this week’s report on rail traffic from the AAR are still week. with traffic in October down 15.3% from a year ago, and down 0.3% from September.

It looks like bad news for the monoliner bond insurers is heating up, with French bond insurer CIFG is on a path to an insolvency filing.

In real estate, mortgage applications hit a 9-year low, despite the fact that the 30-year fixed mortgage fell again.

Additionally, we have dueling headlines, with CNBC saying, “Foreclosures Fall Again,” (true, though the call the improvement “fleeting”) but Bloomberg saying that, “U.S. Foreclosure Filings Surpass 300,000 for 8th Straight Month.” (also true.

Your call as to hed is the right one.

Meanwhile, there was an auction for 30 year Treasuries, and prices fell, because….Hell, I don’t know why they fell….Maybe inflation concerns, since the 3 and 10-year auctions were fairly well received.

Then we have our last bit, energy and currency, and oil fell, largely on an unexpectedly high inventory numbers, and the dollar rose, as investors looked for a safe haven.

Economics Update (a Day Late) (Again!)

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Ambac share prices

MBIA Share price

We are Unbelievably Screwed, H/t The Big Picture


Job Turnaround? Perhaps the End of the Beginning, but Not the Beginning of the End

For a bit of Auld Lang Syne, let’s start with an update on the monoliner insurers…I’ve posted on them just once since May.

Ambac’s share price is collapsing on reports that it will file for bankruptcy, and MBIA posted a $728 million loss, which comes to about $3.50/share, and the shares are trading at about $3.69 right now….ouch.

The monoliner business model is that you create a company, get an AAA rating, and then make money by renting out that credit rating.

Among other things, it’s a way to soften the blow of the comparatively low credit ratings that states and municipalities get, and it allows for another revenue stream for the parasites on Wall Street to tap.

I think think that the entire business is essentially corrupt, and should be outlawed.

In any case, we do have news that might be a cause for optimism, with China’s industrial output and retail sales grew sharply in October, and the US Department of Labor’s Job Openings and Labor Turnover Survey rose slightly in both September and October.

On the down side are the continued fall in retail sales (see 3rd chart down), and the vacancy rate in housing is at a 44-year high.

The recent news does not seem to have effected the price of Treasurys, though which were basically flat.

In energy, we have weather, specifically the fact that Ida was pretty weak by the time that it hit oil producing areas, driving oil down, and China’s gangbuster economic report drove the US dollar down.

Economics Update

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Perspective from the Wall Street Journal:
Falling Hours & Wages Drove Productivity Numbers Up


Long Term Unemployment


Unemployment vs. the Stress Tests, H/T Calculated Risk


Employment:Population Ratio, H/t Calculated Risk


Average Weekly Hours, h/t The Big Picture

Well, I already mentioned that unemployment (U3) broke 10%, with non-farm payrolls falling by 190,000, (better than September), so the next thing is the productivity number, where, “Non-farm business sector labor productivity increased at a 9.5 percent annual rate during the third quarter of 2009.” OMFG, that is a huge number.

Normally, this would be good news, but soaring productivity means fewer workers needed for a task, so in the short term it would tend to stall any recovery in the labor markets.

On the brighter side, we are now getting reports that hiring of temporary workers are increasing, which might presage a more general hiring increase, as temps tend to be hired earlier, because they are easier to get rid of.

On the other hand, US consumer credit fell for the 8th straight month in September, which indicates that the consumer is continuing to deleverage an pay down their debts.

It appears that wholesalers are deleveraging too, as wholesale inventories fell in September, though less than anticipated, and retail sales did rise, but inventories are at an all time low, 1.18 months.

In any case, the unemployment numbers drove a flight to safety, which drove Treasuries up, and their yields down.

This flight to safety has also drive both the dollar and the Yen up, while concerns about recovery has driven oil down.

Economics Update

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The Notch is the Bankruptcy law change
H/t Calculated Risk

The FOMC has met, and they are keeping their benchmark rate at essentially 0%, and they have clearly said that they will keep rates low for an extended period of time.

Meanwhile the Bank of Japan has issued a statement that its walk-back on emergency programs to bolster the credit market are not a precursor to a rate hike.

In employment, ADP’s private sector job survey reports that 203K jobs were cut in October, the smallest cut in over a year, and Challenger, Gray, & Christmas is reporting that announced that planned layoffs fell to 55,6799 in October, down 16% from September.

Meanwhile, in New Zealand, where they are supposed to be out of the recession, their jobless rate hit a 9-year high, 6½%.

Meanwhile, the Institute for Supply Management’s Non-Manufacturing survey fell to 50.6, down from September’s 50.9, but any number above 50 indicates expansion., though, as Calculated Risk notes, “the Non-Manufacturing Employment Index for October registered 41.1 percent. This reflects a decrease of 3.2 percentage points when compared to the 44.3 percent registered in September,” so the sector expanded, while employment in the sector shrank.

Still, even after the draconian legislation enacted in 2005, personal bankruptcies rose 9% in October, to a new post law change high (see graph pr0n). (American Bankruptcy Institute report)

One interesting thing on all this is that the the market is pricing in increasing inflation expectations, as indicated by the spread between Treasury Inflation-Protected Securities (TIPS), and generic Treasuries. It’s at 2.08%, the highest level in over a year.

Unsurprisingly, the statement by the Fed regarding rates, juxtaposed with the increased inflation concerns, pushed Treasuries down, and hence their yields up.

The Fed’s statement pushed the dollar down, as investors looked for higher returns, though this was abated somewhat when Fitch cut Ireland’s credit rating to AA- from AA+, which put a downward pressure on the Euro.

As is customary, the falling dollar drove oil prices up, but only by about 1%, to $80.40/bbl.

Full Federal Reserve Open Market Committee statement after break.

Press Release

Release Date: November 4, 2009

For immediate release

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Economics Update

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The Misery Index Continues to Rise
H/t My Budget 360

Today will be a slow news day, because everyone is waiting on the Federal Reserve Open Market Committee’s (FOMC) statement tomorrow afternoon.

I think that the big news is that Warren Buffet’s Berkshire Hathaway has bought the Burlington Northern-Santa Fe Railroad, betting on recovery while further reducing his stake in Moody’s Investors Service.

Warren Buffet does not invest in things that he cannot get his head around, which is why he missed the dot com implosion, he couldn’t figure out how they could make money.

So now, he is dumping a financial company for rail, which implies to me that he sees a lot more trouble ahead for the banking industry, even as the economy recovers, and the demand for goods and services increases.

This is further reinforced by the September new factory orders rising by 0.9%.

Also the numbers for automobile sales were remarkably good, considering the “cash for clunkers” sales hangover.

There was strong sales growth for and strong October sales numbers from Ford, GM, Nissan, Hyundai and Kia, while sales for Toyota and Honda were basically flat.


Bummer of a birth mark, Chrysler

As for Chrysler, well…..”Bummer of a birthmark, Hal.

BTW, if you’ve been reading the financial press, you may not that they are touting a 4.4% increase in the MIT Center for Real Estate’s transaction-based index (TBI) index for the 3rd quarter.

One should note, as Calculated Risk does, that this is not the But this isn’t the monthly Moody’s/REAL Commercial Property Price Index (CPPI), which actually showed a drop.

This is an index of, “commercial properties sold by major institutional investors,” and these institutional investors are likely avoiding the distressed properties like the plague.

It should be noted that things are still bad, with business bankruptcy filings rising 7% in October, a change from the drops in filings in August and September.

Gold surges to an all-time high – Nov. 3, 2009: “

Here’s a bonus for the gold bugs, gold hit a new high, $1,084.90/oz (troy) after the Reserve Bank of India announced that it was bought 200 metric tonnes of gold from the IMF. (What’s up with this? Really, I have no clue.)

In energy and currency, both oil and the dollar rose today.

Economics Update

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Commercial Real Estate Delinquencies
$ billion


Percentage
CRE Data H/t Realpoint (PDF) and FT Alphaville


ISM Employment Index v BLS Manufacturing Employment H/t Calculated Risk


Construction Spending

Yeah, we are in some sort of recovery, though I still think that the underlying problems, particularly as pertain to finance and real estate, have not been addressed.

The Institute for Supply Management’s Manufacturing index rose to 55.7 in October, up from September’s 52.6 and its Manufacturing Employment index rose to 53.1, the first time that this index has broken 50, showing expansion, since April 2006.

On the other side of the Pacific, we have Chinese manufacturing growing for the 8th straight month.

Real estate news appears to be improving too, with construction spending rising in September, and the NAR’s Pending Home Sales Index rising for the 8th month in a row.

This news has had the anticipated effects in currency and energy, with the dollar falling on an increased risk appetite, and oil rising in expectation of increased demand.

Economics Update

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Too True!
H/t Calculated Risk,
The Artist should have his website up shortly


Fannie Mae Single Family Delinquencies..OUCH

You know with this recession being over and all, maybe someone should tell the consumer, because consumer spending fell by 0.5% in September, the biggest drop in 9-months.

So consumers are skittish, as a new consumer sentiment survey, this time the Reuters / University of Michigan Survey of Consumer Sentiment Survey, fell in October, down to U Michigan survey, 70.6 from 73.5 in September.

So, that’s like 3 different consumer sentiment surveys that I’ve seen in the past 3 days, one up, and two down.

You have permission to be confused.

There are still a lot of people hurting out there, as shown by the Fannie Mae single family delinquency numbers for August. (see graph pr0n)

I am not seeing even a smidgen of a moderation there.

In the central bank world, the banks appear to be slowly walking back from the extreme measures that they took a year ago, with the Federal reserve re-instituting regulations that it suspended which allowed banks to supply capital to affiliates, which is generally a no-no, and the Bank of Japan is slowly pulling out of the credit markets.

Basically, they are trying to slow-walk their quantitative easing (printing money) measures.

It does not mean that they will be raising rates soon, but it does mean that there is a very gradual tightening of money going on.

In any case, the consumer spending numbers have rattled the markets, pushing US treasuries higher.

In stocks, the VIX, an index of stock volatility spiked upward by 24%, which indicates that market participants are expecting major swings in the stock market.

The bearish news today also pushed oil down, on demand concerns, and pushed the dollar up, on a flight to safety.