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Archive for May, 2008

2008-05-30 US Economic Releases

Posted by Sada Mosler on 30th May 2008

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2008-05-30 Personal Income

Personal Income (Apr)

Survey 0.1%
Actual 0.2%
Prior 0.3%
Revised 0.4%

Soldiering on, and would have been higher if the Fed hadn’t cut rates as interest income is a meaningful factor.


2008-05-30 Personal Spending

Personal Spending (Apr)

Survey 0.2%
Actual 0.2%
Prior 0.4%
Revised n/a

Also holding up and supporting GDP at muddling through levels.


2008-05-30 PCE Deflator YoY

PCE Deflator YoY (Apr)

Survey 3.1%
Actual 3.2%
Prior 3.2%
Revised n/a

Zig-zagging its way higher as crude prices rise and get passed through to everything else over time.


2008-05-30 PCE Core MoM

PCE Core MoM (Apr)

Survey 0.1%
Actual 0.1%
Prior 0.2%
Revised n/a

Taking a breather for a month or so.


2008-05-30 PCE Core YoY

PCE Core YoY (Apr)

Survey 2.1%
Actual 2.1%
Prior 2.1%
Revised n/a

In the 1970′s this moved through 3% as headline moved through 6%.  Might be just a few months away.


2008-05-30 Chicago Purchasing Manager

Chicago Purchasing Manager (May)

Survey 48.5
Actual 49.1
Prior 48.3
Revised n/a

Another indicator coming in better than expected and showing signs it has bottomed.


2008-05-30 U. of Michigan Confidence

U. of Michigan Confidence (May F)

Survey 59.5
Actual 59.8
Prior 59.5
Revised n/a

Though a tad better than expected, still down and out due to rapidly rising inflation expectations.


2008-05-30 NAPM-Milwaukee


Survey 47.0
Actual 45.0
Prior 48.0
Revised n/a

Not looking cheerful in Milwaukee.


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2008-05-30 Data Recap

Posted by Sada Mosler on 30th May 2008

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Karim writes:


  • Core pce up 0.1% m/m and unch at 2.1% y/y (recent high 2.5% in 2/07; recent low 1.9% in 9/07); 3mth annualized rate back to 1.9%

Yes, the Fed welcomes this but is concerned about its forecasts given food/energy/import/export prices and pipeline pressures.


  • Headline rises from 3.1% to 3.2%

And likely to go up from here.


  • Personal income up 0.2% m/m; wage and salary component posts decline of 0.2%; likely reflecting end of seasonal bonuses in Q1

Yes, but sufficient to keep consumption muddling through and not collapse as the Fed had feared.


  • Chicago PMI rebounds from 48.3 to 49.1

Still weak, but yet another sign the worst may be over.


  • Final Michigan reading largely unch but 5-10yr infl expex up a tick from 3.3% to 3.4%

Yes, and very troubling for the FOMC. There have been numerous strong statements regarding the imperative of not letting inflation expectations elevate.


  • All add up to ISM likely holding below 50 next week; payrolls down another 50-75k and ue rate back up to 5.1% or 5.2% for May

Yes, weak, but not recession, and strong enough to support the stock markets and ever higher consumer prices.


Posted in Inflation, USA | No Comments »

U.S. May Final Consumer Confidence: Summary (Table)

Posted by Sada Mosler on 30th May 2008

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2008-05-30 US May Final Consumer Confidence TABLE

US May Final Consumer Confidence TABLE

Interesting how current conditions improved while expectations fell, probably due to expected higher prices.

It’s all about inflation now.


Posted in Inflation | No Comments »

ICSC Survey

Posted by Sada Mosler on 30th May 2008

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Karim writes:

The ICSC weekly chain store sales index was unchanged for the week ending May 24 compared with the prior week and rose by 1.5% from the same week of the prior year–steady with the prior week. The ABC News/Washington Post Consumer Comfort Survey for the period ending May 25 continued to show a record low buying climate evaluation by consumers (for two consecutive weeks) with 81% of respondents calling it a bad time to spend money.

ICSC Research’s statistical analysis (combined with the consumer survey result) suggests that the record high gasoline prices at the pump are dragging down chain-store sales demand by nearly 1 percentage point currently, while the lift so far from higher income, because of the federal tax rebate, is only offsetting that spending drag by about a quarter of percentage point. As such, the net effect (approximately -0.75 pp.) continues to be negative on store spending. April chain store sales on a year-over-year comparable-store basis rose by 3.5%, based on ICSC’s tally of retail chains. However, the April 2008 increase was exaggerated by the shift in the date of Easter compared with April 2007. Over the prior two months, the average monthly year-over-year pace was 1.5%.

Yes, the key is whether the oil producers ‘spend’ the funds here or ‘save’ them and build reserves as they did in the 1970′s.

So far the booming US exports and annecdotal evidence of massive infrastructure expenditures in the middle east indicate they have been spending their higher revenues and sustaining US GDP at muddling through levels.

This means employment and growth muddle through but real terms of trade and our standard of living declines

As of May 23, 43% of the $107 bn. personal federal tax rebate already has been distributed to taxpayers, which should begin to turn the consumer spending tide a bit. In a special consumer tracking survey taken between May 22 and 25, 12% of households reported spending most of the rebate already. Based on the latest tax rebate flow that would imply approximately $5 to $10 bn. of the rebate was spent already by the 51.7 million taxpayers receiving a rebate check so far.

According to an ICSC Research tax rebate survey, released on May 19, ultimately 22% of households expect to spend the rebate, which will potentially mean nearly $25 bn of spending power over the next several months. For the fiscal month of May, ICSC Research expects monthly sales will grow by between 1% and 2% on a year-over-year same-store basis.

My best guess is more will be spent with a relatively short lag of maybe 30 days after receiving the checks. This includes using the checks to make down payments on deferred purchases, such as small appliances and home improvements, which has a multiplier effect.


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Dow Jones: Housing Starts

Posted by Sada Mosler on 30th May 2008

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Housing Starts Down 8.7% In April

(Dow Jones) Japan’s housing starts fell 8.7% in April from a year earlier to 97,930 units, the Ministry of Land, Infrastructure and Transport said Friday.

The result was better than the 11.0% decline forecast by a Dow Jones and Nikkei poll of economists.

That was the 10th straight month of declines. The orders fell 15.6% in March and 5.0% in February.

Annualized housing starts stood at 1.151 million units.

Note that this is now higher than in the US, with a far lower population.

US starts should move well above this level over the next few months.

Housing starts for individual homes in April fell 7.8% to 27,274 units, while rental housing starts slipped 5.3% to 39,220 units.

Starts for multiunit dwellings, meanwhile, fell 10.4% to 31,048 units, including condominiums.


Posted in Articles, Housing, JN | No Comments »

Re: Midcurve steepener – The unusual nature of the current USD selloff

Posted by Sada Mosler on 30th May 2008

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(an interoffice email)

On Thu, May 29, 2008 at 11:58 PM, Deep wrote:
>    The attached charts shows the change in 3M Forwards for the USD curve from its
>    lowest yield point this year (17Mar08) to today.
>    In Chart 1, the changes are compared to two other periods where we had strong
>    selloffs Jun03->Sep03 and Apr07->Jun07.
>    As the chart shows, in the current selloff, the front end has moved approx 180bp
>    (similar in magnitude to the 2003 selloff). However, in contrast to both 2003 and 2007,
>    the forwards beyond 8y have barely moved. In 2003 and 2007, the 10Y3M rate sold off
>    approx 55% as much as the front end. Both of these periods were characterized by
>    mortgage convexity paying.
>    The lack of movement of the back end in the current selloff is leading to an extreme
>    flattening of the yieldcurve compared to prior selloffs.
Hi Deep,

I’m thinking the forwards are anticipating future Fed moves. They see a relatively quick ‘take back’ of the cuts as market functioning returns and we are left with a ‘normal ‘ slowdown.

With cpi looking to move past 5% over the next few months, passthroughs to core increasing, gdp muddling through with strong exports, the Fed will have to decide what the appropriate ‘real rate’ is for what they feel is an appropriate output gap.

The markets will likely believe/discount the Fed will be successful, which means a eurodollar curve that rises sharply with the inflation attack and then tails off after it’s success.


>    A possible reason for the unusual nature of the current selloff maybe that
>    two offsetting flows characterize it -
>    a) unwind of yieldcurve steepeners by Fixed income, Credit and Equity Funds
>    as part of their delevering out of steepeners – this leads dealers to hedge by
>    paying the front end (less than 5Y) and receive the back end (beyond 10Y).
>    b) paying of 10Y by mortgage convexity hedgers
>    The offsetting flows in the 10Y sector may result in the lack of movement in the
>    forwards beyond 8Y.
>     A low-risk way to position against the extreme flattening selloff is through
>    the Midcurve steepener. The trade is to
>     Buy 3160mm Z8expiryZ9 97.00 Call
>    Sell 100mm 12Dec08->10Y 4.25% receiver
>     execute at zero cost


Posted in Email | No Comments »

2008-05-30 EU News Highlights

Posted by Sada Mosler on 30th May 2008

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European Inflation Accelerates More Than Forecast as Oil Surges

Note the concern over inflation expectations in the text below.
That’s what has turned the Fed as well.

German Retail Sales Unexpectedly Dropped on Inflation
Weber Rules Out Changing ECB’s Current Inflation Goal

While the US economic memory from the depression is unemployment lines, the German memory is wheelbarrows full of money.

Eurozone unemployment is down to about 7% which frightens the inflation hawks, as per the below reports.

Trichet Says Pushing Down Inflation Is ECB’s Biggest Challenge



European Inflation Accelerates More Than Forecast as Oil Surges

(Bloomberg) European inflation accelerated faster than economists forecast this month as oil prices jumped to a record, adding to what European Central Bank President Jean-Claude Trichet has called policy makers’ “biggest challenge.”

The inflation rate in the euro area rose to 3.6 percent, matching a 16-year high, from 3.3 percent in April, the European Union statistics office in Luxembourg said in a statement today.

Economists had forecast a 3.5 percent rate, according to the median of 36 estimates in a Bloomberg survey.

The ECB, which aims to keep consumer-price growth below 2 percent, said yesterday there are signs inflation expectations “have been trending up recently” and it’s imperative that they remain contained. The Frankfurt-based bank celebrates its 10th anniversary this weekend, having failed to meet its target for the last eight years.

“There has been a sharp deterioration in the inflation picture,” said Simon Barry, an economist at Ulster Bank in Dublin. “Our base case is the ECB is on hold for now, but the inflation risk has increased and there’s no room for complacency.”

Separate figures published by the statistics office today show that unemployment in the euro area remained at a record low 7.1 percent in April.

Crude Oil
Crude oil prices have doubled in the last 12 months and reached a record $135.09 May 22. Food commodities have also surged in the last year, boosting how much consumers are paying for staples such as bread and milk. Wheat has gained 45 percent in the past year and corn has surged 51 percent.

Soaring prices have led to protests in Europe and companies and consumers expect prices to continue to rise. A European Commission index of manufacturers’ selling price expectations increased this month, while consumers’ outlook for their personal finances deteriorated. Greencore Group Plc, the world’s biggest maker of prepared sandwiches, this week said it’s been passing on cost increases to customers by raising its prices.

In France, fishermen have blockaded ports in the past week to protest against the increase in oil prices, while a group representing bus companies in Ireland said it may have to stop school runs because of the cost of gasoline.

Key Rate
The ECB has kept its key rate at a six-year high of 4 percent to counter inflation even as the economy of the 15 euro nations cools. The central bank is concerned that wages will increase to compensate for the higher cost of living, threatening a wage-price spiral.

“We’re looking at below trend growth” in the euro area, said Barry, the Ulster Bank economist. “But for the ECB to consider cutting, that would require a pretty sharp weakening in the economy and nothing so far is heading that way.”


Some companies are raising salaries. German wages increased the most in 12 years in January, the statistics office said last month. Germany’s Ver.di union in March negotiated a settlement for as many as 2.1 million public-sector staff that is worth 8.9 percent over two years.


Weber Rules Out Changing ECB’s Current Inflation Goal

(Bloomberg) European Central Bank council member Axel Weber said revising the ECB’s definition of price stability would jeopardize the bank’s credibility at a time when fighting inflation is “of the essence.”

“I see no compelling reason why a temporary, albeit protracted, rise in energy and food prices should give rise to a discretionary change in the eurosystem’s stability norm,” Weber said at a conference in Frankfurt today. “It would risk unanchoring inflation expectations at a point in time where their solid anchoring is of the essence.”

The ECB defines price stability as keeping inflation just below 2 percent “over the medium term” and has struggled to meet that goal since taking charge of monetary policy in 1999. While economists including Joachim Fels of Morgan Stanley say the ECB should be open to changing its target, President Jean-Claude Trichet said May 8 he won’t consider it “for one second.”

“The present price hikes are a timely reminder that, when it comes to inflation, complacency is out of place,” said Weber, who is also head of Germany’s Bundesbank. “We cannot rest on our laurels where credibility is concerned.”

`Prepared to Act’
The ECB’s 21-member governing council is scheduled to hold its next assessment on interest rates on June 5.

“Over the past decade, the Eurosystem has shown that — if necessary — it is prepared to act in a firm and timely manner,” Weber said. “We will continue to do so over the next decades in order to maintain price stability.”

Surging energy costs pushed inflation to 3.6 percent in May, the most since 1992, from 3.3 percent in the previous month, the European Union’s statistics office in Luxembourg said today.

Economists forecast a 3.5 percent rate, according to the median of 36 estimates in a Bloomberg survey.

Surging food and oil prices “represent the latest, and arguably the most worrying, disturbance in a series of substantial upside price shocks,” Weber said.

Inflation expectations, as measured by French inflation-indexed bonds, rose to an all-time high of 2.46 percent on May 28 from around 2.1 percent two months ago.

A surge in inflation expectations close to 3 percent for this year “is hardly surprising,” Weber said. “Market participants and the general public are likely to readjust their short-term inflation expectations as soon as they observe inflation returning to a lower level.”


Trichet Says Pushing Down Inflation Is ECB’s Biggest Challenge

(Bloomberg) European Central Bank President Jean-Claude Trichet said the central bank’s “biggest challenge” is to push inflation just below 2 percent in the medium term, according to an interview with Bild newspaper.

“We have to be careful that current price shocks of food and oil don’t translate into price increases of other goods and exaggerated wage agreements, thus triggering a general inflation and wage wave,” Trichet told the newspaper in the interview published today. Bild translated his remarks into German.

Price stability “is and will always be the most important aim of the ECB,” Trichet told the newspaper. Regarding the global financial turbulence, the ECB continues to be “very alert and ready to act” if needed, he said.


Germany is the only large member of the euro zone where the measure of economic sentiment remains above its long-term average of 100.0. It rose slightly to 103.0 in May from 102.8 in April.

French economic sentiment in May fell below the 100.0 long-term average for the first time in more than a year, declining to 99.8 from 103.1 a month earlier. Sentiment remains well below average in Italy, Spain and Greece.


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2008-05-29 US Economic Releases

Posted by Sada Mosler on 29th May 2008

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2008-05-29 GDP

GDP QoQ Annualized (1Q P)

Survey 0.9%
Actual 0.9%
Prior 1.5%
Revised 1.7%

Staying clear of recession levels.
Looking like Q4 was the bottom of this move.


2008-05-29 Personal Consumption

Personal Consumption (1Q P)

Survey 1.0%
Actual 1.0%
Prior 1.0%
Revised n/a

As expected, not collapsing as feared, yet.


2008-05-29 GDP Price Index

GDP Price Index (1Q P)

Survey 2.6%
Actual 2.6%
Prior 2.6%
Revised n/a

Not good, and pipeline pressures continuing to build.


2008-05-29 Core PCE QoQ

Core PCE QoQ (1Q P)

Survey 2.2%
Actual 2.1%
Prior 2.2%
Revised n/a

A little better than expected.

But trend looking up.


2008-05-29 Initial Jobless Claims

Initial Jobless Claims (May 24)

Survey 370K
Actual 372K
Prior 365K
Revised 368K

Seems to be leveling off.

Fiscal package should help.


2008-05-29 Continuing Jobless Claims

Continuing Claims (May 17)

Survey 3060K
Actual 3104K
Prior 3073K
Revised 3068K

Lagging indicator, still trending higher, but still far below recession levels.


2008-05-29 Help Wanted Index

Help Wanted Index (Apr)

Survey 19
Actual 19
Prior 19
Revised n/a

Indicator of soft jobs markets.


Posted in Daily | No Comments »

Reuters: Saudi Arabia Pumps Extra Oil to Match Demand

Posted by Sada Mosler on 29th May 2008

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Saudi Pumps More Oil

(Reuters) Top oil exporter Saudi Arabia has boosted supply to help meet the world’s need for fuel and may further increase output later if needed, a senior Gulf OPEC source said on Wednesday.

Yes, they set price and then sell all that’s demanded at their price. The fact that they are pumping more means demand has increased at current prices.

OPEC’s 13 members, especially core Gulf producers, are taking their output cues from global oil demand rather than sticking to production targets, said the source familiar with Saudi thinking.

“Whenever there is demand it will be met by OPEC,” he said. “The majority of OPEC producers definitely don’t like this high oil price because it is neither in their interest nor in the interest of the global economy, and it’s especially painful for the developing world.”

U.S. crude hit a record above $135 a barrel last week, prompting consumer countries such as the United States to renew their plea for more oil from the Organization of the Petroleum Exporting Countries.

OPEC’s leading producer Saudi Arabia has been adjusting supply to match demand since August last year when prices were around $60 and it was pumping around half a million barrels per day (bpd) less than now.

Saudi Oil Minister Ali al-Naimi said earlier this month output would rise by 300,000 bpd and hit 9.45 million bpd in June. Riyadh is pumping about 9.1 million bpd this month, the source said.

Global demand is likely to increase this year by about one million bpd, with demand picking up in the third quarter, the senior Gulf OPEC source said, which explains the current Saudi production increase.

Last September OPEC agreed a 500,000 bpd increase in its formal output targets, with Saudi Arabia providing the greatest share. The group holds its next official conference on Sept. 9 in Vienna.

That’s a long way off.

Most OPEC members would like to see lower prices, but there was little they could do as the market was responding to factors beyond supply and demand, the source said. If those fundamentals dictated the price, oil would cost around $60 to $70 a barrel, the source said.

And the pundits believe this ‘source’.

The world oil market balance is similar to that in 1999, when the price was less than $20, he added.

The oil market has risen in large part because of increasing doubt over production capacity and global oil reserves, the OPEC source said.

That concern was unwarranted, he said, but helped to explain a roughly $5 premium for crude prices for delivery in 2016 compared with the prompt contract now trading at about $126 a barrel.

A wave of investment activity has also been fueled by the weakness of the U.S. currency and lower U.S. interest rates, which adds to the appeal of dollar-denominated commodities.

“This big rush to oil futures is definitely leading to higher and higher prices,” he said. “So adding more or taking less oil from the market will not change the oil price since the sentiment of investors in the futures market is pushing for higher prices.”

Everything but the obvious: Saudis are swing producers, setting price and letting quantity adjust.


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2008-05-28 US Economic Releases

Posted by Sada Mosler on 28th May 2008

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2008-05-28 MBAVPRCH Index

MBAVPRCH Index (May 23)

Survey n/a
Actual 352.7
Prior 352.5
Revised n/a


2008-05-28 MBAVREFI Index

MBAVREFI Index (May 23)

Survey n/a
Actual 2013.5
Prior 2210.5
Revised n/a

Both holding their own.


2008-05-28 Durable Goods Orders

Durable Goods Orders (Apr)

Survey -1.5%
Actual -0.5%
Prior -0.3%
Revised n/a


2008-05-28 Durables Ex Transportation

Durables Ex Transportations (Apr)

Survey -0.5%
Actual 2.5%
Prior 1.5%
Revised 1.7%

Yet another set of ‘better than expected’ releases.


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2008-05-27 US Economic Releases

Posted by Sada Mosler on 27th May 2008

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2008-05-27 S&P-CaseShiller Home Price Index

S&P/CaseShiller Home Price Index (Mar)

Survey n/a
Actual 172.2
Prior 175.9
Revised 176.0

Still moving lower. The sample is the 20 largest metro areas which were the regions hit hardest by the speculative bulge.

Broader measures don’t show this kind of depreciation.


2008-05-27 S&P-CS Composite-20 YoY

S&P/CS Composite-20 YoY (Mar)

Survey -14.2%
Actual -14.4%
Prior -12.7%
Revised n/a

Same as above.


2008-05-27 S&P-CS US HPI

S&P/Case-Shiller US HPI (1Q)

Survey n/a
Actual 159.2
Prior 170.6
Revised 170.6

Same as above.


2008-05-27 S&P-CS US HPI YoY%

S&P/Case-Shiller US HPI YoY% (1Q)

Survey n/a
Actual -14.1%
Prior -8.9%
Revised n/a

Same as above.


2008-05-27 New Home Sales

New Home Sales (Apr)

Survey 520K
Actual 526K
Prior 526K
Revised 509K

April up and higher than expected, March revised down some.


2008-05-27 New Home Sales MoM

New Home Sales MoM (Apr)

Survey -1.1%
Actual 3.3%
Prior -8.5%
Revised -11.0%

As above.

2008-05-27 Consumer Confidence

Consumer Confidence (May)

Survey 60.0
Actual 57.2
Prior 62.3
Revised 62.8

This is what an export economy looks like.


2008-05-27 Richmond Fed Manufacturing Index

Richmond Fed Manufacturing Index (May)

Survey 1
Actual -3
Prior 0
Revised n/a



2008-05-27 ABC Consumer Confidence

ABC Consumer Confidence (May 25)

Survey -49
Actual -51
Prior -49
Revised n/a

As above. Consumers are getting squeezed by inflation, while exports boom.


Posted in Daily | No Comments »

Data Review

Posted by Sada Mosler on 27th May 2008

thanks, a few quips below:

Karim writes:

  • Conference Board survey falls from 62.8 to 57.2 (lowest since 1992)
  • Both present situation and expectations decline

Labor conditions, plans to buy home and plans to buy auto all fall to new cycle lows

Tough living in an export economy.

  • 1yr inflation expectations jump from 6.8 to 7.7

Inflation rips as non-residents outbid us for your output, as all our funds are spent on food and fuel.

  • Case Shiller Home price index accelerates rate of decline, down 6.7% q/q and 14.1% y/y

Narrow index of 20 metro regions, with 4 or 5 biggest spec boom/bust regions doing most of the damage.

  • New home sales rise 3.3% in April; mths inventories fall from 11.1 to 10.6

Coming back from unsustainably low levels give the US population and income growth.

Actual homes in inventory fell to the lowest levels since July.

  • Jan-March sales data revised lower by cumulative 5.5%

Tough first quarter with record low consumer sediment :) behind us.

Posted in USA | No Comments »

Mexico’s poor get food cash bonus

Posted by Sada Mosler on 27th May 2008

Right, this was also suggested in a prior email- the political response towards a food shortage would be cash distributions.
Assuming there actually is a world food shortage and the prices are indicative of a world market allocating by price, this doesn´t create any new food but simply adds upward pressure on prices, triggering an international inflation.

Politically, there is no other choice but to add to inflation like this to at least be seen to be doing something.

Mexico’s poor get food cash boost

The Mexican government is to give its poorest citizens a monthly cash payment of 120 pesos ($11.55; £5.85) to help them cope with rising food prices.

The news came a day after the country said it would cut tariffs on imported crops such as corn, wheat and rice.

In a further sign of the impact of rising food and fuel costs, inflation in Vietnam jumped to 25% in May, the highest rate for 10 years.
Average food costs have risen by 42.4% in a year, the Statistics Office said.

Growing demand
In Mexico, official figures show consumer prices rose by 4.55% – the fastest rate for three years – in the 12 months to 30 April, led by increases in the cost of tomatoes, chicken and cooking oil.

Growing demand from fast-expanding countries such as India and China has been blamed for spiralling food prices, along with record fuel costs and the use of grain to produce bio-fuels.

Governments around the world are under pressure to intervene to help the poorest cope with the sharp food price rises.

There have been public demonstrations about food prices in a number of countries including Egypt and South Africa.

Mexico’s monthly cash payment, which will go to 26 million people in the Latin American country, equates to just over twice the national daily minimum wage of 50 pesos.

The government faced street protests last year when the price of tortillas doubled.

Rice restrictions
Vietnam has seen the price of rice, its staple food, jump 67.8% in the last 12 months, according to government figures.

One of Vietnam’s most important sources of imported rice, Cambodia, stopped exporting the grain in March.

It is one of a number of rice-producing countries, including India, Egypt and Indonesia, to have either banned or restricted exports in recent months to secure supply for domestic customers.

On Tuesday, Cambodia was set to resume exports of rice after its two-month ban ended.

Prime Minister Hun Sen said only rice that was not needed for domestic consumption could be sold for overseas consumption until the new harvesting season began in December.

Last year, that amounted to 1.6 million tons of milled rice.

Posted in Energy | No Comments »

Bloomberg: New-Home Sales in the U.S. Rose 3.3% to 526,000 Pace

Posted by Sada Mosler on 27th May 2008

Looking more like a bottom with every report. And most housing reports are ‘fighting’ some strong seasonals in the spring.

by Shobhana Chandra

(Bloomberg) New-home sales in the U.S. unexpectedly rose in April after readings for the prior month were revised down, signaling a worsening housing slump is still a threat to the economy.

Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington. A separate report today showed home prices dropped in the first quarter by the most in at least 20 years.

A separate report today showed confidence among American consumers fell to the lowest level since October 1992 this month, raising the risk that households will rein in spending. The Conference Board’s confidence index declined more than forecast to 57.2.

They already have reined it in. That´s what an export economy looks like!

Economists’ Forecasts
Economists forecast new home sales would drop to a 520,000 annual pace from an originally reported 526,000 rate the prior month, according to the median estimate in a Bloomberg survey of 70 economists. Forecasts ranged from 500,000 to 570,000.

Purchases in April were the second lowest since October 1991. The March reading became the weakest since April 1991.

The median sales price last month increased 1.5 percent from April 2007 to $246,100. The figures can be influenced by changes in the mix of sales at the regional level. For that reason, economists prefer price measures that track the same house over time.

They never added that type of comment when prices fell. Still a lot of biased reporting out there.

One such gauge is the S&P/Case-Shiller index. Those figures, also reported today, showed house prices dropped 14.1 in the first quarter compared with the same period in 2007, the biggest decline since records began in 1988.

Much narrower market and different months

Sales of new homes were down 42 percent from April 2007, the biggest year-over-year decline since September 1981, the Commerce report showed.

Better to be 10 miles from hel_ and moving away from it than 100 miles away moving towards it.

Drop in Inventories
One bright spot is that inventories decreased. The supply of homes at the current sales rate dropped to 10.6 months’ worth from 11.1 months in March. The number of homes completed and waiting to be sold decreased to 181,000, the fewest since July.

Shortages looming as suggested in prior emails.

Purchases rose in three of four regions, led by a 42 percent jump in the Northeast. They increased 8.3 percent in the West and 5.8 percent in the Midwest. Purchases dropped 2.4 percent in the South.

Sales of previously owned homes, which account for about 85 percent of the market, fell 1 percent in April, and the supply of unsold properties reached a record, the National Association of Realtors said last week.

New-home purchases, which make up the remaining 15 percent of the market, are considered a timelier indicator because they are based on contract signings. Resales are calculated when a contract closes, usually a month or two later.

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2008-05-27 Weekly Credit Graph Packet

Posted by Sada Mosler on 27th May 2008

2008-05-27 IG On-the-run Spreads

2008-05-27 IG6 Spreads

2008-05-27 IG7 Spreads

2008-05-27 IG8 Spreads

2008-05-27 IG9 Spreads

Might be settling into a trading range.

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2008-05-24 Valance Weekly Chart Review

Posted by Sada Mosler on 24th May 2008

2008-05-24 Real GDP

Hard to see any recession here, and the consensus is for Q1 to be revised up to 0.9%, bringing year over year up to 2.8%.

I also think the estimates of the effects of the fiscal package are on the low side.

2008-05-24 Personal Spending, Personal Income

Income and spending continue to chug along, ahead of core but not headline ‘inflation’.

2008-05-24 Total Delinquency Rate, Residential Delinquency Rate, All Consumer Loan Delinquency Rate, Credit Card Delinquency Rate

Still moving higher.

2008-05-24 Fiscal Balance, Government Public Debt, Government Spending, Government Revenue

Fiscal rebates now kicking, with other government spending on the rise as well – should be a decent Q2 and better Q3.

And revenues seems to be holding up also indicating no recession yet.

2008-05-24 Export Prices, U. of Michigan 12 Month Inflation Expectations, CRB Index, Saudi Crude Production

2008-05-24 Philly Fed Prices Paid, Philly Prices Received

While headline CPI took a slight breather due to seasonal factors, the drivers of the current bout of inflation continue without let up, as crude oil touches $135 and the USD fall resumes.

Saudi crude output remains above 9 million bpd, indicating world demand is holding at the higher prices.

Booming exports and export prices work in tandem.

Inflation expectations have alarmed the FOMC with recent speeches indicating there will probably be no more rate cuts if inflation continues to escalate .

2008-05-24 U. of Michigan Confidence

Posted in USA, Valance | 3 Comments »

Homes in inventory

Posted by Sada Mosler on 23rd May 2008

2008-05-23 Homes in Inventory

Homes in Inventory

Looks like a lot of additional homes for sale hit the market all at once.

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2008-05-23 US Economic Releases

Posted by Sada Mosler on 23rd May 2008

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2008-05-23 Existing Home Sales

Existing Home Sales (Apr)

Survey 4.85M
Actual 4.89M
Prior 4.93M
Revised 4.94M

Looking more and more like a bottoming action.


2008-05-23 Existing Home Sales MoM

Existing Home Sales MoM (Apr)

Survey -1.6%
Actual -1.0%
Prior -2.0%
Revised -1.8%

A touch better than expected for both March and April.


Posted in Daily | No Comments »

OFHEO Home Price Index

Posted by Sada Mosler on 22nd May 2008

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2008-05-22 OFHEO Home Price Index

OFHEO Home Price Index

Yes, down a touch for the quarter, but overall looks like it’s flattened out but certainly not collapsed as headlines indicate.


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5 year tips 5 years forward and recent Fed speeches

Posted by Sada Mosler on 22nd May 2008

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2008-05-22 5yr Tips 5yr Forward

5yr Tips 5yr Forward

The Fed watches this carefully in regard to inflation expectations, along with surveys and professional forecasts which have gone up considerably.

The 5 year tips 5 years forward dipped a couple of months ago on the generally commodity sell off, then fell again for short term technical reasons- the first five years went up with crude and the 10 year stayed about the same, so the forwards went down as a matter of arithmetic and little volume – and now this is all sorting itself out along the curve, with the forwards moving up as shown.

Just saw Fed Gov Warsh on TV saying the same thing Vice Chair Kohn said (and was also in the Fed minutes) they have to be careful about perceptions that the Fed’s inflation tolerance have gone up feeding into inflation expectations.

And concern has been further supported by pronouncements that even if the economy weakens some there’s no room for rate cuts.


Posted in Fed, Inflation | No Comments »