Monthly Archives: January 2014

Mortgage purchase apps now down 20% yoy

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Most interesting is the positive spin from CNBC. Bouncing back? Finding their footing?

As they say, “Don’t p on me and tell me it’s raining…”

Highlights below:

Mortgage refinances bounce back as rates settle

By Diana Olick

January 8 (CNBC) — A sharp surge in interest rates caused mortgage refinances to plummet two weeks ago, but they are now finding their footing again.

Applications to refinance rose 5 percent last week after falling 9 percent the previous week, according to a seasonally adjusted measure by the Mortgage Bankers Association. They are still down 69 percent from a year ago, as mortgage rates are now up well over a full percentage point from January of 2013.

The average rate on a conforming 30-year fixed loan hit 4.72 percent two weeks ago, after the Federal Reserve announced it would slowly curtail its purchases of mortgage-backed bonds. That rate stayed put last week, causing more borrowers to come back to the refinance market.

The average rate for a jumbo loan is once again below that of conforming at 4.66 percent, as lenders and investors in that market are growing more confident and competitive. They are also not faced with high guarantee fees from Fannie Mae and Freddie Mac.

Applications for a mortgage to purchase a home, however, did not bounce back, falling one percent on week.

“Mortgage application activity remained weak over the holiday period, with purchase applications almost twenty percent lower than at the same time last year,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. “Other economic data is reflecting a strengthening economy, so this weakness is likely due to a combination of the increase in rates and still tight credit.”

Credit availability was little changed over the past month, according to another MBA report. Investors are continuing to fine-tune credit scores and loan-to-value formulas and debt-to-income measures in order to comply with new rules from the Consumer Financial Protection Bureau; those rules go into effect at the end of this week.


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ADP up 238,000

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Promising, but +48,000 construction jobs seems suspect?

Shopping and car sales peaked during that period as well.

The ADP national employment report is computed from a subset of ADP records that represent approximately 400,000 U.S. business clients and approximately 23 million U.S. employees working in all private industrial sectors. The data are collected for pay periods that can be interpolated to include the week of the 12th of each month

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Factory orders and ISM non manufacturing releases

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First, factory orders
Always boring
;)

Factory Orders



Solid domestic demand together with solid foreign markets appear to be giving a lift to the factory sector with factory orders up a very strong 1.8 percent in November. Another plus is a 4 tenths upward revision to October, to minus 0.5 percent. September orders are unrevised and very strong at plus 1.8 percent like November.

Excluding transportation, orders rose 0.6 percent in November vs an upward revised 0.1 percent gain in October. Orders for capital goods show a big surge, possibly boosted by year-end tax issues but also perhaps by rising business confidence.

Shipments were very strong in November, up 1.0 percent following incremental 0.1 percent gains in the two prior months. And there seems to be no risk of inventory overhang as inventories were unchanged to bring down the inventory/shipments ratio to 1.28 from 1.29.

Unfilled orders are a special plus, jumping 1.0 percent for an 8th straight gain. Last week’s ISM report, boosted by strength in construction-related and auto-related industries, points to another strong month in December for manufacturing which is once again a leading strength for the nation’s economy.


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ISM non manufacturing
Always more interesting
Downward slope since the peak a few months back has continued
Enough said…



New orders moved suddenly into reverse for ISM’s non-manufacturing sample, pulling down the index which fell 9 tenths to 53.0. New orders, the leading indicator in this report, fell to 49.4 from 56.4 in November. This is the first sub-50 reading for new orders, which had been especially strong through much of the second half of last year, since July 2009.

But coincidental and lagging indications are positive including a steady reading for business activity and a big bounce back for employment, up 3.3 points to 55.8.

Other readings include a second straight contraction for backlog orders, a slight rise for input price pressures, and a slowing in export orders.

Today’s employment reading may lift expectations for Friday’s employment report but otherwise the report hints at an early 2014 slowdown for the economy.


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Car sales missing

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Averaging October’s govt shutdown reduced report with November’s bounce back approx = today’s Dec releases. So levelish sales for the quarter, and a leveling off in general post Jan tax hikes vs a prior multi year upward slope.

* GM, Ford, Toyota, Chrysler December U.S. sales all miss

* Ford sales up 2 percent

* GM sales down 6 percent

* Toyota sales down 1.7 percent

* Chrysler sales up 6 percent

By Bernie Woodall and Ben Klayman

DETROIT, Jan 3 (Reuters) – The top four automakers in the U.S. market missed December sales expectations, but 2013 will still easily be the best year for the industry since before the recession.

General Motors Co said that the U.S. auto industry will have December U.S. auto sales at a 15.6 million-vehicle annualized selling rate, well below the 16 million vehicles expected by 27 economists surveyed by Thomson Reuters.

The late December holiday season is generally one of the heaviest sales periods at U.S. auto dealerships.

Sales that may have occurred in December were pulled ahead to November because of a late-month, four-day Thanksgiving weekend, said John Felice, head of sales at Ford Motor Co.

December auto sales were also hampered by snowy and icy weather over parts of the country late in the month, said Chrysler spokesman Ralph Kisiel.

Each month, auto sales are seen as an early indicator of consumer spending.

For all of 2013, U.S. auto sales are expected to finish near 15.6 million vehicles, up about 8 percent.

That would be the best sales year since pre-recession 2007, when 16.1 million vehicles were sold in the U.S. market. At the height of the recession in 2009 sales fell to 10.4 million.

GM’s sales fell 6 percent, to 230,157 new vehicles, below analysts’ expectations of a slight sales gain.

Sales of GM’s Chevrolet Silverado pickup truck fell 16 percent in the month.

Ford’s sales rose 2 percent, to 218,058, also below analysts’ expectations. Its F-Series pickup truck, the best-selling model in North America, had an 8 percent sales gain in December.

Toyota’s U.S. December sales fell 1.7 percent to 190,843 vehicles, versus expectations of a slight gain.

Chrysler expects the industry to show a December annualized selling rate of 15.8 million vehicles.

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Full Interview, Econ Focus, John Cochrane – Federal Reserve Bank of Richmond

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University of Chicago going MMT?

If you know him, point out that the micro foundation is the currency itself is a public monopoly, and all the implications thereof, particularly the idea that monopolists are inherently ‘price setters’ rather than ‘price takers’, and that unemployment as defined is necessarily the evidence that Federal spending isn’t sufficient to cover the need to pay taxes and desires to net save, etc. etc.

And direct him to my book and website, thanks!
;)

Econ Focus

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