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Source:
Housing Bottom? “Not Even Close,” Barry Ritholtz Says
Aaron Task
Tech TIcker, Nov 24, 2009
http://finance.yahoo.com/tech-ticker/article/378885/Housing-Bottom-”Not-Even-Close”-Barry-Ritholtz-Says?
Via Visual Economics, we get this map showing the states that contribute the most in Federal tax dollars, and consumes the most in Federal Tax monies:
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click for ginormous chart
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Hat tip Chart Porn
The Census Bureau reported that New Home Sales for October 2009:
Sales of new one-family houses in October 2009 were at a seasonally adjusted annual rate of 430,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 6.2% (±17.6%)* above the revised September rate of 405,000 and is 5.1% (±14.9%)* above the October 2008 estimate of 409,000.
The median sales price of new houses sold in October 2009 was $212,200; the average sales price was $261,100. The seasonally adjusted estimate of new houses for sale at the end of October was 239,000. This represents a supply of 6.7 months at the current sales rate.
The standard disclaimers apply to this data point: Both the monthly and the annual data are below the margin of error. Monthly data was reported as +6.2%, +/- 17.6% (whoops!). Annually, sales improved 5.1% +/- 14.9%.
As Pete points out, all of the gains were in the South.
Assuming that the number turns out to be actually positive (something we cannot know for sure now), this will be the first year over year gain in new Home Sales since the market peaked in 2005.
The other decent news: Inventory is down significantly from the highs of 12.4 months supply to 6.7 in October.
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Chart courtesy of Calculated Risk
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There are some improvements in this report, but New Homes, which have been competing with foreclosures, likely have a ways to go before we can call this market healthy.
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Source:
NEW RESIDENTIAL SALES IN OCTOBER 2009
The Census Bureau
http://www.census.gov/const/newressales.pdf
New Home Sales totaled 430k annualized, 26k above expectations and up from a revised 405k in Sept. Months supply continued its decline, falling to 6.7 from 7.4 and is at the lowest level since Dec ’06 and is down from the peak of 12.4 in Jan. Over the past 30 yrs, the average supply is 6.1 mo’s so we have clearly made much progress in terms of new home building and inventories as the absolute # of new homes for sale fell to 239k, the lowest since ’71. Competition from foreclosures has certainly crimped new home sales. The gain in sales for the month was solely in the South which more than offset drops in the Northeast, Midwest and West. The median home price at $212,200 is down .5% y/o/y as 79% of all sales were homes priced below $300k. Sales of homes above $500k totaled only 6% down from 11% in Sept. For those who signed a contract in Oct knew they had to close by Nov 31st in order to get the tax credit which now runs till April and we don’t know what rush there was at the time in order to qualify.
Airtime: Wed. Nov. 25 2009 | 8:50 AM ET
Art Cashin, head of floor operations at UBS, has the buzz from the NYSE.
Oct Personal Income rose .2% m/o/m, .1% more than expected. Spending rose by .7%, .2% above forecasts but comes after a .6% drop in Sept and 1.3% rise in Aug as the CARS program created lumpiness in the data. Sept income was revised up by .2% and spending lower by .1%. Because headline PCE inflation rose .3%, REAL Income fell .1% and REAL spending rose .4%. As a result of the jump in spending relative to the modest rise in income, the savings rate fell to 4.4% from 4.6%. Y/o/Y, the PCE deflator is up .2%, positive for the first time since April. Personal Income is now down 1% y/o/y but Disposable Income (income less taxes) is up 2.4% y/o/y and lends evidence that a reduction in taxes paid is helping to lift the overall savings rate in addition to consumers spending less relative to their income. Net-net, while spending #’s looked good, the sustainability comes down to income growth which still remains punk but with hoped for improvement in ’10.
Initial Jobless Claims totaled 466k, well below expectations of 500k and its at the lowest level since Sept ’08, the week before Lehman and down from 501k last week. Continuing Claims fell by 190k which measures up to 26 weeks of benefits. Past this, Emergency Unemployment Compensation rose by 16k but Extended Benefits fell by 34k. Overall, the data clearly states that the level of firings continue to moderate, and rather sharply on the week, but there is not enough information within today’s data to see whether the level of hiring has picked up as the amount of those receiving benefits past 26 weeks still remains high and now some can get claims up to 99 weeks. With that said, it certainly is a nice thing to see initial claims fall below 500k and we can only hope that the path to hiring from a long stretch of firings is becoming shorter.
Oct Durable Goods unexpectedly fell by .6% and 1.3% ex transports. The estimate was for gains of .5% and .7% BUT Sept was revised up, twice the initial reading, putting the headline # over the two mo’s about in line but leaving the ex transport reading still below estimates. Non defense capital goods ex aircraft, the key cap ex data point, fell 2.9% but follows a 2.6% rise in Sept. Following 3 months of gains, orders of vehicles/parts fell .1%. Declines in computers/electronics and machinery orders weighed on the number too. Shipments, which get directly plugged into GDP, fell .2%. The inventory/shipments ratio was unchanged at 1.75, the lowest since Oct. Net-net, the data remains lumpy as over the past 6 mo’s orders have been up, down, up, down, up, down. This is not typical of post recession recoveries which have seen V bounces and provides further evidence that comparison’s to post WWII recoveries may not apply this time.
“There are still some important losses that have not been unveiled. It’s possible that 50 percent (of bank losses) are still hidden in their balance sheets. The proportion is greater in Europe than in the United States.”
-Dominique Strauss-Kahn, International Monetary Fund’s chief
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Today’s WTF quote comes to us from France, where the head of the IMF is worried about losses hidden on banks balance sheets. This is due in large part to the suspension of Mark-to-Market and the current accounting principles of Mark-to-Make Believe.
Reuters:
“Half of the losses suffered by banks could still be hidden in their balance sheets, more so in Europe than in the United States, the International Monetary Fund’s chief, Dominique Strauss-Kahn, was quoted as saying on Tuesday.
In an interview with French newspaper Le Figaro, Strauss-Kahn also said the IMF thought the euro currency was probably a bit too strong.
“There are still some important losses that have not been unveiled,” Strauss-Kahn was quoted as saying in response to a question on banks, according to excerpts of the interview that were sent to media ahead of publication on Wednesday.”
I’ll try to pull the full interview when it is published . . .
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Source:
Half of banks’ losses may be unknown: IMF chief
Estelle Shirbon
Reuters, Nov 24, 2009 3:01pm EST
http://www.reuters.com/article/ousivMolt/idUSTRE5AN4QD20091124
Repeat after me: banks need more capital and better quality capital. The post-crisis regulatory mantra has been accepted almost universally. But the tricky process of determining what that means is just beginning. It is likely to mean further capital raising by banks globally – not just because, as the head of the International Monetary Fund said on Monday there are substantial bank losses still to be revealed. Capital itself remains a moving target. There are two basic questions to consider on regulatory capital: what should go into it and what goes on top of it? The first has thus far garnered more attention. Loss- absorbing capital, consisting of common equity and reserves, is in favour while more complicated hybrid structures will be subject to limits. However, varying approaches to the second question – the type of risk-weighted assets that capital is used to support – can make comparisons between banks almost meaningless.
Comment
<Click on chart for larger image>
<Click on chart for larger image>
A study by Standard & Poor’s, one of the world’s leading credit ratings agencies, has raised questions over the financial strength of some of the biggest banks ahead of new rules that could require them to raise more funds. The analysis by S&P showed that HSBC is the best capitalised bank in the world, while Switzerland’s UBS, Citigroup of the US and several of Japan’s biggest banks are among the weakest. The ranking of 45 of the world’s leading banks will unnerve investors, highlighting once again the capital shortfall that institutions still need to make up over the coming years. Although some banks will be able to top up capital through retained profits, analysts expect a string of rights issues from weaker banking groups as they try to raise tens of billions of dollars. S&P’s risk-adjusted capital (RAC) ratios – a measure of balance sheet strength – foreshadow the new capital ratio regime expected to be set by the Basel committee on banking supervision early next year.
Notwithstanding $ comments from Bernanke (hollow I know based on the minutes yesterday) last week and policy and potential policy steps in Taiwan, Brazil, South Korea, Indonesia, Vietnam and Russia to reverse the strength in their currencies, the $ index is rolling over again to a fresh 15 1/2 month low and the $ is also lower against Asian currencies. In response, gold is rallying for the 17th day in the last 18 to a fresh record high and continues to extend its outperformance relative to the S&P 500 where bullishness on stocks grew significantly over the past week according to the II data. Bulls rose to 50.6% from 46.1% to the highest since Sept and Bears fell to 17.6% from 21.3% last week and 26.7% the week before. Bears are now at the lowest level since June ’04. ABC confidence fell 2 pts to -47. The MBA said purchases bounced 9.6% off a 12 yr low but refi’s fell 9.5% even as 30 yr rates held steady at 4.82%, a 6 month low.
"I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -Thomas Jefferson (letter to John Taylor in 1816)
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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