US - Economic Data & News 01 (May 08 - Jul 08)

[winston]

BCA Research: US consumer outlook – slowdown continues

“US retail sales were soft in April and persistent headwinds underscore that the consumer retrenchment is not over.

“US annual retail sales growth continues to decelerate, albeit the headline contraction of 0.2% m/m was worse than the report details. March sales were revised higher, and excluding autos and gasoline, retail sales were up 0.6% on the month. Building supplies, electronics and appliance stores were strong in April, but we doubt this trend will be sustained, given the ongoing squeeze on discretionary spending thanks to the surge in energy and food costs and housing deflation.

“Still, the main factor that will determine consumer spending behaviour will be employment growth. To this end, the NFIB small business sector survey reported a slight improvement in hiring conditions for April. Economic risks are nevertheless high and we doubt there will be much improvement in the next few quarters because the major headwinds (housing and the banking system) are still in place

[millionairemind]

http://www.bloomberg.com/apps/news?pid= ... refer=news

U.S. Producer Prices, Minus Food, Energy, Rise 0.4%

By Courtney Schlisserman

May 20 (Bloomberg) -- Prices paid to U.S. producers, excluding food and fuel, rose more than forecast in April, reflecting increases in automobile and furniture costs.

The 0.4 percent gain in so-called core prices was twice as big as anticipated and followed a 0.2 percent increase in March, the Labor Department said today in Washington. A drop in energy costs and unchanged food expenses held the total price measure to a 0.2 percent gain.

Soaring raw material costs may force companies to raise prices to protect profits. The increases may heighten concern among Federal Reserve policy makers that prior increases in food and energy costs will filter through to inflation even as growth slows.

Businesses ``have considerable pipeline cost pressures,'' said Aaron Smith, a senior economist at Moody's Economy.com in West Chester, Pennsylvania. While companies may find it tough to pass the costs on to consumers given the economic slowdown, today's figures are ``a reminder that inflation pressures reside even as we have slower growth,'' he said.

Treasury securities rallied, with benchmark 10-year notes yielding 3.80 percent at 8:53 a.m. in New York, down from 3.83 percent late yesterday.

Economists' Forecasts

Economists forecast producer prices would rise 0.4 percent, according to the median of 70 projections in a Bloomberg News survey. Estimates ranged from no change to a 1 percent gain. Excluding food and energy costs, producer prices were expected to rise 0.2 percent, according to the Bloomberg survey.

Factories, farmers and other producers were paid 6.5 percent more in April than a year earlier. That compares with a 6.9 percent gain for the 12 months ended in March.

The core index was up 3 percent in April from a year earlier, the biggest gain since December 1991.

Rising costs for metals, chemicals and fuel propelled the increases in raw materials, the report showed. The price of steel-mill products jumped 5.5 percent in April and agricultural chemicals surged 5.6 percent. Further down the pipeline, prices for scrap steel and iron soared 32 percent, the most since July 2004, and scrap copper costs jumped 5.3 percent.

So far this year, wholesale costs are up 8.5 percent at an annual pace compared with 8.4 percent for the same time last year. The core rate has increased at a 5.2 percent annual pace, compared with 2.1 percent in the first four months of 2007.

Food, Fuel

Food prices were unchanged and fuel costs dropped 0.2 percent, the first decline this year.

The increases in fuel costs last month were less than the gains recorded for April of prior years and may have lead to the government reporting that energy costs were lower on a seasonally adjusted basis.

Crude oil and other energy products prices have continued to rise this month and may elevate inflation figures in coming months. The price of a barrel of crude on the New York Mercantile Exchange closed at a record $127.05 a barrel yesterday.

The cost of passenger cars climbed 0.4 percent, light trucks were up 1.3 percent and commercial furniture jumped 1.8 percent, the most since February 1981.

Costs of intermediate goods, those used in earlier stages of production, increased 0.9 percent, after a 2.3 percent gain the prior month. They rose 11 percent from a year ago.

Excluding food and energy, intermediate prices increased 1.2 percent. Prices for raw materials, or so-called crude goods, increased 3.2 percent.

Impact on Deere

Deere & Co., the world's largest maker of tractors and combines, is among companies being constrained by rising costs. The Moline, Illinois-based company said last week that profit this quarter will fall short of analysts' estimates as U.S. construction slows and material prices jump.

Materials, which represent as much as 20 percent of Deere's costs, and freight expenses will rise as much as $500 million this year, twice as much as the company's earlier forecast. It spent $60 million more than in the year-earlier quarter.

Producer prices are one of three monthly inflation gauges reported by the Labor Department. The government said last week that prices of imported goods jumped 1.8 percent in April, pushed up by higher energy and metals costs.

The consumer price index, the government's broadest measure of inflation, increased a less-than-forecast 0.2 percent last month, as cheaper costs for cars and hotel rooms offset the biggest jump in food in 18 years.

Rate Expectations

Concern over inflation has led investors to project Fed policy makers will keep the benchmark interest rate unchanged at 2 percent at least through September. It would be the first pause since the central bank started cutting rates in September.

While uncertainty is ``high,'' inflation is likely to moderate as the economic slowdown continues, policy makers said last month in announcing a reduction in the benchmark rate. Even so, some officials are expressing greater concern.

Other companies have said they are likely to pass on price increases to customers. Dr. Pepper Snapple Group Inc., a beverage maker, may raise prices this year to counter higher transportation and ingredient costs, Chief Executive Officer Larry Young said May 7.

``We took pricing last year, we'll be looking at probably taking some pricing again this year,'' Young said in a Bloomberg television interview. The company is working on 23 cost-cutting projects, he said.

-- With reporting from Rhonda Schaffler and Monica Bertran in New York. Editors: Carlos Torres, Chris Anstey

To contact the reporter on this story: Courtney Schlisserman in Washington [email protected].

Last Updated: May 20, 2008 09:07 EDT

[kennynah]

eur/usd weakened slightly to 1.573

gold dipped abt $4 in reaction

22 May 2008 12:30 GMT

BULLET: US DATA: Jobless claims -9,000 to 365,000 in the May.

US DATA: Jobless claims -9,000 to 365,000 in the May 17 wk from upward adjusted 374,000 prv wk. The 4-wk ave was +5,000 to 372,250.

Again, no special factors cited but a big decline in NY was a rebound from the prv wk's spring break upward spike.

Continuing claims for the May 10 wk were 3,073,000, unchanged.

For May 10 wk, Mich reported the most initial claims, all auto related.

Unadjusted claims were 317,542, -7,867. Yr ago was 270,446.

Insured unemp rate remained 2.3%.

[kennynah]

14:00 United States Housing Price Index (MoM) (Mar) -0.4 (actuals) vs 0.4 (prev)

14:00 United States Housing Price Index (YoY) (Mar) -3.4% (actuals) vs -2.4% (prev)

guess what......eur/usd weakened....???????

gold also dropped... ?????

how come....read as being deflationary to economy with the dropping prices of houses ???

[kennynah]

the OFHEO figures released may not be as accurate a read on the plummeting home prices... it could be worst in actual fact...as pointed out by another set of indicator...read below..

22 May 2008 17:00 GMT

US DATA REACT: The OFHEO home price index showed price declines intensifying in 1Q, although the pace of decline was much less serious than what other price measures have shown.

For example, the OFHEO purchase-only index declined 3.1%oya in 1Q and 3.4%oya in the month of March, while the Case-Shiller 20-city composite dropped 12.7%oya in February, the most recent month for which data is available.

"Although the Case-Shiller index has more limited geographic coverage, we suspect that it is currently more accurate. The OFHEO index's main flaw is that it only covers transactions done with conventional conforming mortgages that have been bought or securitized by the GSEs.

It thus misses transactions financed with the non-agency loans that contributed significantly to the housing boom and bust," economists at JPM say.

[kennynah]

some more of the same about the housing index released today (22may08)

***********

22 May 2008 17:16 GMT

Gov't home price index posts largest drop in 17-year history

WASHINGTON (AP) - A home-price index considered to be the most comprehensive reading of the U.S. market posted the sharpest quarterly decline in its 17-year history, and analysts say housing has yet to bottom out.

Rapidly falling home prices in California, Florida and Nevada skewed the national results.

The Office of Federal Housing Enterprise Oversight said Thursday that home prices fell 3.1 percent in the first quarter compared with last year.

It was only the second quarter of price declines since the index started in January 1992. The price index first declined on a year-over-year basis in the final quarter of 2007, when it dropped 0.45 percent.

Another widely followed reading, the Standard & Poor's/Case-Shiller index, has shown larger declines for major U.S. metropolitan areas. But analysts say the government index provides a more comprehensive reading of nationwide housing market.

That's particularly true for midwestern states, where prices never skyrocketed and have been less affected by the real estate downturn.

"Most people don't live in a Miami condo," said Michael Englund, chief economist with Action Economics in Boulder, Colo.

Still, declines in the government index, which focuses on less expensive properties and includes fewer houses bought with risky home loans that have gone sour over the past year, show the depth of the housing market's troubles.

Prices fell in 43 states, with California and Nevada showing the biggest declines. Home prices dropped by more than 8 percent in those states.

The government index also fell 1.7 percent from the fourth quarter of 2007 to the first quarter of 2008, the largest quarterly price drop on record.

"The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation," Patrick Lawler, the agency's chief economist, said in a prepared statement.

The government index is calculated by tracking mortgage loans of $417,000 or less that are bought or backed by the government-sponsored mortgage-finance companies Fannie Mae and Freddie Mac.

Wall Street analysts have tended to focus on the S&P index, an update of which is due next Tuesday, as a way to measure the value of securities backed by subprime mortgages and loans to borrowers in big metropolitan areas.

Earlier this month, economic forecasters surveyed by the Federal Reserve Bank of Philadelphia projected the government index would show a 5.4 percent annual decline in the fourth quarter of 2008. The survey projected the reading would not recover until early 2009.

Adam York, an economic analyst with Wachovia Corp., said Thursday's data was unsurprising. "It was pretty widely expected that we would see declines this quarter and for some time to come," he said.

The housing market is facing numerous troubles as buyers stay on the fence and rising mortgage defaults dump more homes on an already glutted market. In addition, many banks have raised their lending standards in response to the surge in mortgage defaults.

Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 5.98 percent this week. That was down from 6.01 percent last week and the lowest level in five weeks.

[winston]

US Home Prices Fall Record Amount in Quarter
05/22/08 - 02:15 PM EDT
Simone Baribeau

U.S. home prices fell at an annualized 6.92% rate in the first quarter, according to the Office of Federal Housing Enterprise Oversight's purchase-only quarterly index. This is the largest decline in the index's 17-year history.

Housing prices have fallen 3.1% in the last year, according to the index.

"These substantial home price declines bring positive and negative news," said OFHEO Director James B. Lockhart in a release. "For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets. To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates."

As home prices fall, many mortgage holders have found themselves with their debt exceeding their home's value. Negative equity has left them unable to pull money out of their homes or to refinance when subprime balloon payments come due, causing foreclosure rates in many areas to skyrocket.

BankingMyWay

Another OFHEO index, which includes data from appraisals for refinancing, showed that home prices held steady: The all-transactions House Price Index was flat over the last year and fell only 0.2% in the last quarter.

Other indices have shown big declines over the last year. The 10-city Case-Shiller composite index showed an 8.8% drop; there was a 7.4% drop in the 20-city composite index in February from the same month the prior year. The nationwide median price of single-family homes fell 7.7% in the first quarter from the year-earlier period, according to the latest quarterly survey of the National Association of Realtors.

The OFHEO numbers include only new conforming mortgages: mortgages of less than $417,000 purchased by Fannie Mae(FNM - Cramer's Take - Stockpickr) and Freddie Mac(FRE - Cramer's Take - Stockpickr). Conforming loan limits were temporarily raised in February, but Fannie and Freddie did not start buying the larger mortgages until after the end of the first quarter.

The survey's results might have been more pronounced if it included nonconforming mortgages: Some areas that have experienced drastic price volatility in recent years have median home prices above the conforming loan limit.

Between 2000 and the nationwide height of housing prices in 2007, home prices rose almost 70% nationwide, according to the OFHEO index. Rent of primary residence only rose 30%, according to the Bureau of Labor Statistics. The gap suggests some of the run-up in home prices may have been the result of a bubble and that housing prices have a long way to go before fully correcting.

But housing prices aren't falling evenly across the country. Many of the areas which saw the greatest run-ups in housing prices are also experiencing the greatest declines. Housing prices in California, Nevada and Florida, for instance, more than doubled between 2000 and their heights in 2006. Housing prices in those states have since fallen 12%, 11% and 8%, respectively, according to the OFHEO's all-transactions housing price index.

[winston]

May 20, 2008

California's luxury home prices down: poll

Fall for 2nd straight quarter due to banks demanding higher credit scores

(SAN FRANCISO) California's luxury home prices fell for the second consecutive quarter as banks required higher credit scores and downpayments, reducing the number of potential buyers in the state's wealthiest communities.

The average price of a luxury home in the San Francisco Bay Area declined 0.8 per cent from the previous three months to US$3 million, according to a survey by First Republic Bank, a unit of Merrill Lynch & Co. Los Angeles prices dropped 2.2 per cent to US$2.35 million, and San Diego prices fell 2.2 per cent to US$2.06 million.

'Values of luxury homes in California have declined slightly in price after many years of strong appreciation,' Katherine August- deWilde, president of San Francisco-based First Republic Bank, said in a statement.

Mortgages are more difficult to obtain after the world's biggest banks reported more than US$300 billion in sub-prime-related writedowns and credit losses since the beginning of 2007. The value of jumbo loans, those over US$417,000, probably fell below 10 per cent of the entire mortgage market in the first quarter, Guy Cecala, publisher of Inside Mortgage Finance, said in an interview. That's the lowest since the Bethesda, Maryland-based newsletter began keeping statistics in 1985.

In Los Angeles, prices fell 3.7 per cent from a year earlier, to the lowest level since the first quarter of 2006. In San Diego, they dropped 4.9 per cent to the lowest level since the second quarter of 2005.

Prices rose in San Francisco, climbing 2.9 per cent in the first quarter from the same period a year earlier, First Republic said.

Reduced availability of jumbo loans cut the median price of San Francisco homes and condominiums by as much as 10 per cent in March, DataQuick Information Systems Inc said last month.

'It's really a liquidity problem,' Mr Cecala said. 'There's no market for securitised jumbo loans. Investors are still not convinced that the mortgage market has cleaned up its act.'

First Republic tracks luxury prices with Fiserv CSW Inc, a provider of automated property valuation services for financial institutions.

'The strongest markets are the best neighbourhoods in San Francisco, desirable close-in suburbs and upscale coastal communities,' Ms August-deWilde said. 'The higher end of the luxury market is the most active.' - Bloomberg

[winston]

May 7, 2008
US Commercial Properties:-

On July 16, 2007, we sounded the alarm on commercial real estate stocks... aka REITs. We cited record low yields and high valuations as reasons for avoiding – or even shorting – the sector.

It didn't take long for the market to prove us right... After that column, REITs in general fell 25% in six months. Shares of America's largest REIT fund manager, Cohen & Steers, were cleaved in half during the drop. After all, if folks don't want to own REITs, they don't want to own the guys who own REITs either.

As today's chart shows, investors are warming back up to the sector. C&S has built a solid "floor" in the $25 area and sits at a six-month high. Rallies come on strong volume, corrections come on weak volume. CB Richard Ellis, the world's largest real estate services company, sports a similar chart.

We can't know what the future holds for U.S. commercial real estate. Times could get worse. Times could get better... The renewed strength in Cohen & Steers tells us the forward-looking stock market likes the "times are getting better" thesis.

[kennynah]

23 May 2008 14:00 GMT

BULLET: [US April existing home sales -1.0% to 4.89 mln - vs. [US April existing home sales -1.0% to 4.89 mln units] - vs an upwardly revised 4.94 mln units in March and higher than the median expectation of 4.85mln.

Single-family home resales dropped 0.5% to 4.340 mln and condo sales were -5.2% to 550K.

Sales in the South were unchanged, yet dropped in the remaining three regions,-6.4% in the West, -6.0% in the Midwest, and -4.4% in the Northeast.

April supply on market was 11.2 months, the highest since the series began in 1999.

Single-fam supply on on mkt 10.7 months, highest since June 1985 when it was 11.4.

Median sales price was $202,300, +1.1%m/m and -8.0% y/y. NAR says past 2 wks mtg availability increased as GSEs reverses declining mkt policy and interest rates on jumbo loans declined significantly.