Monday, 29 February 2016

Dallas Fed: "Texas Manufacturing Activity Contracts Again" in February

From the Dallas Fed: Texas Manufacturing Activity Contracts Again
Texas factory activity contracted again in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but edged up from -10.2 to -8.5, suggesting output declined but at a slightly softer pace than in January.

Most other indexes of current manufacturing activity also indicated further contraction in February. The new orders index fell 8 points to -17.6, reaching its lowest level since May 2009, when Texas was in recession. The growth rate of orders index remained strongly negative at -17.4. The capacity utilization index was largely unchanged at -8.2. Meanwhile, the shipments index rose 10 points to -1.1 after plunging last month.

Perceptions of broader business conditions remained strongly negative in February. The general business activity index has been negative for more than a year and came in at -31.8, up slightly from the January reading. ...

Labor market indicators reflected further decline in February. The employment index dropped 7 points to -11.1, hitting its lowest reading since November 2009.
emphasis added
This was the last of the regional Fed surveys for February. All five of the regional surveys indicated contraction in Febuary, especially in the Dallas region (oil prices).

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Fed Manufacturing Surveys and ISM PMI Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through February), and five Fed surveys are averaged (blue, through February) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through January (right axis).

It seems likely the ISM index will be weak in February, and will probably show contraction again.  The consensus is the ISM index will increase to 48.5% from 48.2% in January (below 50 is contraction).

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Black Knight: House Price Index up 0.1% in December, Up 5.5% year-over-year

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From Black Knight: Black Knight Home Price Index Report: December Transactions U.S. Home Prices Up 0.1 Percent for the Month; Up 5.5 Percent Year-Over-Year
• U.S. home prices were up 0.1 percent for the month, and have gained 5.5 percent from one year ago

• At $253K, the national level HPI remains 5.3 percent off its June 2006 peak of $268K, and up 27 percent from the market’s bottom in January 2012

• Among the 20 largest states tracked by Black Knight, New York and Texas both hit new peaks in December

• Of the nation’s 40 largest metros, 8 hit new peaks – Austin, TX; Dallas, TX; Denver, CO; Houston, TX; Nashville, TN; Portland OR, San Antonio, TX and San Francisco, CA
The year-over-year increase in the index has been about the same for the last year.

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Solid ceramics and glass demand keeps Vietnamese kaolin, silica sand prices stable

Preference for higher quality material in China is supporting Vietnamese kaolin prices while robust consumption of silica sand by the Asian glass industry is offsetting lower volumes sold to foundries.

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Sunday, 28 February 2016

Sunday Night Futures

Last week the FDIC released its “Quarterly Banking Profile” for Q4 2015.
Declines in expenses for litigation at a few large banks combined with moderate revenue growth to lift fourth-quarter net income at FDIC-insured institutions to $40.8 billion, an increase of $4.4 billion (11.9 percent) compared with fourth quarter 2014. The improving trend in earnings was widespread.
...
The number of insured institutions on the FDIC’s “Problem List” declined from 203 to 183 during the quarter, and total assets of problem institutions fell from $51.1 billion to $46.8 billion. For all of 2015, there were 305 mergers of insured institutions, one new charter was added, and eight banks failed.
FDIC REO Click on graph for larger image.

On the REO front, the report showed that the carrying value of one-to-four family REO properties at FDIC institutions declined to $4.66 billion at the end of December, down from $4.91 billion at then end of September and $5.98 billion at the end of 2014.

REO is down from $14.6 billion in 2010.

Weekend:
Schedule for Week of February 21, 2016

February 2016: Unofficial Problem Bank list declines to 228 Institutions

Monday:
• At 9:45 AM ET, Chicago Purchasing Managers Index for February. The consensus is for a reading of 52.9, down from 55.6 in January.

• At 10:00 AM, Pending Home Sales Index for January. The consensus is for a 0.5% increase in the index.

• At 10:30 AM, Dallas Fed Manufacturing Survey for February.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures and DOW futures are mostly unchanged (fair value).

Oil prices were up over the last week with WTI futures at $32.69 per barrel and Brent at $35.00 per barrel.  A year ago, WTI was at $50, and Brent was at $61 - so prices are down about 40% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.75 per gallon (down about $0.65 per gallon from a year ago).

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Life Outside of Procurement: A Sticky Gooey Dough

We all have a life outside of procurement.

Some of you for example may like to golf or play any number of sports.

Others may like to go for long drives while listening to their favorite music. It could be anything.

The point is that beyond our passion for procurement, we all have personal interests.

Mine happens to be cooking, which from time-to-time includes the occasional television appearance with my wife – who happens to share my love of the culinary world.

Sticky Gooey Dough

Click Here to watch last Friday’s segment

This past Friday I shared my recipe for homemade pizza.

You can catch the segment by clicking on the image above. By the way, the pizza is really good – and not just because I made it.

So now that you know a little bit more about me, what do you enjoy doing when you’re not doing procurement?

30




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Friday, 26 February 2016

China’s economic slowdown hits Mongolian metspar exports

Falling steel output in China followed by the Spring Festival holiday has led to lower shipment volumes for Mongolia’s metallurgical fluorspar exporters, while prices are also showing the strain of weaker demand.

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Personal Income increased 0.5% in January, Spending increased 0.5%

The BEA released the Personal Income and Outlays report for January:
Personal income increased $79.6 billion, or 0.5 percent ... in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $63.0 billion, or 0.5 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.4 percent in January, compared with an increase of 0.2 percent in December. ... The price index for PCE increased 0.1 percent in January, in contrast to a decrease of 0.1 percent in December. The PCE price index, excluding food and energy, increased 0.3 percent, compared with an increase of 0.1 percent.

The January PCE price index increased 1.3 percent from January a year ago. The January PCE price index, excluding food and energy, increased 1.7 percent from January a year ago.
The following graph shows real Personal Consumption Expenditures (PCE) through January 2016 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Personal Consumption Expenditures Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was above consensus expectations.  And the increase in PCE was also above the consensus. A solid start for 2016.

On inflation: The PCE price index increased 1.3 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.7 percent year-over-year in January.

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Q4 GDP Revised Up to 1.0% Annual Rate

From the BEA: Gross Domestic Product: Fourth Quarter 2015 (Second Estimate)
Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 1.0 percent in the fourth quarter of 2015, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 0.7 percent. With this second estimate for the fourth quarter, the general picture of economic growth remains the same; private inventory investment decreased less than previously estimated ...
emphasis added
Here is a Comparison of Second and Advance Estimates. PCE growth was revised down from 2.2% to 2.0%. Residential investment was revised down from 8.1% to 8.0%.  This was above the consensus forecast.

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Price Briefing 19 – 25 February

Bromine prices come through 2015 on a high, while frac sand, graphite and TiO2 could slide further this year.

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Zircon prices remain flat as hopes of rebound fade

Slight downward adjustment at the end of 2015 just starting to be reflected in contracts, but prices are not expected to erode further.

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Thursday, 25 February 2016

Friday: GDP, Personal Income and Outlays, Consumer Sentiment

Some interesting analysis from Romer and Romer:
According to an analysis by Gerald Friedman, Senator Sanders’s proposed policies would result in average annual output growth of 5.3% over the next decade, and average monthly job creation of close to 300,000.1 As a result, output in 2026 would be 37% higher than it would have been without the policies, and employment would be 16% higher.

Although we share many of Senator Sanders’s values and enthusiastically support some of his goals, such as greater public investment in infrastructure and education, we also believe it is vitally important to be realistic about the impact of policies on the performance of the overall economy. For this reason, it is worth examining Friedman’s analysis carefully. Moreover, Friedman has made available an extensive report describing his methodology and assumptions, allowing others to examine the specifics of his analysis.

Unfortunately, careful examination of Friedman’s work confirms the old adage, “if something seems too good to be true, it probably is.” We identify three fundamental problems in Friedman’s analysis. ...
Friday:
• At 8:30 AM ET, Gross Domestic Product, 4th quarter 2015 (Second estimate). The consensus is that real GDP increased 0.4% annualized in Q4, revised down from 0.7%.

• Also at 8:30 AM, Personal Income and Outlays for January. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• At 10:00 AM,University of Michigan's Consumer sentiment index (final for February). The consensus is for a reading of 91.0, up from the preliminary reading 90.7.

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Bangladesh Garment Exports Surge Despite Attacks, Margins Under Pressure


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Lawler on Existing Home Sales, Table of Distressed Sales for Selected Cities in January

From housing economist Tom Lawler:

Yesterday the National Association of Realtors estimated that US existing home sales ran at a seasonally adjusted annual rate of 5.47 million in January, up 0.4% from December’s downwardly-revised (to 5.45 million from 5.46 million pace, and up 11.0% from January’s upwardly-revised (to 4.93 million from 4.82 million) seasonally adjusted base. The NAR’s unadjusted sales estimate for January was up 7.5% from a year ago. The January release incorporated annual seasonal adjustment revisions, which, as shown in the table below, worked to increase adjusted sales in the early part of the year (especially January and February), and decrease adjusted sales from late Spring through earl Fall.

Seasonally Adjusted Existing Home Sales in 2015, Old vs. New Seasonal Factors (Annual Rate, 000's)
  Old Seasonal Factors New Seasonal Factors % Change
Jan 4,820 4,930 2.3%
Feb 4,890 4,970 1.6%
Mar 5,210 5,250 0.8%
Apr 5,090 5,140 1.0%
May 5,320 5,290 -0.6%
Jun 5,480 5,410 -1.3%
Jul 5,580 5,480 -1.8%
Aug 5,300 5,290 -0.2%
Sept 5,550 5,440 -2.0%
Oct 5,320 5,290 -0.6%
Nov 4,760 4,860 2.1%
Dec* 5,440 5,450 0.2%
*Note: December’s preliminary sales pace using old seasonal factors was 5.46 million. However, the NAR revised unadjusted sales in December down to 436,000 from 438,000. The number in the table above uses the old seasonal factor but the revised unadjusted sales number.


The NAR’s seasonally-adjusted sales estimate for January was above consensus and slightly higher than my projection, but that was solely attributable to the larger-than-expected downward revision in January seasonal factors.

The NAR also estimated that the inventory of existing homes for sale at the end of January was 1.820 million, up 3.4% from December’s downwardly-revised (to 1.76 million from 1.79 million) level and down 2.2% from last January. The NAR’s estimate was somewhat higher than my projection based on local realtor/MLS reports available about a week ago, though reports released suggest that the NAR’s estimate is “reasonable.” Finally, the NAR estimated that the median existing SF home sales price last month was $215,000, up 8.2% from last January. This YOY increase was slightly higher than my projection.

CR Note: Tom Lawler also sent me the table below of short sales, foreclosures and all cash sales for a several selected cities in January.

On distressed: Total "distressed" share is down in all of these markets.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors pull back, the share of all cash buyers will probably continue to decline.

  Short Sales Share Foreclosure Sales Share Total "Distressed" Share All Cash Share
Jan-
2015
Jan-
2014
Jan-
2015
Jan-
2014
Jan-
2015
Jan-
2014
Jan-
2015
Jan-
2014
Las Vegas 7.0% 9.7% 7.9% 9.4% 14.9% 19.1% 31.1% 36.0%
Reno** 4.0% 10.0% 6.0% 6.0% 10.0% 16.0%    
Phoenix 2.3% 6.3% 3.9% 6.8% 6.2% 13.1% 27.4% 32.0%
Sacramento 4.8% 6.9% 4.2% 9.5% 9.0% 16.4% 19.8% 22.7%
Minneapolis 2.9% 4.3% 11.0% 16.0% 13.9% 20.3%    
Mid-Atlantic 4.3% 5.8% 13.9% 15.2% 18.2% 21.0% 19.5% 21.4%
Riverside 3.1% 3.3% 4.2% 5.8% 7.3% 9.1% 18.2% 19.9%
San Bernardino 1.9% 4.3% 4.5% 6.1% 6.4% 10.4% 19.2% 21.9%
Bay Area CA* 2.5% 4.2% 2.5% 4.2% 5.0% 8.4% 20.5% 24.3%
So. California* 3.5% 5.7% 4.5% 5.7% 8.0% 11.4% 22.4% 26.7%
Florida SF 3.5% 5.3% 15.3% 25.7% 18.7% 31.0% 36.8% 43.4%
Florida C/TH 2.2% 3.2% 12.1% 20.6% 14.4% 23.9% 61.9% 69.5%
Miami MSA SF 5.7% 8.9% 16.8% 23.2% 22.5% 32.1% 36.3% 42.4%
Miami MSA C/TH 2.7% 3.7% 14.7% 23.5% 17.4% 27.2% 65.6% 70.9%
Chicago (city)         22.8% 24.1%    
Rhode Island         11.8% 16.1%    
Northeast Florida         24.8% 38.1%    
Spokane         15.6% 24.2%    
Spokane         15.6% 24.2%    
Toledo             34.7% 37.6%
Tucson             29.7% 34.8%
Knoxville             26.3% 28.5%
Peoria             22.3% 24.6%
Georgia***             24.8% 31.3%
Omaha             19.5% 22.2%
Pensacola             32.9% 38.3%
Richmond VA     13.5% 18.3%     21.9% 22.8%
Memphis     15.6% 14.8%        
Springfield IL**     16.8% 16.6%        
*share of existing home sales, based on property records
**Single Family Only
***GAMLS


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Kansas City Fed: Regional Manufacturing Activity "declined further" in February

From the Kansas City Fed: Tenth District Manufacturing Activity Declined Further
The Federal Reserve Bank of Kansas City released the February Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined further.

“Factories reported a slightly larger decline in February than in previous months,” said Wilkerson. “Energy-related firms generally had a negative outlook, but firms overall remained slightly optimistic about future factory activity.”
...
Tenth District manufacturing activity declined further in February, while producers’ expectations for future activity remained slightly positive. Price indexes were mixed, but most remained in negative territory.

The month-over-month composite index was -12 in February, its lowest level since 2009, down from -9 in January and December. ... The employment index dropped from -15 to -26, its lowest level in nearly six years. The new orders for exports index fell from -4 to -13, while the capital expenditures index remained stable but weak.
emphasis added
The Kansas City region continues to be hit hard by lower oil prices and the stronger dollar.

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Sears 4Q Loss Widens After Limping Through the Holidays


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Wednesday, 24 February 2016

Chinese New Year keeps lid on mineral markets in February

Antimony fluctuates, rare earths stay flat; lithium prices exaggerated, says Albemarle; graphite stagnates, chromite prices dip.

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Thursday: Unemployment Claims, Durable Goods

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 270 thousand initial claims, up from 262 thousand the previous week.

• Also at 8:30 AM, Durable Goods Orders for January from the Census Bureau. The consensus is for a 2.0% increase in durable goods orders.

• At 9:00 AM, FHFA House Price Index for December 2015. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.5% month-to-month increase for this index.

• At 11:00 AM, the Kansas City Fed manufacturing survey for February.



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Comments on January New Home Sales

The new home sales report for January was below expectations at 494,000 on a seasonally adjusted annual rate basis (SAAR), however combined sales for October, November and December were revised up.

Sales were down 5.2% year-over-year (YoY) compared to January 2015.   However, we have to remember January 2015 was a pretty strong month at 521,000  SAAR.  Sales for all of 2015 were 501,000 (up 14.5% from 2014) - and since January (and February) were especially strong months last year, the YoY comparison is difficult.

Earlier: New Home Sales decreased to 494,000 Annual Rate in January.


New Home Sales 2013 2014Click on graph for larger image.

This graph shows new home sales for 2015 and 2016 by month (Seasonally Adjusted Annual Rate).

The comparisons in early 2016 are difficult.  And I also expect lower growth this year.

Houston (and other oil producing areas) will have a problem this year. Inventory of existing homes is increasing quickly and prices will probably decline in those areas. And that means new home construction will slow in those areas too.

And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next few years.

Distressing GapThe "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through January 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.

I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.

However, this assumes that the builders will offer some smaller, less expensive homes.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

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Graphite prices stabilise as trading volumes dwindle

Price Review: Chinese prices remain steady as market demand shows few signs of recovery.

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Wall Street And The Analyst Firms Are Dead . . . Long Live The New DO-ERS!

Not that long ago I wrote about Zycus and their proud proclamation that they are independent and free from the reliance on traditional money sources such as VCs and Wall Street.

I have never been a big fan of Wall Street for pretty much the same reasons as most everyone else. If you have seen movies such as Too Big To Fail, you will get my drift.

Let’s face it, and outside of a relatively small group of players that includes analyst firms and exit strategy executives, how many of us in the procurement world really care about a solution provider’s stock price? How many procurement professionals actually own shares in the companies with whom they deal? How many have tuned into a Quarterly Earnings Call?

I would hazard a guess that the number is very, very low.

The fact is, that we are entering a new era in which the plethora of press releases bragging about recent wins as a means of driving up stock prices, is being replaced by a “shut up, and just do it” mindset, in which successful solution providers focus their time and energy on simply getting the job done. Or as one new wave executive so succinctly put it . . . those who do – do, and those who don’t – talk (as in press releases).

do-it-now-chalk-drawing

Just DO IT!

 

Of course Zycus isn’t the only company, with whom I have had the opportunity to talk, regarding this paradigm shift in procurement world sensibility.

Yesterday I spent a good 45 minutes on the phone with Nipendo’s Ed Berger.

Like a Zycus, what is interesting about Nipendo is the fact that they seem to be succeeding in stealth mode. Specifically, and self-sufficiently, they are going about their business in terms of working with major industry players to provide what I once referred to as being the universal operating system for eProcurement solutions.

In short, Nipendo doesn’t care what current cloud-based or otherwise solutions  are in place with a client. Like a highly efficient central nervous system that manages solution interchangeability with a minimal need for human intervention, Nipendo delivers a point to many simultaneous capability that establishes a standardized operating platform.

Think of it in terms of a meeting I once had with a VP of Procurement from Duke Energy.

After completing yet another sizable acquisition, the VP lamented the fact that they now had 11 additional legacy systems with which to deal. The question was how to effectively integrate these different solutions into a cohesive “one” without alienating front-line users.

This was back in 2005, a time when bridging the disconnect between competing applications was a painfully costly and time consuming process. Part of the problem of course was the fact that each of these legacy systems cost millions of dollars and were all in various stages of implementation. That’s right, and unlike today’s solutions that can be up and operational within weeks if not days, implementing these bygone monolithic applications took years. No wonder an attempted consolidation of legacy systems was tantamount to abandonment as opposed to advancement.

This is what makes Nipendo’s offering so interesting and yes, even exciting.

A Nipendo client could have Coupa, Ariba and Bob’s Corner Store solutions operating simultaneously within the collective enterprise. Rather then forcing an artificially-induced compression to a single provider, Nipendo’s solution becomes the great melting pot of collective and collaborative data capture and process management that produces a cohesive singlularity.

The technological singularity is a hypothetical event in which artificial general intelligence (constituting, for example, intelligent computers, computer networks, or robots) would be capable of recursive self-improvement (progressively redesigning itself), or of autonomously building ever smarter and more powerful … Wikipedia

singularity-university-metal-logo

A New Singularity?

Going back to the Wall Street and analyst firm tie-in, you are not likely to read about this in any financial report or for that matter in a chest-pounding, drive up our stock price press release.

The reason is simple . . . with this new and emerging generation of players, the focus is on actually doing something for the industry as a whole, as opposed to making a select few rich.

30

 

 

 

 

 




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Tuesday, 23 February 2016

Air New Zealand to Use 3D Printing to Create Aircraft Cocktail Trays


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Real Prices and Price-to-Rent Ratio in December

Here is the earlier post on Case-Shiller: Case-Shiller: National House Price Index increased 5.4% year-over-year in December

The year-over-year increase in prices is mostly moving sideways now around 5%. In December 2015, the index was up 5.4% YoY.

In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $274,000 today adjusted for inflation (37%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

It has been almost ten years since the bubble peak.  In the Case-Shiller release this morning, the National Index was reported as being 3.7% below the bubble peak.   However, in real terms, the National index is still about 18% below the bubble peak.

Nominal House Prices


Nominal House PricesThe first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through December) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) is back to October 2005 levels, and the Case-Shiller Composite 20 Index (SA) is back to April 2005 levels, and the CoreLogic index (NSA) is back to June 2005.

Real House Prices

Real House PricesThe second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to December 2003 levels, the Composite 20 index is back to September 2003, and the CoreLogic index back to December 2004.

In real terms, house prices are back to 2003 levels.

Note: CPI less Shelter is down 0.6% year-over-year, so this has been pushing up real prices recently.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Price-to-Rent RatioHere is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to August 2003 levels, the Composite 20 index is back to April 2003 levels, and the CoreLogic index is back to July 2003.

In real terms, and as a price-to-rent ratio, prices are back to 2003 levels - and the price-to-rent ratio maybe moving a little sideways now.

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A Few Comments on January Existing Home Sales

The January existing home sales report was stronger than expected, and even slightly stronger than the December report (that included a rebound from the decline in November related to the new TILA-RESPA Integrated Disclosure (TRID)).   Note: TILA: Truth in Lending Act, and RESPA: the Real Estate Settlement Procedures Act of 1974.

Going forward, there are some economic reasons for some softness in existing home sales in certain areas. Low inventory is probably holding down sales in many areas, and there will be weakness in some oil producing areas (see: Houston has a problem).

Earlier: Existing Home Sales increased in January to 5.47 million SAAR

I expected some increase in inventory last year, but that didn't happened.  Inventory is still very low and falling year-over-year (down 2.2% year-over-year in January). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Existing Home Sales NSAClick on graph for larger image.

Sales NSA in January (red column) were the highest since January 2007 (NSA).

This is a solid start to 2016.

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Existing Home Sales increased in January to 5.47 million SAAR

From the NAR: Existing-Home Sales Inch Forward in January, Price Growth Accelerates
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, inched 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Sales are now 11.0 percent higher than a year ago – the largest year-over-year gain since July 2013 (16.3 percent)....

Total housing inventory at the end of January increased 3.4 percent to 1.82 million existing homes available for sale, but is still 2.2 percent lower than a year ago (1.86 million). Unsold inventory is at a 4.0-month supply at the current sales pace, up slightly from 3.9 months in December 2015.
Existing Home SalesClick on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in January (5.47 million SAAR) were 0.4% hgiher than last month, and were 11.0% above the January 2015 rate.

The second graph shows nationwide inventory for existing homes.

Existing Home InventoryAccording to the NAR, inventory increased to 1.82 million in January from 1.76 million in December.   Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Year-over-year Inventory Inventory decreased 2.2% year-over-year in January compared to January 2015.  

Months of supply was at 4.0 months in January.

This was above consensus expectations of sales of 5.32 million. For existing home sales, a key number is inventory - and inventory is still low. I'll have more later ...

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Case-Shiller: National House Price Index increased 5.4% year-over-year in December

S&P/Case-Shiller released the monthly Home Price Indices for December ("December" is a 3 month average of October, November and December prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: Home Prices Marginally Increased in December According to the S&P/Case-Shiller Home Price Indices
The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a slightly higher year-over-year gain with a 5.4% annual increase in December 2015 versus a 5.2% increase in November 2015. The 10-City Composite increased 5.1% in the year to December compared to 5.2% previously. The 20-City Composite’s year-over-year gain was 5.7%, the same as November.
...
Before seasonal adjustment, the National Index posted a gain of 0.1% month-over-month in December. The 10- City Composite decreased by 0.1% and the 20-City Composite remained unchanged in December. After seasonal adjustment, the National and 20-City Composites Index both recorded a monthly increase of 0.8%. The 10-City Composite increased 0.7% month-over-month in December. Ten of 20 cities reported increases in December before seasonal adjustment; after seasonal adjustment, all 19 cities increased for the month.
emphasis added
Case-Shiller House Prices Indices Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 12.4% from the peak, and up 0.7% in December (SA).

The Composite 20 index is off 10.8% from the peak, and up 0.8% (SA) in December.

The National index is off 3.7% from the peak, and up 0.8% (SA) in December.  The National index is up 30.1% from the post-bubble low set in December 2011 (SA).

Case-Shiller House Prices Indices The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 5.1% compared to December 2014.

The Composite 20 SA is up 5.7% year-over-year..

The National index SA is up 5.4% year-over-year.

Prices increased (SA) in 19 of the 20 Case-Shiller cities in December seasonally adjusted.  (Prices increased in 10 of the 20 cities NSA)  Prices in Las Vegas are off 38.2% from the peak.

Case-Shiller CitiesThe last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.

As an example, at the peak, prices in Phoenix were 127% above the January 2000 level. Then prices in Phoenix fell slightly below the January 2000 level, and are now up 57% above January 2000 (57% nominal gain in almost 16 years).

These are nominal prices, and real prices (adjusted for inflation) are up about 40% since January 2000 - so the increase in Phoenix from January 2000 until now is about 17% above the change in overall prices due to inflation.

Six cities - Charlotte, Boston, Dallas, Denver, Portland and San Francisco - are above the bubble highs (Seattle is close).    Detroit prices are barely above the January 2000 level.

I'll have more on house prices later.

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Monday, 22 February 2016

Tuesday: Existing Home Sales, Case-Shiller House Prices, Richmond Fed Mfg Survey

From Matthew Graham at Mortgage News Daily: Mortgage Rates Sideways Again; Anxiety Builds
For now, the most prevalently-quoted conventional 30yr fixed rate remains 3.625% on top tier scenarios. Some of the less aggressive lenders are back up to 3.75%, but that was the case as of late last week as well.
Tuesday:
• At 9:00 AM ET, S&P/Case-Shiller House Price Index for December. Although this is the December report, it is really a 3 month average of October, November and December prices. The consensus is for a 5.9% year-over-year increase in the Comp 20 index for November. The Zillow forecast is for the National Index to increase 5.3% year-over-year in November.

• At 10:00 AM, Existing Home Sales for January from the National Association of Realtors (NAR). The consensus is for 5.32 million SAAR, down from 5.46 million in December. Economist Tom Lawler expects the NAR to report sales of 5.36 million SAAR for January.

• At 10:00 AM, Richmond Fed Survey of Manufacturing Activity for February.



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DOT: Vehicle Miles Driven increased 4.2% year-over-year in December

With lower gasoline prices, driving has really picked up!

The Department of Transportation (DOT) reported today:
Travel on all roads and streets changed by 4.2% (10.6 billion vehicle miles) for December 2015 as compared with December 2014.

Travel for the month is estimated to be 264.2 billion vehicle miles.

The seasonally adjusted vehicle miles traveled for December 2015 is 268.5 billion miles, a 4.0% (10.4 billion vehicle miles) increase over December 2014. It also represents a 1.4% change (3.7 billion vehicle miles) compared with November 2015.
The following graph shows the rolling 12 month total vehicle miles driven to remove the seasonal factors.

The rolling 12 month total is moving up - mostly due to lower gasoline prices - after moving sideways for several years.


Vehicle Miles Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Miles driven (rolling 12) had been below the previous peak for 85 months - an all time record - before reaching a new high for miles driven in January.

The second graph shows the year-over-year change from the same month in the previous year.

Vehicle Miles Driven YoY In December 2015, gasoline averaged $2.14 per gallon according to the EIA.  That was down significantly from December 2014 when prices averaged $2.63 per gallon.  Gasoline prices have continued to decline, and vehicle miles will probably up sharply year-over-year in January.

Gasoline prices aren't the only factor - demographics are also important. However, with lower gasoline prices, miles driven on a rolling 12 month basis, is setting new highs each month.

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Margaret Sullivan, New York Times Public Editor, Joining Washington Post


By THE NEW YORK TIMES from NYT Business Day http://ift.tt/1QwVbuZ
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Sunday, 21 February 2016

Facebook Open Sources Wireless Gear


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This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

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Sunday Night Futures

From Marcoblog: Are Paychecks Picking Up the Pace?
Based on the Atlanta Fed's Wage Growth Tracker (WGT), the median annual growth in hourly wage and salary earnings of continuously employed workers in 2015 was 3.1 percent—up from 2.5 percent in 2014 and 2.2 percent in 2013. That is, the typical wage growth of workers employed for at least 12 months appears to be trending higher.

However, wage growth by job type varies considerably. For example, the WGT for part-time workers has been unusually low since 2010. ...

The take-away? Wage growth for continuously employed workers appears to have picked up some steam in 2015, and the recent trend in wage growth is positive across a variety of job characteristics. Wage growth for people in lower-skill jobs has increased during the last couple of years, consistent with evidence of increasing tightness in the market for those types of jobs. The largest discrepancy in wage growth appears to be among part-time workers, whose median gain in hourly wages in 2015 still fell well short of those in full-time jobs.
Weekend:
Schedule for Week of February 21, 2016

Fannie and Freddie: REO inventory declined in Q4, Down 34% Year-over-year

Monday:
• At 8:30 AM ET, the Chicago Fed National Activity Index for January. This is a composite index of other data.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 4 and DOW futures are down 32 (fair value).

Oil prices were down over the last week with WTI futures at $29.64 per barrel and Brent at $33.01 per barrel.  A year ago, WTI was at $50, and Brent was at $60 - so prices are down about 40% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.71 per gallon (down about $0.45 per gallon from a year ago).

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Saturday, 20 February 2016

Schedule for Week of February 21, 2016

The key reports this week are the second estimate of Q4 GDP, January Existing and New Home sales, and the Case-Shiller House Price Index for December.

----- Monday, February 22nd -----

8:30 AM ET: Chicago Fed National Activity Index for January. This is a composite index of other data.

----- Tuesday, February 23rd -----

Case-Shiller House Prices Indices9:00 AM: S&P/Case-Shiller House Price Index for December. Although this is the December report, it is really a 3 month average of October, November and December prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the November 2015 report (the Composite 20 was started in January 2000).

The consensus is for a 5.9% year-over-year increase in the Comp 20 index for November. The Zillow forecast is for the National Index to increase 5.3% year-over-year in November.

Existing Home Sales10:00 AM: Existing Home Sales for January from the National Association of Realtors (NAR). The consensus is for 5.32 million SAAR, down from 5.46 million in December.

Economist Tom Lawler expects the NAR to report sales of 5.36 million SAAR for January.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for February.

----- Wednesday, February 24th -----

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

New Home Sales10:00 AM: New Home Sales for January from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the November sales rate.

The consensus is for a decrease in sales to 520 thousand Seasonally Adjusted Annual Rate (SAAR) in January from 544 thousand in December.

----- Thursday, February 25th -----

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 270 thousand initial claims, up from 262 thousand the previous week.

8:30 AM: Durable Goods Orders for January from the Census Bureau. The consensus is for a 2.0% increase in durable goods orders.

9:00 AM: FHFA House Price Index for December 2015. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.5% month-to-month increase for this index.

11:00 AM: the Kansas City Fed manufacturing survey for February.

----- Friday, February 26th -----

8:30 AM ET: Gross Domestic Product, 4th quarter 2015 (Second estimate). The consensus is that real GDP increased 0.4% annualized in Q4, revised down from 0.7%.

8:30 AM ET: Personal Income and Outlays for January. The consensus is for a 0.4% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.2%.

10:00 AM: University of Michigan's Consumer sentiment index (final for February). The consensus is for a reading of 91.0, up from the preliminary reading 90.7.

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