By B.P.T., on March 24th, 2010
Durable Goods Orders will be announced at 8:30 AM, and the consensus is a gain of 1.0% over January. Last month, orders were up by 2.6%, and regional surveys indicate that demand for durables is still on the rise.
The monthly new home sales report will be reported at 10 AM, and the consensus is that 315,000 new homes were sold in February. Expectations are low because of multiple snowstorms that hit the Northeast in February, and this statistic has been in a downtrend for the last 2 months.
The weekly EIA Petroleum Status Report will be also be released today, and there is a 5 year treasury note auction this afternoon.
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By Eldon Mast, on February 24th, 2010
Seasonal factors play an important part in the monitoring housing prices, pushing up prices during the high traffic months of the spring and summer and pulling them down in the cold of the fall and winter.
The Case-Shiller data on home prices was released on Tuesday. When seasonally adjusted, the data points to an extended price recovery, at plus 0.3 percent in December vs. 0.2 percent gains in the prior three months going back to September. These results point to a building on top of last years mid-year gains.
City-by-city, the data shows consistent improvement continuing to build in the West and the Midwest. The narrower 10 City Composite Index also accelerated to a gained 0.3% following three months of only a 0.2% increase.
By Eldon Mast, on January 28th, 2010
So far this week, we’ve continued a string of good news following last week’s focus on banking reform. More specifically reports on consumer confidence and the housing market confirm the worst of the recession’s detriments are now behind us.
First in December, existing home prices firmed significantly — up a sizable 4.9% on the median to $178,300 and up 6.4% on the average to $225,400. The National Association of Realtors attributed the gains to a higher proportion of repeat buyers during the month.
The report on new home sales also confirmed the December trend indicating a firming in those prices as well. Their median month on month price rose 5.2% to $231,000 while the average rose 7.6% to $290,600. The year-on-year rate for the average price is now actually up 10.5%.
The conference board’s consumer confidence index edged forward in January to 55.9 vs. December’s 53.6 in continued welcome news. The assessment of the present situation improved noticeably, up nearly 5 points to 25.0. The present situation added another 7 tenths to 76.5 and is inching closer to the important 80 milestone. A reading of 80 or better for the expectations index is widely considered to be a signal of economic health.
The assessment of the present jobs market has now improved for three straight months. Those saying jobs are hard to get fell again to 47.4% vs. 48.1% in December and 49.2% in November.
And on Wednesday, markets cheered as Fed policy makers kept the funds and discount rates unchanged at very low levels. Their summary assessment is that the economy is strengthening, labor market declines are abating, and household spending is expanding at a moderate rate.
By Eldon Mast, on January 4th, 2010
As we ring in the New Year here are the top Good News Headlines of 2009.
1. Graphs That Lie (A First Look 1974 vs 2008 Stock Behavior)
2. What was Warren Buffet doing in 1974? (Invest Now and Get Rich)
3. John Cassidy (The Eternal Pessimist) Sees The Light
4. Deflation? NOT!
5. Evidence Points To Recession’s End by July
6. ISM Index Turns Northward (and never looked back)
7. The Stimulus Passes (and naysayers still abound)
8. The Bull Market Move (will leave many in the dust)
9. 101 Economic Positives (the first 101 of 2009!)
10. Corporate Layoffs Subside (substantially)
11. Stock Market Bottom Called Three Days Before the Low
12. This time is NOT Different
13. 50,000+ Job Opportunites In 28 Firms
14. The Recession is Over (In June – NBER will confirm later)
15. Homeowners Cheer LIBOR (And the cheering continues today)
16. Home Prices Up (in a dozen cities and counting)
17. Second Half Growth (coming on strong)
18. Clunkermania
19. Bad News Bears Battle Break-Neck Bounce (and the bears continue to retreat)
20. US Job Growth Likely By Christmas
21. UPS and Fedex add 64,000 Workers
22. FedEx Reports Jump in Package Deliveries
23. Texas Adds Nearly 70,000 Jobs
24. Nasdaq Now Up Nearly 75% From 2009 Low
25. Christmas Week Data Points to Rosy 2010
By Eldon Mast, on December 29th, 2009
Last week markets were subdued as many economists and investors on Wall Street and Main Street took several days off to prepare for holiday celebrations.
The data that did arrive was mostly reminiscent of the spirit of St Nick – slipping coinage into stocks without their owner’s knowledge.
A report on the Tuesday before Christmas showed that US corporate profits in the third quarter were up sharply from the second quarter of 2009. Profits in the third quarter rose an annualized 68.0%, following a 24.5% boost in the second quarter. Corporate profits of course are a strong indication when determining the direction of a company’s stock price. When corporate profits rise, then it is a good bet the stock price will get a lift. The report underscores the fact the US corporate profits have now been up for three consecutive quarters — a fact that shakes out any lingering economic doomsday advocates and gives additional fundamental underpinnings to a stock market that continues to be bullish. (Some indexes now up well over 75% since March)
On the same day, a report on existing home sales revealed steeply higher numbers in November on the heels of record growth in October. Existing home sales rose 7.4% in November on top of October’s 9.9% lift-off. The year-on-year rate is now up 44%. The annual unit sales rate of 6.54M single-family homes and condominiums flew by even the most optimistic estimates of only 6.34M dwellings for November.
Retail sales rates in the week before Christmas Day were also jovial. The Redbook retail report illuminated results of plus 1.9% year-on-year. Many feared that a big snowstorm on the east coast would hamper sales, but the net effect of the snow was a big pick up in online shopping instead. Cumulative weekly retail results this quarter continue to point to a quite positive effect on Q4 GDP results.
A very bright spot in the economic data came on Christmas Eve. The initial jobless claims reports continue their downward trend. The claims fell another very substantial 28,000 in the Dec. 19 week to 452,000. The current report points to what it calls a “long-term trend of improvement.” The four-week average also fell to 465,250 for a 2,750 decrease. Continuing claims also keep retreating to a level now at about 5M. As we said back in early November, the trends for both initial and continuing claims show sizable improvement and point to our conclusion back then, that net US job growth has now likely begun. (Just in time for Christmas) The December payrolls report (released on January 8th) will confirm that fact.
The best news is that as we move further into 2010, the job market situation will continue to improve substantially. Now that net job loss has stopped, net job growth can begin.
As our jobs chart trend predicted in November, the US economy will likely be adding nearly 500,000 jobs per month by mid 2010. Thanks Santa!
(click chart to enlarge)
Source Data: US Dept of Labor
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By Eldon Mast, on December 2nd, 2009
What a difference a few days have made in the mainstream headlines.
Overblown concerns about Dubai defaults are quickly shifting to the into the shadows. On Tuesday clarity on the extent of the loan restructuring indicated that Dubai World likely would restructure debt worth $26 billion against earlier talk of a possible $59 billion default.
Moving to center stage was a string of economic good news on Monday and Tuesday.
To kick off the week, gains in new orders were the highlight of November’s Chicago purchasers’ report. Chicago’s PMI rose nearly 2 points to 56.1 to indicate another strong month-to-month increase in the pace of overall business activity in that area of the country. New orders rose 1.4 points to a very strong 62.8. The Chicago survey includes both service and manufacturing segments of the economy in its report.
Contrary to a more gloomy consensus forecast, reports Tuesday showed a continued rebound for the auto sales even in the absence of government incentives. Sales of domestic-made vehicles came in at an 8.2 million annual rate in November, considerably above the 7.9 million rate in October.
On the retail front, Redbook reported strong results for the Nov. 28 shopping week. Redbook’s year-on-year measure for the week is up 3.8 percent and week over week up 1 full percentage point! (That’s 52% annualized). No doubt this is the strongest retail rate of the year and Redbook projects an exceptionally strong 5.2 percent rise in November vs. October. (That’s a heady 62% annualized)
Indications in the manufacturing sector continue to point to strength with ISM’s report showing continued momentum. The manufacturing new orders component of the index (the report’s leading indication for future activity) continues higher to 60.3 for a 1.8 point gain. Acceleration in new orders and gains in backlogs show a healthy mix pointing to rising production and rising employment ahead. Employment continues much improved from earlier in the year, holding above 50 in November from October’s very strong level of 53.1. You’ll remember the past relationship between ISM’s PMI and the overall economy. If the correlation to the PMI for November is annualized, it corresponds to a 3.9 percent increase in real GDP annually.
Then home sales reports were released. You may remember that existing home sales got a giant boost in October as speculation increased that the homebuyer’s credit expiration would pull sales forward and then dip in subsequent months. But to the contrary Tuesday’s report points to continued strength ahead. Pending home sales jumped nearly 4% in October adding to September’s 6% gain. Year-on-year pending home sales are now up a robust 32%.
Then early Tuesday afternoon, Philadelphia Federal Reserve Bank President Charles Plosser gave his views on monetary policy. Plosser (like us) sees economic recovery to be a little more modest than many gloomy economists. Said Plosser, “Looking ahead to next year, I expect real GDP growth from the fourth quarter of this year to the fourth quarter of 2010 to be about 3 percent. I expect similar real GDP growth in 2011. These rates of growth are more modest than what some forecasters anticipate.”
This economic recovery continues to build momentum. No surprise here.
By Eldon Mast, on November 11th, 2009
Sales of previously owned homes rose across the country during the third quarter, according to a report released Tuesday by the National Association of Realtors.
Nationally, sales were up 5.9 percent from the third quarter of last year. Previously owned homes changed hands at a seasonally adjusted annual rate of 5.3 million, according to the report. NAR attributed much of the jump to continued affordable prices and a federal income tax credit. Congress and President Obama legislated an extension and expansion of the tax credit program last week.
Home sales rose in 32 states and Washington, D.C., from the third quarter of 2008 to the third quarter this year. Sales jumped in 45 states, and in Washington, D.C., from the second to the third quarter.
There was no lack of media enthusiasm for the news on Tuesday as local media outlets across the country finally picked up on the good news…
1. Home sales up nearly 79.6% in October in Orlando
2. Pittsburgh home prices rise in third quarter
3. US Home Sales Rise to Two-Year High
4. Home prices seen stabilizing in North Jersey
5. NJ homes sales jump 11 percent in quarter
6. DC Area housing sales jump
7. Las Vegas Home Sales On The Rise
8. Florida home sales up for fifth straight quarter
9. Houston-area home prices rise in third quarter
10. Ohio home sales rose during the third quarter
11. Nashville home sales climb first time in three years
12. Lehigh Valley home sales rise 30 percent in October
13. Illinois Third Quarter Home Sales a Bright Spot in 2009
14. Home Prices Are Suddenly Hot in Some Areas…
Back in June we pointed out a dozen housing markets that were showing pricing improvement. August revealed a dozen more.
While some year over year comparisons continue to show price erosion recent jumps in the national S&P/Case-Shiller Home Price Index further clarifies that the price drops of the past few years are now over. The 20-city index is now consistently rising quarter-over-quarter.
Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are now all showing housing price improvement.
Repeatedly we’ve said that the strength of this recovery will be measured in part by how well the housing industry fares. Tuesday was further strong evidence that this recovery continues unabated.
By Eldon Mast, on November 3rd, 2009
The economy continues to rebuild itself and the manufacturing sector has now grown for three consecutive months. According to the Institute for Supply Management, their PMI registered 55.7 percent. That is 3.1 percentage points higher than the 52.6 percent reported in September. It was the highest reading for the index in over 3 years and manufacturing output month over month rose at the fastest pace in 63 months.
This year, the PMI has correlated extremely accurately with the growth in the overall economy. When annualized the current reading corresponds to a 4.5 percent GDP growth rate.
In more good news on Monday, the National Association of Realtors said its Pending Home Sales Index, rose 6.1 percent — the index is now at its highest level in nearly three years.
An additional report from the US Commerce Dept showed that U.S. construction spending made its largest gain in a year in September. The report reflected a huge increase in private residential building — the largest increase in more than six years.
In continued positive earnings news: For the first nine months of the year, Ford has now posted a $1.8-billion profit. That’s a $10.6-billion improvement from the same period a year ago. Surprisingly, Ford said that even without Clunkermania, it would have showed a profit. Further, Ford said it “expects to be solidly profitable in 2011, with positive operating-related cash flow.”
On the jobs front, the ISM’s Employment Index registered 53.1 percent in October, which is 6.9 percentage points above the reading reported in September. This indicates the first month of growth in US manufacturing employment in over a year. Eight of the ISM’s 18 manufacturing industries surveyed reported growth in employment in October.
To recap, the overall economy is now growing robustly, the housing market continues to recover steadily, earnings news continues to be extremely positive, and it now appears that we’ve seen the early concrete indications of employment growth.
While there continues to be fallout from the deep recession earlier in the year, it is becoming clearer by the day that upward economic momentum will persist and that this will not be a jobless recovery.
By Eldon Mast, on October 5th, 2009
As another October comes into focus there are many signs that robust recovery is no doubt firming in late 2009:
1. Retail sales improved in the last week in Sept according to ICSC-Goldman’s tally which rose 0.1 percent. The gain represents a 0.9 percent year-on-year gain that compares with a plus 0.6 percent gain the week before. Goldman’s report summarizes that retail traffic is indeed improving. Redbook, like Goldman, reported strength for store sales and extends an improving trend. Redbook further reports that Halloween sales are off to a good start. Later in the week the Commerce Department reported that while everyone was expecting spending to be up in motor vehicle sales, consumers were actually spending elsewhere, too. Consumer spending spiked on clunkermania auto purchases as personal consumption expenditures surged 1.3 percent in August. Indeed there was strength in durable goods spending, which jumped 5.3 percent on sharply higher motor vehicle sales. However, non-durables were robust also with a 2.3 percent boost and services also advanced 0.4 percent.
2. Case-Shiller reported a third month of gains for home sale prices. Their index rose 1.7 percent in July on top of a 1.4 percent gain in June and a 0.5 percent gain in May. Interestingly almost all metro areas now show sale price gains or at least flat conditions in the July report period. Year-on-year rates also improved for a third month. The pending home sales index also jumped in August, up 6.4 percent for a year-on-year gain of 12.4 percent. All regions posted home sales increases for August.
3. The third estimate for second quarter GDP clearly shows the economy at the recession bottom back when we technically called the recession’s end in June. And the component mix for second quarter GDP adds to credibility our argument that the third quarter will be much more positive than the lackluster results many had predicted. For the second revision to second quarter GDP, the Commerce Department pushed up its estimate to an annualized 0.7 percent decrease from the previous estimate of minus 1.0 percent.
4. On the employment front, Challenger’s count of layoff announcements fell to 66,404 in September, down from 76,456 in August for the lowest total since March 2008. Industrial goods employment showed improvement as did the health care and construction segments. The Monster employment index also showed firming job prospects in many blue collar segments.
The first half of September was full of economic good news, and October is bringing more of the same.
By Eldon Mast, on September 28th, 2009
Three of our favorite blogs are: Positive Economic News, Carpe Diem, and Calafia Beach Pundit. Each posted a over abundance of great economic news last week:
From Positive Economic News:
—————————-
1. Toyota raised its world 2009/10 sales forecast by 3 percent citing a recovery in demand for autos.
2. September consumer confidence is now at its highest level since January of 2008!
3. Chinese industrial output and other far east economic data surprised to the upside in August.
From Carpe Diem:
—————-
1. California and Florida Housing markets continue to improve. California’s home sales increase for the 14th straight month and Florida’s string of sales improvements as now stretched to a full dozen.
2. Back in March, Intrade odds had the possibility of Q3 growth at 25%. Now those odds are a 95%
3. Nationally, the inventory of homes on the market has now fallen to April 2007 levels.
From our Beach Pundit:
———————-
1. Current mortgage rates are now the deal of a lifetime… (both conventional and jumbo)
2. In aggregate, US financial burdens are down.
3. The pundit shows three charts providing a distinct turn for the better in the housing market.
Q3 draws to a close this week. And our favorite bloggers will likely continue to diet on a healthy supply of good news reports.
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