Economic Charts

All economic charts are at the bottom of the page.

Monday, March 21, 2011

Monthly Existing Home Sales

The February existing home sales number was abysmal today.  The Existing home sales number is an annualized number of residential buildings that were sold during the previous month, excluding new construction. It is considered a leading indicator of economic health due to the ripple effects it has in the economy (finance, furniture and home improvement).  The forecast called for 5.15 million, but the actual headline number is 4.88 million.  This was a 9.6% decrease in existing home sales from January's revised number of 5.4 million.  

Lawrence Yun the NAR chief economist remarked:
“Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”

FED POMO Purchase

The FED performed another POMO (Permanent Open Market Operation) purchase in the amount of $2.070 billion.  This brings the total since November 3rd 2010 (when the FED announced the printing of $600 billion dollars to $451.5 billion and since August 17th 2010 to $515.960 billion dollars.

Operation Date:03/21/2011
Operation Type:Outright Coupon Purchase
Release Time:10:15 AM
Close Time:11:00 AM
Settlement Date:03/22/2011
Maturity/Call Date Range:08/15/2028 - 02/15/2041
Total Par Amt Accepted (mlns) :$2,070
Total Par Amt Submitted (mlns) :$8,323

Sunday, March 20, 2011

Monthly Housing Data

February Housing Data was released this past week which turned out to be a disappointment with permits and starts coming way under forecast.  Housing starts forecasted 580k but came in at 479k and Housing Permits forecasted 580K but came in at 517k.  Housing completions beat last months 510k with a number of 581k.  Overall the housing data did not look very well for the short term.

Food Inflation

Weekly King World News Interviews

This week King World News interviews James Dines, Michael Pento, Rick Rule and Chris Whalen.  These interviews discusses the Japan devastation, rebuilding, real inflation in the U.S., depreciation of the dollar (breaking below support), Uranium, Loan modifications and bank balance sheets.  Great interviews that hit multiple facets of the economy, really highlighting the issues in todays economy.

James Dines - Discusses Japan situation due to the disaster that has happened.  Also, BOJ starting printing additional money to clean up this effort, which is helping cause further inflation.  James talks about the worries that are occurring in our nations food supply and the increasing prices effecting availability.  He also talks about how turning food into energy is creating further shortages in food and increases in price.  James sees silver going well over $100 per ounce.  James also discusses this race to rearm weapons all over the world like in the 1930's.  James points out that people that don't understand currencies will participate in the biggest wealth transfer in history (on the losing end).  James points out that Gold is money and regardless of price, it will always be the central part of money.

Michael Pento - Discusses how Japan is the 2nd largest country holder of our debt (approx $900 billion).  He says they should be a seller of the bonds to use the money to rebuild and further their economy, but instead they have printed 31 trillion Yen in the last 3 days depreciating the value of the Yen.  Michael asks who is going to be a purchaser of debt if the Treasury needs to continue to sell bonds (as Japan will be busy rebuilding).  Michael says that the U.S. will be paying 50% of our revenue, just to service the interest on our debt.  Michael believes for some form of default on its outstanding national debt in the future.  We also hit a 52 week low on the Dollar index (below 76) which is a bad sign (broke through support).  Michael points out that most Americans have no real retirement and will rely on Social Security which will not be there for them.  Government inflation numbers do not really reflect true inflation and the FED is over its stated 2% even with the corrupt calculation of CPI and PPI today.  Michael says we are actually at 9% inflation currently.

Rick Rule - Discusses Japans nuclear accident and its effect on Uranium prices around the world.  Pre-Japan, Rick was bullish on energy and post-Japan Uranium has increased over 50% which he believes is due to an on-going bull market in Uranium.  20% of our energy in the U.S. comes from Uranium/Nuclear power and if we were to turn off these plants tomorrow, we would not have electricity.    Rick goes on to make the case for long term investment in Uranium, but short term it may go down as emotional concerns weigh in.  

Chris Whalen - Discusses the organized (or not) investigation in mortgage origination and servicing.  Chris believes this is mostly political fluff and the Attorneys General don't have enough of a case here.  Chris points out with all this loan modification, how are we not marking to market the whole portfolio creating accounting issues.  Chris mentions we will continue seeing foreclosures for some time, which will impact bank earnings (expenses in foreclosures hitting earnings).  Chris also talks about why did we let these banks get so big in the first place (too big to fail) creating and reinforcing their monopoly in the finance industry.  Chris brings up that currently when a loan is originated the loan is sold off to another institution (Fannie Mae/Freddie Mac) along with the servicing (usually a big bank), but servicing should be retained by the local bank that it originated.  Chris points out that if the limit for conforming jumbo loans is decreased in September, we will see housing prices decrease until the end of the year ( instead it the cap should be increased to 1 million dollars).  Very critical information from Chris on the banking industry and aiding your understanding of it.

Weekly Initial Unemployment Claims

This weeks Initial Unemployment Claims were better than forecast, but still not good.  Initial Unemployment Claims measures the number of people filing for unemployment benefits for the first time in  the prior week.  This week the forecast called for 388k, but the actual headline number came in at 385k.  Last weeks number of 397k was revised up to 401k creating a larger gap in released vs revised.  The 4 week moving average is still heading downward, currently at 393.25k using revised numbers.

Weekly Money Flows

This week in the money flows report domestic stocks continued to sell of but with lesser intensity than the week prior and Municipals continued their sell off.  Domestic stocks saw an out-flow of -$1.129 billion dollars while Foreign stocks saw in-flows of $929 million.  Taxable Bonds saw in-flows of $3.882 billion dollars, while Municipal bonds continued to see out-flows of $681 million dollars.  Municipals has seen a continued sell of for 18 straight weeks now having pulled -$39.505 billion dollars out of Municipal bonds.  

Weekly M1/M2 Money Supply

This week we saw more expansion of the money supply as M1 (which includes: Currency, Travelers Checks, Demand Deposits and other checkable deposits) increased +1.12% from the previous month and +10.10% from the year prior.  M2 (which includes: M1 plus retail Money Market Mutual Funds, Saving and small time deposits) increased +0.18% from the previous month and +3.96% from the year prior.  If we refer to the Money supply chart by at the bottom of this page we will see that M3 is also expanding.  Tones of liquidity being pumped into the system.

Weekly Unofficial Problem Bank List

CalculatedRisk published their weekly Unofficial Problem Bank List this week with a small spike in the number of Problem Banks, brining the total to 982.  There were 21 additions and 3 removals this week.  The 3 removals were for action terminations in Iowa, Minnesota and New Jersey.  Read more here.  The following is a breakdown of problem banks per state:
The following states saw increases/decreases in the number of problem banks from last week:

FED POMO Purchases

The FED made additional POMO (Permanent Open Market Operations) purchases this week with a total since last post on Mondays transaction of $13.737 billion.  This brings the total printed since November 3rd of 2010 (when the FED announced the printing of $600 billion dollars) to $449.430 billion dollars and since August 17 2010 to $513.890 billion dollars.