Weekly Unofficial Problem Bank List Update

CalculatedRisk has updated the Unofficial Problem Bank List bringing the total of problem banks to 920 institutions with $411.40 billion in assets.

The Unofficial Problem Bank List finished the week at 920 institutions with assets of $411.4 billion, up from 919 institutions last week. Assets were essentially unchanged. This week there were six failures, but only four were on the list -- The Bank of Miami, National Association, Coral Gables, FL ($448 million); Chestatee State Bank, Dawsonville, GA ($244 million); United Americas Bank, National Association, Atlanta, GA ($242 million); and Appalachian Community Bank, F.S.B., McCaysville, GA ($68 million Ticker: APAB).

As anticipated, the OCC released its actions through mid-November, which contributed to the five additions the weeks. Newly joining the list are Omnibank, National Association, Houston, TX ($384 million); Empire National Bank, Islandia, NY ($319 million Ticker: EMPK); The First National Bank of Mercersburg, Mercersburg, PA ($188 million Ticker: MCBG); The Headland National Bank, Headland, AL ($114 million); and The First National Bank of Fleming, Fleming, CO ($18 million).

The OCC strengthened actions against First Citizens Bank of Polson, National Association, Polson, MT ($26 million) and Metropolitan National Bank, New York, NY ($600 million) by replacing Formal Agreements with Consent Orders. The other change was a Prompt Corrective Action order being issued by the Federal Reserve against The Park Avenue Bank, Valdosta, GA ($1.0 billion).

We anticipate the FDIC will release its actions for November 2010 next week, and it is likely they will take the rest of the year off executing closures.

Weekly Bank Failure Update

This past week bore witness to 6 additional bank failures brining the total to 158 banks failed in 2010 so far.  The state of Georgia was hit the worst losing 3 of the 6 banks; United Americas Bank in Atlanta, Appalachian Community Bank in McCaysville and Chestatee State Bank in Dawsonville.  The other banks that failed were; Community National Bank in Lino Lakes MN, First Southern Bank in Batesville AZ and The Bank of Miami in Coral Gables FL.

Interactive Map of Unemployment per State

FED POMO Purchase

Yesterday the FED performed another POMO (Permanent Open Market Operation) purchase of $2.03 billion dollars.  This brings the grand total since August 17th 2010 to $202.365 billion dollars and since November 3rd 2010 (when he announced the $600/900 billion dollar purchase plan) to $137.905 billion dollars.  The target is to purchase $75 billion per month and the FED has already purchased $64.836 in the month of December.

OPERATION 1 - RESULTS

Operation Date:	12/17/2010
Operation:	Coupon Purchase
Settlement Date:	12/20/2010
Maturity/Call Date Range:	08/15/2028 - 11/15/2040
Total Par Accepted:	$2,030
Total Par Amt Submitted:	$6,679

FED POMO Purchase

The FED performed another POMO (Permanent Open Market Operation) purchase today in the same amount as yesterdays $6.78 billion dollars.  This brings the grand total since August 17th 2010 to $200.335 billion dollars and since Nov 3rd 2010 (when the FED committed to 600/900 billion in printing) to $135.875 billion dollars.

OPERATION 1 - RESULTS

Operation Date:	12/16/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	12/17/2010
Maturity/Call Date Range:	06/30/2013 - 11/30/2014
Total Par Amt Accepted (mlns) :	$6,780
Total Par Amt Submitted (mlns) :	$22,084

Weekly Initial Unemployment Claims

Last weeks Initial Unemployment Claims were released today with better than expected news.  Initial Unemployment Claims are the number of person whom filed for unemployment for the first time in the prior week.  Last weeks number of 421K was revised up by 2k to 423k.  This weeks forecasted number called for 421k and actually came in at 420k.  We see that the 4 wk Moving average is trending downward as has since the Augusts timeframes high of 504k.  It is somewhat coincidental that stores started the Christmas shopping season earlier and thus needed additional staff for this, but I don't have those figures (merely an observation on my part).

The Delta in revisions are staying more steady as last weeks revision was a revision up by 2k which has been a norm lately.  Going on past revisions and adding 2k to this weeks number we most likely have a number more like 422k which would have disappointed, but is progress non-the-less.

Weekly Fund Flows

The week ending 12/8/2010, saw additional outflows from Bonds (both Taxable and Municipal) and domestic stocks.  Foreign flows continued to see money flowing in.  Flows for Stocks and Bonds overall were negative as Domestic outflows outweighed Foreign inflows.

Figure 1

As usual with billions flowing out of Domestic stocks per week as you can see in figure 2, you have to wonder where does the money come from that is elevating the stock market (FED Printing press and the PPG or primary dealers? It seems logical).

Figure 2

Bond flows continue to show signs of stress as Taxable bonds join the sell off that municipal bonds started the week ending 11/10/2010.  More worrisome is the municipal bonds with outflows continuing, it leads you to wonder if municipalities will have enough or be able to get enough to float their budgets.  As I don't track bond auctions I don't know how much they are looking for and how much they are falling short, this would be a great statistic to get.

Figure 3

Yesterday's FED POMO Purchase

I apologize for the late post on this, but yesterday the FED performed another POMO (Permanent Open Market Operation) purchase to the tune of $6.78 billion dollars.  This brings the total since August 17th 2010 to $193.555 billion dollars and since November 3rd when he announced the purchase of $600 billion (really $900 billion) by June of 2011 the total purchased is $129.095 billion dollars.

OPERATION 1 - RESULTS

Operation Date:	12/15/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:16 AM
Close Time:	11:00 AM
Settlement Date:	12/16/2010
Maturity/Call Date Range:	12/31/2014 - 05/31/2016
Total Par Amt Accepted (mlns) :	$6,780
Total Par Amt Submitted (mlns) :	$13,114

Monthly Business Inventories

The Manufacturing and Trade inventories report showed a better than expected number in the month of October.  Business Inventories are the change in the total value of goods held in inventory by manufacturers, wholesalers, and retailers. It is considered a signal of future business spending as companies are more likely to spend on materials to build up inventories if their current inventories are depleted.  The forecasted number called for a 0.9% increase, the actual headline number came in at 0.7%.  This seems negative, but considering the prior months number was -1.3%, this months number provides a sigh of relief.

When compared to the prior year we see sales are up YoY (Year over Year) as well as inventories.  If inventories were the only items up and sales were down or flat then there would be concern.  This inventory buildup is more than likely due to expected turnover due to sales.  We will have to keep a watch on inventories after the holiday season to better assess.

Monthly Core/PPI

The Core PPI and PPI (Producer Price Index) were released today showing positive news.  The PPI is the change in the price of finished goods and services sold by producers and Core PPI is PPI excluding food and energy. Core/PPI is a leading indicator of inflation and can have ripple effects on prices of goods and consumer spending.

Category	Forecast	Actual
PPI	0.6%	0.8%
Core PPI	0.2%	0.3%

So what does this data tell us.  Well it says that Food and energy are 0.5% of the increase and the cost of brining food and energy to market have gone up significantly, which will then have to be passed on to the consumer.  This can be a troublesome sign as food and energy are not discretionary items, they are "must have" for survival.  The other 0.3%, depending on what it is, is less concerning because consumers can just choose to do without.  This is the largest jump in PPI since February of this year where the increase was 1.4%.  We will have to keep an eye on the coming numbers to see if a trend begins from this.

Monthly Core/Retail Sales Numbers

The monthly retails sales numbers were released today showing a better than expected number. Retail sales are change in the total value of sales at the retail level and is considered a primary gauge of consumers spending.  The forecasted number called for a 0.6% MoM (Month over Month) increase, but the actual headline number was a 0.8% MoM increase.  This number makes sense due to the holiday season and increased sales due to the holiday spending season.

Core Retail Sales numbers were also better than expected beating the prior months 0.8% increase.  Core Retail sales are the change in the total value of sales at the retail level, excluding automobiles and are considered a more accurate gauge of consumer spending due to the removal of Auto's. The forecasted number called for a 0.7% increase, but the actual headline number came in at 1.2%.  

The report showed an increase from 2009 by a larger margin, across the board the month of November 2010 beat November 2009's spending. 

Courtesy of the U.S. Census Bureau

You can view the full report here.

Dylan Ratigan on Tax Cut Vote

Visit msnbc.com for breaking news, world news, and news about the economy

Europe's Debt Domino Effect

Spotlight on Banks' Exposure In Europe

The WSJ's Nina Koeppen wrote an article in todays Money and Investing section entitled "Spotlight On Banks' Exposure In Europe" where Nina points out that German and French banks exposure to Ireland and the southern rim of the euro zone was greater than previously thought for the second quarter.   Quoting the BIS data, here are the following countries exposures. 

Country	Total Exposure
Greece	$252.1B
Ireland	$746.8B
Portugal	$292.6B
Spain	$989.8B

Total Exposure to the PIGS is $2.2813 trillion dollars.  Of this Germany is exposed to $512.7bn or 22.47%, France is exposed to $410.2 bn or 17.98%, USA is exposed to $352.9 or 15.47% and Great Britain is exposed to $370bn or 16.2% and finally other Euro areas are exposed to $281.1 or 12.3%.  Here is the link to the BIS report.

FED POMO Update

The FED performed another POMO (Permanent Open Market Operation) purchase today for $7.79 billion dollars.  This brings the total since August 17th 2010 to $186.775 billion dollars and since the FED announced a $600 billion (really $900 b) on Nov 3rd/4th 2010 it has printed $122.315 billion dollars.  According to the schedule the FED was going to target anywhere between $7b - $9b for todays purchase and almost came in the middle of that range.  Wednesday the 15th is scheduled another $6 to $8 billion.

OPERATION 1 - RESULTS

Operation Date:	12/13/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	12/14/2010
Maturity/Call Date Range:	06/30/2016 - 11/30/2017
Total Par Amt Accepted (mlns) :	$7,790
Total Par Amt Submitted (mlns) :	$18,268