Opinions Uncensored

Oil Prices Down Year-over-year

From MarketWatch: Oil futures suffer worst weekly performance of the yearOil futures settled higher Friday, recouping a portion of recent losses, but a day after posting their biggest one-day loss since December, prices saw their worst weekly performance of the year.…Brent shed 4.6%, while WTI...

Q2 GDP Forecasts: Mid 1% Range

From Merrill Lynch: We lowered 2Q GDP tracking by 0.2pp to 1.6%, while 1Q remained unchanged at 2.9% [May 24 estimate]emphasis addedFrom Goldman Sachs: We lowered our Q2 GDP tracking estimate by one tenth to +1.5% (qoq ar) [May 23 estimate]From the NY Fed Nowcasting ReportThe New York Fed Staff...

Housing and Recessions

Now that new home sales have reached a new cycle high (in March), I'd like to update a couple of graphs in a previous post (most of this from an earlier post).For the economy, what we should be focused on are single family starts and new home sales. As I noted in Investment and Recessions "New Home Sales appears to be an excellent leading indicator, and currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight." For the bottoms and troughs for key housing activity, here is a graph of Single family housing starts, New Home Sales, and Residential Investment (RI) as a percent of GDP. The arrows point to some of the earlier peaks and troughs for these three measures. The purpose of this graph is to show that these three indicators generally reach peaks and troughs together. Note that Residential Investment is quarterly and single-family starts...

Merrill on the "Softening" Auto Sector

A few brief excerpt from a Merrill Lynch research note on the auto sector: Autos: lot full In our view, the peak in auto sales is clear and we will likely see some softening going forward, but we do not expect a sharp drop. The labor market is still solid with a healthy pace of job growth and the emergence of wage inflation. Consumers are feeling increasingly confident about job prospects, which could encourage the purchase of a big-ticket item such as a vehicle. Absent a recession, auto sales will avoid the painful drop. The slowdown in sales leads to excess inventory ... the excess inventory is largely concentrated in light trucks and SUVs and the cost to carry such inventory is high. Producers have started to respond, with motor vehicle production down 2.5% mom sa in April, marking the second drop in three months. There is likely more to come. A weakening in the auto cycle will serve as a...

"Mortgage Rates Drop Quickly as Market Panic Sets In"

We could see a 3 handle for mortgage rates tomorrow.From Matthew Graham at Mortgage News Daily: Lowest Mortgage Rates in More Than a MonthMortgage rates dropped quickly today as global financial markets underwent a volatile shift. When money is flowing out of stocks and into bonds (as it was...

A few Comments on April New Home Sales

New home sales for April were reported at 673,000 on a seasonally adjusted annual rate basis (SAAR). Sales for March were revised up to 723,000, a new high for this cycle.   Sales in January and February were also revised up.My view has been that we'd see further growth in New Home sales...

New Home Sales decreased to 673,000 Annual Rate in April, March Revised up to New Cycle High

The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 692 thousand. The previous three months were revised up."Sales of new single‐family houses in April 2019 were at a seasonally adjusted annual rate of 673,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.9 percent below the revised March rate of 723,000, but is 7.0 percent above the April 2018 estimate of 629,000." The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically. The second graph shows New Home Months of...

Weekly Initial Unemployment Claims Decrease to 211,000

The DOL reported:In the week ending May 18, the advance figure for seasonally adjusted initial claims was 211,000, a decrease of 1,000 from the previous week's unrevised level of 212,000. The 4-week moving average was 220,250, a decrease of 4,750 from the previous week's unrevised average of...

Thursday: New Home Sales, Unemployment Claims

Thursday:• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 217 thousand initial claims, up from 212 thousand last week.• At 10:00 AM, New Home Sales for April from the Census Bureau. The consensus is for 678 thousand SAAR, down from 692...