BREAKING 1370? A strong barrier.
U.S. CAR SALES LOOK GOOD IN FEBRUARY
We estimate a 14.1mm February U.S. SAAR. This would represent 8%
y/y growth and down modestly from January’s 14.2mm rate. However,
January 2012 had a high fleet component so we believe February retail sales are sequentially stronger. Even with some higher fleet YTD, we are clearly seeing an acceleration from 4Q11’s 13.5mm unit rate. February’s daily selling rate would be up 22% from January; February is a more average selling month (smaller seasonal factor versus January). We believe that President’s Day weekend holiday sales were strong, and that unseasonably warm weather may be contributing as well. (RBC Capital)
U.S. HOUSING
Case-Shiller index edged down -0.5% in December (-4.0% YoY). Distressed home prices remain weak. Non-distressed home prices are flat.
Sales Index Stirs Hope for Housing
The National Association of Realtors (NAR) reported that January pending sales of single-family homes improved 2.0% (8.0% y/y) following a lessened 1.9% December drop. The index level of 97.0 (2001=100) was the highest since April of 2010 when the first-time homebuyers tax credit was fueling sales.
The NAR also noted that recent strength in the index is likely linked to buyers recommitting to a home purchase after an initial contract ran into problems (most likely due to access to mortgage financing) over the past few months. Last week, the NAR highlighted that 33% of realtors reported contract failures in January, unchanged from the previous three months but nearly double the 18% reported in September and well above the 9% reported a year ago.
Real-estate firms saw buyer traffic surge as the year began, “but we don’t yet know if they’re going to buy,” said Glenn Kelman, chief executive of brokerage Redfin Corp. “Part of the concern is that we saw a strong January and February last year,” only to see sales disappoint during the spring and summer, he said.(…)
Also, while mortgage rates are nearly one percentage point below their levels of a year ago, applications for home-purchase mortgages remain in the dumps.
Applications were down by 10% from a year ago in mid-February, according to an index maintained by the Mortgage Bankers Association, recording their second-lowest weekly level since the housing downturn began.
Some housing analysts say a pickup in sales might not be detected by the mortgage index because investors and other all-cash buyers have played a growing role in many of the hardest-hit housing markets over the past year.
Where Are All the Home Sellers?
Inventories of homes listed for sale in January dropped by 6.6% from December to 1.77 million, the eighth straight month that listings have declined. For-sale listings are 23.2% below year-earlier levels and at the lowest point since the housing bust accelerated five years ago, according to data from Realtor.com.(…)
Compared with one year earlier, listings were down by a whopping 55% in Fort Lauderdale, Fla., and by nearly half in Miami, Phoenix, and Bakersfield, Calif. Markets with the smallest declines included New York (-1.7%) and Philadelphia (-3%).
Housing inventories typically rise heading into the spring selling season, but only four markets saw inventories increase from December, all of them in Florida. San Francisco and Boston, reported some of the largest monthly inventory declines, of 16% and 10%, respectively.
Texas is one of the healthiest housing markets: existing home sales in Texas rose 9% y/y in January after December’s +3% y/y gain. Listings in Texas plunged 17% y/y in January to 103,450 units. Texas’ median home price slid 1% y/y in January, unchanged from December. The rental apartment market in Texas’ major markets also continues to tighten. Effective rents in Texas climbed across the board according to 4Q data from MPF Research. Austin led all markets, with a 7.2% y/y average rent increase, followed by Dallas (+4.8% y/y), San Antonio (+4.6% y/y), Fort Worth (+4.4% y/y), and Houston (+4.0% y/y). Occupancy rates also improved in all markets, ranging from a 90 bp improvement in San Antonio (to 93.3%) to a 240 bp improvement in Houston (to 91.8%).
Consumer Debt Falls on Less Mortgage Borrowing
Total consumer debt levels fell 1.1% to $11.53 trillion in the fourth quarter of 2011 compared to the prior quarter, largely due to developments in the housing market, a report from the Federal Reserve Bank of New York said Monday.
The figure released by the bank included mortgage-related borrowing, which by itself fell by 1.6% in the quarter. The bank noted household mortgage debt is now 11% under its peak level.
The New York Fed said that those with credit-related troubles fell. Total delinquency rates moved to 9.8% of total outstanding debt from 10% in the third quarter. The bank noted $1.12 trillion in consumer debt is delinquent; some $824 billion is deemed “seriously delinquent.”
The report found housing related borrowing remained a troubled arena for households. While the fourth quarter level is 35.3% under its fourth quarter 2010 peak, there was nevertheless a 9.5% increase in the last three months of 2011 for those with a foreclosure noted on their credit record.
Buffett: Lenders Were Housing Victims, Too
(…) But Mr. Buffett also singled out “a largely unnoted fact: Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit.” That is because they extracted cash from their homes through refinancings before the crisis hit. In other words they took the money and left banks with the loss. “In these cases, the evicted homeowner was the winner, and the victim was the lender.”
Even though he’s talking his portfolio, Mr. Buffett is wasting many occasions to shut up these days.
Spain’s 2011 budget deficit exceeds 8.5%
Government pledges not to repeat overshoot
Data show ECB loan spur for bond rally
Periphery banks step up sovereign purchases with aid of LTRO
(…) The figures support forecasts from many banking analysts that suggested that the use of the LTRO by Italian and Spanish banks had been a major contributor behind a rally in government bonds since the start of the year. (…)
Investor sentiment will be tested further on Tuesday when Italy will attempt to sell a clutch of bonds.
In another indication of the improved sentiment in the market, the rate at which banks in Europe lend to each other fell below the ECB’s main refinancing rate for the first time in more than a year. Three-month Euribor hit 0.997 per cent on Monday. The ECB’s main refinancing rate currently stands at 1 per cent.
EUROBANKS LENDING AGAIN
CANADA
Canadian retailers warn of ‘slow growth, no momentum’
(…) members forecast another year of slow sales growth and challenging competitive conditions. “Most do not see any momentum developing. … This stands in direct contrast to expectations at the start of 2011 when merchants hoped that things would gradually improve.
“Either strong growth returns, or a number of competitors get into trouble and exit the market – bankruptcy, closure, merger or sale,” says the report, based on a members’ survey this month.
CHINA
Shanghai to raise minimum wage by 13% Shanghai said Monday that it will raise the monthly minimum wage for workers by 13 percent to 1,450 yuan ($232), following pay hikes announced by several other cities in recent months. (Chart from CEBM Research)
The minimum monthly wage will increase from 170 yuan ($27) to 1,450 yuan, while the minimum hourly wage will increase from 11 yuan to 12.5 yuan.
The city also plans to raise the monthly social security allowances for impoverished urban and rural residents by 12.87 percent and 19.44 percent, respectively, to 570 yuan and 430 yuan, the statement said. Only those who are extremely poor and have no marketable job skills are entitled to such allowances.
East China’s Shandong province will raise its minimum monthly wage by up to 19 percent in March in a bid to attract workers and buffer rising living costs, local authorities said Tuesday.
The government will strive to form a reasonable salary distribution system with planned annual wage increases of at least 13 percent in the years to 2015, a move that will also help bridge the income gap, according to the local development plan for human resources and social security (2011-2015).
Twenty-four provinces, autonomous regions and municipalities raised their minimum monthly wages by an average of 22 percent last year, according to Yin Weimin, minister of human resources and social security.
The southern manufacturing city of Shenzhen led another round of wage hikes this year. It raised its minimum monthly wage by 13.6 percent to 1,500 yuan, the country’s highest, starting this month, in hopes of wooing migrant workers from inland regions to help ease labor shortages.
With the industry transfer, many migrants now choose to work at factories closer to their homes, rather than those in faraway coastal regions like Shenzhen and Shandong. This has left many factories in the traditional eastern manufacturing centers short of laborers, and has pushed local governments to roll out compulsory wage hikes to help compete for workers
Jewelry sales jump 42% in China China’s jewelry retailers saw a huge spike in sales last year, with strong demand for gold and precious stones surging.
China’s industrial production remains weaker than seasonality. Based on data ending February 10th, average daily crude steel production barely rose, while the price of steam coal declined, indicating demand from power plants remains weak. The inventory of iron ore was high and copper inventory in the futures market continues to increase rapidly. The copper inventory in the Shanghai Free Trade Zone has reached record high level. (CEBM Research)
COPPER
Feb. 28 (Bloomberg) — Some Chinese banks have stopped approving
loans to companies using warehouse receipts of copper as a pledge, the Oriental Morning Post reported today, citing an unidentified executive at a state-owned bank. Approval will only be given to companies that have fixed buyers of downstream products, the newspaper said, citing the bank executive. The suspension came after banks found that companies used the same collateral to apply for loans from more than one bank, posing risks amid volatile metal prices, according to the report. (Via FT Alphaville) (Chart from CEBM Research)
AAPL
Zerohedge recently (exactly one month ago, also exactly 100 bucks ago!) was wondering how AAPL could continue to rise given that
with nearly 200 hedge fund holders in the name, and pregnant to the teeth in the stock, we fail to find who the incremental buyer of GS’ AAPL stock will be.
Another one of the many Tyler Durdens at ZH got new info that seems to leave some buying potential after all…
One out of five long/short hedge funds has AAPL among its ten largest long positions and approximately 30% of hedge funds own at least one share of AAPL. (…) In aggregate, hedge funds own only 4% of AAPL equity cap. The average hedge fund AAPL position equals 1.6%, given 70% of funds own no AAPL. (ZH)
Hopefully, the latter Tyler Durden will relay the info to the former. Disclosure: I own AAPL.
