NEW$ & VIEW$ (30 OCTOBER 2013)

U.S. Retail Sales Slip But Spending less Autos Firms

Retail sales and food services posted a 0.1% slip (+3.2% y/y) during September following an unrevised 0.2% August rise. A 2.2% decline (+5.1% y/y) in motor vehicle purchases held back total sales for the month. It was consistent with the earlier reported fall in unit vehicle sales. Retail sales excluding autos rose 0.4% (2.8% y/y) after a 0.1% August uptick. A 0.3% rise had been expected.

Sales at general merchandise stores gained 0.4% (0.6% y/y) after a 0.2% August decline. Sales at furniture and electronics stores also rose 0.4% (3.0% y/y) on the heels of a 0.6% rise. Sales of nonstore retailers gained 0.4% (8.9% y/y) following a 0.3% August increase. Sales of building materials and garden equipment ticked up 0.1% (5.8% y/y) following their 0.3% shortfall. Countering these gains was a 0.5% decline (+2.7% y/y) in apparel store sales after a 0.2% August drop.

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Morgan Stanley economist Ted Wieseman said that post-shutdown auto-sales numbers still look weak and traffic at shopping malls remained slow into the second half of the month. “We’re not off to a strong start in the fourth quarter,” Mr. Wieseman said. (WSJ)

HALLOWEEEN SPENDING (Bus. Week)

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Home Prices Rose in August, but Pace of Gains Is Slowing

U.S. home prices continued to advance in August but increases are decelerating, according to the S&P/Case-Shiller home-price report released Tuesday.

Home prices in August were up 12.8% from the year-earlier period, the fastest pace since early 2006, according to the Standard & Poor’s/Case-Shiller home-price index. Of the 20 cities in the main index, 13 posted double-digit annual gains.

However, monthly details of the Case-Shiller report show some softening. Home prices rose 1.3% in August, the smallest monthly gain since March, as 16 of the 20 cities saw slower growth. After seasonal adjustments, home prices in August rose 0.9%, below a recent peak of 1.9% in March.

Land Prices Hit the Brakes

The slowdown in sales of newly built homes since last summer has sapped momentum from the land market, as home builders are starting to balk at paying increasingly lofty prices for lots.

Nationally, lot prices have gone from a gain of nearly 7% in the first quarter of 2013 compared with the previous quarter, to gains of about 6% in the second quarter and 4% in the third quarter, according to a survey of land buyers and sellers in 55 U.S. markets conducted by housing-research and advisory firm Zelman & Associates. (…)

The land-price increases went hand-in-hand with the rising prices of new homes. The average price of a new home in the U.S. reached an all-time high of $337,000 in April, census data show. During the housing crisis, the average dipped as low as $245,000 in January 2009.

Wholesale Prices Tame as Fed Meets

The producer-price index, which measures how much companies pay for everything from footwear to computers, fell 0.1% in September from August, the Labor Department said Tuesday. The decline was primarily the result of an 18% decline in fresh-vegetable prices.

Excluding food and energy components, core wholesale prices rose 0.1%. Compared to the same period last year, September wholesale prices rose by 0.3%, the lowest annual level since October 2009.

German Unemployment Rises a Third Month as Growth Slows

The number of people out of work climbed a seasonally-adjusted 2,000 to 2.97 million, after gaining by a revised 24,000 in September, the Nuremberg-based Federal Labor Agency said today. Economists predicted no change, according to the median of 36 estimates in a Bloomberg News survey. The adjusted jobless rate was unchanged at 6.9 percent.

Unemployment in East Germany rose by 2,000, leaving the jobless rate unchanged at 10.3 percent. The number of people out of work in West Germany was unchanged and the rate stayed at 6.1 percent. The national rate of 6.9 percent is near the lowest level in two decades.

Euro-Zone Banks Tighten Lending Standards

Euro zone commercial banks tightened their standards on new loans to private-sector firms during the third quarter, the European Central Bank said Wednesday, suggesting the region’s recovery remains hampered by a lack of funds to finance new spending, investment and hiring. (…)

The net percentage of banks reporting higher lending standards to nonfinancial businesses stood at 5% in the third quarter, the ECB said, compared with 7% in the second quarter. The figures are calculated by subtracting the percentage of banks reporting looser standards on new loans from those saying that they have made it tougher for companies and households to obtain them.

The findings “confirmed the ongoing stabilization in credit conditions for firms and households in the context of still weak loan demand,” the ECB said.

The sluggish economy continued to weigh on business demand for new credit, according to the report. Demand for housing loans and consumer credit rose slightly in the third quarter from the second, the ECB said.

Banks in the region expect loan demand to pick up across all categories in the fourth quarter.

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Troubled loans double at Europe’s banks
Non-performing loans approach €1.2tn as review of assets looms

A report by PwC found that non-performing loans (NPLs) rose from €514bn in 2008 to €1.187tn in 2012, with rises in the most recent year driven by deteriorating conditions in Spain, Ireland, Italy and Greece. It predicted further rises in the years ahead because of the “uncertain economic climate”. (…)

He estimates European banks are sitting on €2.4tn of non-core loans that they plan to wind down or sell off. The first eight months of 2013 have seen €46bn of European loan portfolio transactions, equal to the entire amount recorded in 2012. (…)

PwC’s figures, which are derived from lenders’ accounts, showed that Germany, the EU’s biggest economy, had the highest amount of non-performing loans at the end of 2012, at €179bn, unchanged on the previous year’s number.

Spain had €167bn of NPLs, up sharply from the €136bn recorded for 2011. Britain’s €164bn of non-performing loans represented a decline from €172bn in 2011. (…)

EARNINGS WATCH

296 companies representing 66.0% of S&P 500’s market-cap have reported so far. Surprise is at 64% on earnings (63% last week) and 31% on revenues (30%). RBC Capital’s blended earnings growth for Q3 is now +4.9% (4.6% last week).

 

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