Pending Home Sales Highest in Decade The number of homes that went under contract in April to be sold climbed to the highest level in over 10 years, a sign the housing market is gaining traction and supported by steady job creation and historically low interest rates.
Pending sales of previously owned homes, reflecting contract signings, rose 5.1% last month from March, the National Association of Realtors said Thursday, handily exceeding the 0.7% rise expected by economists surveyed by The Wall Street Journal.
The sales index climbed to 116.3, the highest level since February 2006. (…)
Pending sales in April rose 4.6% compared with a year earlier, marking the 20th consecutive month of year-over-year gains.
Gasoline prices are 16% cheaper today than the last time oil was at $50 a barrel in November. Refineries have been running hard this year, with fewer outages than a year ago. That keeps gasoline supplies healthy and blunts the impact of rising crude prices. (…)
Retail prices jump about 25 cents for every $10 change in crude futures, according to AAA (…).
Gasoline is more expensive than it was three months ago, with the national average for regular now at $2.31, according to AAA. Pump prices are up 33% from their recent low in mid-February, which came just as oil futures crashed to their own 13-year low. But that rebound in gasoline prices hasn’t been as severe as the 89% rise in crude prices over the same period.
U.S. households are still likely to save $160 billion in 2016 compared with what they spent on gasoline two years ago, when oil prices were more than $100 a barrel, according toJason Thomas, director of research at private-equity firm Carlyle Group.
The savings is equivalent to a 2.6% raise in the median household income of $51,900 in 2014, according to Citigroup. AAA estimates the savings at about $700 per licensed driver, even with crude prices on the rise.
AAA expects more than 34 million Americans to travel at least 50 miles this Memorial Day weekend, up 2.1% from 2015 and the most since 2005. (…)
Travel by air is also forecast to rise this weekend though by a less robust 1.6% even though flights on the 40 most popular U.S. routes are about 26% cheaper than a year ago, according to AAA. (…)
From Doug Short:
New orders for durable goods jumped 3.4% during April (1.9% y/y) following a 1.9% March increase, revised from 0.8%. A 0.2% April gain had been expected in the Action Economics Forecast Survey. Data were revised back to 2001.
A 64.9% rise (5.1% y/y) in orders for civilian aircraft drove total transportation sector orders 8.9% higher (8.2% y/y). Orders for defense aircraft & parts declined 4.5% (+29.8% y/y) and motor vehicle & parts orders gained 2.9% (4.1% y/y). Excluding the transportation sector altogether, total durable goods orders improved 0.4% (-1.4% y/y) after a 0.1% rise.
Business investment remained soft. Nondefense capital goods orders excluding civilian aircraft eased 0.8% (-5.0% y/y), down for the fifth month in the last six.
MORE ON THE CHINA RISK
Chinese firms’ financial outlook worsens Credit ratings suffer record deterioration, says Moody’s
(…) The agency more than quadrupled the number of Chinese debt issuers it classified as having a “negative outlook bias” on their credit ratings at the end of the first quarter of this year, compared to the end of 2015. A negative bias includes both those companies with ratings on review for a downgrade and those with a negative outlook on their rating. (…)
“We believe that China’s authorities have the tools to prevent a financial crisis from materialising in the near future,” said the report. It added that the fact that the Chinese banking system was state-backed, funded domestically and that authorities have considerable powers of moral suasion all helped to impart solidity. (…)
In addition, the debt servicing ratio — which measures cash flow against debt obligations — has also worsened (see chart above), leaving fewer funds available to companies for productive uses as the debt burden has climbed. (…)
Another key measure of corporate health — returns on assets — have also been in retreat, especially for state-owned enterprises (SoE) rated by Moody’s. Overall SoE returns on assets slipped to 2.9 per cent in 2015 from a post-crisis high of 5.9 per cent hit in 2010. (…)
THE ROBOTS ARE HERE
Today, Adidas announced the first ever 100% robot-made shoe. (…)
Deutsche Welle, Germany’s international broadcaster, reports Adidas Shoe Manufacturing Will Return to Germany. (…)
The new production site in the southern German city of Ansbach is still under construction, but it represents a return to local production for Adidas, which stopped manufacturing shoes in its home market more than two decades ago in favor of Asia.
But the company has struggled with steadily rising wages across the continent, where it employs around a million people.
Six subcontractors of Adidas in China declined to comment or said they were not aware of the new production sites in Germany, news agency AFP reported. (…)
The sportswear and equipment company also plans to open a second Speedfactory in the United States in 2017, with similar ones to follow in Britain or in France. (…)
Let’s not sugar coat what’s going to happen. 1,000,000 Adidas shoe making jobs in China will vanish by 2018. Nike? Converse? Everyone else? (…)
Also consider Robots Taking Over: Foxconn Terminates 60,000 Employees, Hires Robots! (emphasis theirs)
In one of the largest terminations ever recorded in human history, iPhone manufacturer Foxconn has decided to fire 60,000 employees in one single go. Earlier this factory based out of Kunshan in Jiangsu province of China had 110,000 employees, but now, it will only have 50,000 human employees. (…)
And the interesting aspect is that, almost all of the 600 major manufacturing companies based in Kunshan are about to fire humans, and assign their tasks to robots. In fact, 35 biggest manufacturing companies from Taiwan, including iPhone’s main manufacturer Foxconn have spent a collective 4 billion yuan or HK$4.74 on improving and optimizing automation.
And this recent termination of 60,000 humans is just the start.
Earlier this year, we reported that top Indian IT companies hired 24% less employees; and automation is the reason for this sharp decline. Cognizant Technologies was the company which was impacted to the max, as they hired 74.6% less employees in 2015, solely due to rise in automation.”
Mish to conclude:
New Slogans Needed
Instead of “Buy Union!” we need “Buy Human!”
Anyway, China’s problems are compounding fast. Waiting for the other shoe to drop?
Equity fund outflows pass $100bn in 2016 Further $9.2bn shed in week ending May 25 despite brighter data
(…) The headline consumer price index fell 0.3 per cent year on year in April, after a fall of 0.1 per cent in March, marginally better than economists’ expectations but a far cry from the 2 per cent targeted by the BoJ. (…)
Yet the BoJ’s preferred measure of underlying inflation, which strips out energy and fresh food, slowed to a rise of 0.9 per cent year on year in April from 1.1 per cent in March, according to estimates by Capital Economics. (…)
There are signs that the slide will accelerate in the months ahead. Preliminary data for the Tokyo area in May showed headline prices falling at an annual rate of 0.5 per cent, quicker than the 0.4 per cent decline in April, but in line with economists’ forecasts. (…)