Bits & Pieces (Wednesday Night Open Mic)

Posted on February 22, 2012 by Kevin S. Willis

An Actress of Rare Beauty, Gladys Frazin, from the days of more modest covers of National Police Gazette.

Looking for evidence that we are indeed moving forward as a society, and humanity is progressing nicely? Then, look to the past and National Police Gazette, and contemplate the fact that it finally stopped publishing in 1977. Progress, people. Progress.

Filed under: Bits and Pieces, Uncategorized | Tagged: | 4 Comments »

Morning Report

Posted on February 22, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1359.4 -0.7 -0.05%
Eurostoxx Index 2526.7 -14.9 -0.59%
Oil (WTI) 106.1 -0.2 -0.14%
LIBOR 0.4916 -0.001 -0.20%
US Dollar Index (DXY) 79.286 0.178 0.23%
10 Year Govt Bond Yield 2.05% -0.01%

Markets are weaker this morning on a weaker than expected economic report out of Europe and a lousy forecast from Dell. Mortgage applications fell 4.5% for the week ending Feb 17. Existing Home Sales will be released at 10:00 am.

Obama has laid out the broad brush strokes for a corporate tax overhaul. He plans on lowering the statutory rate to 28%, while eliminating loopholes. His plan will benefit domestic manufacturers and he will target the energy sector for more revenues.  It looks like he is proposing some sort of AMT for corporations, with a minimum tax for overseas earnings. The plan will be revenue-enhancing.

Of course, the devil is always in the details, and hopefully the administration is smart enough to draw a distinction between overseas production meant to be sold overseas and outsourcing to cut costs. He could end up hurting US competitiveness if he doesn’t think this through.

The FHFA sent a letter outlining its plan for the GSEs aptly titled “The Next Chapter in a story that Needs an Ending.” It is a strategic document, not a step-by-step plan. They intend to build a new infrastructure for the secondary market, gradually reduce the footprint of Fannie and Freddie, while maintaining foreclosure prevention activities and credit availability.

With the S&P 500 rallying, bonds have sold off a bit, driving best-ex mortgage rates back over 4%. FWIW (and I am not a big technical analysis guy) it appears the March Treasury futures are stuck in a 140-145 range, which implies a yield range of 1.85% to 2.05%. We are again at the top end of that range. As I have mentioned before, the S&P 500 is right up against resistance and looks like it wants to break out. The Fed has been stepping into the MBS market when rates hit these levels, so we’ll see if that continues.

Filed under: Federal Reserve, housing | 67 Comments »