Morning Report 5.7.12

Vital Statistics:

 

 

Last

Change

Percent

S&P Futures 

1357.0

-5.5

-0.40%

Eurostoxx Index

2250.6

2.2

0.10%

Oil (WTI)

97.76

-0.7

-0.74%

LIBOR

0.466

0.000

0.00%

US Dollar Index (DXY)

79.69

0.190

0.24%

10 Year Govt Bond Yield

1.87%

-0.01%

 

RPX Composite Real Estate Index

175

0.4

 

 

Global markets are weaker this morning after the far left won elections in France, and Greece voters rejected austerity measures. Greek bond yields have blown out 240 basis points this morning. French yields have taken the election in stride. The CAC-40 (French stock market) is actually up. The S&P futures were initially down 20 points on the Asian open, but have largely recouped their losses. Bonds and MBS are flat / up.

Pundits will be trying to read the tea leaves in the European election. Needless to say, Paul Krugman is delighted. Mohamed El-Arian is cautious.

Robert Samuelson sums up the debate going on in the academic community over how to address the current recession. Paul Krugman has been urging the Fed to target increased inflation in order to decrease unemployment. Ben Bernake considers Krugman’s prescription to be reckless.  FWIW, I side with Bernake here. With so much slack in the labor force, we are seeing zero upward pressure on wages, and the Fed’s profligacy has created a bull market in commodities. Stagnant wages plus higher food and energy costs are a recipe for more consumer misery, not less.

The Obama administration has released its April Housing Scorecard. Punch Line: The housing market remains fragile and the administration remains committed to try and prevent avoidable foreclosures and to stabilize the housing market. It more or less reads like a campaign ad.

This week is Loanapalooza – the Mortgage Bankers Association Secondary Conference, which is being held in NYC. Certainly the top issues will be the CFPB, the return of the private label market, and the new regulatory environment.

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