Morning Report 5/24/12

Vital Statistics:

  Last Change Percent
S&P Futures  1317.8 2.1 0.16%
Eurostoxx Index 2154.3 20.3 0.95%
Oil (WTI) 90.56 0.7 0.73%
LIBOR 0.467 0.000 0.00%
US Dollar Index (DXY) 82.14 0.046 0.06%
10 Year Govt Bond Yield 1.75% 0.02%  
RPX Composite Real Estate Index 176.7 0.5  

Markets are giving up earlier gains on the back of some disappointing economic reports. Euro sovereigns are higher with the exception of Greece which now yields 30% and Portugal. Bonds are down a point and MBS are down a few ticks as well.

The Durable Goods headline number came in at +.2%, more or less in line with expectations, but DG ex transportation fell .6%. Cap Goods orders and shipments both fell. This metric tracks business investment and is an ominous sign for the economy.  This might explain why HP is laying off 27,000 workers.  

Initial Jobless claims came in at 370k, in line with expectations.

Freddie Mac released their Economic and Housing Outlook yesterday. It mainly re-hashes data we have already seen. They are of the view that housing is at or near bottom and that rental vacancies are at 9-year lows.

The housing market had another positive data point with the Toll Brother’s earnings announcement. Toll is in the McMansion business, so this report focuses more on the high end. Q2 revenues rose 14% YOY, but signed contracts increased 51%.  Backlog was up 49%. Granted, we are coming off of a low base, but you are starting to see some life in homebuilding. Doug Yearley, CEO said “It appears that the housing market has moved into a new and stronger phase of recovery as we have experienced broad-based improvement across most of our regions over the past six months. The spring selling season has been the most robust and sustained since the downturn began.”  Granted, he is talking his book, but still…

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