Morning Report 7/19/12

Vital Statistics:

Markets are generally higher this morning on hopes of further stimulus measures and some decent earnings reports out of Ebay and IBM.  Morgan Stanley missed. Spain raised 3 billion euros but paid dearly for it. Bonds are down almost a point and MBS are down a tick or two.

Initial Jobless Claims for the week of 7/14 came in at 386k, more in line with typical readings. Last week’s low 350k print was revised upwards, but still looks like a statistical fluke. Separately, it looks like another round of job cuts is on the way in the banking sector.

In other economic data, existing home sales fell by 5.4% month-on-month to an annualized pace of 4.37MM units.  The Street was expecting 4.62MM. The Leading Economic Indicators index posted a negative number in June, the second negative number in 3 months. 

The Philly Fed survey reported weak business conditions. Ominously, they reported declines in employment and shorter work hours. 

FHA is conducting another mass distressed loan sale. Buyers will not be permitted to initiate foreclosure proceedings for 6 months. The loans are concentrated in hard hit areas like Phoenix, Tampa, Chicago, and Newark.

The Fed is considering another measure to ease up credit – allowing banks to borrow from the Fed at even lower interest rates provided the money is used to lend, not buy Treasuries. The Fed is really scraping the bottom of the barrel at this point – I guess the next step would be to allow the banks to repo the water cooler and office furniture.

Chart:  Initial Jobless Claims:

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