Morning Report – Disappointing Durable Goods 1/28/14

Vital Statistics:

Last Change Percent
S&P Futures 1780.8 5.1 0.29%
Eurostoxx Index 3024.4 9.8 0.32%
Oil (WTI) 96.37 0.7 0.68%
LIBOR 0.236 0.000 0.00%
US Dollar Index (DXY) 80.52 -0.001 0.00%
10 Year Govt Bond Yield 2.75% 0.01%
Current Coupon Ginnie Mae TBA 105.5 0.1
Current Coupon Fannie Mae TBA 104.3 0.0
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.34
Stocks are higher this morning in spite of some weak economic data and disappointing sales out of Apple. Ford reported good numbers. Bonds and MBS are flat. Later on today we will get consumer confidence and Richmond Fed.
The FOMC starts its two day meeting today, which will be swan song for the Bernank.
Durable Goods orders came in at -4.3% vs. the Street expectation at +1.8%. This continues the trend we have seen of data suggesting a weak December. It is possibly weather-related, or tax related. Capital Goods orders were weaker than expected as well.
Continuing that trend, new home sales were weaker in December as well. New home sales fell to an annualized 414,000 pace in December from a downward-revised 445,000 pace in November.
Case-Shiller rose 13.71% year-over-year although it reported its first month-over-month decline in prices. Most experts think the torrid pace of the last couple of years will not be repeated in 2014 as increasing prices and increasing rates take their toll.  Prices are back to mid 2004 levels.

Homebuilder D.R. Horton reported first quarter earnings that topped estimates. Orders increased 4% in Q1. Gross margins continue to expand as average sales prices jump 10%. It has been a tale of two markets as there is strong demand from the move-up buyer and the first time homebuyer struggles to get a foot on the first rung of the ladder. The stock is up a few percent pre-open. We will get a better read on the first time homebuyer later this week when PulteGroup reports.

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