Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1402.3	-0.9	-0.06%
Eurostoxx Index	2455.6	-21.7	-0.88%
Oil (WTI)	102.66	-0.4	-0.35%
LIBOR	0.4682	0.000	0.00%
US Dollar Index (DXY)	79.015	0.011	0.01%
10 Year Govt Bond Yield	2.20%	-0.01%
RPX Composite Real Estate Index	170.51	0.4

Stocks are flattish this morning on no real news in the US. Bonds and mortgages are up slightly. Construction Spending and ISM reports are out at 10:00 this morning. There was some disappointing economic data out of Europe - Eurozone unemployment was 10.8%, which suggests Europe is in a recession. France, Germany, and Italy Purchasing Managers Indices all came in below 50, indicating manufacturing conditions are in a decline. The Japanese Tankan survey was disappointing as well.

The Washington Post had a long article about rentals over the weekend. Big investors are using proprietary algos to analyze and manage rental properties. Oaktree, Carrington, Starwood, Apollo, and Zell are getting into this business. Private equity fund Waypoint reported a return of 8% to 9% in Q4 buying foreclosed properties and renting them. Interesting. RTWT.

Bill Gross's Total Return Fund gained 2.83% in Q1, outperforming the benchmark by 2 percentage points on an aggressive bet on mortgages. He increased the mortgage exposures from 38% in September to 52% at the end of February. This is a bet on either (a) QEIII or (b) The fed replacing Operation Twist with a more aggressive stance on mortgage purchases. In other words, mortgage rates have been pushed lower by two big behemoths - PIMCO and the Fed - aggressively buying mortgage backed securities. If the Fed doesn't provide an exit for Bill (either by not doing QEIII or not replacing Operation Twist with a mortgage support program), then mortgage rates could back up in a hurry. Something for lock desks to think about..