Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1361.3	-4.5	-0.33%
Eurostoxx Index	2280.4	-2.7	-0.12%
Oil (WTI)	96.95	-1.0	-1.01%
LIBOR	0.466	0.000	0.00%
US Dollar Index (DXY)	79.74	0.132	0.17%
10 Year Govt Bond Yield	1.85%	-0.02%
RPX Composite Real Estate Index	175.4	0.4

Markets are generally lower this morning on follow-through from the weekend elections in Europe. German industrial output rose more than forecast, suggesting that Germany may avoid a recession. German GDP growth was negative in Q4, however as an exporter, they benefit form Euro weakness. Such is they symbiotic relationship between the North and South - the Southern European countries benefit from their ability to borrow at lower rates than they otherwise would, while the Northern European countries benefit from the currency weakness that results. Bonds and MBS continue to rally, and the 10-year yield has cracked 1.85%.

The National Federation of Independent Businesses released its Small Business Optimism Report this morning. The report contained an interesting statistic - nearly half of the respondents hired or tried to hire in the last three months, and 3/4 of them said they had "few" or "no" qualified applicants. Hard-to-fill job openings rose, and are typically a leading indicator to a drop in unemployment. Capital Expenditures have increased from the record lows of August 10, but are still below "normal" levels, indicating spending is in maintenance mode, not expansion mode.  Contrary to public perception, access to credit remains low on the list of concerns. Earnings are pushing to cyclical highs. Anyway, it is an interesting report. RTWT.

Wells Fargo made nearly 34% of the $385 billion of mortgages originated in the first quarter. Their next closest competitor was JP Morgan at 10.6%.  Should the Federal Trade Commission start preparing an antitrust lawsuit?  Probably not, as the reason for their increased market share was due to their competitors scaling back the business.

It is looking more like Ally will put its Residential Capital unit into bankruptcy and Treasury will support the decision if it happens. Treasury wants to put Ally on the block and recoup their money, but the liability stream from ResCap is making that impossible. The end result could be an acceleration of putback claims.