Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1334.7	6.5	0.49%
Eurostoxx Index	2186.7	8.0	0.37%
Oil (WTI)	92.98	-1.0	-1.06%
LIBOR	0.467	0.001	0.21%
US Dollar Index (DXY)	81.31	0.086	0.11%
10 Year Govt Bond Yield	1.80%	0.03%
RPX Composite Real Estate Index	175.5	0.4

S&P futures are firming this morning after hitting lows of 1321 overnight. Good earnings reports from Target and Deere seem to be overshadowing the bank run going on in Greece. Greek, Irish and Portuguese yields are higher this morning. US Treasuries are down half a point while MBS are flat. Everyone is waiting for the minutes of the last FOMC meeting which will be released this afternoon.

Industrial Production increased 1.1% in April, a reasonably strong reading. Capacity Utilization ticked up to 79.2%, but the Fed revised down everything for the past year

The recent drop in rates is triggering refi activity, as evidenced by a 9.2% jump in mortgage applications last week.

April Housing Starts came in at a 717k annualized rate, better than expectations, but still horribly depressed. To put that number in perspective, the in the 74-75 recession, starts bottomed at 904k.  In the 81-82 recession, they bottomed at 837k. In the 91-92 recession, they bottomed at 798k.  These bottoms were V-shaped and typically lasted 6 months or so before returning to normalcy of around 1500.  When was the last time we saw a 800k print?  September of 2008 - almost 4 years ago. Housing historically leads the economy out of a recession, and its absence has been a big part of why this recovery has been so anemic.

Is the summer of 2012 going to be a replay of the summer of 2011?  Certainly the pieces are being put in place - Europe's sovereign debt crisis is again in the forefront, the economy is decelerating after a good Q4 / Q1, and the old saw "Sell in May and go away" was good advice again. We even have the prospect of major tax increases Jan 1 as the Bush tax cuts expire. The only thing we are missing is a debt ceiling fight. Oh, wait...

The Florida Supreme Court is hearing a foreclosure case that asks an interesting question - can the banks who filed foreclosures based on robo-signed documents voluntarily dismiss these cases and re-file them with better documents?

The good market reception to the Facebook IPO means that sellers are increasing the amount for sale. Existing holders like Goldman, Tiger, and Accel are blowing out of 241MM shares, much more than they originally planned.  Surprisingly, and perhaps no coincidentally,  GM has dropped paid advertising with Facebook because they "weren't effective enough". Apparently "likes" doesn't necessarily translate into sales or dealer inquiries.