Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1322.1	-0.5	-0.04%
Eurostoxx Index	2148.8	-7.7	-0.36%
Oil (WTI)	90.91	0.3	0.28%
LIBOR	0.467	0.000	0.00%
US Dollar Index (DXY)	82.16	-0.186	-0.23%
10 Year Govt Bond Yield	1.76%	-0.02%
RPX Composite Real Estate Index	177.1	0.4

Markets are flat overall this morning, which makes sense.  Given the fact we have a 3 day weekend and we may have a resolution on the Greek situation, you would have to be certifiably insane to carry positions over the weekend.  Bonds close early today, and I suspect most of the Street will be on the L.I.E. by noon.

No economic data with the exception of University of Michigan confidence at 9:55 this morning. University of Michigan consumer confidence really just tells you where gas prices were last month (h/t Ron at MCM). Consumer sentiment and the Triple A Gas Price index have a -.52 correlation with a 1 month lag.

Are people who bought Facebook stock in the initial frenzy getting a do-over?  Sounds like it. The underwriters are claiming they made $100 million supporting the stock. I can see how they made money supporting the stock on the open.  I can't see how they made money supporting it at the close since it opened down a couple of bucks the next day. Unless they were shorting it in the 40s.

I came across this testimony from a community banker regarding the unintended consequences of Dodd-Frank and the Volcker rule. The biggest one is that the regulators swung at Goldman and Morgan, they ducked, and the regulator ended up slugging all the small fry right in the jaw. When you have 15% of your staff handling regulatory matters and 12% of your operating budget is compliance there is a problem. He notes that regulatory costs as a percent of operating costs is 2.5x the costs for big banks. The Volcker rule alone will require the drafting of policies and procedures to ensure the East Podunk Savings and Loan doesn't inadvertently set up a trading desk and start slinging around credit default swaps.

He also notes some major problems with the "ability to repay" test on mortgage origination and on the CFPB's characterization of pricing risk as "predatory lending."  The net result may be to drive community banks out of entire lines of business because of regulatory risk.  Will the powers that be listen?  I doubt they will do anything more than make perfunctory statements that these regulations were not meant to impact small banks. They will listen to this guy instead.