Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1433.8	7.5	0.53%
Eurostoxx Index	2473.0	16.4	0.67%
Oil (WTI)	92.44	1.2	1.30%
LIBOR	0.34	-0.003	-0.73%
US Dollar Index (DXY)	79.83	-0.092	-0.12%
10 Year Govt Bond Yield	1.71%	0.04%
RPX Composite Real Estate Index	194.3	-0.4

Markets are firmer after a surprisingly low initial jobless claims report. Initial Jobless claims fell to 339k, which is below the average over the past 45 years and more or less consistent with normal non-recessionary economies. Bonds and MBS are down on the report.

At the Council on Foreign Relations yesterday, Jamie Dimon revealed the background to the Bear Stearns deal:  "We did them [the government] a favor.  We were asked to do it and we did it at great risk to ourselves."  Many on Wall Street suspected the flurry of merger activity at the height of the financial crisis - JPM / Bear & Wamu, Bank of America / Countrywide and Merrill, and Wells / Wachovia were a series of shotgun weddings ordered by the government.  Now we have someone explicitly saying that it was.  You would think that would be news, especially since the government is suing JPM for stuff that Bear did prior to the merger.  Or that fact would be interesting to people who bemoan TBTF. To the Washington Post, they discuss Dimon's comments with the snarky headline "The Financial Gospel according to JP Morgan Chase CEO." without mentioning the Bear issue, where they focus on the London Whale. If WaPo is truly representative of the Washington mindset, I guess that article speaks volumes about the disconnect between Wall Street and Washington.

California led the nation into the housing bust; now it is leading the nation out of it. Strength on the coast is steadily moving inland.  The Northeast was one of the last to go into crisis, and is still lagging, although rents are up 10% in Manhattan.

Are distressed sales artificially lowering comps, which feeds into appraisal problems with home sales?  The NAR thinks so. Given that you have to use comparable sales, appraisals will lag the market, almost by definition.  This has caused problems on 35% of sales.