| Last | Change | Percent | |
| S&P Futures | 1408.8 | 1.7 | 0.12% |
| Eurostoxx Index | 2600.1 | 17.7 | 0.69% |
| Oil (WTI) | 88.11 | -1.0 | -1.10% |
| LIBOR | 0.311 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 79.69 | -0.188 | -0.24% |
| 10 Year Govt Bond Yield | 1.63% | 0.01% | |
| RPX Composite Real Estate Index | 190.9 | -0.1 |
Markets are flattish after John Boehner released the Republican counter-offer to Obama's proposal. Needless to say, the two sides are far apart. We have the ISM New York later this morning and no other economic data. Bonds are up slightly and MBS are down small.
John Boehner laid out the GOP proposal for the fiscal cliff last night: $800B in new revenues over the next decade, and $600B in cuts to entitlements. The new revenues would come from limiting deductions on incomes over $250k, and would maintain current marginal tax rates. Of the spending cuts, they propose to increase the Medicare eligibility age to 67 and to make changes to the CPI calculation that affects cost-of-living increases to Social Security. Given that marginal tax rates will stay the same on the rich, this plan is obviously a non-starter with Democrats.
Toll Brothers released its 4Q earnings this morning and this release demonstrates how much different the landscape is today from a year ago. Revenues were up 48%, signed contracts were up 75%, and backlog was up 70%. Prices were up 3% YOY. Toll is in the McMansion business, so these numbers are more representative of the high end. Bob Toll made a point re homebuilding that I have been making - that household formation has been artificially depressed due to the economy, and that has created pent-up demand for new construction. He cites a Harvard study that estimates that based on historical trends, 1.8 to 2.8 million households should have been formed since 2007 than were actually created. He goes on to say that experts estimate the the housing industry has to product 1.4 to 1.7 million homes per year to keep up with demographic demand. Don't forget, 1.5 million has been the average number since the 1950s. Our recent production has been around half that. Since 2007. TOL is up about 3% pre-open.
The upcoming increase in G-fees has created a flurry of activity as borrowers and lenders try and get loans done ahead of the increase. November issuance of government-backed MBS increased 45% last month. The G-fee increase takes effect on Dec 1, so expect issuance to fall off in the coming months.
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