Morning Report - Freddie Mac Housing Outlook

Vital Statistics:

	Last	Change	Percent
S&P Futures	1518.0	-0.5	-0.03%
Eurostoxx Index	2632.2	-3.2	-0.12%
Oil (WTI)	96.64	-0.7	-0.69%
LIBOR	0.29	0.000	0.00%
US Dollar Index (DXY)	80.52	0.066	0.08%
10 Year Govt Bond Yield	2.01%	0.01%
RPX Composite Real Estate Index	192.7	-0.4

Markets are flattish on no real news. The Empire State Manufacturing Survey showed improvement in NY State for the first time in months. Bonds and MBS are flat.

Elizabeth Warren is fighting to keep the CFPB from being accountable to Congress. Senate Republicans are pushing to have the Bureau subject to annual appropriations and installing a 5 member board to increase transparency and accountability. Liberals are pushing for a straight up and down vote on Richard Cordray, who was installed through a recess appointment.

Dr. Cowbell was on Bloomberg TV this morning pushing for the Fed continue ZIRP as long as possible, in order to sustain the US housing recovery.  He blames Japan's lost decade on premature tightening by the Bank of Japan. He made is usual push for infrastructure spending and said we don't have a debt problem. Of course the Fed is keeping the bond vigilantes at bay. Can they do so forever?

Freddie Mac has released their 2013 Economic and Housing Market Outlook. Like Krugman, they note the nascent strength in housing and estimate that it could add .5% to GDP this year.  They see the 30 year fixed rate mortgage at 4% by Q413, with unemployment at 7.5% and housing starts at 1 million. They forecast that originations will fall by 15% this year as refis drop from a 75% share to a 40% share.

Senate Democrats unveiled a plan to delay the sequester by replacing the non-defense discretionary spending cuts with tax increases and maintaining defense cuts. Of course it has zero chance of going anywhere -  it is more of a demagoguing opportunity for the President and an attempt to give the Heisman to an idea that was his to begin with.  It is increasingly looking like there will not be a deal on the sequester, so it will either (a) happen, (b) get delayed for a year, or (c) happen and then get fixed in the continuing resolution.