Morning Report - Case-Schiller

Vital Statistics:

	Last	Change	Percent
S&P Futures	1550.2	3.3	0.21%
Eurostoxx Index	2637.9	-11.4	-0.43%
Oil (WTI)	95.58	0.8	0.81%
LIBOR	0.284	0.001	0.18%
US Dollar Index (DXY)	82.87	0.039	0.05%
10 Year Govt Bond Yield	1.93%	0.01%
RPX Composite Real Estate Index	191	0.2

Markets are higher this morning after a positive durable goods report, which showed orders increased 5.7% in Feb. January was revised higher.  Bonds and MBS are down small.

The S&P / Case-Schiller index of home values increased 8.1% YOY , better than the 7.9% estimate. The month on month index rose as well.  For the first time since the housing bust, we have not seen a seasonal drop in house prices.  The New York MSA finally reported positive returns. House prices are back to their Autumn 2003 levels.

CoreLogic reported that shadow inventory (the number of homes that are seriously delinquent, in foreclosure, or REO, but not listed on the MLS) is down 28% from its peak three years ago when it stood at  3 million units. The current 2.2 MM units is down 18% from last year and represents 9 month supply.FL, NY, CA, NJ, and IL account for half of the shadow inventory. 

The Cyprus rescue, while small in actual dollar terms, may have reverberations all across the euro zone. Under the rescue plan, senior Cypriot bond holders will take haircuts and uninsured depositors will be wiped out. This sets a precedent - that all stakeholders can be targeted - which will probably cause even bigger outflows the next time another Euro country gets in trouble. Given that Cyprus instituted capital controls so that investors can't take money out means that the exit door will be very narrow the next time someone gets in trouble.