Morning Report - Fannie Mae reports record profit

Vital Statistics:

	Last	Change	Percent
S&P Futures	1562.2	6.3	0.40%
Eurostoxx Index	2651.8	27.7	1.06%
Oil (WTI)	97.01	-0.1	-0.06%
LIBOR	0.282	-0.001	-0.18%
US Dollar Index (DXY)	82.75	0.016	0.02%
10 Year Govt Bond Yield	1.85%	0.01%
Current Coupon Ginnie Mae TBA	104.6	0.0
Current Coupon Fannie Mae TBA	103.3	-0.1
RPX Composite Real Estate Index	189.5	-1.1
BankRate 30 Year Fixed Rate Mortgage	3.68

Markets are higher after Europe returned from a 4 day weekend. Italian sovereign yields are dropping, which is easing concerns about the Cyprus situation. Later this morning, we will get the ISM New York, factory orders and vehicle sales. Bonds and MBS are down small.

Fannie Mae just reported the largest net income in company history.  Good thing they didn't release this yesterday or nobody would have believed it. They reported net income of $17.2 billion for 2012 and $7.6 billion in the 4th quarter. The refi boom of 2012 has certainly helped them, along with a drop in delinquencies, increasing home prices, and higher sales of Fannie Mae-owned properties. They still owe Treasury $85 billion. Fannie Mae stock has rallied from 30 cents a share two weeks ago to 80 cents a share as of yesterday on reports they will be profitable. The stock is trading up a nickel on low volume pre-market. Every dime the stock increases is roughly half a billion dollars in the US government's coffers.

The Consumer Financial Protection Bureau has a new one-stop shopping site for financial gripes. They do not verify the facts of the complaints, but they give the company a chance to respond before they put it on their site. If you had ever been mad at your bank and wanted to create a www.thiscompanysucks.com website, well, there ya go.

Mohammed El-Arian says that the Cyprus situation is not fixed, just temporarily stabilized. Even if it doesn't become a systemic problem (read: spread to Italy and Spain) it still could create a systemic threat if enough peripheral countries have issues. The EU seems to be against an Iceland-style fix, where Cyprus leaves the EU and devalues its currency.