Morning Report - Harry went nuclear - Watt does that mean?

Vital Statistics:

	Last	Change	Percent
S&P Futures	1802.7	0.3	0.02%
Eurostoxx Index	3068.0	-4.8	-0.16%
Oil (WTI)	94.1	0.0	0.01%
LIBOR	0.2366	0.001	0.32%
US Dollar Index (DXY)	80.865	-0.055	-0.07%
10 Year Govt Bond Yield	2.71%	-0.01%
Current Coupon Ginnie Mae TBA	105.365	0.0
Current Coupon Fannie Mae TBA	104.477	0.1
RPX Composite Real Estate Index	200.67	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.34

Sorry I haven't put one of these out in the last couple of days - been traveling for the holidays.

Markets are flattish on no major news. This week should be relatively dull, with no major economic reports. Bonds and MBS are flat as well.

We have had some economic data over the past couple of days. Pending Home Sales came in at -.6%, which is evidence the housing recovery may be slowing down a bit. That said, prices are still rising at a rapid clip, with the Case-Shiller index up 13.3% on a year-over-year basis and the FHFA House Price Index up 2% for the third quarter.

Building Permits came in at 974k, higher than the Street estimate. We didn't get housing starts today due to the government shutdown. 

One piece of news from last week - Harry Reid "went nuclear" and changed the rules regarding Presidential nominations. Now, nominees cannot be filibustered. Watt does that mean? It means Mel Watt will be the next FHFA Chairman. Mel Watt is basically a CRA guy, so expect a lot of fair-lending scrutiny. Also, he will do everything he can to expand HARP and HAMP. Watt does that mean for originators? Maybe one more refi wave.

Mel Watt wouldn't take a position on the use of eminent domain to handle underwater mortgages, which is pretty much tacit approval of the strategy. Expect a lot of consumer friendly / investor unfriendly stuff to come down the pike. Principal mods are almost a given, although there will be push-back from investors. Not that the government is going to care about hurting hedge funds or mortgage REITs, but there are investors they do care about, namely pension funds. Pension funds have been begging the government not to do this, and this will certainly lead to interesting political dynamics.