Morning Report: Advance estimate for 4Q GDP is 3.2%

Vital Statistics:

	Last	Change	Percent
S&P Futures	1780.7	9.5	0.54%
Eurostoxx Index	3010.3	-1.2	-0.04%
Oil (WTI)	97.75	0.4	0.40%
LIBOR	0.238	0.002	0.85%
US Dollar Index (DXY)	80.96	0.456	0.57%
10 Year Govt Bond Yield	2.71%	0.04%
Current Coupon Ginnie Mae TBA	105.8	-0.1
Current Coupon Fannie Mae TBA	104.4	-0.2
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.31

Markets are higher this morning after 4Q GDP came in at +3.2%, as forecast by the Street. Facebook is up big on good earnings. Bonds and MBS are still digesting the FOMC meeting and are lower

The advance estimate of fourth quarter GDP came in at +3.2%. Consumption rose 3.3%, which was below the 3.7% estimate. The Commerce Department estimates that the shutdown took .3% off of the number. Finally, the inventory build that drove the large (4.1%) third quarter number wasn't reversed in this reading.

The FOMC decided to reduce asset purchases by another $10 billion per month yesterday, which markets took in stride. The decision was unanimous, the first one the Bernank has had since 2011. Janet Yellen now takes the reins with more hawkish Committee. The Fed's balance sheet will continue to grow, just slower than it did last month. The Fed's balance sheet just passed 4 trillion (it was under 1 pre-crisis)

Pulte reported fourth quarter earnings, which beat expectations. Revenues were in line, but EPS beat by 12 cents. Gross margins expanded as the company raised prices - average selling prices jumped 13% to $325,000, while unit volume dropped by 4%. Orders are down 18%. The stock is up a buck (around 5%) pre-open.

December Pending Home Sales dropped dramatically (down 6.1% year-over-year and 8.7% month-over-month). The Street was forecasting a drop of .3%, so this was a big miss. November was revised down as well. This would comport with the big drop in mortgage applications we have seen.