Morning Report - Mel the "enigma?"

Vital Statistics:

S&P Futures	1831.2	5.7	0.31%
Eurostoxx Index	3080.1	5.7	0.19%
Oil (WTI)	94.1	0.1	0.15%
LIBOR	0.239	-0.001	-0.21%
US Dollar Index (DXY)	80.87	0.083	0.10%
10 Year Govt Bond Yield	2.98%	-0.02%
Current Coupon Ginnie Mae TBA	104.1	0.1
Current Coupon Fannie Mae TBA	103.1	0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.55

Markets are higher this morning on no real news. Bonds and MBS are up small.

This week will have a couple big items - the FOMC minutes and the jobs report. The big question with the minutes will concern whether tapering is in fact on autopilot. Ben Bernanke indicated in the press conference that it more or less is on autopilot, but we will want to read the minutes to get some more clarity. Given that the mystery over whether the Fed will begin tapering is over, the jobs report will probably not have that much of an impact, unless it is extraordinarily strong. Finally, Janet Yellen will be confirmed this week, which should be a nonevent.

This week also kicks off earnings season, with Alcoa reporting after the bell on Thursday. Given the huge run-up we have seen in the stock market, companies better deliver. FWIW, perma-bull Jim Paulsen is cautious going into 2014.

Bloomberg has a piece on the enigma that is Mel Watt. The only thing we know for sure is that he has suspended the g-fee increases and the LLPAs for the moment. Since he has yet to be officially sworn in, he is playing things close to the vest. I don't know why people would call him an "enigma." Mel couldn't even bring himself to come out against the eminent domain policies that some localities are pursuing. That says it all, IMO. At the end of the day, Mel Watt is a liberal CRA guy. All you need to know about how he will conduct policy is to see him through that lens. He wants credit to be easier for low-income borrowers. He likes government involvement in the mortgage market. Whether that means Fannie and Freddie continue in their current form or not is an open question. But at the end of the day, he is going to err on the side of more government involvement, not less. Whether that makes the Fannie Mae prefs a buy is another question.