Morning Report - You get to keep your incandescent light bulbs

Vital Statistics:

S&P Futures	1819.2	4.1	0.23%
Eurostoxx Index	3104.5	-7.5	-0.24%
Oil (WTI)	92.1	0.3	0.33%
LIBOR	0.237	-0.002	-0.90%
US Dollar Index (DXY)	80.6	0.088	0.11%
10 Year Govt Bond Yield	2.85%	0.03%
Current Coupon Ginnie Mae TBA	105.4	-0.2
Current Coupon Fannie Mae TBA	104	-0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.42

Stock markets are stronger this morning after a good retail sales report. Bonds and MBS are down.

Retail sales came in at +2% on the headline number, vs. +1% expected. November's numbers were revised downward. Ex autos and gas, sales increased .6%, vs .3% expected. 

We heard from Wells Fargo and JP Morgan this morning - both beat expectations. On the mortgage origination side, Wells originated $50 billion in Q4, down from $80 billion in Q3. For JP Morgan, origination volume was $23 billion, down 42% from Q3. 

The National Federation of Independent Business optimism survey came in at 93.9, a little better than expected, and just short of the post-crisis peak of 95.4. Still, that number is depressed compared to historical norms. Pre-recession, the index averaged around 100, and numbers in excess of 100 are typical for recoveries. The theme of the this recovery has been the tale of two sectors. The big S&P 500 names have been benefiting from QE and their international exposure, while smaller businesses have not. It is hard to imagine that we can be flirting with record highs on the S&P 500 while smaller business remains in the doldrums. On the plus side, we are seeing some hiring - NFIB owners increased employment by an average of .24 workers per firm in December, the highest reading since Feb 2006. Capital expenditures also increased by 9 percentage points. So not all the news is glum.

It looks like we have a budget deal that relieves some of the sequester spending cuts. The planned military pension cuts were restored, and obama got more spending for his big priority - head start. For Republicans, they got strict rules to prevent the IRS from targeting groups for ideological scrutiny, and specifically banning the agency for targeting citizens "for exercising any right guaranteed under the First Amendment." They also blocked the new standards that would effectively prohibit the sale of incandescent light bulbs, and pulled out $1 billion from an obamacare slush fund.