Morning Report - Housing starts disappoint

Vital Statistics:

	Last	Change	Percent
S&P Futures	2063.4	-5.2	-0.25%
Eurostoxx Index	3664.5	-42.2	-1.14%
Oil (WTI)	43.48	-0.4	-0.91%
LIBOR	0.271	0.000	0.02%
US Dollar Index (DXY)	99.46	-0.146	-0.15%
10 Year Govt Bond Yield	2.06%	-0.02%
Current Coupon Ginnie Mae TBA	102.5	0.0
Current Coupon Fannie Mae TBA	101.4	0.1
BankRate 30 Year Fixed Rate Mortgage	3.88

Markets are lower this morning as housing starts disappoint and oil continues to fall. Bonds and MBS are up.

Housing Starts fell to an annualized pace of 897k in February from an upward-adjusted 1.08 million in January. While it is tempting to blame this on the weather (and undoubtedly some of this is due to the weather), you had an 18% drop in the West as well. Building Permits rose to 1.09 million, however from an upward revised 1.06 million. While this is an improvement from the post-bubble years, we are still operating well below historical norms. 

Today begins the two-day FOMC meeting. Aside from the word patient, the Street will be focusing on the Fed's economic projections, particularly inflation. At the December FOMC meeting, the Fed was projecting GDP growth of 2.6% - 3.0%, unemployment of 5.2% to 5.3% and PCE inflation of 1.0% to 1.6%. Given that six of the last seven PPI prints have been negative, it will be interesting to see what the Fed does with their inflation forecasts. If it gets too low, will the Fed hold off raising rates? Certainly the dovish wing of the FOMC will argue for caution. 

Great article on the bubblicious tech company valuations. All sorts of games are being played in order to boost the valuations of companies like Uber, AirBnb, Dropbox, etc. Mark Cuban has described the current bubble in these private companies to be bigger than the internet bubble of the late 90s. FWIW, Henry Blodgett (who would know a thing or two about bubble valuations) thinks Uber could go public at $50 - $100 billion in a few years. That makes it worth about the same as Allergan or ConocoPhillips.