Morning Report - Obamacare goes before the Supreme Court

Vital Statistics:

	Last	Change	Percent
S&P Futures	2108.8	-5.1	-0.24%
Eurostoxx Index	3580.6	-10.5	-0.29%
Oil (WTI)	49.66	0.1	0.14%
LIBOR	0.262	0.000	0.10%
US Dollar Index (DXY)	95.4	-0.062	-0.06%
10 Year Govt Bond Yield	2.09%	0.01%
Current Coupon Ginnie Mae TBA	102.2	-0.2
Current Coupon Fannie Mae TBA	101.5	0.0
BankRate 30 Year Fixed Rate Mortgage	3.85

Markets are flattish on no real news. Bonds and MBS are up small.

The ADP Employment number came in at 212k, slightly lower than expectations. The Street is forecasting Friday's payroll number to come in at 235k. The key number on Friday will be average hourly earnings, not payrolls. 

Mortgage Applications rose .1% last week. Purchases were down .2%, while refis were up .5%. Refis as a percentage of applications dropped to 61.5%. A month ago, they were 71.5%. 

Great interview with Stuart Miller, CEO of Lennar on CNBC. Key points: Spring Selling Season is just getting started, but initial indications look good, not seeing any sort of slowdown in the energy states, and a hike in interest rates will probably mean the economy (and wages) are improving, so it isn't necessarily a negative for the builders. 

Oral arguments over Obamacare will be heard at the Supreme Court today. At issue is what the term "established by the state" means. 33 states refused to set up exchanges for Obamacare health plans. Does this mean they are ineligible for Federal subsidies? Does "the state" = "the government" or does it mean a particular state?  The Administration is arguing that the intent was to provide subsidies to everyone, even if they didn't set up an exchange. Others have pointed out emails showing it was meant to be a carrot to encourage states to establish exchanges, and regardless of intent, the law says what it says. If the SC rules for the plaintiffs, the issue gets punted back to Congress to fix, and since Republicans control the House and Senate, there will be a negotiation over the fix. If the SC rules for the Administration, then nothing changes. The decision is expected in June. 

The CFPB is going after forced arbitration language in credit card loans, auto loans, etc. So other lenders are going to share in all the fun the mortgage industry has had over the past 5 years or so.