Morning Report: Mortgage banking earnings fall at JP Morgan

Vital Statistics:

	Last	Change	Percent
S&P Futures	1883	4.7	0.27%
Eurostoxx Index	3101.4	16.7	0.54%
Oil (WTI)	31.36	0.6	2.07%
LIBOR	0.62	0.003	0.49%
US Dollar Index (DXY)	98.93	0.709	0.72%
10 Year Govt Bond Yield	2.06%	-0.03%
Current Coupon Ginnie Mae TBA	104.4
Current Coupon Fannie Mae TBA	103.7
BankRate 30 Year Fixed Rate Mortgage	3.83

Markets are up this morning after yesterday's bloodbath. Bonds and MBS are up.

Initial Jobless Claims ticked up to 284k last week. Import prices fell 1.2% as the dollar rallied, and consumer comfort ticked up a tiny bit last week. 

JP Morgan reported good numbers this morning. Mortgage Banking net income fell 21% as revenues fell 10%. 

The bursting of the China bubble is going to dominate the markets for the foreseeable future. This will be an epic battle of Mr. Market versus Big Communist Government. With debt at 282% of GDP, China's economy is more fragile than it appears. This is another reason why long term interest rates are probably not headed much higher for the foreseeable future. 

Note that the Chinese stock market is dominated by retail investors, not institutions. This makes their market more volatile. They are pouring money into Chinese government debt (probably a good call), the dollar (another good call) and gold. 

Note that in the President's State of the Union address, housing was basically ignored. The country has an acute shortage of affordable housing, and housing starts are still mired well below historical averages. Getting housing back on track is the difference between 2% GDP and 3% GDP. Unfortunately, the only mention political candidates have regarding housing is that Wall Street is evil, the banks are too big, and there needs to be more government control. Which is most definitely not the way to increase credit or confidence.