Morning Report: Small Business optimism falls

Vital Statistics:

	Last	Change
S&P Futures	2135.0	-17.0
Eurostoxx Index	314.7	-0.6
Oil (WTI)	45.1	-1.2
US dollar index	86.5	0.3
10 Year Govt Bond Yield	1.66%
Current Coupon Fannie Mae TBA	103.3
Current Coupon Ginnie Mae TBA	104.2
30 Year Fixed Rate Mortgage	3.54

Markets are lower this morning as overseas stocks remain weak. Bonds and MBS are flat

Small Business confidence slipped in September according to the NFIB Small Business Optimism Index. Small business earnings are taking a hit as labor costs increase and sales growth remains muted. Small Businesses added .24 workers on average, which is the 12th monthly increase in a row and the highest reading this year. That said, job openings are falling, so we could be losing some momentum here in the future. Planned capital expenditures (another big measure of confidence) fell. Overall, as NFIB Chief Economist Bill Dunkelberg says, "Small business cannot get out of second gear." Sentiment still remains lower than pre-recession levels and Washington remains the first and second biggest issues facing business. 

Completed Foreclosures fell 3.9% MOM and 16.5% YOY, according to CoreLogic. Foreclosure inventory is down 29% to about 355,000 homes or 0.9% of all homes with a mortgage. The Northeast (especially NY and NJ) continue to have the highest level of foreclosure inventory. 

Yesterday, stock rallied after Lael Brainard called for prudence in raising interest rates. The Fed now enters their quiet period until the FOMC decision next week. The Fed Funds futures are assigning a 20% probability of a rate hike in September and a 60% probability of a rate hike by December. Meanwhile, JP Morgan CEO Jamie Dimon says "just hike rates, already"

The House is expected to pass a reform of Dodd Frank today. The Senate has their own bill that has yet to be introduced. Obama will undoubtedly veto any change, but it will be on the table for the next administration. The biggest part will be providing regulatory relief to smaller entities, and bringing the CFPB under Congressional oversight.