Morning Report: Hard data vs. soft data

Vital Statistics:

	Last	Change
S&P Futures	2340.3	6.5
Eurostoxx Index	377.6	0.3
Oil (WTI)	50.6	0.1
US dollar index	89.7
10 Year Govt Bond Yield	2.23%
Current Coupon Fannie Mae TBA	103
Current Coupon Ginnie Mae TBA	104.04
30 Year Fixed Rate Mortgage	3.95

Stocks are up this morning as earnings continue to roll in and oil rebounds. Bonds and MBS are down small. 

Initial Jobless Claims ticked up slightly to 244k last week, while the Philadelphia Fed Business Outlook survey cooled from its earlier torrid pace. 

The Index of Leading Economic Indicators came in better than expected at 0.4%, but is a drop from February. 

Since the election, we have seen a disconnect between the hard data and the soft data. Hard data includes things like the Philly Fed survey, which are often sentiment-heavy indices. These have been exceptionally strong over the past few months, while the actual hard data releases (manufacturing production, retail sales, etc) have been tepid. Stock market bulls have been betting that the hard data would eventually catch up (in other words the optimism would begin to manifest itself into real spending). Instead, it looks like the the opposite is happening - the actual hard data is remaining more or less where it has been for the past 8 years and the sentiment indicators are coming back down to Earth. It is still early days, and regulatory relief will take some time to manifest itself in the numbers, but optimists hoping for a quantum leap in economic activity look like they are going to be disappointed. 

Fed Vice Chairman Stanley Fischer doesn't foresee another 2013-esque "taper tantrum" when the Fed begins to wind down its balance sheet. His view is that the current pace of policy normalization is appropriate and is designed to balance risks to the US and global economy. "A gradual and ongoing removal of accommodation seems likely both to maximize the prospects of a continued expansion in the U.S. economy and to mitigate the risk of undesirable spillovers abroad," 

Refis fell to 37% of all originations in March, according to the Ellie Mae Origination Insight Report. Time to close fell as well, to 43 days, which is the shortest time in 2 years. Interestingly, closing rates fell in March to 68%. Closing rates were 73% at the end of last year, so it is unclear what changed. The average FICO score ticked up a point to 721. 

Want an idea of how hot real estate is in the Bay Area? A two bedroom, 988 square foot teardown bungalow in Oakland went on the market at 495k and ended up selling for over $750k.