Punxsutawney Phil DID NOT see his shadow this morning, predicting an early spring to end what has been a grueling winter. For our sake, let’s hope the little woodchuck gets it right. It’s still well below zero in Dallas and icy roads are all the rage. We do have seven of us here today (secondary), a much better sight than Chris and I holding fort yesterday. ADP’s Employment Day estimates came in up 187K jobs after a revised 247K number for December. The BLS (Bureau of Labor Statistics) estimates Friday’s job growth will be 136K. Although ADP estimates job growth in every sector, no one takes them seriously because they are usually so far off. Case in point was last month when ADP called for a plus 300K print and the actual was just over 100K. Many traders refer to their guesses as “two standard deviations from the moon”. The MBA (Mortgage Bankers Association) reported an uptick in applications as refi’s picked up by 11.3% and purchase loans increased by 9.5%. Not bad. The big news of the day, besides the antics of that little rodent, is the doings in Egypt. Unrest has elevated with pro-Mubarak groups confronting those who want him out. Rock throwing, fighting, and even guys with whips on camels took part. The chaos is effecting the market, chasing money in and out of bonds (flight to quality) depending on the moment. Early morning action had stocks flat to off slightly and treasuries, mortgage backs unchanged to up a 32’nd. We had the Fed in buying a little over two billion, supporting fixed income markets until they closed their checkbook (10:00 cst). Since then, we’ve faded a bit, now off 3/32’s on mortgage backs and down 2 points on the Dow. Really, things are quiet, being effected as much as anything by the weather in many parts of the country. Technically, we failed to get much higher than the middle of the range, telling us that the market just doesn’t have enough muscle to do better. The bearish side has a little momentum but even that is within limits. Big picture tells us to be cautious into Friday’s Employment data, looking for a better print (job growth) than the market is expecting. Stay warm.
Scott S. EggenSenior Vice President – Capital MarketsPrimeLending, A PlainsCapital Company18111 Preston Road, Suite 900Dallas, Texas 75252------------------
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