Daily Bullets ………..For April 15, 2014 (Happy Tax Day)

·         Housing sentiment still flat……Homebuilder sentiment moved up slightly in March to 47, still in flattish pattern the past few months. Reason? Tighter credit, tight supply of buildable lots. Pent up demand for housing is increasing based on household formations and deep supply reductions of past several years. Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140415&id=17526384

·         Shiller positive on housing…….Nobel economist and housing guru Robert Shiller said this morning he sees more momentum in housing market than the stock. While mortgage rates have moved up, affordability is still good. He believes it is possible home prices could rise 25% in next 3-4 years. Link: http://finance.yahoo.com/news/more-momentum-housing-stocks-shiller-141805700.html

·         10-20% correction: Stovall…… Sam Stovall, equity strategist for Standard & Poors, believes we could see a 10-20% market correction by the end of June. Why? Statistically speaking the market has not had a true correction (down 10-20%) in 2.5 years, way beyond the historic average of about every 18 months. His call is purely statistical in nature. Market corrections are normal and necessary to cleanse excesses and imbalances in the markets. Link: http://finance.yahoo.com/news/odds-favor-10-20-stock-195801126.html

·         Big banks need more capital: Yellen……Fed Chair Janet Yellen speaking at a bank conference this morning stated big banks rquire more capital to withstand periods of financial stress. One implication of this: perpetuates the “risk averse” mentality among bankers that could act as a drag on loan growth and, therefore, act as a drag on the economy. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140415&id=17525691

·         Obamacare may help bonds…..Bloomberg News has an interesting analysis that supports the view that Obamacare may actually be favorable for bonds because it will reduce the rate of health care inflation. Lower inflation would be favorable for bond prices because interest rates would not rise as fast. The irony is longer term rates could rise even if inflation remains low because of credit demands for funding expanding federal deficits. Link: http://money.msn.com/business-news/article.aspx?feed=BLOOM&date=20140415&id=17526095

·         CPI picks up a bit…..Labor Department report this morning that CPI increased 0.2% in March, up from 0.1% in February. Core CPI was also up 0.2% in February and increased 1.7% for 12 months. This may raise concern that inflation is “accelerating”. We hardly view 1.7% as heated inflation and we believe inflation will remain relatively subdued. Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140415&id=17525585