Mark Twain said, “The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.”

When visiting Alabama, Georgia, and the Carolinas, one is immediately struck by the impact of NASCAR. (The origin of which is “Nice Car” said with a southern accent.) Currently, team owners are independent businessmen forced to operate within NASCAR's rules – similar to mortgage banking. It's up to the teams to finance their own operations via sponsorships and purse money without direct assistance from NASCAR itself. It sure seems to work, especially for team owners who can run a good business: low-debt, profitable, well-run organizations. NASCAR has no built-in equity within their models via a franchise system, like football or baseball. But unlike those sports, where there are only two components (team owners aligned with league interests and players) NASCAR racing and motorsports in general have four key components with which to deal: independent team owners, drivers, track operators and promoters and NASCAR itself. In addition, many other sports benefit from public financing, such as municipalities helping the teams, whereas NASCAR and other forms of motorsports have not had those benefits.

Who are the big correspondent buyers out there? The list hasn’t changed much in the last several months, although the rankings tend to shuffle around. Wells Fargo, Citi, Countrywide, Chase, Fannie & Freddie, GMAC, and SunTrust are usually the pack leaders.

Regarding companies buying loans, I missed a couple good-sized California wholesalers yesterday: Guild and First California Mortgage. My apologies.

Chase is continuing to focus on increasing the value of their servicing asset by expanding their “Homeownership Center” branches. They just opened up a new one in Washington DC, giving them 24 sites (9 in CA, 5 in FL, 2 in NY, and others in AZ, GA, CO, MI, NV, DC, and PA). The goal is to help borrowers who have a home loan serviced by Chase, Washington Mutual or EMC - all now part of JPMorgan Chase.

Effective on the 19th, “AmTrust Advantage and Delegated will become eligible Underwriting Company options for all eligible Fannie Mae Refi Plus loans. Loans in the pipeline will be permitted to switch from AmTrust Hi-Speed to AmTrust Advantage or Delegated.”

Aside from the usual US government purchases of securities, which helped prices and rates somewhat, yesterday was pretty slow. A Cantor Fitzgerald trader summed it up: “Lackluster day in PT's.  MBS opened 1bp wider vs TRSY and bled to 3bp wider by 3PM.  Origination modest at ~2-3bn, with selling outweighing buying ~1.25:1.  Official buyers relatively quiet at ~2BN (almost exclusively 30yr FNMA 4.0% & 4.5%).”  There are no government auctions until next week (5-yr TIPS on April 23) and so we are left to deal with…economic data!

For example, today we found out that U.S. producer prices fell unexpectedly in March and also notched the largest year-over-year decline since 1950 due to a drop in energy prices slipped. The Producer Price Index fell by 1.2% last month versus a 0.1 percent gain in February versus an expectation of being unchanged. Year-over-year, the PPI was 3.5% lower, the largest decline since a 3.9 percent fall in 1950, the Labor Department said. Core producer prices, which exclude food and energy costs, were unchanged in March compared with a forecast for a 0.1 percent rise. We also had Retail Sales fall unexpectedly after two months of increases. Sales were -1.1% after rising by a revised 0.3% in February, previously reported as a 0.1% fall. Excluding motor vehicles and parts, sales fell 0.9% in March, compared to a 1% gain the prior month, with auto vehicle and parts sales dropping 2.3% after a 3% decline in February. After the news the 10-yr is at 2.83% and mortgage prices are a shade better than Monday afternoon’s close.

An American Indian walks into a cafe with a shotgun in one hand pulling a male buffalo with the other. He says to the waiter, “'Want coffee.”

The waiter says, “Sure, Chief. Coming right up.”

He gets the Indian a tall mug of coffee.

The Indian drinks the coffee down in one gulp, turns and blasts the buffalo with the shotgun, causing parts of the animal to splatter everywhere and then just walks out.

The next morning the Indian returns. He has his shotgun in one hand, pulling another male buffalo with the other. He walks up to the counter and says to the waiter “Want coffee.”

The waiter says “Whoa, Tonto!  We're still cleaning up your mess from yesterday. What was all that about, anyway?”

The Indian smiles and proudly says, “Training for position in United States Congress: Come in, drink coffee, shoot the bull, leave mess for others to clean up, disappear for rest of day.”

Rob

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