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Monday Morning Cup of Coffee: Markets, jobs data test Fed's taper

An uncertain start to 2014 gets its first test this week in trading

January 6, 2014

Monday Morning Cup of Coffee takes a look at news coming across HousingWire's weekend desk, with more coverage to come on bigger issues.

This will be the first full week of trading and everyone’s eyes will be on the upcoming release of December job data and the unemployment rate, and whether the numbers support the Fed’s decision to start tapering monthly bond purchases. The monthly BLS jobs data is among the top metrics watched by the Fed when it considers how to steer monetary policy.

Where the rate goes and how many jobs were created will figure prominently into people’s judgment on whether the Fed’s decision to taper is justified. Predictions from surveys say most expect the unemployment rate will likely hold steady at 7%, averaging about 190,000 jobs.

The steady decline in unemployment over four years has seen a nearly equal decline in workforce participation, leaving many observers concerned that this recovery hasn’t seen the job growth needed.

The stock market started 2014 rather weak and on light volume owing to the lingering holiday weekend the ice storm that hit the northeast. Whether Friday’s jobs numbers are the boost traders are looking for and the assurance the Fed would like remains to be seen.

Meanwhile, the Senate will vote Monday on whether to approve presumptive new Fed Chair Janet Yellen, who is considered as dovish as her predecessor and likely to stay the course that outgoing Fed Chief Ben Bernanke charted.  She won’t necessarily be getting support from the other Fed Presidents, who think Bernanke’s policies aren’t doing what they are purported to. On approval, all signs point to yes.

A lot of people share in the blame for the housing collapse, but the Germans are going to pay their share. Deutsche Bank AG reached an agreement with American shareholders who accused the bank mismanagement of real estate securities leading up to the 2008 financial crisis.  

The German newspaper Handelsblatt said that the German bank’s lawyers submitted their agreement to a court in New York. The plaintiffs accused Deutsche Bank of bundling together and selling bad U.S. real-estate loans as securities. When things went south in the U.S. housing market, shareholder value plummeted 87%. The bank itself, plaintiffs alleged, moved to protect and maximize its own profits.

Late Friday Fidelity National Financial, Inc. formally announced the reorganization of the former Lender Processing Services, Inc. (LPS) businesses and the formation of a wholly-owned subsidiary called Black Knight Financial Services, Inc. and the issuance of a 35% interest in each of Black Knight's two operating subsidiaries.

Fidelity National Finance is a leading provider of title insurance and transaction services to the real estate and mortgage industries. Black Knight, through ServiceLink and BKFS, now owns and operates the former LPS businesses and FNF's ServiceLink business. FNF's core operating subsidiaries now consist of Fidelity National Title Group, Inc. and Black Knight.

What can we say? Nailed it.

No banks were closed by the Federal Deposit Insurance Corp. for the week ending Jan. 3.

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