While sovereign debt is still an issue (Greece), consider that we have our own bottle of Grecian formula right here at AIG.  Since we as tax payers own the company, you should be interested to know that they just announced a Q4 loss of 8.9 BILLION.  AIG said they will need additional government (tax payer) support to meet obligations in the future.  Why not give them 1 hour to get out, put a chain link fence around the building, and bring in a truck load of pit bulls to protect the place from the former employees?  When did we decide that failure needs to be rewarded?

Coming off the soap box, let’s look at the early day economic data. GDP, 4th Qtr revised, rose by .2% to 5.9%.  Inside the numbers, consumer spending fell to 1.7%, leaving the only reason for overall improvement directly linked to inventory building.  That has a finite time frame.  Next up, Chicago Purchasing Managers index rose to 62.6 from last month’s 61.5.  The trouble here is that the only part of the index to show improvement were order backlogs, fitting when you see how inventory rebuilding has bumped GDP.

Final revision for U of Michigan’s Consumer Sentiment tallied 73.6 from 73.7.  Not much here as they revise this number a dozen times before putting out the final.  Last but not least was January Existing Home Sales.  The index fell 7.2% to 5.05 million units annualized.  The print was well below economist’s expectations and blamed partially on the unusually stinky weather across the country.

All of the above has given the last day of the week/month a low volume trade.  Stocks hovering on either side of unchanged while the 10 year is up a dozen.  Mortgage backs have had a nice day, up 5 to 6/32’s depending on the coupon.  We like the market however feel that it is a little toppy and due a small correction.  This probably comes early next week once the new month begins.  Short term we say “go on, take the money and run”.  Longer term, our bias is for a double dip recession of sorts and one more chance to refinance.

Best to get your info together now and be ready.  Have a great weekend.