Market Talk

- Is the economy ready to walk without the Fed’s MBS crutch? It’s possible, but keep in mind the Fed’s made it clear it’ll resume the purchase program if trouble ensues, John Curran says. “I doubt that a declining stock market alone would be trouble enough to trigger a restart of the program but a sinking economy certainly would.”

- The most important thing FCC’s National Broadband Plan should accomplish is increasing amount of wireless spectrum available for broadband Internet, writes Fred Wilson. “The fact is that wires, fiber, and cable aren’t going to get us where we need to go.”

- It seems homeowners are increasingly opting for strategic
defaults. At least that’s the sense from recent NY Times and LA Times stories, Calculated Risk says. “I’m not sure if walking away is becoming more common or if there is a bubble in walking away articles.”

- Palm’s situation is turning from bad to worse, as its 4Q may not be any better than its ugly 3Q, John Paczkowski notes.

- Number of single-family homes under construction has fallen off a cliff since the housing bubble burst. About 1 million were under construction in February 2006; today there are just 300,000. “The precipitous decline ended last summer, and housing construction has been essentially flat for several months,” Donald Marron says. “Perhaps housing construction has finally found bottom?”

- Our DJ colleague Brendan Conway wonders whether the party’s over for financial stocks.

- Sen. Dodd’s financial regulation bill is “tougher and better than I had expected,” Edmund Andrews writes on the Capital Gains and Games blog. “The big banks and Wall Street firms are already howling in protest. Front groups like the US Chamber of Commerce, which claim to be looking out for mom-and-pop businesses, are throwing everything they have at it.”

- PPI falls 0.6% in February, marking biggest drop in seven months and curbing inflation expectations, for now. Gasoline costs declined sharply.

- Fed’s faced its fair share of scrutiny for underestimating the financial crisis, but simply calling for change doesn’t mean much. “Let’s be practical. What other institution did a better job?” James Hamilton ponders. “Where in Washington today do you see an agency with the intellectual resources to get this right? Simply squawking that we need a change is not constructive leadership; it’s political finger-pointing.”

- Starbucks (SBUX) appears to be testing blueberry waffles in some markets, Starbucks Gossip blog reports, with Denver, Oregon and an area north of Seattle trying out the toasted items. Waffles could help increase those morning sales, too, especially at a price noted by several blog commenters: $2.50 per waffle.

- Auto sales are “crawling forward,” but still remain weak, James Hamilton says. “On a seasonally adjusted basis, we’re not making any progress from December…Whatever the explanation, auto sales so far this year remain 40% below the average seen for January and February over 2005 to 2008.”

- Small, mid-cap stocks leading the rally. As confidence about the global economy wavers a bit, some investors and traders are actually turning their attention to companies heavily dependent on the US economy, Tom Petruno writes.

- S&P 500 and US Dollar index are about as negatively correlated as they’ve ever been, Michael Panzner notes. But the equity-dollar relationship typically isn’t sustainable when it hits historical extremes, meaning investors may need to look beyond the currency markets for hints about the stock market’s next move.

- “Amazon’s MP3 store hasn’t done much to weaken Apple’s grip on the digital music business,” MediaMemo blogger Peter Kafka reports. “But that doesn’t mean Apple isn’t paying attention.”

- Since there are no assurances that new regulations will prevent a future financial crisis from occurring, regulators should take the next best step and break up the nation’s biggest banks, James Kwak says. “Politically, breaking up TBTF banks is something that should on paper be able to attract a bipartisan majority.”

- A consumer finance protection agency is a great idea, but it’s a shame that a simple mandate in the original plan — compare all mortgages to plain vanilla 30-year fixed contracts — was rejected, FusionIQ CEO Barry Ritholtz says.

- Millions of homeowners haven’t benefited from lowest mortgage rates in nearly a half-century because they can’t or won’t refinance, WSJ reports.

- Auto veteran Bob Lutz plans to retire from GM after four decades in the business and a career that included executive positions with each of the big three Detroit automakers.

- “It seems like governments are doing a lot of poking, probing and investigating of large investors in the markets recently. Especially when it comes to bets being made that have major implications for governments, i.e., positions taken on currencies and government debt,” WSJ’s MarketBeat says.

- NY Gov. David Paterson finds himself in the middle of yet another scandal.