• Something to chew on.

While I am awaiting for the Ocwen (OCN) conference call I had a thought I wanted to share with all of you. I have suggested to the management of Altisource (ASPS) that they can stabilize and hopefully improve the company's share price by instituting two initiatives.

First, immediately reaffirm the forecast for 2015 earnings of approximately $6 per share and communicate to shareholders that further growth seems likely for the following year. The company should, in its message, relate the third-party endeavours that have accomplished and are currently contemplating.

Second, initiate a $2-per-share annual (and recurring) cash dividend that will not only provide investors with a nearly 7% dividend yield, but would build confidence in the company's ability to transcend Ocwen's current issues in a profitable and growing manner.

• From real estate maven Mark Hanson.

On an NSA basis, November single-family sales were down 3.1% YoY vs. consensus estimates of a small gain.

The SAAR rate of 4.93mm was below every last economist's estimate based on the Bloomberg range of 4.97mm to 5.35mm. This is an important observation on a number of levels, including sales estimates of more retail housing related names.

In sum, 2014 demand will end the year about 15% below year and two ago consensus estimates made amidst the demand "durable recovery with escape velocity" pump period.

Today, it was reported that "prices were up" YoY.  But, that doesn't mean prices aren't falling, which they continued to do in November. Note, that "November" sales and prices are from purchase and pricing contracts made in September and October, right into the plunge in rates, which should have been supportive to prices by at least 5%.

Bottom line on prices...national prices reported by NAR were 8% below the 2006 peak, yet the total monthly payment is 19% higher and income needed to qualify for a mortgage is 32% greater using the popular loan programs of this era.

This doesn't bode well for the slow season and the typical spring re-price boost, which after so many years of unorthodox demand driving this sector, will not happen to the same extent as previous years.  As such, if prices remain flat from today through June, which is highly likely, then YoY prices will be down 6% in June 2015, approximately 9% to 11% below most forecasts.

2015 forecast stands

Today's data further confirms my 2015 forecast of stability in demand at very low levels due to uber-low comp hurdles, as we are coming up against the effects of the year-ago rate spike and subsequent demand plunge.

However, the demand stability at low levels comes with lower prices, which always follow demand trend changes with a lengthy lag and are needed to spur end-user demand now that the unorthodox demand is all but gone.

Bottom line: 2014 was the year of much weaker demand than forecasted. 2015 will be the year of much lower prices than forecasted. Both cycles make up "this" stimulus hangover cycle, which will continue for at least two more years.

Why is demand so weak?  Because the end-users can't support this market with prices back in bubble territory.

• There is about $600 million to sell market on close as on 3:47 p.m.

• I am bidding $25.25 for FibroGen (FGEN), which I recently sold.

 FGEN has been hit in the biotech massacre today.

• I've added on the weakness.

As I await the Ocwen Financial (OCN) conference call at 5 p.m., the magnitude of the decline in shares of Altisource Portfolio Solutions (ASPS) is a shock to me as this capital light company is likely going to earn $6/share in 2015 and should be able to grow by about 10% regardless of Ocwen's ability to grow UPB by acquisitions.

ASPS has developed several key third-party services with companies other than Ocwen over the last several years.

Remember, the management of ASPS repurchased 10% of its outstanding shares (at $104/share!) during the first three quarters of the year.

That decision, a bad one (with the benefit of hindsight), reflected the view of how the company's insiders valued ASPS.

I have added to ASPS today on the huge drop in the share price, though I recognize the next few weeks will be a volatile one.

• Bloomberg's Commodity Index falls to the lowest level since 2009.

• Peter Boockvar on the 2-year note auction.

It was March 2011 the last time the US Treasury sold 2 yr paper at this high a yield with mixed results today. The 2 yr note auction yielded .703%, slightly below the when issued but the bid to cover of 3.21 was below the previous 12 month average of 3.41 and the 3rd lowest of the year. Direct and indirect bidders took about half the auction which is in line with the recent average. Bottom line, even with near 4 yr highs in yields, the 2 yr auction was mediocre as the market continues to sniff out rate hikes in 2015 (assuming the labor market trends continue) and believe that the latest the first one will occur will be in June and is still very possible in April. With this, the yield curve flattening trend remains on track with today's 2s/10s spread at 152 bps vs 265 bps on December 31st and compares to 163 bps just 2 weeks ago. On the flip side, if the Fed does not raise rates by June, it will be because the US economy starts to weaken.

• What i am seeing today (besides the Ocwen situation).

High yield backing off.

Natural gas and crude oil lower.

Gold acting poorly.

Copper weak.

All sign of slowing economic growth.

• Midday musings from Sir Arthur Cashin.

Natural Gas and oil weakness weigh on energy sector.

That sets up a non-confirmation as Dow takes out Friday's high but S&P fails to.

The run rate at 12:30 projects to an NYSE final volume of 710/790 million shares.

• CEO change?

Twitter (TWTR) is starting to rally further based on continued rumors that CEO Dick Costolo is planning to step down shortly.

• I have covered still some more of my Caterpillar (CAT) short.

The stock remains on my Best Ideas list, but barely, given my expectations of reward vs. risk.

• It's a key indicator for what's ahead.

I continue to focus on the high yield market ¿ the iShares iBoxx High Yield Corporate Bond ETF (HYG) and the SPDR Barclays High Yield Bond ETF (JNK) -- as an important forward market indicator.

Today the high yield market is giving up some of the gains experienced late last in the week. 

• I'm taking advantage of the overreaction.

While cognizant of some of the surprises contained in the Ocwen (OCN) settlement with the New York State DFS, I have added small to ASPS (at $38.00) and OCN (at $16.60). In my view, at these price levels there is an overreaction to the settlement details.

I do recognize that there has been a lot of damage done to these shares and that tax selling could intensify in the days ahead.

I am holding off on more serious purchases until the conference call this afternoon.

• Looks like the recovery is slowing.

Goldman Sachs (GS) lowered its 4Q2014 Real GDP tracking forecast by a tenth to +2.2%. 

• UBS is defending Gilead (GILD) now

They're saying the selling is overdone.

• From Piper on Ocwen (OCN) et al:

• Looking to buy some Twitter (TWTR).

I am bidding for TWTR (below the market). 

• As I just wrote in the comments section on Ocwen (OCN):

I am waiting for questions to be answered at the company's 5PM conference call before I do anything.

At $150 million, the settlement was at the lower end of the $ expectations (I was using $200 million) -- but the Erbey resignation of all Ocwen-related companies was out of the blue.

The monitoring requirements elevate costs to Ocwen for the foreseeable future.

The acquisition freedom is restrictive, but we have to learn more about the standards upon which the new monitor will judge future UPB deals . 

I had previously speculated in my OCN commentary that Erbey might have to relinquish Altisource Portfolio Solutions (ASPS) board chairmanship.

Keefe Bruyette: "Without seeing the settlement, our first take is that this is a modest positive for Ocwen mainly because it takes some more draconian outcomes off the table. Also, the $150 million penalty was probably somewhat lower than expectations."

• Renting still an appealing option if you don't own stocks.

Existing home sales in November, likely reflecting contracts signed in August through October, totaled 4.93mm, well below expectations of 5.2mm and compared with 5.25mm in October. It's the weakest month since May and was mostly driven by a sharp m/o/m drop in single family home sales to 4.33mm from 4.62mm. Months' supply held at 5.1mm because of a fall in the amount of homes for sale.

First-time home buyers did see an uptick in their percentage take of the total, to 31% from 29%, but remain well below the historical average level of 40%. Investors maintained their pace of 15%, but all-cash buyers took 25% of homes vs. 27% last month. The median price rose 5% y/o/y but fell sequentially.

The NAR chief economist is trying to explain away the softness by saying "sales activity was choppy throughout the country in November and housing inventory began its seasonal decline. Fewer people bought homes last month despite interest rates being at their lowest levels of the year. The stock market swings in October may have impacted some consumers' psyche and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market."

Bottom line, while the sales data was softer than expected, it does square with the sluggish pace of mortgage applications to buy a home that is seen week after week in the MBA data.

That said, with continued job gains, a leg lower in mortgage rates and a reversal higher in stocks, hopefully housing will gain some traction. But renting still remains an appealing option for many first time households who don't own stocks. 

• I'd rather wait for more info.

I am not doing anything in the Ocwen (OCN) complex after today's announcement.

While I feel this is a big overreaction, I plan to wait until the company's conference call after the close. 

• William Erbey will resign as chairman.

Here is the New York State DFS statement of settlement with Ocwen (OCN).

• Twitter's (TWTR) concise message is its strength.

Argus initiates TWTR with a buy and a price target of $44.

The shares, which now trade close to their 52-week low, do not appear to reflect the underlying positive fundamentals in the co's story. In firm's view, company retains strong growth characteristics based on some key competitive differentiators. The internet services companies that have thrived have initially focused on one competency and one only. In that regard, company's strength is its identification with one thing: the concise message easily shared and endlessly commented on.

• Shares are volatile on settlement report.

I am dissecting the Ocwen announcement this morning (as best I can) but we probably won't have some of the more important input until the company's 5PM investor call this afternoon.

There are few details that I can find beyond this Wall Street Journal article.  

I have scoured the New York State DFS website and there is no formal announcement yet on the settlement.

• Pharma deal implications

An exclusive hepatitis C pharmacy deal between Express Scripts (ESRX) and AbbVie (ABBV) might have served up a serious and maybe permanent blow to the multi-year biotech stock market.

Check out this potentially important TheStreet column and analysis by Adam Feurstein this morning. 

• Enjoying the window displays.

I will be a bit late this morning as I am travelling back from a quick trip to NYC over the weekend.

There is a lot of news on the Ocwen (OCN) complex front that I am going over (a smaller-than-expected settlement, but Bill Erbey -- the chairman of all the companies -- will be stepping down and there are somewhat less-onerous growth restriction on Ocwen's acquisitions of servicing portfolios).

Fom Peter Boockvar:

The differences of opinion as to what exactly Janet Yellen was trying to hint at last week continues. Stocks of course fed off "patient" while the bond market and the US$ do not think they'll be that patient. The 1 yr bill yield today is at .245%, double its level of 3 weeks ago and at the highest level since April 2011. The 2 yr yield is at almost .65%, also the highest since April 2011. The 2 yr when issued ahead of this week's auction is trading at .69%. With Yellen saying likely no rate hike at the next two meetings, the short end is automatically assuming that an April rate hike is very possible as they should. All we need is a continuation of the recent job gains and the two year trend of about a monthly one tenth drop in the unemployment rate and they'll hint at the March meeting of an April rate hike and if not April, the latest June. Highlighting also the two points of view, in the weekend's FT, the currency reporter titled her piece, "Dollar buoyed by confidence in Fed rate rise" while the equity reporter titled his piece "Fed's power to shift sentiment lifts Wall Street close to record high."

The ruble is jumping this morning to 55 vs the US$ (traded as high as 80 after the surprise rate hike last week) after China extended its hand to Russia over the weekend. The Chinese Foreign Minister said "we are convinced that Russia has the ability and the wisdom to overcome the current kind of challenging situation. We consistently support and help each other. If the Russian side requires it, then we will offer required assistance within the scope of our abilities." The love affair between the two countries is more than just their common Communist past but China's voracious appetite for natural resources and Russia's desire for a  market for it. Also, they share a very common bond over reducing their reliance on the US dollar for transactions and for China, to make the yuan another reserve currency over the next 5-10 years.

Existing home sales for November is the main US data point of the day where a modest decline m/o/m is expected but with the overall rate remaining above 5mm for the 6th straight month.

And for fun, here are some pictures of the beautiful holiday windows of Bergdorf Goodman in New York City (the store my family affectionately calls "The Mother Ship.")

• It is coming and there is not one thing you can do about it.