10 Things You Need To Know Before The Opening Bell

Apple Is An iPhone Company. Apple reported strong earnings and revenue after the bell yesterday. "Just when the world was ready to bury Apple, the company delivered a strong beat," BI's Jay Yarow wrote. Especially notable were iPhone sales, which crushed expectations at 43.7 million. That's up 17% year over year. Compare that with iPad sales, which missed expectations at 16.35 million vs. 19 million. "There's no doubt about it. Apple is an iPhone company. Everything else is just gravy," BI's Steve Kovach said.

Stock Split. The firm also increased its share buyback plan to $90 billion from a previously announced $60 billion. It said it was increasing its quarterly dividend by about 8% and said it will split its stock 7-for-1 in June. Shares are up 7.5% before the bell. NASDAQ futures are up nearly 1.5%.

RIP Net Neutrality? The FCC is set to propose rules Thursday that would allow content companies to pay for faster and better streaming. Many thinks this spells the end of net neutrality, which some argue helped foster startups and innovation by giving smaller firms a equal access to customers. "This is a complete turnaround from the FCC's previous stance on the subject of net neutrality, which is the idea that everyone should have equal access to the Internet and content providers should not be discriminated against in providing content to customers," BI's Karyne Levy writes.

Same Old Ratings Agencies - And Wealthier. The Wall Street Journal's Tim Martin writes U.S. ratings agencies are expected to report record profits this month because nothing has been done to change their models despite calls to do so following the financial meltdown. "The business model, in which debt issuers pay for ratings, remains in place; regulations proposed years ago are yet to be implemented; and new competitors have gotten little more than a toehold," he writes.

Spanish Borrowing. Yields on Spain's 10-year hit an all-time low of 3.059%, down from 7.5% just two years ago. "Strong demand for Spanish debt at the auction was due to growing confidence in the economy, hopes the ECB will embark on a quantitative easing programme and rising optimism amongst the ratings agencies, said strategist Annalisa Piazza, of Newedge Strategy," Reuters said.

New Mega Tobacco Reg Coming. The New York Times reports the FDA is not only poised to set tough new regulations on e-cigarettes, but will also get around to things like pipes and cigars that have for years slipped under its radar. "The new regulations would ban the sale of e-cigarettes, cigars and pipe tobacco to Americans under 18, and would require that people buying them show photo identification to prove their age, measures already mandated in a number of states."

Data. Initial jbless claims hit at 8:30 a.m. Expectations are for a slight uptick to 313,000 from 304,000. Also at 8:30 we get durable goods orders. Expectations are for a gain of 2%; ex-transportation, 0.9%.

GM Earnings. Consensus is for $0.09/share versus $0.58/share a year ago. Barclays says it could go as low as a penny, according to NBC. GM just announced it would take a $1.3 billion write-down on the recalls it announced during in Q1.

Other Earnings Announcements. Amazon, Coke, Microsoft, Pandora, Starbucks, UPS, and Verizon all report.

Markets. Stocks are up across much of the world. U.S. futures are higher. Gold is down.

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Below is a Q&A with Jed Kolko, economist at Trulia.

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BUSINESS INSIDER: The concern among many has now shifted to sky-high rents. Do you share this concern?

JED KOLKO: Yes. Rental affordability is worsening. Rents are rising faster than incomes, so the typical household is getting squeezed. Unlike buying, renting did not get significantly more affordable during the housing bust and recession. The drop in home prices and historically low mortgage rates made home buying more affordable after the bubble burst - at least for people who could make the down payment and qualify for a mortgage, though buying was and remains out of reach for many. Rents, however, rose throughout the recession or fell only modestly, depending on the measure you look at, even though incomes stagnated, and of course low mortgage rates don't help renters.; The recession caused rental demand to rise. Millions of people lost homes to foreclosure, and many of them became renters; in addition, many others put off their first-time home purchase and remained renters. Rental supply has increased in response to strong rental demand, in a couple of ways. First, investors purchased single-family homes - including foreclosed homes - and rented them out. Second, apartment construction is booming, reaching a 15-year high in 2013. Our latest Rent Monitor, from March 2014, shows rents rose year-over-year 4.4% for apartments and 1.9% for single-family homes. Without this investor and construction activity, rents would have risen even more.

BI: Where it is a problem, what polices can be effected to address the issue?

JK: The single best policy to improve rental affordability is to increase supply. The markets with the highest rents, like San Francisco and New York, tend to be difficult cities to build in: tight supply plus strong demand equals high rents. Zoning and other local regulations, as well as programs for financing affordable housing construction, all affect the ease and cost of building more units. Policies like rent control preserve affordability for current renters who are covered by the regulations but do little to affect rental affordability in the long run and could even worsen affordability if they end up discouraging new construction (the impact of rent control on new construction depends on the details of rent regulations and which units are covered).

BI: What will be the longer term consequences if the issue persists?

JK: If rents continue to rise relative to incomes, and supply does not keep up with demand, we should expect to see some mix of the following things: (1) some people will spend a higher fraction of their income on rent and reduce spending on other things including saving; (2) some people will consume less housing by choosing smaller units, cheaper neighborhoods, or living with others; (3) some people will buy instead of rent if buying becomes more affordable relative to renting. However, even though rents are rising faster than incomes, home prices are rising faster than rents; furthermore, mortgage rates are rising, too. When prices outpace rents, and mortgage rates rise, the advantage of buying over renting shrinks. Recently, we calculated that it was 38% cheaper to buy than to rent, nationally, but a year ago the gap was wider, at 44%.

BI: What is the most under-reported story in housing?

JK: There are actually still a lot of vacant homes out there. Even though the inventory of homes actually listed for sale is below long-term norms, the share of vacant homes is still higher than pre-bubble levels, including in many markets that have traditionally been fast-growing. The elevated vacancy rate holds back construction activity because builders don't want to build where there are already a lot of vacant homes. The main sources of housing data don't tell us for sure why there are a lot of vacant homes being held off the market (i.e. neither for sale nor for rent).

BI: How do you think Fannie Freddie reform will resolve itself?

JK: There seems to be bipartisan support for Fannie and Freddie reform, but lots of issues -- both practical and philosophical - stand in the way. Ultimately, housing finance reform means finding the right balance between (1) keeping mortgages - including the 30-year fixed-rate mortgage - affordable and available, and (2) minimizing the cost to taxpayers of another housing crisis. Even if there's quick agreement on what the future housing finance system should look like - which is very unlikely - the path will take many years. Other policy changes, like Fed tapering and the new mortgage rules, will have a more immediate impact on the cost and availability of mortgages than Fannie and Freddie reform.