Market Rebounds! 11k in Job loss perspective...and 17 days to Christmas!

WOW!  Market rebounded a little bit today with the FNMA 4.5% bond picking up 28 basis points.  As of Friday afternoon we were down about 150 basis points from where we were at the recent high point.  Rates are still phenomenal as the coupon is today ($101.81) still higher than it has been for most of the year.  High prices on mortgage backed securities means they are selling well...when mortgages are easily securitized, lower rates are offered.  There is a direct link between the securitized mortgages and current mortgage interest rates as we have discussed before.  "FNMA" offered coupons are just securitized mortgages.

What does it mean to "securitize" something?  The short answer:  divide ownership and then sell shares of an asset.  

Example: if you purchased a hotel on the Vegas Strip and wanted to get investors involved, you would divide the "ownership" into shares and sell them to many investors.  Some investors may own more shares than others but effectively the collective would own 100% of the asset.  When mortgages are securitized: ownership of the mortgage loan "asset" are offered to investors.  So: the asset is purchased by FNMA or FHLMC and then like the hotel ownership example above, the "securities" are sold to investors.

Only 11,000 jobs lost in November vs. 125,000 lost jobs expected.  Remember that this is a "net" number...so if someone loses a job and another one is reported as "created" and filled then there would be no jobs lost.  So:  11,000 MORE jobs were lost than what was created according to the report.  

This is how "accurate" the report is though:  they REVISED the last 2 months of reports and found that 159,000 FEWER jobs were lost than they thought.  It is IMPOSSIBLE to get really accurate numbers as most of the report is given as estimates.  Real numbers can take years to actually see.  

The great news: investors were excited and pulled money from "non-producing" investments like gold and put them into investments that actually feed our economy.  

The hard news: reality will set in over the next few days.  

Consider this: it is the holiday season...and even though we expect a slower retail year there are more shoppers buying more goods...but spending less money on average.  SO: help is needed.  Some workforces increase their help by up to 25% during the season.  Temp jobs=jobs and they offset that "job loss" number.  Also, people tend to wait through the holidays rather than lay people off too readily during this time of year (some for the needed help reason above!)  

Oil was trading in the $73 dollar range...but all the expectation of less demand has kept refineries operating below capacity and the lowered supply has led to stable prices at the pump instead of the lower prices that we should or could be seeing.  Supply vs. demand.

18 days to Christmas...whoops we just rolled over into Tuesday so 17 days left.  Hope your holiday season is going well and Merry Christmas Season to you!  As difficult as it may seem, take a moment to savor the peace that comes with recognition of the true meaning of this season.  Let me know your thoughts there...

Cheers!

Chad
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Chad Schauers
Have you metChad?

406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718

Cell: 406 799 8613
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