Charlotte, NC - Team Freeman Real Estate - Mortgage Update

MMG Update + By The Numbers - Tuesday, January 20, 2009 10:19AM ET

Current Trend Direction: Sideways

Risks favor: Floating

Current Price of FNMA 4.0% Bond: $100.06, -12bp

Today marks the inauguration of Barack Obama, America's 44th president. President-Elect Obama has an arduous task ahead of him as he takes control of a nation that is in the midst of one of the worst economic downturns since the Great Depression.

There are no economic reports due for release today - but that hasn't meant much lately as Mortgage Bonds have traded in volatile fashion without the spark of economic news...and today is no different. Prices have already improved significantly from their worst levels earlier today.
The markets are waking up and realizing the cost of these rescue plans and stimulus packages will be to sell more Treasury Bonds. This additional Bond supply has to be absorbed by the market and when there is more supply than meets demand - prices drop. Treasuries, in particular, are under very heavy selling pressure this morning.

This morning's price action is causing a test of support at the 25-day Moving Average. Take a peek at the Bond Chart and you can see that prices are off the worst levels of the day, after touching support at the Rising Trend Line and improving. We'll float for now, as prices test this support.

But let's be mindful - and hopefully you are experiencing this as well - that investors are slammed with the uptick in volume during the past several weeks. This comes at a time when investors have both shrunk in number and have depleted head count, in an effort to slash costs.

So while the increase in activity is certainly a good thing, it may be too much too soon for investors to handle, and the only way to slow down the volume is by an increase in pricing. And if you're an investor...why not do this, while being maxed out in capacity anyways? It helps increase profits while making the workload manageable. As an originator, this can be very frustrating as you watch the actual markets improve from time to time...but this improvement is not being reflected in some investors rate sheets. Let's remember, this is a temporary phenomenon - but during the interim, this is not a time to cut short your lock-in time frames. In other words, make sure you have ample or even excess lock-in periods to get your loans closed during this bottleneck. Be smart and take 60 day locks, rather than trying to squeeze in a shorter time frame.

BY THE NUMBER$

1. THE BEST AND THE WORST - In the last half-century (i.e., the 50-years from 1959-2008), the largest percentage gain day for the S&P 500 (up +11.6% on 10/13/08) and the 2nd largest percentage loss day (a drop of 9.0% on 10/15/08) occurred within 2 days of each other. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).

2. GOOD DAYS AND BAD DAYS - In spite of losing 37.0% in calendar year 2008, the worst total return performance for the S&P 500 in 77 years, 5 of the top 6 percentage gain days in the last 50 years for the index occurred in the last 3 months of 2008. The S&P 500 also suffered through 4 of its 6 worst percentage loss days from the last 50 years in 2008 (source: BTN Research).

3. FEW STOCKS, LARGE IMPACT - The 10 largest stocks in the S&P 500 made up 23% of the total stock market capitalization of the index as of 12/31/08. Thus, 2% of the stocks in the index (i.e., 10 out of 500) have 23% of the stock value of the index. The S&P 500 is a market-cap weighted index (source: S&P).

4. BIG FOR A LONG TIME - 5 of the 10 largest capitalized stocks in the S&P 500 as of 12/31/08 were also ranked on the list of the 10 largest capitalized stocks for the index a decade earlier (source: S&P).

5. MISSING THE BEST DAYS - The average total return for the S&P 500 over the last 25 years (i.e., 1984-2008) is +9.8% per year. If you missed the 25 best percentage gains days in those 25 years (i.e., 25 days in total, not 25 days each year), your average total return falls to +3.9% per year (source: BTN Research).

6. TIME IS ON YOUR SIDE - The split between "up" and "down" days for the S&P 500 over the last 50 years is 53% "up" and 47% "down." The split is 58%/42% if the time period analyzed is months over the last 50 years, 63%/37% if the time period is quarters, 72%/28% if the time period is years, 76%/24% if the time period is 5 rolling years, and 88%/12% if the time period is 10 rolling years. The calculation was based upon the raw index value of the S&P 500 and thus would not include the impact of any reinvested dividends (source: BTN Research).

7. THE NEXT YEAR - In the last 75 years (i.e., 1934-2008), the S&P 500 stock index has suffered total return losses of at least 20% in 4 different calendar years, the most recent was last year's 37.0% decline. In the year after the 3 previous 20%+ tumbles, the index gained an average of +32% (source: BTN Research).

8. THREE OPTIONS - US businesses have an estimated $758 billion of corporate debt maturing this year. The bonds may be paid off, rolled over to new debt or could default (source: S&P, Wall Street Journal).

9. LIVE AND LET DIE - If it takes you 4 minutes to read this issue of BTN, in that length of time 30 births and 20 deaths will have taken place in the USA (source: Census Bureau).

10. OUT-OF-POCKET - Households pay 31% of total health care expenditures (e.g., prescription drugs, hospital care, physicians' costs, clinical services, nursing home care). The remaining 69% is paid by businesses, insurance companies and governments (federal, state and local). The data is from calendar year 2007 (source: Centers for Medicare & Medicaid Services).

11. NOT THE FIRST - One of President-elect Obama's campaign pledges is to implement universal health care, an effort first undertaken by President Theodore Roosevelt more than 100 years ago (source: Newsweek).

12. GLOOMY FORECAST - The chief economist for a global economic forecasting company with offices in 14 countries worldwide believes the # 1 risk today facing the US is a timid response to the global financial crisis. Nariman Behravesh predicts the current US recession may potentially be the most severe America will experience since the end of World War II (source: HIS Global Insight).

13. TAX WORK - IRS audits of individuals and businesses resulted in the payment of $1.1 billion of additional taxes per week in fiscal year 2008. 33 out of every 34 individual taxpayers making at least $200,000 were not audited by the government (source: Internal Revenue Service).

14. BY THE NUMBERS - The top 3 jobs in the USA are # 1, mathematician; # 2, actuary; and # 3, statistician. The rankings were based upon work environment, income potential, employment outlook, physical demands of the job and work-related stress. The worst job in the nation: lumberjack (source: CareerCast.com).

15. WORKING IN WASHINGTON - Barack Obama becomes the 44th President of the United States tomorrow. His new administration is responsible for 7,840 appointees to fill government jobs. 85% of those appointees do not require Senate confirmation (source: Rocky Mountain News).

For More information, go to http://www.teamfreemanproperties.com/ or find more related articles on: Active Rain Team Freeman Blog Trulia.com or HomeGain

Aimee & Team Freeman
RE/MAX Executive Realty
http://www.teamfreemanrealestate.com/
888-278-4935