Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1463.6	7.8	0.54%
Eurostoxx Index	2523.8	38.1	1.53%
Oil (WTI)	91.12	-0.6	-0.64%
LIBOR	0.351	-0.001	-0.28%
US Dollar Index (DXY)	79.3	-0.050	-0.06%
10 Year Govt Bond Yield	1.73%	0.06%
RPX Composite Real Estate Index	194.3	-0.1

Markets are higher this morning after a surprisingly good employment report. Stock index futures initially jumped on the number and now have given back the gains. Bonds are down a point and MBS are down 6 ticks on the number.

The unemployment rate dropped to 7.8% from 8.1% in September and total nonfarm payrolls rose by 114k.    The Street was expecting an 8.1% rate.  U6 (the underemployment rate) didn't change at 14.7%.  873k people became employed in September and the participation rate ticked up to 63.6% from a 30 year low of 63.5%.  It looks like the job gains were largely part time, as that sector increased 582k.  Average weekly hours ticked up to 34.5, and earnings increased .3%.  This report does seem at odds with other economic reports showing the economy is slowing.  It certainly makes you wonder what the Fed was looking at when it announced QEIII.

In response to the numbers, Jack Welch tweeted: "Unbelievable jobs numbers...these Chicago guys will do anything... can't debate so changes numbers."  Unsurprisingly the left blogosphere is swarming.  That said, Jack (We always beat by a penny) Welch should be the last person throwing stones about massaging the data.  Given that BLS magically found half a million jobs in the sofa cushions, which allows Obama to claim that the economy has reclaimed all the jobs it lost since he took office, we are going to see some predictable partisan doubt on the economic numbers coming out of Washington.

The minutes from the 9/13 FOMC meeting didn't have anything groundbreaking in it. Some of the regional presidents are doubting how much of an effect further QE can really have.  Certainly there is nothing in the minutes that suggests that the Fed is seeing more strength in the labor market; if anything they note decreases in hiring plans.

Larry Fink of Blackrock told Maria Bartiromo that "we are about a year away from a full rebound in American housing."  He is worried about the fiscal cliff:  "The fiscal cliff is probably the biggest problem facing us.  We are already seeing a slowdown in the U.S. economy.  I know many CEOs who are sitting with large sums of cash.  If the government comes up with a comprehensive plan to handle it, we would see a huge rally."

FHFA has a new white paper out for comment regarding a new infrastructure for the secondary mortgage market.  It envisions a platform that could be used by multiple issuers - which could be laying the groundwork for an MBS exchange where issuers can sell new issues electronically instead of over-the-counter.