Inaugurations, Housing Challenges, and Tech Trends: A New Chapter for 2025 – Commentary by Bill Corbet and Marc Helm

Inaugurations, Housing Challenges, and Tech Trends: A New Chapter for 2025 – Commentary by Bill Corbet and Marc Helm

[David] Thank you, Matt. Appreciate it very much. A lot going on in the markets. Yeah, it was really interesting. I got a text message from Elliott Lewis, a good friend of mine who trades regularly, and he says, Hey, this could be an ugly day for stocks and he texted me at 3:20 in the morning, called me when you get up and I’m looking at the markets right now, Nasdaq’s heading leads with a sell off due to the AI fear. So what that was is there’s a Chinese company that is announcing a very powerful, cheaper AI chip, which is having an impact on NVIDIA. Now they don’t have anything to mortgages other than we just look at the inverse reaction of mortgage of the bond market to what’s going on potentially. The Dow Jones is still in positive territory right now. So it’s not the big event, more of a NASDAQ item. But as we turn our sights and look at bonds, Bill Corbett. Alice, we’re going to get into the lower FHA premiums in your segment. We’ll have a discussion on that. But I’m really interested, Bill, in your comments, both Bill, Les’s comment and as well as what Matt just talked about, especially the statements about the Fed with the CPI data. Interested in what your thoughts are.

[Bill] Thanks, Dave and I think that bigger thing is what you were just talking about with the volatility created by the conversations on the Chinese AI model. And it’s interesting. My daughter is actually an equity analyst for Allianz in London. So, I also had a series of text to wake up to. But I think, Matt does a great job walking through the numbers, the calendar, the upcoming data. And if you’re a secondary marketing group and you’ve digested all of that, you’re going to be really good. The difference between a good secondary marketing and pipeline management operation and a great one is where days like today and mornings like this morning, don’t freak you out because it’s the stuff that’s not on the calendar that will get you into trouble and this is a good example. My daughter was saying that she was on 2 different calls today with major investment firms. Analysts talking about what was going. 1 call had 3000 people on it. The other 1 had 2000 people and she said that those are regular analyst calls that they have, but they’re typically a couple 100 people. That tells you how much and how far off guard folks were caught by this in the secondary marketing world, right? That’s the difference between good and great is how you’re positioned for these unexpected events seem to happen, during non US trading hours, right? You can’t even say I’ll react to it. Like you said, you wake up this morning and the event’s already taken place.

[David] It’s already happened. Yeah.

[Matt] To Matt’s point it by itself, it’s not going to have a long term impact on rates, but if it causes you to have to make some knee jerk reactions to your hedge ratios and coverage, then it can do some damage. So, that’s where planning for the unexpected is so important in times like this, and these things are going to happen in both the bond and the equity side, where it’s because it’s a surprise, the swings are going to be incredibly dramatic, and then it’ll settle back down. You know by then a lot of damage can be done.

[David] I think Who said the only thing we have to fear is fear itself I think the fear is the biggest driver. It’s an emotional response to freaking out about things that are out of our control. You got to have a discipline how you manage whether you’re trading in the equities or managing a pipeline on the bond market. It’s just managing. It’s all about preparation. That’s what fighter pilots. I love listening to and reading books about fighter pilots who go in and deal with these things. A fighter pilot, a good friend of mine was when I lived in San Diego was a fighter pilot and he says the life of a fighter pilot as exciting as it is to get off and take off in these real high performance airplanes and fly them around, but most of the time it’s sheer boredom interrupted with moments of sheer terror and I think that’s like what’s going on in the markets right now. When you hear what’s going on, I think it’s also curious that China made this announcement the week after Trump talked about a major investment in infrastructure on a data center. So, I think we have race to the moon, race to the Mars. We got all the space stuff that’s going on. We have a race to who’s going to have to be the most powerful AI engine company. And all this stuff is just going to be noise out there. But when it comes to what we do day to day in the mortgage industry, it’s like managing these emotional opportunities for fear.

[Bill] And I can be very curious on what Allen has to say about it. But one of the things that I took away from this is and this has a parallel to the mortgage business on the tech side where it’s just who can spend the most money for the most exotic technology that can be created when the reality is maybe there is something that is easier, cheaper, more basic and still gives you most of the functionality you need and that was one of the things that I’m sensing some reaction of just we’re trying to build things that are so complicated, so out there, so expensive, maybe they’re finding a more basic way that it’s not going to be anywhere near as good, but maybe it’s going to be good enough for a lot of activities and that then turns your head towards, and why are we spending all this money?

[David] Yeah, I think it’s really important. I just bought a new car, and it’s a Hyundai Palisade, and it’s got every, I bought it because it has all these gadgets. It’s got a manual on it that would take an Allen Pollack to read and figure out how to program, and he just bought a new Tesla. We’ll get his data, thoughts on this as well. But yeah it’s really interesting, but it is interesting about the fears and the fear and what do you believe in and how disciplined are you going to be in these markets? Allen, we can jump in and get your thoughts on it right now, or should we save those for your tech segment, your thoughts?

[Allen] It’s relative. Right now we’re dealing with the growth, we’re going to see all kinds of AI growth, and we’re going to see it possibly come out of other countries, Deepseek was founded in 2023 and yeah and right now it’s called Deepseek R1. And it’s got, highly cost efficiency, that’s the biggest issue right now. I remember when I was reading, so you remember perplexity, David, you talked to me a while ago. So perplexity, their CEO is on CNBC midday lunch I don’t know, a couple of months ago. And it was just such a good conversation. He basically said that they think they may have cracked the code to lowering the cost of processing. That’s where AI is expensive right now and companies that want to leverage AI is the computing power. And they said that the cost that the CEO of Perplexity said the cost of computing power. A lot of people are working on it, and it is going to come down. And when it does, we’re going to see a further explosion of AI and he’s completely right. So anyways, that’s one thing that deep seat demonstrates right now. It also has unbelievable, sophisticated reasoning skills. And it has what they say, nuanced and context aware responses. Meaning it reads way beyond the sentiment of what you’re saying, but it can reason about why you’re saying it. Who’s to say our AI doesn’t do that? It’s just not released yet. There’s so much going on right now. So, anyways, the market impact is there today. There’s geopolitical implications, of course, that are going to occur, especially with our new leadership. So, the market’s reacting today, but I don’t think it’s anything to be alarmed about. I don’t know, where it goes from here, but I think it’s just a temporary thing. And the markets are for long term holdings anyways from our opinion or from my opinion, I should say. So I’ll leave it with that.

[David] Yeah, it’s really good. I’m looking at the Yahoo finance right now. And I’m going to read the headline afterwards, but Deepseek prompts questions over AI spending the video stock plummet amid market sell off in light of those comments. So it’s really interesting the emotional aspects of this, what I see that as is, I see that as a Black Friday sell a buy opportunity because prices are so low in the video. I think Nvidia is going to be around for a while. So anyway anyway, I’ll be looking at that a little bit later, but we’re talking about the bonds and where things are at. Marc, any thoughts you have on the markets and what we’ve talked about so far?

[Marc] Yeah I want to get on the soapbox for just a moment, and I’ll try to make this as quick as possible, but what happens to me happens to a lot of people. When I hear of things, whether it’s, especially with politicians, I question about everything, and I do a lot of research, and I realize that research is faulty because all you can do is research is what’s after. But when I did my research, and I’m gonna write an article on it for the normal demonstrate human being can understand that this tariff agenda is scary as hell. It really is scary. I looked at what we do in this country and we got 4 million cars a year coming out of Canada and Mexico in the United States and another 10 million cars produced in the United States and about half of those are produced for Subaru and Kia and Mercedes and then the other cars were produced, but all those use Canadian and Mexican parts I’m not against a tariff, but is 25% the right tariff to be to it, throwing out there and terrorizing everybody. It’s going to be like a COVID thing again. It’s going to help the ability to have cars out there and it’s going to raise price on cars and it’s really scary. And I’m so glad the bluff work with Colombia . Yeah, that did work. Yeah, it did work. And I believe it was a bluff. But yeah, I think it was too. We’ll never know, but I just think people ought to, in the country ought to take a good hard look at what tariffs means because if it’s its own products we don’t need in this country. We want manufacturers to work here. I’m okay with that. If we need something done that we could do in a plant and for reasonably close costs somewhere in the United States, let’s do it. If we’re simply trying to price those people out for doing work here and the ones that have to come in, we charge more, that’s fine too, but just remember, every penny we charge costs the consumer out here more money out of their pockets when they don’t have it. And if this is about saving the people in this country, and helping them out, and helping the underprivileged and the lower working class, etc., in this country, survive. The last thing we need to do is add thing prices to other companies that it, it will on day to day things that they use, do it on the things that are special and do it at a agreeable rate to start out with all parties concerned. It’s you gauge into over a year, but. I’m not sure I’m buying in the 25% tariff across the board just because somebody

[David] Tariffs more of a weapon to get people to get them to do what we want them to do in America’s best interests. And I’m praying that’s the case.

[Marc] Yeah. Me too. I hope that is the case as well.

[David] A lot to go flow on that Alice. Good to have you on the podcast as always faithful. And one of the beginner, one of the ones that had been here at the beginning your thoughts on this and then I want to get into regulation. I’m really interested in getting your thoughts about FHA insurance and or lower moderate incomes, but your thoughts on what we’ve been talking about a market, anything you want to add.

[Alice] I will always say I like Marc’s soapboxes I agree, this is something we’ll have to watch closely with that. And then just to everybody’s point about secondary, I’ll throw in something here. I actually taught a class with the Mortgage Bankers Association years ago that was coordinating loan delivery and secondary and a lot of it we did talk about was being prepared, not having surprises, having standard communication. So, I think that issue is a reminder to Bill’s point about what do you have? What are the systems that you have in place to run with surprises, things like that are something that you can manage through don’t devastate your pipeline, which then has a ripple effect into your operations.

[David] Good point. Yeah. Can’t wait to get into a couple of things related to all that in just a minute with you, but good.