[David] Boy. A lot of information in there guys that was a packed segment, so thank you Matt Graham. Be sure to sign up for Matt’s MBSLive.net. By going to his website MBSlive.net and putting in the LOL code, Lykken on Lending, you’ll get an extended trial period without having to put in your credit card. But go ahead and put it in, buy it because it is so affordable and it is so critical at times like this. Thank you Matt. Appreciate it very much. Let’s get with Bill Corbett, some thoughts on what we’ve heard and reflections of what happened over the weekend, Bill.
[Bill] So thanks David. Excuse me. I think the first thing is focusing on what we didn’t see, which Matt touched on, is, there was not any real massive reaction in the financial markets. Obviously when the attacks first took place, that was in the environment where even in worldwide financial markets, that was a time when everything was closed. So I think that mitigated some of the impact because even the most, itchy finger traders had some time to digest what was happening before markets opened in Asia. We’re now flip side of that as we’re seeing right now, there attacks taking place in Qatar a nd to Matt’s point, the market was already leaning favorably on Michelle Bowman’s comments. That’s pushed things a little bit further. Getting pretty much right on top of Les’s commentary for a while has been, we’re gonna see 429 in the 10 year before we see 471. And that’s to be fair, that’s been his view since, we were in the 450 range. We’re sitting right now at 430, think there was probably a trade in there at so you can check the box for Les being right again. I think he’d say closing basis. But the other thing that I wanna get a little bit on a soapbox is folks need to also pay attention to where they’re getting information and not certainly with everything in Iran, check, double check, multiple sources, different sources. Everybody knows the news sites that are gonna tend to be the most dramatic versus the ones that are the most accurate. It also goes back to I got annoyed last week listening to some of the media accounts of Waller’s commentary on what the Fed should or shouldn’t be doing. And the headline I saw in multiple places. This was a CNBC interview where, Waller says the Fed should slash rates, which then you get the, let’s face it the Fox talking heads that are piling on top of that. I actually went back and listened to what Waller said and nothing close to that came out of his mouth. He was quite measured and he was clearly, he would be in the camp for cutting rates in July. But slowly measured pace, talked about, maybe it’s better to cut a little bit and then pause versus waiting. But he acknowledged that was his view and that…
[David] Was his personal view. Exactly. And he’s not sure how that’s gonna go play
[Bill] Right and acknowledging that it’s after the Fed is not necessarily in that camp yet. And I just, I think that all gets so blown out of proportion that I, again, I would caution folks to not react to the headlines and some of these things. Don’t listen to what people actually say. It’s amazing the difference between what’s coming out of their mouth and what’s being reported.
[David] Yeah. It’s astounding how someone can listen to it, but it goes back to the old scene of the accident. When an insurance claim is five people standing around looking at an accident, we get five different opinions about who caused the accident, how it happened, and all that. So you start looking at some of the people’s reactions. But that one, it’s one person speaking and a whole lot of people reporting on it, pretty clear what he did and did not say, I went and listened to it as well and he was speaking for himself very clearly and he was, it was an opinion, what he thought how it could go. But I thought it was very measured and respectable, responsible.
[Bill] And there was another interview right after that I felt was actually more fascinating with CNBC folks and Roger Ferguson. Former Fed Vice chair. Ferguson basically said, you guys are trying to gold me into saying the Fed should lower rates. He just ultimately said, we’re gonna agree to disagree.
[David] Yeah, that was a good, another good interview. Yeah. There at first, CNBC had it started revealing an agenda that they seemed to have a little more so than I would like to see as far as reporting, but we’ve seen that going on for quite a while. Mr. Kittle, your thoughts on all that’s going on. You were just over in Ireland. Glad you got home, knowing that there’s been a travel advisory put out for everyone traveling overseas. Glad to hear you back. Safe and sound.
[Kittle] Yeah. Scotland actually, but little farther. I said Ireland. I’ve been Scotland. Yes, you’re right. You were in Scotland. Yes. Yes. Yeah. Trudging it through doing an awful lot of exercise over there. I swing the golf club way too many times. David.
[Kittle] As I feel so sorry for you. I’m so sorry you had to endure that.
[Kittle] I guess I’m I said I go on, experience. It’s not so much as what people say is what they do, over the history of Powell, the last, since COVID he’s been too slow to cut and too slow to raise and so given his history, I just wonder, especially along with housing starts, if I got that coming back from Scotland, we’re we’re down. And so if we’re not building houses, we already have an inventory problem. I see that as an issue for the market. And I just wonder, and I’m not, going against anything. Bill says he is a lot better versed on this than me, but if they don’t cut one of the next couple of meetings, I think he’s going to really miss it. Once again, whether they did this time or not, but they’re gonna have to do it soon.
[David] Trump said the same thing he says, he says, how many people think I should fire as if he could. He can’t fire Powell.
[Kittle] But that’s just Trump posturing and that’s what he does. Yeah, that’s exactly right. He knows he can’t fire him. And that’s just Trump being Trump. It’s kinda like the head fakes send the B52 to the Philippines while we’re sending them straight into Iran at the same time.
[David] Yeah. Yep, exactly right. Bill, you had a thought on that.
[Bill] Yeah. And let’s and let’s also be clear. Trump is coming out and saying that rates should be 2 2.5%. The odds of that happening are zero, and I know he is not gonna do it. You can be more measured and probably be more effective sometimes. But again, that’s not his style. But yeah,
[Kittle] I think it’s more Bill he’s wishing for, two to two and a half percent lower, but he’d take 50 basis points or even 75 in a heartbeat.
[David] Yeah, in a heartbeat. It’d be thrill. It’d be a major victory. Yeah. And so it, it was really interesting. We did have someone dialing in from the Fed as a regular listener and we started trying to follow up with them and that number disappeared. I find, think they’re coming in through a number of, a different way from the Federal Reserve. So I know we have people all over the hill listening to this podcast, just kind getting engaged ’cause of various thoughts on it. Marc, let’s run over to you and get your thoughts on all of this and then get to you. Alice.
[Marc] I got four or five here. First of all fed Chairman not knowing how to cut a raise. I don’t want him in a poker game with me, so had to lay that in there. I did to pick on that. I and two, two and a half rate from Trump. He’s certifiably on drugs if he said that, there’s no doubt in my mind. I just chuckle, I know y’all heard me chuckle when you said that back to the same old. We’ll see what happens. But I think he’s gonna probably have to make some kind of move on it. And that question that came up.
[David] When you say he’s gonna have to make some move on it? You talking about Powell take care.
[Marc] Yeah. Powell. But, you brought up an interesting thing and when you talked about the ability to fire him I don’t think there should be any position in government, quasi government, supportive government, whatever the hell you wanna call these organizations that should be, that insulated from being able to be. removed. Okay. Now I agree.
[David] I don’t think Trump cons as consequential as it is.
[Marc] Yeah. I don’t think that Trump needs to necessarily be able to call that shot. But if they have a problem with that, turn it over to Congress or have the finance committee of the Senate do something right now. We got a guy , a loose cannon and really destroy our economy. If he was a bad, he’s not a bad guy necessarily, but he could really do dangerous things in the position he’s in and no control over him. So I think there needs to be somebody from this scene here, not to give Trump extra power, but just from prudent management of people and decision making capabilities. You gotta have a way to control those people and we don’t have a way to control him. Does everybody else agree with that?
[David] Yeah, that’s, it is true.
[Bill] Yeah, so Marc I’ve come at it from both sides. I agree with that, and a lot of it, I think is really making the committee, a true committee versus all of those mysteriously, magically come out 12 to zero has outside influence you.
[Marc] You don’t want a bunch of president Yes, men. I agree with that, yeah.
[Bill] Yeah. I think that’s the bigger benefit because if you, whether it’s the president, especially the President, if they can fire somebody, then if it’s not that person, I feel sorry for, it’s the next person that comes in becau se they’re clearly one disagreement away from their guy, and that to me then starts to look like a DEI type hire, you got the job because of one reason and competence is not necessarily going to be the reason.
[David] Yeah, good point.
[Bill] But going back to my first point I think that’s where making the committee a, a true committee with discussion, with dissension and trust policy that way.
[Marc] I agree with that. Bill.
[David] Yeah. Alice Alvey, let you have Please weigh in.
[Alice] So you guys actually landed on where my question was. Matt talked about there didn’t seem to be any volatility in the dot plot. So is your impression because I don’t know the ins and outs on that side of it as far as whether the committee’s voice does influence the chairman. I thought there was some influence there, but based on what you guys were just saying, it sounds like you don’t feel there is influence that comes from the committee. So I’d love to know more about them if there was enough pressure from the committee. Does the chairman really over completely override if the committee is going, we’ve gotta change rates?
[David] Yeah. Great question.
[Alice] Has that happened historically?
[Marc] No, it’s not happened, but I believe that’s the case. Yeah, I think committee is just a committee. They have no power.
[David] Yeah, they vote, but to say they’re ignored is, I think, going too far to say that they’ve been to the committee’s pressure. It’s, you just go back and think about Volker, you think about Bernanke, you think of all the Fed chairman that’s been in the, in this job. Bill, I’ll get your thoughts on it, but it’s pretty much they marched to their own beat.
[Bill] Yeah. I, so I think the real answer to that is, you now, you’re starting to know five years later whether that’s the case, right? Because the actual fed beating minutes are now public, but with a, I think it’s a five year lag. The other thing is, there, there’s a fine line between when a decision is made, consensus building versus going along and when you have 12 0 votes, 11-1, is that really ’cause everybody’s in agreement? Or is that because they did a group hug? Or is that because they’re getting pressure from the chairman to make it look like everybody’s on the same page?And if it’s right, if it’s the latter and there really is more dissension, then you know, it, what’s driving that? Some of it, so I think it is a longwinded. Don’t know. But it’s an really important question.
[David] I think it’s a great question. Go ahead Alice. You
[Alice] No, I was just agreeing that’s the big unknown.
[David] I just read, I’ve just finished reading a book. I can recommend all our listeners
[Alice] are gonna get Dave waving, like he’s got a, have you see fiddle in? Okay. Yeah. I see Mr. Kettle. Go ahead, weigh in, Mr. Kittle, then I’ll talk about the book.
[Kittle] I would only add to that if the lottery that you just said is true, if there’s dissension, but Fed minutes, don’t recognize it, that is unacceptable manipulation completely for the markets to be able to read something that’s not factual.
[David] You’re talking about transparency and be able to have that level of transparency, which is, and that’s, the Fed hasn’t exactly been transparent. We get the statements in front of Congress, but not necessarily transparent Bill.
[Bill] Yeah. And I agree with that, but let’s step out and take a longer term view. It was for, so between, most of us have been around for a long time, so for more than half of my career, there was a whole group of people who were analyzing the Fed purchases to determine what the Fed’s view of short term interest rates, were they, this idea of having a meeting and coming out and announcing a rate decision and having a press conference to answer every, the same five questions, 15 different ways. That’s still a relatively new phenomenon for the fact.
[Marc] I got two quick, two quick comments. Bill. I’m never gonna lose that image in my mind that you play there. These guys hugging each other and the and the other thing that that I think when we look at this big picture on this deal I think that we can never figure out what’s in those people’s minds when they vote yes or they vote no. And I think that’s the biggest cluster we got going on. But I will tell you this, I personally believe the financial people in the country and financial services are getting tired of this stuff. Everybody I talk to is tired of it, and it’s not gonna be a very long period of time for that boils to the top. But I wanna ask one question here. That’s important. We’ve never done this. Have we ever added up, David? How many now? Can’t count Allen. He’s a newbie. But the rest of us, have we ever added up? How many years of mortgage experience or financial service experience is represented on this call?
[Allen] I’ve got 25.
[Marc] Yeah. Oh that’s right. You do have 20. That’s a good number.
[David] But that makes him a newbie.
[Marc] You’re still a newbie.
[Allen] Compared to your standards. Yes. Absolutely.
[Marc] David and I have a hundred together. David and I have together. Yeah. I’m 40. I’m 40. 41 years. I’m 41 years kid. You’re right up there at, you’re at you’re at really. 50. Really? 55. Oh yeah. Mark 40. Bill. We’re well over 200,000 years. Oh my goodness. Experience on this call mark,
[David] Allen, 25 years is respectable. And wait, yes. Thank you. Whos,
[Allen] but I’ll tell you, I didn’t use an abacus to price loans, so I, you got me there.
[Alice] Hey, we all had carbon paper, it sounds like though. Okay. Yeah,
[David] I started out, oh there, there’s Kittle holding up his abacus that he has attached to his cell phone.
[Alice] But that’s Bill, say 40, 41. Yeah. Bill, did you say 40? That
[Marc] David, that’s your new tagline for the podcast. Yeah. Where you could be over 225 years of mortgage experience on a one hour phone call.
[David] Yeah. That’s podcast. And then if you listen, the Kittle was telling me something, I’m now gonna name the individual, but there’s one particular, fairly vocal guy that owns a mortgage bank company. He says, all us old guys need to go away. Anyway. And David, you know who I’m talking about, right?
[Kittle] Up a name, but he, it’s, he continues to opine that the, it is time for the old guard to retire. There’s no value there anymore. Which is just Wow. Very, and I’d love to have a one-on-one live conversation with him anytime he wants.
[Marc] Yeah. That’s bull. Okay. I absolutely mean the people coming up through Mortgage Bank and most of them doesn’t have the breadth of experience we have or the depth. They were in an origination position. I’ve done every freaking job in the industry. Yeah. Capital. We, yeah, we vote, we how many people do that anymore? Yeah.
[Alice]There’s, they don’t, and it’s supported by technology and half of ’em don’t know what the technology’s doing. Yeah. It’s just it’s about data entry today. It’s about data entry. And by the way, our total is 256 years. 256. Quarter million. Quarter million.
[Bill] Damn. That’s the new tagline. That’s the new tagline. We’ll start quarter million years. That’s Mr. What do you.
[Allen] Guys I do, when I first started, I had to stand, because I’m only five six, I had to stand on a stool in the fax room so I could reach the faxes on top of the filing cabinets to fax out my papers.
[David] Yeah. That’s so funny. Yeah. Yeah. I know. I remember I being like long-term capital when the LTC failure, when that happened in 1999 that’s a black swan event. A lot of people are going like, oh, what that, and there’s so many things that, that, so anyway I put that out there ’cause there is value in listening to what, so folks say there are new trends going on. And Allen, that’s why I just love it. I’m, we’re joking, obviously with you two, having 25 years, you’re a seasoned veteran in this thing.
[Allen] I am. I’m a little baby. Yeah. You’re a seasoned veteran,
[David] But I wanted to get your thoughts. Did you get some chat GPT feedback on the markets based on our conversation? I didn’t, but when I was, when you’re talking about the global markets and our economy, I wonder, think about it, years ago, ’cause I did a major project with Andy Davidson and company and S&P. And remember that and yeah and a couple other Thomson Reuters, a couple other companies, and we ran models and models of data and we reran it and we shocked it with economic, environmental shockers. And I gotta tell you, I know the government’s doing that, but man, do you think they’re using ai? You think they’re trying to use AI to, to look at different scenarios in the market. Are they sticking to the old or the old and I don’t know. But don’t you think someone should be looking at some alternatives? Just ideas? I’m not saying to make the decision, just additional feedback.
[David] I just finished reading the book just finished it last night. The book, the Tower of Basel, B-A-S-E-L, you gotta read it. It’s based off of the Tower of Babel, obviously, but the Tower of Basel. And it talks about the BIS Bank of International settlement. It is the bank for central bankers. It is probably one of the most interesting reads out there because it talked about, Allen, to your point, they started using computers, IBM computers. We’re the first ones to use it to gather up the data, crunch the data, look at trends and an analysis on this. And it was interesting towards the end of the book, it starts way, way back to their earliest beginnings. But get that book listeners, it’s one of those ones. If you’re wanna be a student of this industry and a student of our financial system, you cannot get an accurate perspective. Read the book the Creature from Jackal Island, which is the creation of our Federal Reserve. But then you realize the Federal Reserve is just a part of the global banking. The, all the central bankers and the BIS Bank of International Settlements is the one that is, that they all go to and they go fly in to Switzerland. Basel, Switzerland, and they compare notes and talk about it. It’s a very interesting book and it I don’t wanna get all into it, but it’d be worth a whole podcast just on that. But anyway, catalog lot to move on and talk about. So we’re gonna let that sit there. Unless there’s anyone else that wants to throw in a last final thought. We’ll leave it rest there and continue on.
[Kittle] So far the markets haven’t reacted to the fact that Qatar is being attacked by Iran. Not much, but they’re firing missiles into our base over there right now. It’s gonna be interesting what our response to that.
[David] Oh, it’s gonna be scorched earth. It’s gonna be scorched. Are they coming are they coming out of Iran or are they coming out of the hoodies? Out of Iran?
[Kittle] And of course, all cut’s right there. We mean it’s a stone throw. Yeah. It’s gonna be, that is,
[David] Trump warned on that, so we’ve got a lot more to come. Yeah. Bill.
[Bill] So that, there’s been a lot of talk about that going back to when Soleimani was killed, where the Iranians then through back channels, were saying, look, we gotta do something. We’re gonna launch these missiles and then we’re done. And that’s why the. Retaliate again. So it’ll be interesting to see whether this is a scenario like that or is it really going to be a fit for TA escalation that can, then start spinning in a whole lot directions.
[David] I can’t remember who. I was just talking to one of the generals that we were talking to, and they said, they used to call us and say, now don’t worry. We’ve gotta retaliate, we’ve gotta do a retaliation, but we’re gonna land all these missiles in the desert. And so it was like, we’re gonna save face, but don’t worry, we’re really not gonna cause you any harm. So it’s an interesting concept of what we’re going, it’s a complicated situation over there. That’s all I gotta say. It’s interesting that we have not had the response in the nor the flight to quality that we normally used to see years and years ago, back in the old days, not there. But I’m wondering if it’s not because of the Bank of International Settlements and other, the central bankers manipulating things to just bring, keep stability from the world, just completely unraveling, at least on the financial sector. Very interesting stuff. Let’s get over. Yeah.
[Marc] Lemme make a comment about that if I could, David. Sure, of course. I know a couple in their 50’s that there you go. Where the husband is Jewish and the wife is Iranian. And she left, when the, that was overthrown over there when all the Shaw people that was Shaw was there and all that stuff. And a comment she told me years ago when all this stuff started festering up and we started having problems with Iran, she said, as long as the religious zealots control that country it’s never gonna be like any other country. Okay. Yeah. And so the only way that she saw anything changing dramatically is that they’d be neutralized as a military power. We have taken the first steps on that. So I don’t believe in killing civilians. But what might need to, what a step that might come outta all this down the road is Israel and other countries over there that are concerned, especially with them closing the oil channel if they start targeting the military facilities and just knocking out any of their military power. But I thought that was an interesting comment from her so as long as they control the country, it’s not gonna change. It’s gonna be, they’re gonna support the terrorists, they’re gonna do all the things radical compared to the proxies that are normal.
[David] Yeah. I think that, the re everyone keeps saying, we’re not trying to do a regime change and going, you can say that with your mouth, but I’m not buying it. I think we’re all, I’m not buying it either. We’re all, we’re for all for a regime changing here because of just the rhetoric that’s come out of there. That will wrap it up for this part of the discussion.