[David] Alright, good sound parody there. Breaking the Habit recorded and released in 2003 how does he find all these relevant songs? I don’t know how he does it, but it’s amazing. But Linkin Park, L-I-N-K-I-N Park. That’s where that music came from. If you wanna look it up for you, music enthusiasts very good. Normally we would go over to Matt Graham right now, President & CEO of MBS Live and play his segment and then get into discussion. But guess what? It is again, Martin Luther Day. So day off, the banks are closed and Matt’s not here. Good to have him here. But by the way, I forgot to say, be sure to sign up for Les Parker’s TMSpotlight Newsletter. You could do so by going to TMspotlight.com, putting the word power for power seller, and you get the paid version for free. Good stuff. Good value. Thank you Les Parker, Gary Catrambone for your collaboration and turning out a great segment. Bill, let’s talk about this. He brought up the relevance of the lawsuits and all that’s going on. It’s irrelevant ’cause it’s behind the bond market. It’s going by the bond market. Talk about your thoughts about some of that chatter that’s going on and where are we headed? Seeing a big jump on Friday.
[Bill] Yeah. Yeah. So three or four things to talk about, right? The first was the announcement on. Fannie Fred buying 200 billion in securities was right now, 10 days ago. So I wanna update everybody on what even semiofficial information has come out on how that’s gonna be implemented when, et cetera, did you catch that?
[David] I was making a note.
[Bill] I want 10, 10, 10, 10 days on, one of the few things that everybody has agreed, Fannie and Freddie have the authority to do. ’cause they’re already doing it at a smaller scale, right? The plumbing is in place and nothing has come out. Nothing has come out of it. And in fact, I was at a conference last week and some folks from Fannie and Freddie were there, and they obviously were asked the question and they both did a really good job of trying to minimize the eye roll. These fairly senior folks and they’re acknowledge, they have no idea what the expectations are.
[David] That is so interesting. It seems like a bit of disconnect.
[Bill] It absolutely is. And two other things going on last week to tie into all of this GSEs fed, et cetera. Trump has now come out and said that he really likes Kevin Hassett where he is.
[David] So that was interesting. Yes.
[Bill] His name has been pulled off the table for bed chairs. Now it, and I’m drawing a blank on the third name, but it’s Waller and there’s a, another name somebody from Blackstone I think. He is made up his mind but is this now going to be, I don’t know. He’s a TV show guy, maybe he is doing this survivor style where you don’t announce who wins first. One by one, you knock out the potential candidates and then it’s obvious who the winner is.
[David] Who the winner is. Yeah.
[Bill] Don’t know. The other thing that was talked about is with this idea of Jamie and Freddy Buying securities that the whole GSE release idea is dead on arrival.
[David] Yeah. I think is starting to become clear and clear that is a DOA dead on arrival.
[Bill] Yeah. And I do think and this came out in let’s say the conversations that were reported but then vigorously denied about Besant not being happy with the way things played out. I think that the Fannie Freddie buying securities and therefore the GSE release is off the table, is definitely a factor. But I also think really the bigger factor is there was no agreement between FHFA and Treasury on exactly how to do it. And exactly, you wind up with a standoff, which then every week you get closer and closer to the midterms. It was becoming clear it wasn’t gonna happen, and the buying of MBS just became the the final straw. And so just put all those ideas on the back burner spin the wheel, maybe 2027, it comes back. Maybe it goes all the way to the next administration in 2029. And maybe, it becomes never maybe it becomes never. Yeah. I think more people are, but I think the Hassett announcement and the, that is significant GC release off the table. They’re both pretty significant.
[David] That is significant. It is absolutely quite wild. Question. Do you think that’s why they, we saw Friday’s market to back up and because they kind, everyone’s trying to figuring out, ah, this 200 billion ac purchase by Fannie Freddie is just not gonna happen. Do you think that’s a reason for that or are there other factors for the reason for the market backing on Friday? Again, the market’s closed today when we’re recording this on Monday, but it, we will find out what happens tomorrow, but we’re still within the trading range. That has been.
[David] Yeah. I think it’s a little bit of momentum took over Thursday and Friday. The markets started selling off a bit and with so many unusual things going on, if you’re a trader, yeah. The biggest risk is not…
[David] And you’re facing a Monday holiday.
[Bill] The biggest risk is not the news that you can digest and react to in milliseconds. It’s what happens when trading is closed. Yep. And with it being Martin Luther King Day and the markets are closed, get to safer ground. Yeah. You’ve got, could anything happen in Venezuela iran, on again and off again. There’s just way too much risk over a long weekend.
[David] Yep. Makes total sense. Yeah. Good thoughts, mark, when you look at some of the headlines, the news especially as you think of interest rates, any reflection you have.
[Marc] A couple of things. I was looking what was going on? Did you see what’s happening in Greenland about our troop buildup that’s gonna happen there?
[David] Yeah, Chuck, I chuck about what? Back wrote? I saw one comment was macro row from France says that we’re gonna do troop buildup and they added, they said we’re gonna do a significant troop buildup and there was 30 people sent, so I kind chuckled up.
[Marc] Yeah. But I’m talking about the one from our side. No, I haven’t. Yeah, it’s reading the news blurb today that we’re gonna do a major overhaul to our base in Greenland and increase the troop support over there.
[David] My prediction that’s all’s gonna happen. I don’t see Greenland becoming the 51st state.
[Marc] I, what I can’t get over in this. There are so many battles. We need to fight in the war, in the world. I just hate to be fighting our allies, but the allies ought to realize how important Greenland is to the world, not just to the United States. And I don’t know how, Trump thinks he’s gonna get control of Greenland without it being a really bad way to do it. And so maybe this is all a ploy so he can do the buildup there and nobody will question it rather than taking over everything. I don’t know. I don’t know.
[David] I heard one time who was it said show them death, and they’ll accept a cold. In other words, show them takeover and then we’re gonna do a massive buildup and they’ll, everyone will say, okay, at least you didn’t take it over. And everyone will accept it.
[Marc] But you’re exactly right. You read all those countries. I was reading that breakdown of all the countries that sending troops. One was 30, one was 51 actually was sending in 500. So I’ll believe that one. I see it. So we’ll see how, yeah, exactly right. Yeah. Yeah.
[Bill] So here’s another thing that, is perplexing with that, Up until the early nineties, we hadn’t, don’t quote me on the exact number, but 17 or 18 bases in Greenland. And that was part of the peace dividend after the Cold War ended of consolidating those down. But both sides, the US, all three sides, the US, Greenland, Denmark, all agree that treaty is still in force. So if it was really about the military, then that’s a simple conversation about what do we need to do to get these 16 or 17 bases back up and running. And the commentary from the folks in Greenland and Denmark is like, yeah, just tell us what day you want us to turn the lights on. Pretty much. So it’s like what’s the real agenda and what are you trying to accomplish when, if it’s really defense, the solution is pretty easy.
[David] Yeah, bill, I’ve got a question because one of the things, and Alice making a lot of notes there ’cause I’m coming to you, get your thoughts on all this. One of the things, I had a question asked of me relative to Greenland, Venezuela, Iran, and all that, and someone was asking me the other day, one of our listeners called me and said, Dave, I have a question. What happened to the old rule that there was always a flight to quality when there was a significant concern about a world event? Have all the rules changed? Have they all been suspended? And it seems like that’s the case. How would you respond, Bill?
[Bill] We actually talked about this about six months ago where we touched that. Yeah. The flight to quality was because of stability of the dollar, because it’s backed by the full faith and credit of the US government. Why are you gonna have a flight to the dollar if you have no confidence in the US government anymore? the flight to quality slash stability has been a lot of what’s been driving gold.
[David] Yep. It’s a great question. Stability is no longer in our dollar. It’s totally, or in the bond market it’s totally gone into the precious metals. Exactly right. It’s a fast say, okay, Alice, jump in on this conversation. I always love your input. So does our audience. More importantly, our audience does.
[Alice] Well, I think we off into the politics and then circled back into the market. Yeah, we did. We did. Yeah. Marc took us off in politics. Little, yeah. With but I get it. I get it. We’re trying to get back to what Bill was just saying and you were just asking with, how does this impact the market and do we still have flight to quality? And I’ll just go with I’m gonna just agree at the end there, that people have to have faith and trust, and if trust isn’t in the room, then a lot of things change.
[David] I think that’s why I brought it back with the question about the flight to quality because it reflects the market. ’cause Marc brought in, the, some more about the global markets, what I mean, what’s going on in, the world, and which usually would drive down rates because money would be pouring into the bond market. And we’ve seen that, and Bill did a good job of reminding us that as we talked about this six months or so ago, that the confidence in the dollar is now shaken and therefore the confidence is not flowing into the bond market. It’s flowing into precious metals, which is driving things up. So it’s a fascinating discussion but how does this affect mortgage rates? I think it comes back to this. We’re still locked in a trading range, are we not? Yes, we clearly are. We’re locked in a trading range where we’re in there. So there may be various factors that are there. We’re not seeing the flight to quality, but we’re not seeing deterioration as much as either we’re locked in this thing, what’s gonna move it is a $200 billion. If it could ever happen, if they could figure out how to do it could have an impact. But I think there’s just a whole lot of stuff going on out there and at the end of the day, I’m not saying ignore the news, but listen to it, but get back to doing business because what is happening this year is we are seeing an overall confidence returning about the housing market and what’s gonna be happening. Bill, I got you. Got a thought I can tell.
[Bill] Yeah, the other thing is, and we talked about this last week after the announcement about Fannie and Freddie late last week. On the surface was a good example of what folks need to pay attention to and yes, the 10 year treasury, went from the high four teams to 4 22. Pretty decent move. It was off five basis points on the day, mortgages were off, call it an eighth in price. So much less movement, which is the, okay, I don’t want to get caught on the wrong side of mortgages ’cause what if the Fed or Fannie, Freddie decide they’re gonna start buying on Tuesday? So one of the things we talked about just in general is that announcement of buying and the buying itself are both gonna create changes in the spread between mortgages, their movement and treasuries, the 5 or 10 year. And I think you can make a pretty compelling argument that we saw some of that on Friday.
[Alice] Yeah. I have a question for you, bill. If, I’m sorry I have a question. Les mentioned a range of 4.25 and 4.35 in the first quarter. And is that the range that you’re thinking? Also, I think in the previous week we might have talked a little bit lower than that. And does that even really matter?
[Bill] For folks that are, really smart and do a lot of technical analysis like last, that the specifics matter and usually if Les has a number, for top or bottom of a range, there’s usually a technical driver for that. And there are a whole bunch of different things that could be looked at. A lot of what I talk about, what Matt talks about are a little bit more generic ranges. 1, 2, 3 basis points. Either way , the concept is all the same. And what Les the message was trying to get across is yes, okay, so we broke out of the 4.20 high, right? There are other factors that then you can look at behind that and say but a little breakout is okay. It doesn’t change the big picture. And I think that’s what Les is trying to convey that okay, we went over 4.20, let’s say, but by itself that doesn’t mean Treasury rates are automatically gonna soar that you watch another range for a while and it’s constantly being updated and moving targets. If you’ll, does that help?
[Alice] Thank you. Yeah. Thank you. Yeah.
[David] I think at the end of the day we come back to the same thing. You’re a loan originator, you own a mortgage company, great. Get out and produce loans. The market’s improving. And those, I think one of the topics I want to get into in a minute when we’re around Allen’s segment is the technology and some of the things that are happening. And I’ll get into that in just a minute. But Bill, thank you so much As always. Again, Matt Graham is not here with us, but I’d still encourage everyone to sign up for Matt’s service MBS Live.net. Another thing that you could use the signup code and you get the extended trial period without a credit card. One thing that Les has mentioned several times recently about how he’s working with Adam Quiniones. Adam is another very bright thinker. I’m not sure. He and Les sitting in one of their conversations has gotta be fun. Do you get to do that Bill? When the two of ’em are sitting and talking, you get, does he invite free to some of those
[Bill] Every once in a while? Not frequently enough, that’s for sure.
[David] Yeah. Adam is one of these extremely bright. I don’t have time to talk to the common man ’cause I’m too smart kind of guy. He doesn’t say it arrogantly, it’s just fact. He is incredibly smart, but he’ll talk to less than we’re the benefactor of it here. But anyway, also check out Adam Quinones blog. You can sign up for it and read it. It’s really good. I do as well listen to Les and Reads Les’s podcast or his notes on his new daily newsletter. I recommend that as well. So anyway, wanna point that out.