[David] Good job. Good report. Appreciate it very much, Matt Graham. Be sure to check out Matt Graham’s service, mbslive.net. You can sign up By using the LOL code, it’ll save you from putting in a credit card, and you’ll have an extended trial period. But then again, I don’t know why one wouldn’t want to just sign up for it. It’s so affordable, and it is up to the nanosecond information. Really interesting what’s going on, folks. Let’s get started, Bill, with your analysis. The part that I’m looking at, the trading range that’s moved up. Most interested in your thoughts are th- r- Fed rate hikes versus rate cuts. Your thoughts, start off the discussion on rates and what’s happening, what we anticipate
[Bill] So a couple of different things, right? First is the Fed still has an easing bias, so the most likely outcome from this upcoming meeting is going to be that in their statement they have a more balanced approach, right? Just like the same thing going the other way. That’s effectively a hike by moving… Saying that things are balanced. That’s signaling a change in their direction. That by itself, right? The market loves to take something and overreact to it. I don’t see how that can be a huge surprise and excite anybody one way or the other, right? The Fed is concerned about, this last payroll report notwithstanding. There’s still concerns about the job outlook. There’s still concerns about inflation. Why wouldn’t they have a neutral bias? and I think folks are gonna read way more into it and try and make it a bigger deal on, you Warsh and his opinions. I think one of the things that I’ve heard talked about a bit is, they do the dot plot, which again, everybody focuses on and all they’re doing there is saying, ” If economic conditions don’t change, where do I think rates are gonna be six months, a year in the future?” There’s already questions that, he’s trying to change the entire communication style, and he’s more eloquent than I am, but basically he says the dot plot is stupid because your basic premise is totally unknown. And so he may not even put a dot on the board, just to start setting his tone. Inflation’s gonna continue to be hot for a while, but, you How much and how long? Don’t know. But I think, and everybody’s talked about, and to go back to what Lach specifically is talking about the trading range 420 to 480s. I think that’s very plausible, and I think we’re gonna make a play both ends on that range. But I go back to what I said last week, right? That the war in the Mid East is not just gonna go away and run out of steam. There’s going to be a huge catalyst that drives whatever the resolution is to it. So volatility is still going to be out there, and you just, have to, take the cards that are in front of you, and don’t try and rationalize it, and, the market is what it is.
[David] Do you see any outliers coming in and changing the conventional wisdom that we’re gonna… It’s all based on inflation, and if inflationary trends continue. We watched the jobs number that was very positive this last week, and drove, which again, had put upward pressure on it. We’re seeing no resolution yet after, we’re close. Within a day.” We’ve heard that now for weeks on end. That’s kinda getting to be, like crying wolf.
[Bill] When multiple Iranians, cause it’s never just one, come out and say, “We’re really close,” I’ll start to pay attention to how close we are. Yeah. I don’t think we’re anywhere close, ’cause I think within Iran they’re still trying to sort out who’s… So if you get an agreement and you put a piece of paper there, I’m not sure they’re all in a, in Iran in agreement as to who’s gonna sign it. Yeah. Whatever it says.
[David] Or if, who does sign it is really in authority at that point. Exactly. Yeah. This thing has got such complexity to it and that’s why I think we’re in this long haul. I just I agree with the bottom line, no nuclear we- weapons. Do not allow them to have a nuclear weapon. Get that, got that based on all the rhetoric that’s been said. But how long it’s gonna take to affect that would like to believe that there is some magic thing that’s gonna happen. Not very realistic, but that leaves us leaving where we are. But the good news is that pipelines are growing, Mr. Kittle. We continue to hear that. I just heard that again over the weekend, even though interest rates are higher. So there’s a sense of this thing coming to an end and people are wanting to move on a house before things go raging out of control again. Your thoughts.
[Kittle] Let me go slightly another direction, just back to the jobs report. Isn’t it refreshing to get a jobs report that’s accurate and gets revised up instead of what we had under the previous administration, always trying to look good, and then every time it got revised down consistently? Yeah. it is absolutely saying economically we’re in a good place, save gas prices. Now, they were 4.45 here in Louisville two weeks ago. They’re 3.35 today. All right? And that’s not even at Costco. So they’re down almost a do- they’re down a dollar. that’s a lot. It’s 20 bucks a week if you’re on 20 gallons and, that’s easy math. Let’s go to TMC for a second. We’ve got Austin coming up for our conference in September, and everything internally is breaking right now. It goes to the optimism of where we are as an industry. This could be the largest conference we, attendance-wise, we’ve ever had
[David] And why do you think that is? Would you have, do you have a feel of, is it anticipation we’re coming close, we’re coming into a new positive business cycle for the industry?
[Kittle] I think it tracks to what you just said a second ago, David, that, that volume is not killing it. I think we understand now as an industry certainly as our group at TMC, we are definitely and have been for a while in a purchase market, and you’re back going after good solid business. Pipelines are not full, but they’re steady, and there’s optimism out there. Yeah. You go to Trump for a second, he’s the most impatient president around most things we’ve ever had. Yet with this Iranian situation, he is exhibiting more patience than anybody I’ve ever seen in my life. Yeah. And it comes back to I can’t figure it out. I know he doesn’t wanna kill anybody else but he’s gotta end it at some point. And it’s not just getting the uranium out, out of there. We, meaning the world, has to control that strait for oil supply to go through. Has to. They can’t hold the world hostage anymore. So those two things have to be worked out. But great optimism out there right now. It’s almost like- an industry. We haven’t talked much, maybe we will later, about Pulte. He’s still in the too early to judge. Oh, I have a few opinions on that topic. Yeah. Now he’s, head of intelligence But we still don’t have a good definitive housing policy from this administration. He didn’t have one the first time, actually.
[David] Yeah. We’re gonna get into that in just a minute, because I listened to a podcast that put a different spin on it, and so we’ll we’ll get into that. Maybe he was never hired to bolster the the housing market. There are some other agendas going on there that, that’s I’ll float out there that’s interesting. But let’s get over to Alice. Alice, your thoughts on What we’ve heard so far are rates. You always got good reflection.
[Alice] I just love listening to what all of you say, and then I was doing a little bit of reading today. I guess my question is then expect volatility, and really the Fed then coming to this balanced stage should signal that we as an industry have a little bit of a direction now. There isn’t gonna be a lot of, “Oh, it could still go down,” or, the administration wants to put on pressure for it to go down. It seems… The jobs report seems to give the Fed some cover essentially to be able to stay balanced and maybe help put aside any pressure from the administration and help get us back to feeling the Fed’s independence. And so I think that’s my question for Bill, is with the data, do we see a little bit more evidence that we can count on some independence? Is the data helping that case?
[Bill] So I think the short answer is yes. jobs report was a tremendous gift- Yeah … to Kevin Warsh coming in, where it forces a conversation about, both sides of the coin, versus coming in and just getting barraged with the political agenda versus what the Fed is doing. From his perspective right now, I don’t think you could have had a better jobs report, ’cause yes, it does bring into the mix that they don’t have to jump to raising rates, right? But just by acknowledging the risks or balance puts the inflation argument back on the table, right? ‘Cause when you have an easy bias, you’re, without saying it you’re pushing inflation off the table. And So it, it does set them up well to have conversations throughout the year and and see where things play out.
[David] Yeah. And do you see the rate discussion being politicized? The answer seems to be, you can see the ones on the left have a tendency to be saying, “We’re seeing interest rates. We we’re gonna see higher interest rates.” A lot of failure, a lot of somewhat gloom and doom, but some of it’s just concern that this administration isn’t getting the job done, therefore it’s gonna be getting worse. Then you find the red states or those on the Republican side seem to be having, things are improving. We’re looking at all that’s getting accomplished, and certainly there is a lot getting accomplished.
[Bill] And I think also what, Christopher Waller has said this, his views have changed dramatically in the last 90, 120 days. And somebody was grilling him and, hours, “Are you a hypocrite?” Blah, blah, blah. And he just looked at him, he’s “You understand that data changes month by month.” He goes, ” And my job is to take the data and learn from it in predicting the future.” He goes, ” If somebody’s views don’t change when data changes-” Yeah that’s the bigger problem.” He said, “And it doesn’t-” ’cause they tried to turn it into politics. He goes, “That’s not politics. That’s just being pigheaded.”
[David] Yeah, exactly right. Great point, Bill. I love that. Alice, I heard you in the background there. Any thoughts on that? That was a really good point.
[Alice] Oh, thanks. Bill. That’s what I was understanding, and I wanted to make sure we had a chance to put that back on the table for our listeners because it’s it is something that is important to the industry and so it’s like you said, it was a gift. Yeah. Yeah. A big gift.
[Bill] And hopefully that, to your point it moves things away from being political. So Mr. Kittle commented on that- revisions upward. Thank God the first time that we didn’t see upward revisions wasn’t the December jobs report- … right after the midterm elections. ‘Cause, then all bets are off in the conspiracy discussion. Yeah. . No and really this the… We laugh about it, but the administration needs to latch onto that and say, “Okay.” It’s really a pretty simple explanation to folks. yeah, maybe interest rates aren’t going down because the economy is doing well. Yeah. Yeah. That’s I don’t know how that’s a hard message as a politician to deliver.
[Alice] And I was looking at jobs reports histories, and it depends what you look at. If you’re looking at the monthly revisions or the annual revisions. The annual revisions I think are the ones you were talking about, David, that were so dramatically revised. The monthly revision history was 26 monthly reports were revised up and 22 were revised down in the monthly reports in the previous administration. Yeah. But the the, it was the annual reporting that was way off too.
[Kittle] That, and you’re right, but what I was referring to in Biden’s last year, most of his were revised up. So by and large it may have been pretty close over a four-year period, but there were a lot of them revised up over his, the last portion of his administration was there. That’s a great point if I can add something to the, trump had spent the better part of the last year, ” We’ve gotta lower interest rates,” beating Powell up over this stuff. And- the average person, we said it on here over and over, really doesn’t understand the correlation between the Fed rate and what drives mortgage rates. Yeah. ‘ Cause it really it’s an indirect thing, so it was never any- Yeah … that big a deal. And when you have a strong economy, rates aren’t gonna go down. They’re just not. And so people are settling into that. No. No. Incomes are up. People are getting jobs, and they can maybe afford a little more. But there are still things in, again, I’ll finish with this, that we have discussed probably for the last five or six weeks within the structure of the home finance piece that can be addressed immediately if you want to really get into affordability, and they’re not doing it.
[David] Yeah. Very good. I want to get into the Pulte discussion with him now still staying as FHFA director, and now has roles added. I got to tell you, I was r- I’m going, “This makes no sense.” In my opinion, he hasn’t done a good job running FHFA as the director. There’s not anybody, anything definitive happened, and now he’s taking on Gabby’s job. Maybe it’s just temporary. But then I listened to a podcast flying back from Florida last night and I listened to it, and it was really interesting that maybe Pulte’s job as a fierce… They all pointed at what a fierce loyalist he has been to Trump, is not to revise, make revisions to the housing finance system, but to use things like housing fraud, mortgage fraud specifically, on some of the political candidates, and he has done that. And he has Letitia James, who has some number of others that have been convicted now of mortgage fraud. Maybe that was what it was about, is what this program or this podcast suggested that there was a good debate going on between them. It’s like we are in the mortgage business. We want to see some changes, some fundamental changes in the way our housing finance system works. Again, overall it functions, but there’s some inequities there. Mr. Kittle, I want- I teed that all up for you, my friend.
[Kittle] Yeah. I’ll tell you if that is true, assuming that podcast is true, what a shame and what a missed opportunity because- the actual question is what has he done since he’s been FHFA director? Positive or anything. Yeah. he’s, is still this… Think about this. He’s running CFPB, he’s FHFA director, and he’s CEO of Fannie and Freddie, and now he’s NIL director. Really? Come on. Yeah. There’s only so much you can oversee, as you said. Now, what’s most important out of all this to the country? It’s probably the last position he’s been given, right? National Intelligence director. Yeah, yep. Which means housing and Fannie, Freddie, and everything else is getting no attention at all. Or little to none, and it’s sad. Yeah.
[Bill] So a couple of thoughts, right? So take that podcast at face value. that means Mulvaney is the equivalent of whoever was in Russia that, seemed to be with all the various oligarchs when they just had this rash epidemic of falling out of hotel windows and ’cause I’m also gonna go back and pick on what you said, ’cause there’s a key word in there. So if he was brought in to FHFA to go after people he had a lot of high-profile accusations, some of which got to the indictment stage. But I don’t think there were any high-level convictions, which means if he was brought in as a hitman, he didn’t do a good job with that either
[David] Even as a hitman, yeah. I’ve been scratching my head about Mulvaney the whole time, and just… It was an interesting podcast, ’cause it just offered another point of view on something- And- … that, and I, I want to throw that out there for a little discussion …
[Bill] And if that’s true, it’s really disappointing. Because, when you start talking about custom, you know- satisfaction. Housing stability, which can take on a variety of forms, is probably the largest input into how do people feel about their life position day by day, week by week, right? And that’s whether you’re owning, whether you’re renting. How you feel about housing drives everything else, and if we had somebody in charge of housing that had a whole different agenda, then- i’m sorry, the American people got screwed.
[David] Yeah. You’re exactly right. Oh, so good. I don’t wanna bag on Polti too much. I’ve done enough of it. I’ve heard some from people that, “Dave, back off on that issue. That’s not playing well with some people out there.” I’m just sorry. We gotta talk it. What we try to do is say things. Not everything we say here is, when it comes to the political side is perspective is spot on. We’re not saying that, but I think it’s good to have the discussion on it as we start seeing point versus counterpoint.
[Kittle] There’s nothing dishonest or wrong about what we’ve said. No. Sometimes the truth hurts, and remember, I’m a Trump fan and supporter.
[David] Yeah, but this one left me scratching my head and going, “Oh my gosh, gotta be concerned.” Wrap that one up.