Phil Grossfield's Blog

Clues #3 & #4 to Mystery Anniversary.  My wife, The Travel Mama, is taking me to a mystery location with a mystery agenda for our 12th wedding anniversary. We leave later this afternoon and I have no idea where we’re going…still…but I’m getting closer. Clue #1 is “we are going by airplane.“ Clue #2 is “he will need more jeans/pants than shorts.”  Clue #3 is “we’re boarding Alaska Airlines.“ Clue #4 is “one of day’s activities is wine tasting.”   She posted this on her TravelMamas Facebook page today and will posting more clues periodically…. Where the hell am I going?!

My Schedule:  Available all day until 3p, then getting ready for my mystery anniversary….

My Market Watch:   Bonds Were Up…Now Down – Fixed Better For Now…   Sound familiar?  That headline is the same as yesterday.  Hmmmm…pattern?  Bonds were trading up this morning which was good because Interbank published better fixed rate prices. But once again Bonds are down enough from this morning’s highs to warrant a mid-day reprice for the worse.

Bernanke Calms Things Down.  Finally…it seems that Bernanke is making some statements to ease the panic of bond traders. In his appearance this week his statements were noticeably calming.  I’ve been asking for this for 6 weeks for crying out loud!  After his blowout Mr. Hyde impression where he completely changed his position on QE, there was no subsequent statement to calm things down. It’s almost as if he wanted the bottom to fall out so he could get things where he wanted, and then, ever so carefully, he started calming the markets down. One thing is for sure, Ben Bernanke is an extremely intelligent thoughtful person.  If you’ve ever watched interviews with him or read up on his background, the guy is brilliant. I think he knows exactly what he’s doing, and I think he has things exactly where he wants them.

Perspective.  30-Year Fixed Average Rates:

Past 40 years:  8.15%    Past 20 years:  6.52%
Past 30 years:  7.45%    Past 10 years:  5.72%

A Word On Pricing.  We have corporate calls on our pricing strategy. Interbank has traditionally been hyper-aggressive in price but with so much volatility in the bond market we have backed off temporarily while remaining competitive. It is our every intention to jump back into our role as an aggressively priced lender…but when the time is right…. This is good smart business.   

A word on locks.  Even though turn-times are fast, I advise longer term locks or at least a pricing cushion to account for possible lock extensions. Flexibility in getting additional days is not as elastic. I advise 45 day Locks. If you must lock 30 days then be sure to build in additional rebate in case you need to pay for an extension.  This is good smart business.

Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs.  Let me know if you’re interested in a presentation….

Clue #2 to My Mystery Anniversary

My wife, The Travel Mama, is taking me to a mystery location with a mystery agenda for our 12th wedding anniversary. We leave Friday and I have no idea where we’re going…no idea…no clue…clueless. That is until yesterday when she revealed that we’re boarding an airplane…that was Clue #1.  Clue #2 is “he will need more jeans/pants than shorts.”  She posted this on her TravelMamas Facebook page today and will posting more clues periodically…. Where the hell am I going?!

My Schedule:  On a corporate conference call this morning…I have a luncheon presentation this afternoon…available the remainder of the day….

My Market Watch:  Bonds Were Up…Now Down – Fixed Better For Now… 

Bonds were trading up this morning which was good because we got back yesterday morning’s pricing before the price worsening yesterday afternoon. Bonds are down enough off of morning highs to warrant a mid-day reprice for the worse.

Yesterday’s Fed Meeting Minutes were as I expected…more of the same regarding the tapering of QE. In fact, half of the members agreed. So, you can either interpret that as 50% believe in QE tapering, or that 50% do not believe in it. Hmmmm…as a trader how do you use that to help you in deciding whether to buy or sell bonds?

Perspective.  30-Year Fixed Average Rates:
Past 40 years:  8.15%    Past 20 years:  6.52%
Past 30 years:  7.45%    Past 10 years:  5.72%

A Word On Pricing.  We have corporate calls on our pricing strategy. Interbank has traditionally been hyper-aggressive in price but with so much volatility in the bond market we have backed off temporarily while remaining competitive. This is good smart business.  

A word on locks.  Even though turn-times are fast, I advise longer term locks or at least a pricing cushion to account for possible lock extensions. Flexibility in getting additional days is not as elastic. I advise 45 day Locks. If you must lock 30 days then be sure to build in additional rebate in case you need to pay for an extension.  This is good smart business.

Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs.  Let me know if you’re interested in a presentation….

Mystery Anniversary. July 14 marks my 12 year wedding anniversary with my wife Colleen. Each year for our anniversary we trade the planning responsibilities. Last year was my year and this year Colleen is doing all the planning. That means every other year we have a fantastic anniversary planned…yep. Two years ago Colleen planned a mystery anniversary…I wasn’t allowed to know where or what we were doing.

She surprised me when we ended up at Disneyland, kid-free, for the weekend and it was awesome. We stayed in their fancy hotel, ate at their premiere fine dining restaurant in a kitchen-side table where the chef catered to us, and we walked the park at night. It was romantic and, well, fun!

This year is another mystery…on Friday night I’m headed somewhere and I haven’t a clue where I’m going. All I know so far is we’re getting on a plane and my in-laws are watching the kids (they arrive tonight). How lucky am I?

My Market Watch:  Bonds Down – Fixed Pricing Worse 0.125
Bonds are trading down about -30bps this morning but I’m not real concerned about that. I am concerned about the Fed minutes which will be released at 11a.

There is reason to believe the minutes will not be favorable for bond trading. That is, traders will be reading the minutes and looking for an interpretation on where the economy is headed. If the minutes give traders a feeling that the economy is strong, or if the minutes solidify with strong language the Fed’s new position on tapering QE, then they will invest in stocks and sell off bonds to free up those investment dollars. If that happens our rates/pricing will get worse. On the other hand, if the minutes indicate a weaker economy or soften the discussion on tapering QE, then traders will sell off stocks and buy bonds instead…this would improve our rates/pricing.

So what will happen? My opinion is there is more downside to upside. We already know the crux of that Fed meeting…they agreed to begin tapering QE and plan to eliminate it mid-2014. That’s why bonds have sold off over 600bps and why rates are so much worse. So why would we expect the minutes to reveal anything other than more of the same? It just seems to me the potential positive outcome of traders’ interpretation is far-fetched. It’s just my opinion…for all I know the minutes might reveal some beautiful discussions on continuing QE indefinitely in which case we could see a nice improvement in rates…but I doubt it.

Perspective.  30-Year Fixed Average Rates:

• Past 40 years:  8.15%
• Past 30 years:  7.45%
• Past 20 years:  6.52%
• Past 10 years:  5.72%

A word on locks.  Even though turn-times are fast, I advise longer term locks or at least a pricing cushion to account for possible lock extensions. Flexibility in getting additional days is not as elastic. I advise 45 day Locks. If you must lock 30 days then be sure to build in additional rebate in case you need to pay for an extension.  This is good smart business.

Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs.  Let me know if you’re interested in a presentation….

Weekend Developments:

Fair Food. Lemonade, Corn-On-The-Cob, Funnel Cake With Strawberries and Whipped Cream, Chicken Strip, Bacon Doughnut, Fried Zucchini, Gatorade, And a Chicken Taco.  As far as fair food goes, this was the tamest I’ve ever been. The bacon doughnut was pretty good!

Butt-Head. At one point this weekend my 5-year old son laughingly called me a “butt-head.” This was promptly posted on Facebook.

Daughter Compliments. At one point this weekend my 8-year old daughter out of nowhere complimented me and my wife on our parenting skills. This was also promptly posted on Facebook.

Survival of Monster’s University. We took the kids to see Monster’s University for some needed out-of-the-sun downtime. My 5-year old son was uncomfortable the whole time and eventually begged me to take him out of the movie…just too scary for him. I figured the kids would be up all night with nightmares but it was okay…we survived!

My Schedule:  Available all day….

My Market Watch: Bonds Up Big After Friday’s Bashing.  Bonds are way up +69bps after falling -206bps on Friday after the Jobs Report.  On Friday the Jobs Report came in even on unemployment but much better on new jobs created. As a result, traders dumped bonds and bought stocks. When I say traders dumped bonds I mean they sold them off big-time…bonds dropped over -200bps in one day…a bond blood bath.

This morning we’ve gotten back some of those losses – almost +70bps. Wednesday the minutes to the big Fed meeting last month are revealed.  This is freaking me out because I anticipate more downside to this report than otherwise. And with job creation being strong, there is nothing to butt-heads with his new stance on tapering QE. I got a bad feeling about it….

Perspective.  30-Year Fixed Average Rates:

• Past 40 years:  8.15%
• Past 30 years:  7.45%
• Past 20 years:  6.52%
• Past 10 years:  5.72%

A word on locks.  Even though turn-times are fast, I advise longer term locks or at least a pricing cushion to account for possible lock extensions. Flexibility in getting additional days is not as elastic. I advise 45 day Locks. If you must lock 30 days then be sure to build in additional rebate in case you need to pay for an extension.  This is good smart business.

Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs.  Let me know if you’re interested in a presentation….

My beautiful lovely hyper-intelligent friend. I hate Cancer…blank Cancer.

I wrote the following late Saturday night after spending the evening with my friend and her husband, with whom I shared more than a reasonable amount of fine wine:

I wish. But it matters not. It is. 

As I drank my Pinot Noir and talked with my friend about life, the afterlife, and about what matters least, and most, I think of my kids, my parents, my wife, my brother and sisters…family. I think not of work, loans, the market, money…things…stuff…it matters not. More Pinot Noir.  

I wish…it is. I focus on my beautiful too young friend whose body is failing…her life highs, her life struggles…her thoughts towards the end, or rather the beginning as she now sees it… Something is approaching…palpable. She is scared but hopeful…I am sad but grateful. She is a beautiful soul who teaches me…. 

My Market Watch:  Bonds Up – Fixed Rates Better

Bonds are up +23bps on the day so far and fixed rates are better than Friday. This is a big week on the economic calendar which includes the Jobs Report. I’ll be writing more on this tomorrow….

A word on locks.  Even though turn-times are fast, with rates moving higher and Capital Markets challenged with its hedged locks over the last 70 days, be mindful to lock 45 days or more for your transactions. If you must lock 30 days then be sure to have additional rebate accounted for in case you need to pay for an extension.  This is good smart business.  Let me know if you have questions….

My Schedule:  Available all day….

Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs.  Let me know if you’re interested in a presentation….