Phil Grossfield's Blog


Monthly Archives: March 2014


Leo“DADDY, IT’S ST. PATRICK’S DAY!!!!!”  My son came into my room yesterday morning wearing every green shirt, pants and socks he could find, and, a green hat no less.  I got it tapered down a little (notice I used e a financial term to explain) and this was the result.  Not bad, eh?  He was so excited for St. Patrick’s Day…every day since Wednesday last week he was asking when the big day would finally get here.  Yesterday morning he woke me up at the crack of dawn (thank you very much) to tell me it had finally arrived…”DADDY, IT’S ST. PATRICK’S DAY!”  Then he slammed the door shut and ran downstairs to make a poster for the Leprechaun, which is proudly displayed in the picture to your right.  Now tell me that doesn’t bring a smile to your face.

My Market Watch:  Bonds Up +16bps – Pricing Is Improved. The Fannie Mae 30-Year Bond is trading up +16bps since yesterday’s close. A lender’s rates/pricing improve when bonds are being bought.  Crimea is the headline once again…I’m sure you’ve already read that Russia has taken control. Crimea is now a part of Russia…it’s official. From my standpoint, I know nothing of Crimea other than rates/pricing have improved this morning.

Record Your Memories

memotosRecord Your Memories.  Yes, we can now record your memories, kind of. Memotos has created the Narrative, a camera with GPS technology that takes a picture every 30 seconds of any portion of your day. In fact, if desired, you can have it snap pictures of your entire day, and store them in an efficient, geographical and otherwise organized manner on a cloud-based server.  Therefore, you can effectively create a memory of your day in 30-second picture increments.  The technology is tiny, and attaches to your clothing. You simply clip to your clothes and look up the results later.

beach_dayThis technology would have been awesome for a day like yesterday. French toast breakfast and then a long stretch of games in the backyard including coloring and tic-tac-toe with the 6-year old on the right and hangman and scrabble with the 9-year old on the left.  Then the daily scramble to get out of the house and off to lunch, followed by a bare foot stroll along Torrey Pines State Beach. beach_day2In fact, just to turn it on for the beach section of the day would have been cool. Sure, we took a few pictures with our phones, but how cool would it be to have a 30x30x30x30x30x30… account of that 90-minute stretch?  The remainder of the day was just as fun…swimming at the club, an ice cream break, and then home for BBQ dinner with the neighbors, complete with collective neighborhood puppy entertainment.  This was a memorable day…in a matter of typing I’ve memorialized it here. But having a photographic account of this day would be something I would love to be able to see.

Check out this 2-minute video about Memotos Narrative.

My Market Watch:  Bonds Down -6bps. The Fannie Mae 30-Year Bond is trading down this morning -6bps since Friday’s close. A lender’s rates/pricing worsen when bonds are being sold off although -6bps is not enough to make a significant difference.

crimeaCrimea continues to be in the spotlight…I’m not exactly sure why this news is so significant to Americans but I suppose there must be some oil or other interest our government is looking at. One interesting note is Crimeans got the opportunity to vote on whether to join Russia…95% were in favor of it. But if you dig a little deeper you learn that their only other choice was to be independent, not to return to the Ukraine. Anyway, how this affects pricing is yet to be seen.  Historically unrest in the world creates an unstable economic market for traders…usually this results in more bond trading since it’s a safer bet. We’ll have to wait and see what happens…

A New Way To Read

spritzA New Way To Read.  I can read incredibly fast as long as comprehension isn’t taken into consideration. I always wanted to read faster, in fact long ago I took a speed-reading class…it taught how to read in chunks, you know, paragraph by paragraph. AND IT WORKED, I could read super-fast…but my comprehension got even worse…ugh!  So, I stuck to the old fashion way of reading.

Spritz has unveiled a new technology that let’s you read over 1,000 words per minute, that’s 800 words faster than the average. It works by bringing the words to you rather than the traditional method of moving your eyes across and down the page, which is extremely inefficient for your eyes. Spritz flashes the words on a screen in a specific way so your eyes won’t move. That is, the words come to you rather than you going after the words. Man, I wish I had that technology when I was in law school!  As soon as the technology is available for the iPhone I’m all over it. Here’s a good writeup on TechAdvisor if you’re interested.

My Market Watch:  Bonds Flat – Now Down Just -5bps.  The Fannie Mae 30-Year Bond is down -5bps since yesterday’s close.  A lender’s rates/pricing generally get worse when the bond is being sold off.  But -5bps is not enough to really affect pricing. Interestingly, Interbank has been issuing mid-day reprice improvements even when the market is flat.  I think this is a strategy to see how the market reacts to morning reports, and then positively adjust pricing if the bond remains stable. Since the bond is actually down this morning, I don’t expect any improvements to pricing at this time.


grease_we_go_together2A-Wop-Baba-Lumop!  My daughter turned 9-years old this weekend and for her birthday we had a party at the house…she invited seven girls.  Being the Super-Mom she is my wife planned games such as charades and had a build-your-own-sundae-bar complete with fruit, whip cream and other and saucy toppings…yum!

For the main event of the party the girls piled into our family room to watch Teen Beach Movie…apparently this is the big thing because all seven girls knew all the words and the dance moves…this is when my wife and I looked at each other and rolled our eyes. The best I can do to describe it is to compare it to Beach Blanket Bingo of the 1960s.  But my generation watched Grease…the greatest of all-time. For the record, I was hopelessly devoted to Olivia Newton John, particularly when she did her Tell-Me-About-It-Stud song…I GOT CHILLLLLS…THEY’RE MULTIPLYING!!!!!

Teen Beach Movie
Beach Blanket Bingo
Grease – We Go Together
Grease – You’re The One That I Want

My Market Watch:  Bonds Up +13ps.  The Fannie Mae 30-Year Bond is up +13bps since Friday’s close.  A lender’s rates/pricing improve when the bond is being bought.

There are not many reports this week so look for geopolitical news to affect markets. As of now the bond is trading in a positive direction and I hope it stays this way. I just read that the one of the Fed members believes QE tapering should be accelerated…that kind of rhetoric doesn’t bode well for bonds.  If you recall, QE tapering is the process of decreasing the amount of bonds the government buys.  Traders shy away from buying bonds on the news of increased tapering. But so far bonds are holding well.  If I see significant trading going one way or the other I’ll let you know….


fire_tom_hanks_castawayFIRE!!!  Here’s a little advice I now offer you after first-hand experiencing this morning…after you buy a delicious pastry from your local neighborhood non-chain coffee shop, and after you bring it home to split and share with your lovely adorable wife, and before you stick it in the microwave for eleven seconds in an attempt to warm it up to the perfect temperature, I strongly advise you take your tasty pastry out of the paper bag the coffee shop person so thoughtfully placed it in.  Of course, if you do not remove your tasty pastry from the paper bag, the microwave will try to do it all by itself.  Voila…FIRE!!!

My reaction to this delightful event was not much different from Tom Hank’s reaction to building fire in the movie Castawayat the 55 second point.

My Market Watch:  Bonds Down -26bps.  Jobs Report Comes In Strong.  The Fannie Mae 30-Year Bond is down -26bps since yesterday’s close.  A lender’s rates/pricing get worse when the bond loses ground…prices are worse today.  Hopefully you followed my advice yesterday and locked in ahead of this morning’s report.

This morning the Jobs Report came in at 175,000 new jobs. That’s a lot more than what was expected…25,000 more.  Since traders only expected 150,000 new jobs to be reported, the economy appears to be stronger than thought.  When traders feel the economy is stronger they want to invest in the stock market, so, they sell off bonds to free up Capital. When traders sell off bonds our rates/pricing worsen.


The Unemployment Rate has a similar analysis.  It came in at 6.7% which is just slightly higher than the expected 6.6%.  Although this means there is more unemployment, which indicates a weaker economy, it wasn’t enough to counter the big Jobs Report number. At best, maybe it kept the bond from losing even more ground.

Because the bond is now trading lower new moving averages are in play.  Traders are watching the bond’s movement to decide when and if it’s a good time to start buying again, or, if they should keep selling.  As long as the bond trading doesn’t escalate one way or the other this afternoon rates/pricing should stabilize.

Below is a 12-month recap of the Jobs Reports, courtesy of MBS Highway:


I Was John Travolta; Jobs Report Tomorrow

travoltaI Was John Travolta.  I must be John Travolta…why else would I put in my post yesterday that I love Jimmy Carson?  JOHNNY Carson…I love JOHNNY Carson.  Man!  So if you’re completely lost as to why I would claim I’m John Travolta it’s because he monumentally screwed up the pronunciation of Idina Menzel’s name when he introduced her at the Oscars.  IT WAS BEAUTIFUL…I’ve watched it a dozen times.  See it here on Conan in first 20 seconds.

Want to master the art of saying the wrong name?  There’s a website for that.  Yes, here you can enter any name and it will tell you exactly how John would say it…here’s your chance to be just like John Travolta. 🙂

jobsreport2My Market Watch:  Bonds Down Just -6bps.  Jobs Report Tomorrow.  The Fannie Mae 30-Year Bond is down but only by -6bps since yesterday’s close.  Generally a lender’s rates/pricing get worse when the bond loses ground.  I usually attribute 0.125 in price to about 20-25bps or so.  So, since the bond is only down -6bps rates/pricing should be the same as yesterday.

Tomorrow are the big Jobs and Unemployment Reports…these reports traditionally has the power to significantly influence trading. A trader’s job is to buy low and sell high. Therefore, traders try to predict what will happen and invest accordingly. If the either report is off, then traders will react based on how well they guessed.

Jobs_Report_AnalysisThe Jobs Report tells us how many new jobs were created in February and the Unemployment Rate tells what percentage is out of work.  If the Jobs Report shows more new jobs than expected (indicating a stronger economy), then traders will invest in the stock market.  In order to free up money to invest in stocks, traders will sell off bonds and when that happens our rates/pricing get worse.  Conversely, if the Jobs Report shows less new jobs than expected (indicating a weaker economy), then traders will sell their stocks and invest in safer bonds instead.  When that happens our rates/pricing get better.  I hope that makes sense.

The Unemployment Rate has a similar analysis…if the unemployment rate goes up, it means a weaker economy, right?  More unemployed = weaker economy.  If the unemployment rate goes down then the economy should be considered stronger.

Traders try to predict what will happen and react sharply when either report is significantly off.  For example, if there are a ton more or less jobs created than expected, then the amount of stocks and bonds traders buy or sell goes up greatly.  It is expected that 150,000 new jobs will be reported and the Unemployment Rate will be 6.6%. The number of expected new jobs seems low to me…I’m betting it comes in higher.  Therefore I advise locking today before the report is published.  But MBS Highway disagrees with me…they think less new jobs will be reported and they are recommending you float your locks until after the report is published.

Please do your own research and rely on the same before you decide to lock or float your loans. Feel free to call me to discuss….

My Disclaimer

She Can Sing! Serious Pipes!

frozen_idina_menzelShe Can Blow!  Man! There are not many singers that have the range and power of Idina Menzel…she has SERIOUS PIPES. And to prove it you have to watch her performance on The Tonight Show with Jimmy Fallen.  As a side note, I love Jimmy Fallen…I always have…he’s the closest thing we’ve had to Johnny Carson, and I loved Johnny Carson. Not to take a shot at Conan, but Jimmy has more range, and he has infectious energy…I just love the guy…serious man-crush.  Anyway, he does a lot of music videos with his guests, and they’re pretty cool. My favorite is Miley Cyrus – “We Can’t Stop” (A Cappella).

The other night he had Idina Menzel on his show to sing Let It Go, from the Disney Frozen movie.  As I said in my post-Oscars post, Frozen is now one of my all-time favorite Disney movies, and this song is the best Disney song so far. YOU GOT TO CHECK OUT IDINA’S PIPES!


bored_ho-humMy Market Watch:  Bonds Flat +6bps.  The Fannie Mae 30-Year Bond is flat, up just 6bps after a big sell-off yesterday.  When traders sell off bonds our rates/pricing get worse.  There really isn’t much going on, and without something more enticing to write about I won’t waste my time, or yours. I’ll keep an eye on things today and if something should spark my interest I’ll fill you in….

Conflict Over Crimea Creating Volatility

Bonds Down -34bps – Nearing Moving Average Floor. The Fannie Mae 30-Year Bond is down -34bps since yesterday’s close. When traders sell off bonds our rates/pricing get worse. More importantly, the bond price has reached a level that is very concerning…it has touched a floor of support and is now testing its strength. I’ll use my Glass Elevator Analogy to explain.

Earlier this morning the bond elevator was heading down to the first floor from traders selling off bonds and then it stopped. But traders want to buy low and sell high…when the bond reached Floor 1 they figured it had reached its low. So, traders started buying bonds again at this low price and the elevator reversed direction and headed back up towards the second floor. c49So, Floor 1 is now a level of support…we expect traders to start buying at this point, unless some news or report gives them reason to keep selling off bonds.  But now the elevator is heading back down towards Floor 1 because traders are once again selling off bonds. The question is, will Floor 1 hold…is it strong enough that traders will start buying again? A trader’s job is to buy low and sell high…as the bond reaches Floor 1, will traders think it’s hit the low and start buying again like this morning? If so, the bond price will reverse and we’ll be safe from rates/pricing getting worse. But if traders continue to sell, and the bond price drops below Floor 1, then you can bet on rates getting worse, probably in the form of a mid-day reprice worsening.

crimeaThe reason for all this volatility is the overseas conflict between Russia & Ukraine over Crimea, and now the U.S. has gotten into the mix. When military action seemed probable yesterday, traders sold off stocks since global markets were considered a bad bet. Trader’s put their money into bonds instead because they figured it was a safer investment and as a result we saw a little improvement in rates/pricing. Since the U.S. got involved Russia has essentially backed down, at least for now, and for that reason traders felt more confident in investing in stocks. Therefore, they invested into the stock market and sold off bonds to free up the capital to do so…this is what is causing this predicament.

Top 10 Reasons We Watch The Oscars

oscars_ellenTop 10 Reasons We Watch The Oscars.  As long as I record the Oscars so I can skip through the boring stuff, I like watching.  I asked my wife and in-laws who were in town this weekend for their top reasons to watch the Oscars:

  1. To see what they’re wearing – per my mother-in-law, Grandma Ellen.
  2. To see what they’re not wearing – per my father-in-law, Papa Tom.
  3. To see all the pretty people – I made this one up although I really don’t care…I just thought it should be on the list. However, it doesn’t pain me to see Charlize Theron and Scarlett Johansson …yowza!
  4. To watch Ellen DeGeneres – per Papa Tom although Grandma Ellen was approvingly nodding her head.  My favorite line was when she told Jonah Hill he revealed something in Wolf of Wall Street that she hadn’t seen in a long time.
  5. To laugh at their stupid acceptance speeches – per Grandma Ellen. This is why I record the Oscars…so I can skip past the mundane.
  6. frozen_idina_menzelTo hear Idina Menzel sing the Frozen song – per my wife, the Travel Mama.  I have to say, Frozen is now one of my all-time favorite Disney movies …right up there with Toy Story, Pirates of the Caribbean, and Finding Nemo. But the song Let It Go is the best Disney song so far and Menzel kills it…in a good way. You can listen to the song in the animated scene.
  7. To find out who won – per papa Tom with a dissenting opinion from Grandma Ellen since you can simply look it up on the Internet after the show.
  8. oscars_u2To watch the Memoriam and see who passed away over the year – per Papa Tom but I agree.  I’m always astonished at how many names I recognize.
  9. To watch U2 perform Ordinary Love – this one is mine because any chance to watch U2 perform live is AWESOME.
  10. AND THE NUMBER ONE REASON TO WATCH THE OSCARS IS ………………… drum roll please ……………….. to watch people get acknowledged for following their dreams – gee, I wonder who said this? Yes, it was me…on this side of the family I guess I’m the sappy one.

My Market Watch:  Bonds Up +17bps From Friday’s Close. The Fannie Mae 30-Year Bond is up +17bps since Friday’s close. When traders buy bonds a lender’s rates/pricing improve…it’s as simple as that.

The stock market is down which is why bond trading is up. As you probably know there is an inverse relationship between stocks and bonds…when traders would rather invest in bonds they sell off stocks to free up capital…most of the time. So, why are traders more interested in bonds rather than stocks?crimea

From what I’m reading it’s because of the conflict overseas between Ukraine and Russia over Crimea which was transferred to Ukraine from Russia in 1954…Russia has taken it back. The potential for war always freaks out traders as it pertains to stocks because global instability affects the global markets…everything is connected in a matter of typing. So, the safe bet is to sell off stocks and invest in bonds instead.

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