Phil Grossfield's Blog


Monthly Archives: January 2015


cheatiesDeflategate III.  It’s not difficult for a NFL QB to tell the difference between a properly inflated ball and a deflated ball. To wit, Drew Brees, QB of the New Orleans Saints (and formerly the San Diego Chargers) was handed two footballs on Conan O’Brien and Brees accurately judged one football to have 13 pounds of pressure and another to have 11. But he also said this, “throughout the course of a game a ball will come up and you won’t even think about how it feels. You’re programed to go through your read, throw the ball, no excuses. But if we just sat here and kind of gripped one, I could probably tell the difference.”

I want to believe they’re innocent…but now this?! Bill Nye the Science Guy explains the science behind DeflateGate.

appleuniverseiPhone Still Kills.  Many of you took exception when I spoke the truth yesterday about Apple’s dominance in the cell phone space. For the record, any of you claiming your cell phone is better than the iPhone is wrong….sorry, but you are. Your phone is is ugly and inferior in every possible way compared to the iPhone. Sorry…I just type the truth.

My Market Update – 01/29/2015

The 30-year Fannie Mae bond is trading down -14bps this morning since yesterday’s close. Generally a lender’s pricing worsens when the bond is being sold off.

The bond improved yesterday after the Fed meeting probably because there was mention of a decrease in inflation. Bonds hate inflation so when traders heard inflation was less of a concern they invested in bonds. As of now the bond is trading right on the ceiling. Our rates did not improve yesterday afternoon unlike many lenders but our pricing is very aggressive this morning. But with the way bonds are moving right now, I would be concerned we could lose those gains. I advise locking if you have a need-to-lock-soon situation.

ceiling to floor2

My Disclaimer



iPhones Kill! Fed Meets

iPhones Kill!  iPhones Kill.  You know what they say…there are two kinds of cell phone users…those who own an iPhone and those soon to own an iPhone.  Apple reported huge revenue numbers this morning.  They sold $75,000,000 in iPhones in just 3-months…wow.

appleuniverseI have to say, I live in an Apple universe.  I’ve been an iPhone owner since they came out and I’m loyal.  I’ve seen friends and family try other brands and they never hold up.  My wife recently switched to a droid phone made by HTC and she hates it.  Let’s face it, Apple knows what they’re doing…they make beautiful phones that work the way you expect.  Yeah, there is less customization and more common denominator functionality…I say it’s just fine with me.  If you don’t have one, I bet you will soon enough.  As Yoda would say, an iPhone soon will you own.  I’m virtually entirely Apple at this point…iPhone, iPad, iPods for the kids…all I need now is a Macbook Air.  To that end, I need some loans people!

My Market Update – 01/28/2015

The 30-year Fannie Mae bond was trading up +16bps this morning but then dropped quickly to just +6bps and is now back up to +16bps since yesterday’s close.  Generally a lender’s pricing improves when the bond is being bought.  Yesterday the bond started out strong but lost ground over the course of the day…I called it…nailed it!  Today there is early volatility, probably because of the Fed meeting this afternoon and overseas markets.
Today the Fed Open Market Committee ends and although there is no formal statement scheduled the Fed members can be counted on to get in front of the microphone.  Whenever they do the markets could bust a move.  From what I’m reading nobody expects any blockbuster news about monetary policy but make no mistake about it…everyone will be listening to what they have to say.  I feel locking is still prudent until we see some positive momentum in bond trading to get us over the ceiling of resistance.

You Really Think They’re Cheaters?! Deflategate II

Deflategate II.  You really think they’re cheaters?!  After talking to many of you yesterday I know there are a lot of opinions…BUT I DIDN’T GET YOUR EMAILS!  Resend them!

Deflategate I yesterday continues here…  I will say this, I know Brady and Belichick have been accused of cheating before, but c’mon…there’s no way!  Maybe it’s because I’m naive…I like to believe people are innocent.  When OJ was accused I defended him for the longest time…my wife was p.o.’d at me for even considering his innocence.  And when Clinton looked the camera (me) in the eye and said he didn’t have sexual relations with that woman, I believed him (but I also didn’t care).  And when my broker was accused of a straw-buyer scheme in 2007, I initially defended his honor until I investigated and found out the truth.  I guess that’s why I intended to be a criminal defense attorney before I changed trajectories.  I guess I want to believe the best in people.   But Brady and Belichick? C’mon!

My Market Update – 01/27/2015

The 30-year Fannie Mae bond is trading up +20bps since yesterday’s close.  Generally a lender’s pricing improves when the bond is being bought.

The Fannie Mae 30-year bond is dancing on a ceiling of resistance.  That means traders are buying bonds but start selling it off when it reaches a high price (the ceiling), presumably to take gains.  That’s why they call it a ceiling of resistance …it influences traders to stop buying.

The ceiling is a line based on past trends in buying and selling…it helps traders decide if they should keep buying or stop and maybe even sell.  Think about it…if you knew your bonds had reached the highest price, would you keep buying?  Hell no!  This of course assumes you believe in buying low and selling high, and if you don’t, you need to rethink your career.

So, the question is, will traders keep buying and push the bond over the ceiling into another floor of trading?  I think not, at least not today.  It’s my opinion that you should consider locking if you’re under the gun and have to decide quickly what to do.  If you have time to float, then you might want to see what the remainder of the week brings.  I hope that’s helpful…


deflategateDeflategate.  Tom Brady is not a cheater.  Bill Belichick is not a cheater.  Does anyone else out there think this is completely ridiculous as I do?

If you live under a rock then let me explain…the New England Patriots whooped the Indianapolis Colts last week to win a Superbowl appearance this Sunday in Phoenix…but they were accused of cheating. Specifically, the accusation is that footballs used for the Patriots offense were deflated (by 2-pounds which is a lot) making them softer for the purpose of making throwing and catching easier.  Moreover, the accusation is that the deflation of all 12 Patriot footballs occurred just before the beginning of the second half wherein the Patriots scored most of their points.

If you don’t follow football then you wouldn’t know that Tom Brady and Bill Belichick are two future Hall Of Famers.  “Coach Belichick…will go down as the greatest NFL coach of all time,” said Peyton Manning….and if you don’t know who Peyton Manning is then just stop reading this post now…I’m done with you. And Brady, well, he has earned 6 trips to the Super Bowl, won 3 of them, was named MVP in 2 of them, has 2 league MVP awards, has been selected to 10 Pro-Bowls, and has led his team to 12 division titles and has more playoff victories than any other quarterback in NFL history.  In other words, he’s good…great actually…maybe the best.  For the love of all things holy in this land, Brady did not get where he is today by cheating.  Can I get a “Hell Ya!”

One more thing, why isn’t the NFL referees in charge of these footballs?  Can someone explain this to me please?

My Market Update – 01/26/2015

The 30-year Fannie Mae bond is trading flat at 0bps…neither up nor down…par golf.  Generally a lender’s pricing improves when the bond is being bought and worsens when it’s sold off.

This week the Fed meets just after housing data is released. Whenever the Fed meets it makes my spine tingle…usually there is movement in the markets on such an occasion.  I’m really curious to see how trading is affected by the blizzard storm closing in on New York City which is expected to be one of the worst storms in their history.  Suffice it to say, this week could be interesting.  If I were a betting man, which I’m not unless I’m playing poker or Fantasy Football, I’d wager the stock market is going to suffer this week which means the bond market would have a good shot at improving. If I’m right, and you’ll please read my disclaimer below, our rates/pricing would improve.




Ego – Too Much Or Too Little?

curmudgeon2Ego – Too Much Or Too Little?  Too much or too little or just right?  Ego…it causes all the hate in our world…I’m convinced of that.  But some Ego is okay…it can even be helpful…useful.  But let’s focus on the negative, shall we?

I think everyone is born with a big ego.  I often hear people say that babies are born innocent…uh, not so much.  Babies are certainly cute, but make no mistake about it…they are selfish and self-absorbed creatures.  Only over time do humans learn to reduce ego and increase tolerance.  Some people never learn, either because of a genetic in-balance or unfortunate environmental surroundings.  We call those people psychopaths because they lack empathy for others.

Over our lives we humans go one of two directions…we either become more tolerant of others or less tolerant of others.  Another way to say it is that we become more forgiving of others or less forgiving of others.  Those that are less forgiving and less tolerant have huge egos…they want everyone to be like them and if not, well, then they hate…  Baseless hatred is all ego.

You know the old cranky man who sits on his porch and yells at people all day…a curmudgeon…he’s become less tolerant and less forgiving of others over the course of his life.  I hope most of us find the other side where we become more tolerant and more forgiving of others.  We are interested in peace and togetherness.  That’s all I have to say about that.


My Market Update – 01/23/2015

The 30-year Fannie Mae bond is trading up again, THANK GOODNESS!  It is up +22bps this morning since yesterday’s close.  Generally a lender’s pricing improves when the bond is being bought.

After a week of volatility the bond has held it’s ground relatively well.  We’re still in great rate range.  As you can see, over the course of a year the bond has improved and our rates along with it.




jerksJerks.   When someone is being a jackass, you know, a complete jerk, I often say to myself, ‘I wonder what’s going on in their world.’  Everyone has some stuff they’re dealing with and some things are more intense/stressful/painful/traumatic than others.  I’m sure you have some stuff going on in your life too
…I most certainly do.

As an operations manager I sometimes had to deal with an employee who acted out on another…some form of inappropriate behavior or uncharacteristic outburst.  I always asked them if they were okay…was there anything they wanted to tell me, ya know?  I suppose we work with some bona fide jerks2jerks in the world but most are just like you and I (assuming you don’t think I’m a jerk).

But in the end, we have a responsibility to remain professional and treat others with kindness and understanding.  After all, most of the anger we experience is just a form of Ego.  We say subconsciously, “he shouldn’t talk to me that way because I deserve better” instead of subconsciously saying, “gee, I hope everything is okay at home with this jerk.

This is something I preach to my kids too since they often complain about how they are treated by each other or someone at school or sometimes me I suppose. It’s a difficult thing to do sometimes, but I have to remind myself often to give people the benefit of the doubt and presume they are typically kind.  That’s all I have to say about that.


Ghost Boy

ghostboyGhost Boy.  Unimaginable. He was in a coma, a vegetative state, for 12 years…but fully aware of what was going on around him. Every morning his father would give him a bath, feed him dinner, put him to bed, and then wake up every two hours to turn his body so he wouldn’t get bed sores. 12 years…12 YEARS!

Today, Martin Pistorius is free from that coma and is living in Harlow, England with his wife. He uses a computer to speak and a wheelchair to move around.

Did you ever see that movie Awakenings with Robin Williams? That’s what I keep thinking about. But in that movie Robert De Niro’s character didn’t remember things while in the vegetative state whereas Martin remembers everything. His book was released in 2013…I think I’ll have to read this one.

My Market Update – 01/14/2015

The 30-year Fannie Mae bond is trading up +28bps this morning since yesterday’s close. Generally a lender’s pricing improves when the bond is being bought.

A variety of reports including Retail sales have given traders a reason to conclude the economy is weaker. When traders feel the economy is weak they’ll pull money out of stocks and invest in bonds instead…it’s a safer bet.

Moreover, the bond has broken through a ceiling of resistance and is now trading north of that ceiling. If it holds, the ceiling will turn into a floor and provide support for better rates. This is very encouraging! Let me know if you want to discuss…

ceiling to floor


Terrorism Post Response – No Surprises in Jobs Report

Terrorism.  In response to my Terrorism post, I received this comment from a reader and I appreciated it so much I thought I’d share it with you:

terroristLike you wrote, terrorism is here to stay. Whether it is homegrown or foreign. This is actually a good thing that the markets and investors are not reacting or overreacting. The reason being is that terrorists are not getting the power pull by causing the market to take a big swing. It is just like all the mass media attention these terrorists are getting right now. This just empowers more People who crave this kind of attention to go out and copycat. We need to stop glorifying the terrorists. We need to spend more time glorifying good deeds. When was the last time you saw this much media attention on something good???? I cannot remember a time and I am 47 years old. When we continue to glorify and give more attention to the bad we create more bad. We need to stop and start glorifying the good. If you want to put a few blips on the screen “hey have you seen these 4 men driving a stolen car, please call police.” that is it. All this iPhone coverage of the actual killings and the shooting of an innocent bystander is wrong. We need to stop. The markets have it right, don’t react and we keep the power and not give it away to terrorism.

My Market Update – 01/09/2015

The 30-year Fannie Mae bond is trading up +42bps this morning since yesterday’s close.  Generally a lender’s pricing improves when the bond is being bought.  We’re seeing some volatility in trading…the bond was down to +30 just a few minutes ago and then bounced back up to +42bps again.  I suspect traders are taking quick profits.  Today pricing is about 0.250 better than yesterday.  I’m advising locking now…I’ll explain below.

wagesToday’s Jobs Report came in pretty much as expected.  We expected 245,000 new jobs but 252,000 new jobs were reported.  This isn’t significantly higher, so why are trader’s investing in bonds?  Wages…that’s why.  Wages remain weak and actually fell in December.  Lower wages indicate that there isn’t much inflationary pressure.  Since bonds hate inflation, a report indicating less inflation makes bonds attractive.  Moreover, less inflationary pressure encourages the Fed to keep rates low.  For all these reasons, and with a Jobs report that is par with expectations, traders are investing in bonds and when that happens our rates improve.

All that said, I think you should take advantage of the increased prices and lock now.  Even though the Jobs Report was not much higher than expected, adjustments to previous months were higher making 2014 the biggest jobs growth month since 1999.  I suspect these facts will slowly work its way against bonds and by the end of the day I wouldn’t be surprised to see a mid-day change for the worse.  Therefore, if my Mom asked for advice and needed to lock soon, and since I love my Mom, I’d tell her to lock.

My Disclaimer

Be More Attractive…Scientifically! Jobs Report Analysis & Prediction for Tomorrow

scarlettjohanssonBe More Attractive…Scientifically.  Want to be more attractive?  According to scientists, all you have to do is a few simple things.  Believe it or not, men are attracted to women who wear less make-up…we like the more natural look.  I concur.  And we also like a woman who smiles.  I concur.  Women are attracted to men that have a straight face and wear red.  Yep, smile less and put on some bright clothes and the women will be all over you.  Don’t believe me?  Check it out.  And for the record, yes, I love Scarlett Johansson.

My Market Update – 01/08/2015

The 30-year Fannie Mae bond is trading down -8bps this morning since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off. Yesterday we lost some ground after back-to-back increases in bond activity.

Tomorrow is all about the Jobs & Unemployment Report.  Yesterday I posted my analysis.  Today, I’ll address expectations.

Once the Jobs and Unemployment numbers are reported, we can predict how the markets will react.  But what about now in anticipation of the reports?  It is expected that 245,000 new jobs will be reported and the unemployment rate will decrease just a tick to 5.7%.  Now that we have our expectation, the only thing that matters is whether the actual numbers will be more or less.

jobsreport2If the actual jobs number comes in as expected, then it is logical to assume there will be little activity since most traders have already made adjustments in anticipation of the report.  However, if the actual number comes in significantly higher or lower than expectations, then traders will react per my analysis yesterday.  For example, if tomorrow it is reported that only 200,000 new jobs were created in December, 45,000 fewer than expected, then traders would conclude the economy is weaker than expected.  That should make sense…fewer new jobs must mean the economy isn’t doing as well as we thought, right?  But if many more new jobs are created than expected, say 300,000, then traders would logically conclude the economy is stronger.  Remember, traders typically sell bonds when they think the economy is strong and buy bonds when they think the economy is weak. When they buy bonds our rates improve and when they sell off bonds our rates get worse.

Also, a quick explanation of the unemployment rate is warranted. A higher  unemployment rate means there are more people out of work than expected which will be interpreted as a weaker economy.  A lower rate means fewer people are out of work which is interpreted as the economy is stronger.  In my experience, this report is less likely to vary significantly from expectations…but if it does then the analysis is the same.

MBS Highway thinks we might see a lower than expected report on new jobs.  Per a Bloomberg article you could conclude the numbers are likely to come in as expected.  Economist Brian Jones thinks the number will come in high at 305,000 new jobs.  The simple truth is nobody knows what’s going to happen.  You can survey 20 economists and get 20 different opinions.  Hell, they’ll even differ on what color outfit President Obama is likely to be wearing during his speech in Phoenix today.  For what it’s worth, my gut tells me the actual number will come in slightly lower than expected and as a result we could see a tick improvement in rates/pricing.  As always, I feel it’s important you understand the analysis to give you talking points with your borrowers.  The more knowledgeable they perceive you, the more likely they will trust you…and it’s all about trust. Just be careful not to firmly predict the outcome, and for the love of all things holy in this land, don’t tell them to lock or float.  Instead, explain the analysis and then let them make the decision.  Your feedback is welcome…


Terrorism; Jobs Report – How Will You Advise Your Client?

Terrorism.  Unfortunately it’s here to stay. Traders typically view terrorism as bad for the economy since it has a potential effect on global markets.  Therefore, traders usually stray away from investing in the stock market when terrorism strikes. terrosimThis typically will result in more investments in the safer bond market and when that happens our rates/pricing improve.

Strange isn’t it…terrorism can actually benefit us in the form of improved rates/pricing.  But not today.  Despite the brutal terrorist attack at a French satirical magazine, which published a cartoon depiction of Muslim prophet Muhammad, the markets appear unaffected. This surprises me. Have we gotten to a point where terrorism is so mainstream, like this terrorist attack that left 12 dead including 2 police officers, that traders just aren’t swayed by it anymore? Lord help us.  Click the graphic for more details at CNBC…

My Market Update – 01/07/2015

The 30-year Fannie Mae bond is trading down -20bps this morning since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off. This was expected after enjoying gains since December 24…that is, we expected traders to take gains and as a result bonds were poised for a reversal.

Now the focus turns to Friday’s Jobs & Unemployment Reports.  Each report is an indicator as to the perceived strength or weakness of the economy.  Trader’s will interpret these reports in this way…more jobs equals a stronger economy and conversely fewer jobs equals a weaker economy. Traders will typically invest in stocks if they feel the economy is stronger and in bonds if they feel the economy is weaker…it’s one or the other…rarely both.  This inverse relationship isn’t always true, but almost always can be relied upon in your analysis and counsel to your client borrowers.  Most importantly, as it pertains to mortgage rates/pricing, if traders sell off bonds to invest in stocks, then rates/pricing worsen but if they buy bonds then rates/pricing will improve.


I’m a firm believer that the more information you can provide your clients serves to reinforce their confidence and trust in you. They want your opinion, right?  The question they’ll ultimately ask of you is, ‘will rates get worse and should I lock now, or, will rates improve and should I hold off on locking?’ How will you advise them?  Short of giving an actual opinion and being potentially wrong, I advise you explain how it works coupled with a disclaimer that it’s impossible to know for sure.  Of course, if you’re Dan Aykroyd or Eddie Murphy, then you’ll already know the results of the report and you’ll be looking and feeling good.  Let me know if you want to discuss the upcoming reports in more detail…


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