Phil Grossfield's Blog


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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…


Get Ready For A Busy 2015!

creditrepairGet Ready For A Busy 2015!  I’m Yeah, you heard me right…get ready for a busy 2015!  I aint playing either.  There are reasons to be excited about this year. First, foreclosures from years past are maturing.  That is, many borrowers who were foreclosed on in 2008 and 2009 are still waiting for a breath of fresh air, their credit still bruised.  But that’s about to change.  About 25% of renters today spend 50% of their income on rent…can you believe that?!  Seems to me their LO should be in touch with them about ensuring their credit is repaired so they can better their financial position and get back to home-ownership.  Do you feel me?  Can you dig it!  If you’re not calling on them I’m sure another LO would be happy to assist your client.  As my wife would say, “hippity-boppitty-bippity-bip…get going!”  Second, rates are still low!  But we all know this phenomenon will be harder to say soon…and when I say soon I mean this year.  Let’s go!

My Market Update – 1/5/2015

unemployment_rateThe 30-year Fannie Mae bond is trading up +30bps this morning since Friday’s close.  Generally a lender’s pricing improves when the bond is being bought.  Moreover, we have seen a nice rally in the bond market since December 24…see the graphic.


This week is full of market-moving reports.  Wednesday is the ADP Employment report and the release of the Fed minutes from the December meeting.  The Fed minutes always seem to bring some fun to the trading pits.  On Friday is the Non-farm Payroll and unemployment reports…these are the big ones and everyone will be watching closely as an indicator for the next several weeks.

Firearms & Grateful Experiences

Firearms & Grateful Experiences.  I’m not a big fan of guns…but I did own one for a while when I was a law student in my third-year of law school.  You see, I was assigned by a Judge to work on a first-degree murder trial in Minneapolis.  The accused, Leonard J. Richards, was being prosecuted for killing his half-sister for insurance proceeds.  And, since Richards was already serving a life sentence for murdering his tax attorney,  I had to work at the Stillwater Maximum Security Prison.  So, every week after law school I would ride my motorcycle to Stillwater and go through security to work with Richards in the visitation room.  You can imagine my trepidation to be working with a convicted murderer who just so happened to have killed his lawyer.  Anyway, that’s another story for another time.

prisonDuring my visits other prisoners would enter an adjacent visitation room…there was glass in-between the sections of the large room.  Richards would point to a convict and explain what heinous crime he committed …and when I say heinous please consider the full meaning of the word.

gunsIt freaked me out to be near so many hideous repulsive “people
…the things human beings are capable of is mind-boggling.  It wasn’t long before I decided to get a gun.  I bought one and signed up for a class to learn how to shoot, etc.  It was a strange time back then.  The experience changed the trajectory of my life since I had planned to be a criminal defense lawyer.  In hindsight I’m thankful since nothing I have today would likely have occurred if I had chosen that timeline.  I guess that’s the meaning of this post…to be thankful for where I am and for the experiences along the way that got me here.

My Market Update – 12/29/2014

boredThe 30-year Fannie Mae bond is trading at par since Friday’s close.  Generally a lender’s pricing improves when the bond is being bought and gets worse when selling off.  Today neither is happening so you’d expect pricing to be the same as Friday’s close…and it is.

Not much is going on today and despite more economic reports tomorrow I don’t expect too much volatility unless some big news is revealed.  Simply put, there’s just not that much going on right now.  If that changes I’ll try to give you a heads-up…
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