Phil Grossfield's Blog

Spock.   I’m a self-proclaimed science fiction geek.  If you’ve been reading my posts for a while, then you probably already know this to be true.  But what you may not have known is that I have a special love for all things Star Trek.  Furthermore, my admiration for Spock, or Lenard Nimoy if you please, is right up there with my all-time favorites.  I will no doubt be writing more about this…for now I haven’t the time to adequately express the loss.

My Market Update – 03/03/2015

Bonds Down -2bps.  The 30-year Fannie Mae bond is down -2bps since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.

Today should be quiet after yesterday’s NASDAQ victory.  Friday is the all important Jobs Report.  The Jobs Report indicates how many new jobs were created in February.  The results change the way traders interpret the economy…either stronger or weaker…and in turn affect their buying and selling behavior with respect to stocks and bonds.  This week trading is only in anticipation of what the actual report will show.  But when Friday hits, a reaction could be dramatic depending on how far off expectations the actual numbers report.  Last month this report killed us and threw the bond market into the gutter for the entire month of February.  On Thursday I’ll have some better information to share…

Michael Jordan Joins Billionaire Club.   My favorite basketball player of all time…nobody can touch MJ…but it had nothing to do with money.  But now he adds his name to to the billionaire club by reaching the $1,000,000,000 bubble.  Here’s the article on CNN Money if you care to read it.  I wonder what leader list he’ll join next…

My Market Update – 03/02/2015

Bonds Down -31bps…Reprice Worsening Possible.  The 30-year Fannie Mae bond is down -31bps since Friday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.

The stock market is performing well this morning and the NASDAQ has hit 5,000 which hasn’t happened in 15 years…this is the reason bonds are being sold off.  Typically traders either invest in bonds or stocks but rarely both.  Moreover, it’s a fair analysis that when traders are investing in stocks, they sell of bonds to free up capital.  When they sell of bonds, our rates/pricing get worse.  Similarly, when investors feel stocks are a bad bet, they sell them off and invest in safer bonds instead which helps our rates/pricing.  But today the former is the case and the latter is a but a dream.

Therefore, if you were planning on locking today, I’d lock in before a reprice for the worse.  If that has already occurred by the time you’ve read this section, then you should check with the bond market to see if there is a chance of further bond degradation, or, call or text me.

This morning’s boost is a confidence maker for the stock market because despite economic data that wasn’t exactly strong in terms of economic strength, the stock market performed well anyway.  This could be interpreted that investors are bully on stocks and that could mean trouble for the bond market this month.  This week is full of economic reports including the all important Jobs Report on Friday.  Last month this report killed us and threw the bond market into the gutter for the entire month of February.  I don’t have an angle on what we might expect just yet, but as I learn more I’ll share it with you. For now, we need to send some positive energy towards that Friday report because we need it if we’re to see any attractive rates in March…

Jackie Robinson or Babe Ruth?   My father-in-law and I got into a debate on who is the most valuable-famous baseball player in history.  I said Jackie Robinson.  He said Babe Ruth.  Despite his vast knowledge of the sport, I say he’s wrong.  Your thoughts?

My Market Update – 02/27/2015

The Greatest Human Behavior Experiment Ever – 30 Seasons Over 15 Years of Survivor!  This year should be one of the most fascinating ever…this year they are splitting the castaways in the beginning by social class…this is the first time they’ve done it this way…nice!

Each year they find some nuance that makes it interesting.  Sometimes they include a famous/notorious castaway such as Jimmy Johnson or the controversial John Rocker…remember him?  Those were interesting episodes.  Or, the theme itself can be incredibly intriguing…in the past they have pitted virtually every protected class against each other including race, creed, gender, age, national origin, sexual orientation, marital status, and even disability.  Each is a fascinating experiment of how people work with and against each other in a hostile environment.

But this year is a first and should prove to be no less intriguing…”Worlds Apart” will start the show with 3 tribes split up based on social class:  White Collar, Blue Collar, and No Collar.  No Collar can best be described as people who break the rules, or don’t go by convention and couldn’t care less about the status quo.

If you ask Jeff Probst, the host since the beginning, he would say the reason Survivor has lasted all these years is fan loyalty…I am proof of that.  What can I say…I’m a die-hard Survivor fan.  My wife dropped out about 7 years ago and my in-laws gave up about 5 years ago.  Now it’s just me and I love it more than ever.  I’M STOKED!

My Market Update – 02/25/2015

Bonds Down -5bps but Down More Since Rates Were Published.  Janet Yellen Testifies Today!
The 30-year Fannie Mae bond is down-5bps since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.Rates are better today than yesterday but that could be short-lived.  Today Federal Reserve Chair Janet Yellen testifies in front of the House….yesterday she testified to the U.S. Senate.  More than anything this testimony will influence traders one way or the other because she will have to answer questions about when to raise interest rates.  Most traders consider this the biggest news because if the Fed times the rate hike incorrectly, it could send the U/S. economy into another depression-like period.  Note the Fed hasn’t done a hike since 2006.To me rates are looking good right now…if any more information comes out I’ll do my best to deliver it to you promptly…

My Disclaimer

No Joan For You!  Oscars Snub Joan Rivers.  Sometimes I just hated her but she almost always made me laugh.  In fact, I’d find myself laughing and then feel guilty that I was laughing and then blame her for my laughing…does that sound about right?  That’s the thing about Joan Rivers…she was tasteless…purposely.

My guess is that many movie stars hated her guts for all the crude, obnoxious, disgusting, abusive, abhorrent, disgraceful, yet mostly funny jokes made at their expense over her career (sometimes there just aren’t enough words in the thesaurus).  Their ultimate revenge…snub her at the Oscars by not acknowledging her in the In Memorium portion of the show.  Mission accomplished.

Some will say she wasn’t a movie star and didn’t deserve her picture on the In Memorium screen.  But that’s a lousy argument.  Let’s face it, Joan Rivers was as much a part of the Oscars as anyone in the industry.  Over the years she was consistently there…a staple to the event.  She coined the question, “so what are you wearing?” making the Oscars as much a fashion show as an awards show. Whatever you thought of her, she deserved to be remembered on the big screen and anything less was a snub, make no mistake about it.

Like I said, sometimes I despised her, but she made me laugh, and she’d take that over me liking her any day.  She had an endless list of quotes to leave behind…but here are just a few…

• If you don’t want gays in the military, make the uniforms ugly.
• I told my mother-in-law that my house was her house, and she said, ‘Get the hell off my property.’
• People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made.
• You know you’re getting old when you buy a sexy sheer nightgown and don’t know anyone who can see through it.
• She’s so pure, Moses couldn’t even part her knees.
• I wish I had a twin, so I could know what I’d look like without plastic surgery.
• A man can sleep around, no questions asked but if a woman makes 19 or 20 mistakes, she’s a tramp.
• Never be afraid to laugh at yourself, after all, you could be missing out on the joke of the century.

My Market Update – 02/23/2015

Could this be our week?!  With a week full of economic reports, falling oil prices, and just two weeks away from a new Jobs Report, we might see some positive momentum to get us closer to where we were at the end of January.But the big news this week is Federal Reserve chair Janet Yellen testifies in front of the U.S. Senate on Tuesday and the House on Wednesday.  More than anything this testimony will influence traders one way or the other because she will have to answer questions about when to raise interest rates.  Most traders consider this the biggest news because if the Fed times the rate hike incorrectly, it could send the U/S. economy into another depression-like period.  Note the Fed hasn’t done a rate hike since 2006.

My Disclaimer

My House Shook – From Anger To Fear.  I was angry.  I thought the kids were jumping off the bed upstairs and making the whole house shake.  I let it go with the first boom but when the second one came I jumped out of my office chair to yell at someone…”STOP JUMPING OFF THE BED,” I yelled.  When I got out of my office both children were on the stairs and pleaded they’d done nothing.  My wife came into the hall as well and the four of us looked at each other.  “What was that?  An earthquake?”  Couldn’t be…I’ve experienced earthquakes…but nothing like this.

I filled with fear.  With the four of us huddled at the bottom of the stairs a third boom came that shook the house so intensely that my arms instinctively went out to my sides for balance.  I suspect the look on my face was full of fear because my wife and kids looked at me, the man of the house, and then they started to scream.  I’ve experienced earthquakes before…but nothing like this.  I ran to the back of the house and locked the door.  Was someone on the roof?  Had a plane fallen from the sky?  What could be so loud and make the house shake like that?

I immediately went into man-mode, “I’m sure there’s a logical explanation for all of this…everyone just calm down while I investigate…everything will be fine…”  But in my head my science fiction fixation began to get the best of me.  Was it War of the Worlds?  Were we indeed under attack my creatures that buried death machines deep under the ground for a future attack?

I went outside and all the neighbors had gathered.  After much speculation the only logical conclusion was a sonic boom.  Apparently aircraft can fly too low, break the sound barrier, and as a result cause a sonic boom.  Well, if it wasn’t a sonic boom, then I hope our environment will be incompatible to the alien invaders.

My Market Update – 02/18/2015

The 30-year Fannie Mae bond is trading flat.  In 2015 we are at the lowest point in bonds.  Will it come back?  MBS Highway seems to think so.  What are your thoughts?

My Disclaimer

Lockdown at School.  This morning our elementary school called with an automated message saying two unknown men were seen jumping the fence and are on campus…the school was on LOCKDOWN.  My instincts were to jump up and go to school…my daughter…I have to get to her and get her out of there.  My son is home sick, thank goodness.  But then the announcement continued…they are prohibiting anyone from coming to campus…stay away is the instruction.

So, my wife and I sat by the computer refreshing the page of the school’s homepage waiting for an update.  My wife is crying…I tell her everything will be okay.  Besides, these types of situations only happen by singles…they do these crazy things on their own…not in teams or groups.  My wife reminds me of Columbine…two there.  At this moment I am as uncomfortable as anytime I can recall.  I decide to go…screw the instruction…I’m going.

Then the call came…all clear…a sigh of relief…but still unsettled as the two unknown men were not identified or located.  But police are on campus and will remain.  We hypothesize…maybe it was two junior high school kids late for class and they jumped the fence so as not to be tardy.  My wife yelled, “I’m going to get her out of there” and she was out the door.

Everything is fine. Big sigh of relief.  Is it too early to have a drink?  What in the hell is going on in this world?

Mid-March.  I am scheduling appointments for mid-March.  If you’d like a visit, please let me know…

My Market Update – 02/10/2015

The 30-year Fannie Mae bond is trading down again -11bps this morning since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.

Friday was ugly…yesterday was ugly…today looks to be ugly.  Simply, stocks are higher.  As you know, there is typically an inverse relationship between stocks and bonds.  That is, traders generally invest in bonds when stocks are not considered a good bet.  But when stocks are looking juicy, traders will invest money they pull out of bonds and when that happens our pricing worsens 99% of the time.  Let me know if this doesn’t make perfect sense…

Moments ago I put out an ALERT that Capital Markets is preparing for a reprice for the worse.  Although they haven’t yet pulled the trigger, and might not just yet, I advise you lock now if you were considering locking today.

My Disclaimer

Austin Hatch – Miraculous.  I was up late last night…just couldn’t sleep. I turned on the TV and within seconds a new feature story was beginning on ESPN entitled, “Miraculous.” That word is certainly appropriate, yet inadequate to describe the story of Austin Hatch.

When Austin was boy he was in a plane crash that took his mother, sister and brother’s life…only he and his father survived. Years later Austin excelled at basketball and was ultimately recruited to the only team he wanted to play for…the college where his Mom graduated…Michigan. But then the second plane crash happened…yep…it happened again. This time his father was taken, and his step-Mom too. Austin suffered a brain injury and was in a coma for 8 weeks. But nothing would stop him… Miraculous.

Dean Smith (1931-2015). “Loyalty to a fault…two words that should never be used in the same sentence.”

Mid-March. I am scheduling appointments for mid-March. If you’d like a visit, please let me know..

Why Analyze The Jobs Market?  Each day I provide some analysis on the markets to give you an idea of what’s going on.  Why do I do this?  What value does it provide to you?

Some think I do it to give you an opinion of whether rates are likely to worsen or improve.  I suppose this is true to some extent…I’d like to think my posts offer some welcomed insight to the potential movement in the markets and in doing so give you a heads-up on pricing changes.  But there’s a far more important reason I do market updates…to empower you.

I am a firm believer that the more you know the stronger and more valuable you become.  How often does your borrower say, “I don’t care if rates go up or down…the rate I lock is not important to me“?  Hmmmm, I bet not often.  My best friend’s father was/is a bit eccentric and he used to insist on buying a new car at the highest list price…he was afraid that if he paid anything less the car wouldn’t come exactly like he expected.  Uh, that’s crazy to me.  I always try to get a decent price for whatever I buy…you should see me get the Girl Scouts to come down in price.

My point is, your borrower wants your opinion on whether to lock or wait for a better rate, right? What are you going to tell them?  Are you going to offer a straight out opinion?  I hope not.  Wouldn’t it be better to discuss what’s going on in the market?  Hell ya!  Offer some insight into what is going on in the market, AND, how the activity is likely to affect rates.  Then ask them their opinion. Ultimately it should be their opinion whether to lock or float and this frees you from being wrong.  Just make sure you make them understand that nobody knows for sure what’s going to happen, and regardless of which direction rates go, you are looking out for their best interests and they need to follow through with their decision.  Let me know if you’d like to discuss…

My Market Update – 02/05/2015

The 30-year Fannie Mae bond is trading down -25bps this morning since yesterday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.  However, because we had a bond rally at the end of the day yesterday after negative economic news out of Europe, pricing is still better than yesterday morning on government programs, virtually the same for Jumbo, and Agency rates worsened just slightly.

Tomorrow is the Jobs Report which always has the power to significantly influence traders’ behavior.  The Jobs Report tells us how many new jobs were created in January.  If the report indicates more new jobs than we expected, traders would be bully on the economy and invest in stocks rather than bonds – when they do our rates/pricing usually suffer.  On the other hand, if the report indicates less new jobs than we expected, then traders would be skeptical as to the strength of the economy and would rather invest in safer bonds than stocks – when they do this our rates/pricing benefit.

The Jobs Report is expected to reveal 230,000 new jobs created in January and the Unemployment Rate is expected t be unchanged.  So, the question is…will the actual report show more or less new jobs in January?  According to MBS Highway, expectations should be spot on, but they are conservatively advising locking.  If the report comes in as expected, then it’s reasonable to assume trading would be neutral with not much movement one way or the other.  However, some feel the Jobs Report may disappoint and reveal far less new jobs than expected.  If this analysis makes the most sense to you then you should advise your borrowers to float their locks to see if improvements are forthcoming.  One more thing to consider…January often makes adjustments for the holiday season since so many employers over-hire for the holidays.  This adjustment has to be taken into consideration when analyzing the jobs market.  My gut tells me we could see an improvement in pricing tomorrow, but rely on your own research and your own gut when making decisions.  Let me know if you would like to discuss…

My Disclaimer

Breaking News – Belechick HexTextGate.  It is believed that Coach Bill Belechick of the New England Patriots sent a hexing text message to Coach Pete Carroll of the Seattle Seahawks just before the end of the Superbowl game last night.  The text came at a volatile moment just after the Seahawks gave the ball to running back “Beast” Marshawn Lynch who pounded his way to the 1-yard line nearly scoring the winning touchdown.  The hexing text came as Coach Carroll was determining which play to run next.  According to sources Carroll received a text from one of Belechick’s coaches upstairs in the booth at Belechick’s direction.  The contents of the text are under investigation but according to reliable sources it convinced Carroll to throw the ball despite having the most prolific running back in the NFL with 3 opportunities to drive the ball 1-yard for the go-ahead score.  Our investigation has revealed that Coach Belechick employs a private detective to discover the transgressions of each NFL coach and periodically uses the same to coerce bad decisions for the opposing team.  Whatever the contents of Belechick’s message to Carroll it was enough to befuddle and induce him to make arguably the worst goal-line call in NFL history.  Belechick denied all accusations saying “In all my years in the NFL I have never considered using a cell phone and wouldn’t know the first thing about sending word messages.”

My Market Update – 02/02/2015

The 30-year Fannie Mae bond is trading down -17bps this morning since Friday’s close.  Generally a lender’s pricing worsens when the bond is being sold off.  I expected a sell off this morning which is why I sent you an alert on Friday afternoon…the signs were all there.  However, PMAC’s pricing is not far from Friday’s so these rates look very strong this morning, particularly the conventional rates.

Friday is the Jobs Report which always has the power to significantly influence traders’ behavior.  As soon as I get a handle on the expectations of Friday’s report, I’ll let you know…  In the meantime, let me know if you have questions…

My Disclaimer