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July 25, 2024

Future Mortgage Rates: Insights and Predictions with Dan Habib

Curious about when mortgage rates will finally drop? Join Mike Mills and Dan Habib from MBS Highway as they explore the future of mortgage rates and what real estate professionals need to know. They discuss inflation's impact, the Fed's role, job numbers, and the potential for a refinancing boom. Dan also shares insights on national debt and his company, Crypto Charged, which helps investors navigate the cryptocurrency market.

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The Texas Real Estate & Finance Podcast with Mike Mills
Future Mortgage Rates: Insights and Predictions with Dan Habib
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Investing Mortgage Housing Market

Curious about when mortgage rates will finally drop and spark new housing demand? Join Mike Mills as he dives deep with Dan Habib of MBS Highway to uncover the future of mortgage rates and what real estate professionals need to know!

In this episode, Mike Mills sits down with Dan Habib, Executive Vice President of MBS Highway, to discuss the future of mortgage rates. They explore critical topics such as inflation's impact on mortgage rates, the Federal Reserve's role, and the accuracy of job numbers. Dan provides insights from his recent attendance at a Fed meeting and discusses the potential for a refinancing boom. They also delve into the national debt and how MBS Highway prepares for its daily show. Finally, Dan shares valuable information about his company, Crypto Charged, which helps people understand and invest in cryptocurrency.

Key Takeaways

Inflation's Impact on Mortgage Rates

Inflation plays a significant role in determining mortgage rates. As inflation rises, mortgage rates tend to increase because investors demand higher returns to offset the eroding value of fixed-rate returns. Understanding this relationship helps real estate professionals anticipate rate changes based on economic conditions.

Federal Reserve's Influence on Rates

The Federal Reserve's monetary policy, including interest rate adjustments, significantly affects mortgage rates. Dan discusses how the Fed's decisions are influenced by inflation and employment data, and what real estate professionals can expect in terms of future rate cuts or hikes.

Accuracy of Job Numbers

Job numbers reported by the Bureau of Labor Statistics (BLS) have shown significant discrepancies, impacting economic forecasts and market reactions. Dan explains the reasons behind these inaccuracies and how they can affect predictions for mortgage rates and the broader economy.

Potential for a Refinancing Boom

As mortgage rates are expected to decrease, there is a potential for a refinancing boom. Lower rates can lead to increased refinancing activity, offering opportunities for real estate professionals to help clients reduce their mortgage payments and secure better loan terms.

Crypto Charged: Navigating Cryptocurrency Investments

Dan introduces his company, Crypto Charged, which aims to educate investors about cryptocurrency. He emphasizes the importance of understanding crypto markets and how real estate professionals can diversify their investment portfolios with informed decisions in this emerging field.

00:00 - 05:00

Introduction and Overview

  • Mike Mills introduces the Texas Real Estate and Finance Podcast.
  • Discussion on the primary question in real estate: "When are rates coming down?"
  • Introduction of guest, Dan Habib, Executive Vice President of MBS Highway.

 

05:00 - 10:00

Current Mortgage Rates and Future Predictions

  • Dan Habib shares insights on current high mortgage rates and factors influencing them.
  • Detailed discussion on inflation's role in rate changes.
  • Overview of Federal Reserve's actions and their impact on mortgage rates.

 

10:00 - 15:00

Inflation, Job Market, and Fed's Role

  • Explanation of core inflation and its measurement.
  • Impact of job market conditions and unemployment rates on Fed decisions.
  • Dan's perspective on the reliability of BLS job data and its revisions.

 

15:00 - 20:00

BLS Data and Market Reactions

  • Analysis of the BLS's business and household surveys.
  • Discussion on the discrepancies between job creation numbers and unemployment rates.
  • Insight into the Fed's dual mandate of stable prices and full employment.

 

20:00 - 25:00

Fed's Rate Cut Predictions and September Meeting

  • Predictions on the timing and impact of the Fed's rate cuts.
  • Highlights from Dan's attendance at the Economic Club of Washington, D.C. event.
  • Powell's comments on inflation and labor market conditions.

 

25:00 - 30:00

Government Spending and Debt Impact on Rates

  • Examination of the impact of government spending and national debt on mortgage rates.
  • Analysis of current government expenditure levels.
  • Discussion on the Treasury's role in bond market supply absorption through buybacks.

 

30:00 - 35:00

Impact of Treasury Auctions and Market Dynamics

  • Discussion on how treasury auctions and bond supply affect mortgage rates.
  • Explanation of the large amounts of debt being issued and its absorption by the market.
  • Push-pull relationship between economic data, inflation, and government spending.

 

35:00 - 40:00

Fed's Balance Sheet and Quantitative Easing

  • Detailed explanation of the Fed's balance sheet reduction strategy.
  • Discussion on quantitative easing (QE) and the Fed's asset purchase policies.
  • Impact of the Fed's reinvestments and Treasury buybacks on market supply.

 

40:00 - 45:00

Future Rate Predictions and Market Expectations

  • Dan's predictions on future mortgage rates by the end of 2023 and 2024.
  • Discussion on factors influencing rate changes, including potential recession impacts.
  • Expected rate levels and their implications for the housing market.

 

45:00 - 50:00

MBS Highway and Market Insights

  • Overview of MBS Highway's services and tools for mortgage professionals.
  • Discussion on the value of market data and analysis provided by MBS Highway.
  • Introduction to new tools and features, including List Reports and the Home Report.

 

50:00 - 55:00

Housing Market Trends and Projections

  • Analysis of current housing market conditions and inventory levels.
  • Predictions on home price appreciation and market demand.
  • Factors influencing housing market trends, including household formations and new constructions.

 

55:00 - 60:00

Crypto Charged and Cryptocurrency Insights

  • Introduction to Dan's crypto-focused company, Crypto Charged.
  • Overview of cryptocurrency market analysis and investment strategies.
  • Discussion on the potential of Bitcoin and other cryptocurrencies as investment assets.

 

60:00 - 65:00

Final Thoughts and Closing Remarks

  • Importance of staying informed and educated in the real estate and finance markets.
  • Encouragement to explore MBS Highway and Crypto Charged for valuable insights.
  • Closing remarks and appreciation for listeners.

 

Guest Bio

Dan Habib

Dan Habib is the Executive Vice President of MBS Highway, a premier resource for mortgage professionals. With a deep understanding of the mortgage-backed securities market, Dan provides daily updates and insights that are essential for mortgage professionals. His expertise extends to job numbers, inflation, bonds, and overall market trends, making him a vital source of information for those in the real estate finance sector. Dan's extensive knowledge and ability to break down complex financial data have made him a sought-after speaker and commentator in the industry. He is also involved in the cryptocurrency space through his company, Crypto Charged, which aims to educate investors on the crypto market.

 

MBS Highway

  • Website: https://www.mbshighway.com/
  • Description: MBS Highway provides mortgage professionals with up-to-the-minute information on the mortgage-backed securities market, including daily updates and insights to help make informed decisions.

 

 

Transcript
Mike Mills
(0:19) Well, hello, all you web surfers out there today. (0:22) This is the Texas Real Estate and Finance Podcast, and I am your host, Mike Mills, a North Texas mortgage banker with Geneva Financial. (0:30) And do you know what the number one question on everyone's mind is these days when it comes to the real estate market?
 
(0:36) Well, whether you're a realtor, a lender, or a title rep, or even vendors that sell to everybody in the business, the number one question on everyone's mind is when are rates coming down? (0:46) We've been spinning around in this 7% to 8% mortgage rate land for the last two years, and I, like many of you, are really ready to put all this behind us. (0:53) And today we are going to show you why our wishes are going to be granted probably pretty soon.
 
(0:59) So what I want to do is introduce you to our guest today. (1:03) Now I talk about mortgage rates all the time on the show, but today I want to reveal my secret source to all my rate knowledge and insight because I'm just a mortgage rate novice when it comes to today's guest. (1:14) So his daily updates on MBS Highway are a must-watch for me each and every morning, and I am so pumped to nerd out with him today about job numbers, inflation, bonds, and the market.
 
(1:24) So please welcome to the podcast the Executive Vice President of MBS Highway, Mr. Dan Abib. (1:28) Dan, how are you doing, sir?
Dan Habib
(1:29) Mike, I'm doing good, man. (1:30) It's great to be with you.
Mike Mills
(1:32) Thank you so much. (1:33) I appreciate you hopping on. (1:34) I know you guys, you know, you all do this stuff every single day, which we were chatting about it a little bit beforehand about how you guys pull this stuff off, and I try to do it once or twice a week and I can barely keep up.
 
(1:44) So I'm truly impressed with the depth of knowledge that you guys give. (1:47) And honestly, like I pull a lot of my information and sources from you all because you give so much information. (1:53) I'm so excited to have you here because I really want to kind of dive into this, some of this stuff that you guys talk about each week.
 
(1:58) So right off the top, because, you know, kind of what I really want to dive right into it is, you know, when we look at where rates are right now, okay, what is it that you think, where do you think things are headed ultimately in the near future? (2:13) Like, where are we going to, you know, within the next six months? (2:16) Are we coming back down?
 
(2:17) Is it going to come hard? (2:18) Is it going to come slow? (2:19) Like, what are you guys seeing just right off the top?
Dan Habib
(2:22) Well, you know, rates have been, you know, peskily high for quite some time. (2:27) And there's several factors that go into it, right? (2:31) But to answer your question, you know, succinctly, I think rates are going to start coming down.
 
(2:37) But, you know, to put an exact number on it or to give you an exact timeline is definitely difficult because there's so many moving parts. (2:45) But I'll tell you this, the biggest influencer, at least historically speaking, and still has a big influence today is inflation, right? (2:53) So inflation, you know, the definition, too many dollars chasing too few goods.
 
(2:58) It's really the rate at which the price of goods and services is rising or falling. (3:04) And we've been in the last several years, a very high inflation environment. (3:09) Now, the Federal Reserve has tried to quell that by hiking the Fed funds rate five and a quarter percent.
 
(3:15) And we're seeing inflation now get a lot closer to the Fed's target of 2 percent on core inflation. (3:22) But there's some, you know, misconceptions out there that that means that inflation is now gone or something like that. (3:28) It's important to note that the inflation that we've seen over the last, let's say, a few years, which has been over 20 percent, that's still there.
 
(3:36) Right. (3:36) It's just the future rate of prices continuing to go up right has now come down in line with or close to the Fed's target. (3:44) But make no mistake about it, unless you see negative inflation, the prices of goods and services aren't going to come down.
 
(3:50) They're just going to go up more slowly at what the Fed would consider like a tolerable Goldilocks rate of 2 percent. (3:58) So that's an important thing to know. (3:59) But inflation, we've recently seen rates behave a little bit more because inflation has come down.
 
(4:05) And we take a look at, you know, the CPI report, which is one of the big inflation readings out there, the core reading, which when I keep saying core reading that strips out food and energy prices. (4:16) And that's what the real focus of the Fed is. (4:18) You might say, why don't they want to look at food and energy prices, because we spend a lot of our money on that.
 
(4:23) But the Fed wants to kind of look at what they feel they can control or influence with their monetary policy, meaning, hey, we're hiking rates, is this getting inflation down and food and energy prices can be influenced by extraneous things like, let's say, geopolitical turmoil. (4:39) They can hike all they want. (4:40) If you have all kinds of geopolitical turmoil that causes the price of oil to go up, they can't really have an impact there.
 
(4:45) Right. (4:45) Or you could have bird flu or bad weather for food products and stuff. (4:49) Right.
 
(4:49) So they strip that out and they look at the core because that will give them the best kind of like barometer on if they're getting inflation under control and if their monetary policy is working. (4:59) So they have this kind of 2 percent target. (5:02) And the Fed's everybody wants to know, when is the Fed going to cut rates?
 
(5:06) Right. (5:06) So the Fed has made it very clear that they're not going to wait for inflation to get to 2 percent before cutting because that would be waiting too long. (5:15) There's lags with monetary policy.
 
(5:18) So they want to be confident that inflation is heading there. (5:21) So inflation coming down is definitely helping. (5:24) And I think it will continue to come down.
 
(5:26) And that will help mortgage rates. (5:28) But there's other influences out there as well. (5:31) The job picture, seeing the unemployment rate go up, which we have been seeing, that certainly is going to be helpful.
 
(5:38) If we saw a recession, the economy would slow. (5:41) Inflation would come down and that would help mortgage rates. (5:44) If the Fed starts cutting, which we can get into when I think the Fed is going to be cutting stuff.
 
(5:49) But when they do, a lot of people think that that's going to help mortgage rates come down. (5:53) Now, I will say that the Fed, they're hiking. (5:56) And cutting something called the Fed funds rate.
 
(5:59) That's not like they're they're not cutting 30 year mortgage rates, but it can have an influence. (6:05) When the Fed hikes or cuts rates, what's directly impacted is things like your short term treasuries, your credit card rates, your car loans. (6:13) And all of those have gone very, very high thanks to the Fed hiking so much.
 
(6:18) And we've also seen mortgage rates go up. (6:20) But, you know, that's mostly because of inflation as well as debt, right, which we get into. (6:26) But but when the Fed starts cutting, you know, I don't think it's so much that the Fed is going to be cutting 25 basis points that that's going to in its own right help mortgage bonds.
 
(6:36) But the perception is, hey, if the Fed is finally cutting rates, then we've won the battle on inflation. (6:42) And if inflation continues to come down and the Fed's cutting and now it's perceived that that's the case, that can cause the long end of yield. (6:50) It's to come down.
 
(6:51) But inflation is usually the biggest driver of long duration bonds or rates, because, you know, if you think about it, let's just say I wanted to borrow one hundred thousand dollars from you, Mike. (7:03) Right. (7:04) So, you know, if it's a long duration loan, you know, if inflation is on the rise, well, you're going to get a fixed rate of return every month for the next 30 years.
 
(7:16) Well, if inflation is going up, you know, that fixed return you're getting, it can buy less and less and less and less. (7:23) So you might not be able to do anything about the loan that you gave me. (7:26) But, you know, if Mike comes in or Joe comes and says, Mike, can I borrow one hundred thousand dollars and inflation has gone up, the only thing you can do to kind of protect yourself from that erosion due to the inflation of your fixed return is to charge a higher rate.
 
(7:40) Right. (7:40) So this is like an oversimplified example. (7:42) But the bottom line is, is that when inflation is rising, rates go up.
 
(7:47) You have to, you know, the investor is going to determine or require a higher rate of return to combat the faster pace of erosion due to inflation. (7:54) Right. (7:54) But the opposite is also true where when inflation is coming down, usually long duration rates will come down as well with it.
Mike Mills
(8:02) Right. (8:02) So, you know, one of the things that you guys talk about, you brought up just a minute ago was, you know, when the Fed looks at what they decide to do for their Fed funds rate, they have the dual mandate. (8:11) They have to have stable prices, which is the inflation number that comes into play.
 
(8:15) And then they have to have full employment, which is where the job numbers come into play, which is why those are the main two metrics that the Fed is watching and looking at every single month to see where they go, determining whether or not they're going to hike, they're going to pause or they're going to cut. (8:28) Right. (8:28) Yes.
 
(8:29) So one of the things that I've also seen on your show lately and Danielle DeMartino Booth, who you all did a webinar with recently, has really been on this, who's one of my favorite followers as well, is these numbers that we're actually getting from the not from the Fed, I'm sorry, from the BLS related to inflation and related to these jobs are having massive revisions there. (8:53) You know, you guys recently talked about the birth death model when it comes to the birth and death of businesses, when it comes to figuring out jobs. (9:00) So all of these numbers have seemed to be, let's call it disingenuous or just bad data.
 
(9:06) OK, we can or bad, old, outdated formulas, whatever you want to call it.
Dan Habib
(9:10) Right.
Mike Mills
(9:10) So why do you think we have seen such, you know, especially with today's technology and access to information that we have in real time as it is, do we do you think the Fed's relying on outdated, you know, formulas to come up with this? (9:26) Do you feel like there is any kind of, you know, we're trying to make the economy look like it's in good shape because we're in an election year. (9:32) We got to make sure everything's looking rosy.
 
(9:34) What are you guys seeing on your end that you think why there's been such a disparity in some of these numbers versus what they give us initially and then the revisions that come later?
Dan Habib
(9:42) Yeah, so it's a good question. (9:44) And it's one that I don't know if anybody knows for certain as far as why the data has been so unreliable. (9:52) The BLS is the ones that release the jobs report every month, which is arguably the most important report on the health of the economy that we get, which is normally the first Friday of every month and has big market implications.
 
(10:05) The Fed is making monetary policy decisions on the most important assets, you know, in the world, essentially based on this data. (10:13) So you would hope that it's right and isn't flawed. (10:16) But boy, after looking at the data for as long as I have, especially over the last two years, you almost think they should drop the L in the BLS, because I'll explain it to you.
 
(10:28) So it is. (10:30) It's a hard Herculean task to come up with an economy of our size, how many jobs in net are created or lost every single month.
Mike Mills
(10:38) Absolutely.
Dan Habib
(10:38) Right. (10:39) And the BLS is trying to give you every month a pretty real time estimate as to what's happening with the labor market. (10:47) Now they have their jobs report.
 
(10:50) They have like two surveys within one of them is called the business survey. (10:53) One of them is called the household survey. (10:54) So in the business survey, what they're doing is they're looking at about six hundred sixty six thousand establishments or businesses across the U.S. And there's a lot of modeling and sampling going on there. (11:07) And they also use something called the birth death ratio of businesses, which this has been responsible for the majority of the job gains that we've seen. (11:16) And it doesn't really make a lot of sense. (11:19) I mean, I don't see in net so many of these businesses being created out there in this economy right now, but.
 
(11:25) Without the birth death model, I mean, in a lot of months this year, this past year, you would have seen like almost no job growth, but it has been responsible for two hundred, three hundred, sometimes thousand job creations out of thin air. (11:38) And what they're really doing with this birth death ratio is they get a lot of data from some larger businesses. (11:43) They're trying to estimate what small business job growth looks like, and they don't have the resources of the data to get that.
 
(11:49) So they try to estimate how many businesses came online versus how many came offline and how many jobs that accounts for using historical numbers over the last five years. (12:02) Right. (12:02) Oh, I mean, has there been anything that happened over the last five years that might skew these adjustments?
 
(12:06) I mean, possibly, yeah, there's a few events. (12:08) Right. (12:08) So the bottom line is this.
 
(12:11) The BLS releases their headline job creation number from the business survey. (12:16) And then after they release it, what they've been doing is releasing what appears to be a really blockbuster number. (12:22) The market reacts negatively.
 
(12:24) You see a sell off in the bond market, but then they revise that number over the next two months. (12:31) So they have their own revisions that they do, and they have been revising the numbers to the downside almost every single month. (12:38) So far, just this year, the average revision is about fifty thousand to the downside each month.
 
(12:44) That's a big amount of jobs. (12:45) That could change materially if it's a strong report or a weak report. (12:50) So last year, they overstated job growth on their own right by about three hundred sixty thousand.
 
(12:56) Right. (12:56) So you have that then. (13:00) Following many, many months later, you get the actual data from the census and they look at the job numbers and even after the BLS is own revisions, they do their own revisions on it.
 
(13:12) And this is in six hundred sixty six thousand establishments. (13:15) This is eleven point nine million establishments. (13:19) So it is the actual data that the BLS is trying to give you a real time estimate of.
 
(13:25) Right. (13:25) Problem is, is it's old now. (13:28) Right.
 
(13:28) I mean, the latest data that they're releasing is from Q4 of last year. (13:31) I mean, here we are about to be in Q3 of this year. (13:35) Right.
 
(13:35) So it's old. (13:36) So the market doesn't really react, even though what the data is showing us is that even after the BLS overstated job growth in their own revisions by about three hundred sixty thousand last year. (13:48) The QCW, quarterly census of employment and wages, people are estimating that this is going to show like almost eight hundred thousand in overstatements.
 
(13:56) So, you know, that is a really material number. (13:59) I mean, essentially one in four jobs at the BLS that happened last year may not happen. (14:04) And then there's other revisions that have to happen based on that, too.
 
(14:07) Which means, you know, when you look at the income numbers and stuff like gross domestic income, a lot of this is based on if you have a job. (14:16) But now, if all these jobs that you thought were there weren't there, all those other numbers have to get revised over, too. (14:22) So I think it's it's showing that the economy and the job market certainly wasn't as strong as the market believed, thanks to the BLS is either inaccuracies or, you know, listen, some people out there say that in election years there could be pressure.
 
(14:36) I don't like to get into conspiracy theory type stuff. (14:38) And I certainly don't know enough one way or the other on what the influence is. (14:42) But either way, the numbers haven't been good or accurate or great.
 
(14:45) Right. (14:45) But then here's what's interesting is that, you know, we just talked about the business survey within the jobs report, but they also have something called the household survey. (14:53) And funny enough, that's where the unemployment rate comes from.
 
(14:56) So the numbers that you're seeing on the headline job creation number has no impact on the unemployment rate at all. (15:01) In fact, they look at the household survey where they collect the data in a different way. (15:06) Now, there's not revisions to the household survey because they are actually phone calling about 60,000 households.
 
(15:14) So based on how many people we have, how many households, I mean, you know, it's probably like each phone call represents like five thousand people or something. (15:21) Right. (15:22) And you might think that that's like, you know, going to have a lot inaccuracies.
Mike Mills
(15:27) And it's also all statistics are done.
Dan Habib
(15:28) You can't know the statistics, though. (15:31) Once you reach a certain size, things don't change that much. (15:34) Right.
 
(15:34) Yeah, it is. (15:35) It is a statistically sound number and that has its own job creation component within it. (15:41) And boy, you just look at the last job report.
 
(15:44) One of them showed like, you know, it's like two hundred thousand job creations. (15:48) The other one showed four hundred eight thousand job losses. (15:50) So the difference between their own report was like six hundred eighty thousand jobs.
 
(15:57) Yeah. (15:57) So, I mean, they're collecting the data in a different way, but that's a pretty crazy discrepancy to have within the same jobs report. (16:04) One shows you lost four hundred eighty thousand jobs from calling people.
 
(16:07) The other shows you gain, you know, two hundred or lost four hundred eight thousand. (16:12) And the other shows you gain two hundred eighty thousand. (16:14) Right.
 
(16:14) I mean, that's crazy. (16:15) Yes. (16:15) That is where the household survey, though, is where you get the unemployment rate from.
 
(16:19) And that has been getting the Fed's attention because that was a couple of months back, three point eight. (16:26) And then it went to three, nine, four. (16:27) Now we're at four point one percent highest level in almost three years.
 
(16:31) And to what you mentioned, the Fed has the dual mandate, stable prices, meaning two percent core inflation and maximum employment. (16:40) Meaning they don't want to see their own plan. (16:41) We go too high.
 
(16:42) So, you know, in summary, on the job picture, it's been getting weaker. (16:47) We've been seeing a big overstatement from the BLS on the jobs data. (16:51) But now that we're starting to get some of the revision data, it's becoming clear that, you know, job market was even weaker than we thought it was in the end of last year and really all during last year.
 
(17:00) And so far this year, we're definitely seeing the job market cool off. (17:04) And it's something that's got the Fed's radar. (17:06) You know, the Fed, if you ask me, I think they're behind the curve and they should be cutting July 31st.
 
(17:11) But it seems like to me they're going to probably start cutting September 18th. (17:15) And, you know, Mike, if you want to pull up picture here, I did have a pretty cool real quick.
Mike Mills
(17:21) That's the frustrating part of it is that we're in a situation where the, you know, (17:26) the Fed, who is ultimately the ones making the decision on when rates are going to (17:31) be cut, is using data that as based off of what we know, because, I mean, in the (17:36) quarter three of twenty twenty three, there was I think the number was from the (17:40) headline number to the actual number that was reported after the numbers had come (17:44) in.
 
(17:44) It was like seven hundred thirty thousand jobs were it missed the mark by that much. (17:48) And now they're saying quarter four is going to be just as dramatic.
Dan Habib
(17:52) So we're they're making the 70, I believe, in Q3 is what the estimates were. (17:56) Yeah, you fit for it's looking, you know, it's looking pretty egregious, too.
Mike Mills
(18:00) So well, and these decisions are being made on because the whole idea is like we want this soft landing. (18:05) We're looking for a soft landing. (18:07) Well, if you're going off of bad data and we've kept rates so high for so long and now you're actually starting to see cracks, then it seems like because, you know, as you guys have pointed out many times historically, once the Fed starts cutting rates, that's when you really start to see these recessions and all this kind of stuff, you know, that really start to kick in.
 
(18:23) It doesn't fix all the problems. (18:25) That's when the economy really starts to take a dive. (18:26) So that's the frustrating part.
Dan Habib
(18:29) Yeah. (18:29) The data's been tough to decipher, though, because, you know, on one hand, you'll see some signs of like big weakness. (18:35) On the other hand, you know, we started to see cracks with the consumer on spending on retail sales, durable goods, on delinquencies and stuff.
 
(18:44) But then today's GDP number was pretty darn strong for Q2 at two point eight percent versus the estimate of like two percent. (18:52) So it's been very mixed. (18:54) I think the situation our economy is in is quite a unique one, because while we haven't had the referee in calling recessions, the NBER, National Bureau of Economic Research, they certainly haven't called a recession yet.
 
(19:08) You know, many economists that I talk to believe that we've been in like a consistent rolling recession where different industries or sectors have been going into periods of recession, but not collectively as a whole in the economy. (19:21) And you certainly could see how that could be the case, whether, you know, you look at manufacturing. (19:25) I mean, that's been in the doldrums for a long time now.
 
(19:28) You look at housing, housing certainly been in like a recession from an activity standpoint. (19:33) I mean, home values have still been going up, but, you know, very little activity.
Mike Mills
(19:37) Mortgage application is the lowest in 30 years. (19:39) So, I mean, it's, you know, it's struggling right now.
Dan Habib
(19:41) It is. (19:42) But, you know, those that are in real estate or mortgage listing, we know that one of the biggest things that will help that activity pick up will be if rates come down, you know. (19:52) So I think I think we're finally starting to see things work in our favor from an economic data standpoint, as well as from what I believe the Fed's going to be doing now.
Mike Mills
(20:02) Well, speaking of the Fed, you had the benefit of actually going recently and attending it. (20:08) Now, this wasn't actually the full Fed meeting, right?
Dan Habib
(20:10) Because that was so people aren't invited to go to the Fed like meeting. (20:15) But there is like a press conference after that Powell does. (20:19) But this was this was like a public speaking thing that he did.
 
(20:22) It was invitation only, but it was to the it was at the Economic Club of Washington, D.C. and somebody that I know is a member there. (20:32) And they invited me to go. (20:33) So it was a pretty cool opportunity, you know, pretty kind of small crowd watching Powell speak.
 
(20:38) He was interviewed by David Rubenstein. (20:40) He's kind of like his buddy. (20:41) So I will say that, like some of the questions were real softballs, like I wish you would ask some better questions.
 
(20:46) You know what I mean? (20:47) And he was trying to almost be a little comical in some cases. (20:50) But like regardless, I did take away, I thought, some really important tidbits from it.
 
(20:55) And I did get a chance to meet him. (20:57) So I tried to rough him up, Mike. (20:59) I tried to be like, listen, Powell, you've got to cut rates July 31st.
Mike Mills
(21:02) Right.
Dan Habib
(21:03) But, you know what? (21:05) I'll tell you what I took from it. (21:06) Right.
 
(21:06) So he obviously like he reiterated that. (21:10) The Fed's not going to wait to get to two percent on inflation before cutting. (21:13) And it's about how when they're confident it's getting there.
 
(21:16) But like previously, I mean, you really have to listen carefully to like the words that the Fed's choosing. (21:21) You know, one word could make a difference. (21:23) And previously, Powell, as well as other Fed members, had made it clear that they didn't yet have the confidence needed that inflation was heading to their goal to cut rates in this meeting.
 
(21:34) I thought that that changed. (21:35) I took some notes here on it, but he basically said that the last three inflation readings had given him more confidence. (21:42) OK.
 
(21:42) And he also gave a nod to the weakening unemployment rate. (21:46) And he said that the labor market has cooled considerably. (21:49) And he said if it weakens unexpectedly, then that could be a case for a cut, even without further progress on inflation.
Mike Mills
(21:57) Although we also say that he felt like the job numbers he did state at some point, not this meeting, but previously that he thought there was some I don't know. (22:06) Remember the words you guys said he used where it was he didn't have great faith in that the numbers were accurate or something like that. (22:11) What do you say?
Dan Habib
(22:12) Exactly. (22:12) He what he did was he acknowledged that there was a big disparity between their business survey and the household survey.
Mike Mills
(22:19) Yeah.
Dan Habib
(22:20) And somebody had questioned him on the reliability of it. (22:23) And he said that, you know, he addressed the discrepancy, but basically said these are the numbers that we have to go off. (22:29) Yeah, essentially.
 
(22:30) Right. (22:31) But I think, you know, Powell changed his tone, sounded more dubious. (22:36) That he had the confidence and also acknowledged that he was worried about the labor market weakening.
 
(22:41) And he kind of said that the thing that keeps him up at night is not waiting too long to or I should say not cutting rates too soon and then inflation coming back. (22:52) Right. (22:53) Yeah.
 
(22:53) Worried about what we saw, you know, Paul Barker in the 70s and stuff. (22:56) Right. (22:57) But then on the other hand, he doesn't want to wait too long and then cause a recession, because if the US if they waited too long, if the US goes into a nasty recession, the Fed would likely have to undo a lot of the good work that they did.
 
(23:11) I mean, they hiked five and a quarter percent. (23:13) They've gotten the rate of inflation down to like close to where their target is. (23:17) They've reduced their balance sheet by quite a large amount.
 
(23:21) You know, and if we saw a nasty recession, if they might have to cut more than they would have previously or more than they want to, they then might have to do asset purchases again. (23:31) Who knows? (23:31) Right.
 
(23:32) So these are all things that they're trying to avoid. (23:35) So, you know, he's trying to walk the tightrope. (23:38) So I don't think that the Fed is going to be cutting rates July 31st, although I think they should.
 
(23:45) But I think there's a in my eyes, 100 percent chance that they're cutting September 18th. (23:51) Yeah. (23:51) And yeah, that doesn't mean that's 100 percent going to happen.
 
(23:54) But I think it's a lock.
Mike Mills
(23:56) And I think that's the general market sentiment. (23:58) Honestly, I think everybody kind of feels that way. (24:00) And with with Powell specifically, I've I've always used the phrase like you can expect the expected like he there's not there's not many situations where he doesn't tell you what he's going to do.
 
(24:12) Like he he's pretty transparent on this stuff. (24:14) I at least of all the times we've watched and seen what he's talked about, he hasn't really ever kind of strayed from, you know, we're staying data driven. (24:22) Here's our plan.
 
(24:22) The only time that I will say that I was a little surprised where he (24:26) did something or didn't do something was back in December when they announced when (24:31) that when the economy was seemed to be doing well and everything was coming along well (24:34) and they announced and they said they were going to do what three three rate cuts at (24:38) the end of December last year, which caused the stock market to go through the roof and (24:42) everything.
 
(24:43) And at that time, I was like, what's the point of even saying like, especially with all the trends that he'd done up to that point and hadn't really.
Dan Habib
(24:51) I don't know that he said it, but it was, you know, I think he he he referenced the fact that like if you looked at their dots plot chart, right?
Mike Mills
(25:00) Yeah.
Dan Habib
(25:00) Which, you know, the Fed, there's 19 Fed members and they have, you know, 12 of them that vote at each meeting and you have the Fed governors and you have your Fed presidents at all their nine regions. (25:13) And then the Fed presidents rotate. (25:15) The governors always vote.
 
(25:16) The New York Fed president always votes. (25:17) The chair does, too. (25:19) So the 19 Fed members, though, they all do at not every meeting.
 
(25:24) It's like every other meeting. (25:26) They do something called the summary of economic projections. (25:28) And they did it in December, which is what you're talking about here.
 
(25:30) And based on what's called the dots plot chart, which is where Fed members unanimously, I should say anonymously dot or plot where they think the Fed funds rate is going to be this year, next year, the year after and the longer run based on where they were plotted, the median showed that the Fed was going to cut three times. (25:51) That doesn't mean that that's what's going to happen. (25:53) In fact, if you go back to 2021 and you looked at the dot plot, it would have showed that there was only going to be a few hikes and then they hiked five and a quarter percent.
 
(26:01) Right. (26:01) So that thing can change wildly. (26:03) You know, the market likes to talk about it and, you know, look at it.
 
(26:06) But it certainly is not an indicator of what's going to happen, you know. (26:10) And even when you look at something like the Fed futures, which right now the Fed futures from the CME, which it's kind of like the betting line in the market as to where the market, what the market thinks the Fed is going to do right now, there's only like a 7 percent chance of a July 31st cut. (26:23) That's the next step.
 
(26:25) Then there's 100 percent chance priced into the market, at least of a 25 base point cut in September on the 18th. (26:32) And now there's even I thought last this morning I looked like a 12 percent chance of a 50 basis point cut. (26:38) And then there's even a very small chance of a 75 base point cut that's in the market.
 
(26:44) So there's now cuts in not only September, but November as well as December. (26:48) So they're pricing in like three cuts this year. (26:50) Now, those things all subject to change with any data point that comes out.
 
(26:56) But, you know, I don't know, Powell, though, he's not telegraphing any day. (27:01) He's being very careful not to. (27:03) Yeah.
 
(27:03) But I think September is a lock. (27:06) I don't think they're going to move in July. (27:08) I think it's too soon for them.
 
(27:10) But I think things are going in the right direction now. (27:13) And let's also remember the Fed at a couple of meetings ago, they made a change that most people I don't think understood where they are absorbing some of the supply out there in the Treasury market. (27:27) You know, one thing we haven't talked about is there's this like push pull relationship here where on the data side of things, as far as like inflation coming down, the economy slowing, the unemployment rate going up and the Fed, who's going to start being accommodative and cutting rates soon.
 
(27:43) I think that's all good for rates. (27:44) But here on the other side, something that's you could work against us and provide some headwinds is just the crazy amount of spending that our government is doing. (27:54) So we are we are currently spending 23 percent of GDP.
 
(28:00) If you want to see times in history where we've spent that percentage of GDP and by the way, that equates it to other periods in time with the value of things. (28:10) Right. (28:10) So it gives you like a fair comparison.
 
(28:12) You'd have to go to like the double dip recession in the 80s, the Gulf War, you know, the Great Recession.
Mike Mills
(28:18) And yeah, we're using more time when that's happening, not just in a normal economy.
Dan Habib
(28:23) Yeah. (28:23) Either like terrible financial disaster or war time. (28:26) And here we are spending like we're we're in an emergency like situation, which we're not even with that spending.
 
(28:32) We're still not seeing crazy growth numbers. (28:34) I think without all that spending, what you would have seen an economic downturn much sooner. (28:39) Yeah.
Mike Mills
(28:40) As well as the consumer has still been spending, you know, but well, that's where the GD when you mentioned the GDP number being up today, like I think immediately in my head, well, how much of that is government spending on what we're doing and what's what's the outputs coming from? (28:52) Because, I mean, I'm looking at a chart right now. (28:53) We've increased we've increased the debt three point five trillion dollars in just 13 months since the debt ceiling was suspended.
 
(29:01) And we're very close to getting to thirty five trillion for the very first time.
Dan Habib
(29:05) And here's the problem with it. (29:06) You know, the debt, the money has to come from somewhere. (29:11) Right.
 
(29:12) And where it comes from is our treasury then issues treasuries, which is why we've been seeing record numbers at auctions. (29:21) When you look at the two year note auction, the five year note auction, the seven year, the 10 year, the 20 year, the 30 year. (29:27) These are treasury auctions that happen every single month, and the numbers have been at record highs for many of these auctions because of the spending we continue to do, the debt we continue to go into and then the treasuries that we have to issue as a result to come up with that money.
 
(29:42) Well, that is a lot of supply that is coming to the bond market that has to be absorbed. (29:48) And that, in my opinion, besides pesky inflation, which is now really coming down, that has been the reason why rates have remained so high. (29:57) Yeah.
 
(29:57) And even though some of these other things are going to start working in our favor, I believe I don't see us stopping the spending side of things. (30:05) So that could still be a headwind for us. (30:08) But you hope that the other stuff will counteract and help us.
 
(30:11) Greater than that will hurt us. (30:13) So I do see rates coming down and getting better. (30:16) You know, I think we're going to continue to see things work in our favor, I think over the next six months or so.
 
(30:23) And, you know, it's hard again to put like a number or a time.
Mike Mills
(30:26) Yeah, yeah. (30:27) There's no way to tell.
Dan Habib
(30:28) But I think we can definitely get. (30:30) You know, to to low sixes, maybe have a five handle over the next year or something, if we get a little lucky either way, I'd be really happy with low sixes, I think that'll unlock a lot of, you know, buyers on the sidelines and such and high fives would be fantastic. (30:44) I don't think we're ever going to get never say never.
 
(30:46) But I don't see us getting back in the foreseeable future, you know, to like under 5 percent or under, you know, we're not going to get back to 2 percent rates or anything like that. (30:54) Right.
Mike Mills
(30:55) But nonetheless, there's a major economic event that, you know, causes serious problems, which I would be happy with.
Dan Habib
(31:00) High fives, low sixes. (31:02) I mean, that would I think that would be a much healthier environment for us.
Mike Mills
(31:05) Well, I want to stay on the debt for just a second, because one of the things that's surprising to me about the debt situation is that I feel like and sometimes perception is reality. (31:14) So but I feel like in previous election cycles, whether it be the Senate or the presidency or whatever, that whenever the debt is starting to get out of hand, the you know, the the challengers, the non incumbents that are trying to come into office, it's a it's a high point of focus and contention. (31:32) It's you know, when you've been in the office, this is what has occurred with the debt.
 
(31:36) When you were in control, this is what's happened with the debt. (31:38) Right. (31:39) And you see that a lot.
 
(31:40) But I don't feel like right now that that's being it's not it doesn't even seem like it's a topic of conversation when it comes to political adversaries talking about what what they're better at than the other one. (31:51) And to me, it's very surprising because it just in my mind, and this isn't conspiracy, this is just how I see it is, OK, this seems to be the biggest threat to our economy right now that very few politicians are talking about. (32:08) Economists are talking about it.
 
(32:09) Jay Powell's even brought it up before when he said in his press conference, you know, in a really nice way, like, yeah, we've got to kind of figure out this spending stuff a little bit. (32:17) So what is it? (32:19) What do you think?
 
(32:20) And this is your opinion, but what do you think? (32:22) Why is this not a bigger focus seen as we're in an election year? (32:25) And you would think both the red and the blue team are would be focusing on this because it is so out of control.
 
(32:30) Why is it not being discussed? (32:32) I mean, we're already we've passed our interest on the debt is beyond what we spend in national defense. (32:37) It's already surpassed that.
 
(32:38) And very soon it's going to surpass what our Social Security spending is, which is the biggest expenditure in the U.S. government. (32:46) So why is this not a bigger focus? (32:48) Why is it not on the national media stage as much as it should be?
Dan Habib
(32:51) Yeah, well, I mean, the interest alone is like over a trillion dollars.
Mike Mills
(32:54) Yeah, it's insane.
Dan Habib
(32:56) Now, you know, when the Fed cuts, that will help a little bit on the interest payment. (32:59) But, you know, they did mention it, like, you know, in the debate that when Biden was still still running, they did mention it. (33:08) But the fact of the matter is, is they both spent a lot.
 
(33:12) Right. (33:12) So I'm not going to get political here. (33:14) But like, no, it's both sides have done it.
Mike Mills
(33:16) It's not a lot.
Dan Habib
(33:17) Biden spent a lot. (33:19) You know, I mean, I think. (33:24) No president is going to run on a ticket and be successful saying we're going to have a great reset, but that's pretty much what needs to happen.
 
(33:30) Right. (33:31) So there is no path right now to this to getting out of the debt that we're in. (33:37) You know, we continue to deficit spend at an egregious amount, which means that, you know, as a country, we take in taxes and we're spending way more than we're taking in taxes.
 
(33:47) Very simple. (33:47) It's not complicated. (33:48) It's pretty simple.
 
(33:49) You can go to debt clock. (33:51) Dot org is pretty amazing. (33:52) You can see in real time the debt climbing.
 
(33:55) And, you know, I don't I don't know the answer to that problem. (33:59) But I do know that, you know, no matter if a Republican or Democrat gets in, they're probably both going to spend like crazy. (34:06) Yeah.
 
(34:06) So I don't have an answer for that one. (34:09) But it is a problem that continues to mount. (34:12) You know, some people have talked about trying to, you know, charge the rich more for taxes and that's going to help or this and that.
 
(34:19) But it's got to be seen. (34:20) Anybody that's going to do something, you know, all this infrastructure spending has been crazy. (34:26) I mean, this is both parties, I think, are guilty of spending unresponsibly.
 
(34:31) Yeah.
Mike Mills
(34:31) And it's the last couple of years. (34:34) It hasn't you know, we've always since probably like, you know, the 90s, I would say maybe even late 80s, we've been spending more than we've made. (34:43) And there's a there's an argument to be made that because these days we're in a debt based economy and we have an annual two percent inflation rate that you could say that having debt is just going to be part of the you know, part of the equation.
 
(34:55) Right. (34:56) And a certain amount of debt and deficit spending, because we can we can always expect a two percent increase in inflation over time that, you know, that's just how it's going to be now. (35:04) Ever since we got off the gold standard, this is what we're operating under.
 
(35:08) And so and I can understand that argument. (35:09) I honestly can't. (35:10) But but the amount that we've done just in the last five years is just insane.
 
(35:16) And that's where you go. (35:17) How is this sustainable? (35:19) How do we continue in and being in the mortgage industry like I am and you are and dealing with interest rates and what's impacting that and understanding how national deficits and debt impacts overall rates, regardless of where the economy is.
 
(35:32) Right. (35:32) And then you get into a circumstance where, you know, nobody wants to get to stagflation. (35:37) But, you know, there are a lot of indicators right now that say that that's not out of the realm of possibilities where we have nobody spending in the economy with inflation still staying at higher levels, but everybody else, you know, shutting down their spending, which is what we've seen.
 
(35:50) Then, you know, there's a lot of there's a lot of concern as we move into, you know, whoever takes over. (35:55) It doesn't really matter because it's like, how do you solve that problem? (35:59) Where is the fix?
 
(36:00) And right now it's not even being discussed. (36:02) The debt ceiling conversations pretty much out of the it's gone, you know, until until somebody and who's going to be the bad guy to bring that back up again and say, hey, guys, everybody, we need to we need to maybe think about spending less money and be concerned with themselves getting reelected. (36:15) So, you know, a lot the inflation is not great.
 
(36:18) It's getting better job unemployment. (36:20) It's good for us in the rate world, but it's not good for the economy writ large. (36:25) So, you know, you see a lot of things kind of heading in the direction of I don't know where the good of this comes in, although being in the mortgage industry and liking lower rates and helping people refinance is a good thing.
 
(36:37) And I want that to happen. (36:38) But I also don't want our economy to completely go in the toilet as a sacrifice of that. (36:42) And that's that's where I look at this and go, man, it's it seems like it's unsustainable.
 
(36:45) And I don't know where you pull this car out of the ditch.
Dan Habib
(36:48) Yeah, I mean, I don't personally see stagflation as a as a real risk right now from what I'm looking at. (36:53) I mean, geez, the latest numbers on Q2 GDP were two point eight percent. (36:57) And inflation tomorrow at the time of this recording, you know, tomorrow we're going to be getting the latest reading on PCE core, which is the Fed's favorite measure of inflation.
 
(37:07) And it's going to drop from two six to probably either two five or maybe even two four, two point four inflation, two point eight GDP. (37:13) That doesn't sound like stagflation to me. (37:15) Right.
 
(37:16) So I'm not really concerned about that, but I am concerned about the debt. (37:20) You know, as long as we continue to spend unresponsibly like we are, we're going to have to continue to issue more treasuries and that has to be absorbed by the bond market. (37:29) So that can negatively impact us on the rate front, even though the other things are working in our favor.
 
(37:34) But maybe they don't come down as much as they would have without that there. (37:37) But one thing that is helping with some of the supply out there is the Fed. (37:42) So it's important to break this down, not just the Fed who's going to be cutting rates, but what they're doing with their assets.
 
(37:49) So the Fed, if you go back to like post-COVID, the Fed wanted to stimulate the economy because we were shut down, we were in a recession. (37:58) Right. (37:58) So what they did is is they cut the Fed funds rate to zero.
 
(38:02) In addition to that, there was like five point two trillion in the stimulus one, two and three checks. (38:09) And the Fed was buying trillions of dollars of mortgage-backed securities and treasuries every single month they were buying. (38:15) And they amassed a balance sheet of like eight trillion dollars or so of these assets.
 
(38:21) Now, the reason why the Fed did this is to artificially keep rates low. (38:26) Now, the combination of all the stimulus supply chains crippled all the buying from the Fed, keeping rates at zero PPP that caught the PPP. (38:36) I mean, all the spending.
 
(38:37) I mean, this created the 40 plus year high inflation. (38:40) Right.
Mike Mills
(38:40) Yes.
Dan Habib
(38:40) I don't know how you don't foresee that that could happen based on all of that. (38:44) Right. (38:44) But regardless, everybody thought it was transitory.
 
(38:47) You know, I even see people judging me now. (38:49) So like, see, it was transitory. (38:50) No, it's not.
 
(38:51) All that inflation is still there. (38:52) It's still there. (38:53) It's transitory.
 
(38:54) The rate has come down.
Mike Mills
(38:56) Yeah.
Dan Habib
(38:56) Increase. (38:57) But it's not transitory. (38:58) If home prices are still four hundred fifty thousand in the median.
Mike Mills
(39:00) Yeah.
Dan Habib
(39:01) But getting back to the point of the Fed. (39:03) So the Fed did all of this asset purchasing. (39:06) It was called QE or quantitative easing.
 
(39:09) And by doing this, by buying all of these billions of dollars every single month of 10 year treasuries of mortgage backed securities that artificially kept rates low. (39:19) I mean, they were buying at least like a third of the mortgage market at one point. (39:23) OK, so they then amassed this massive balance sheet and they said, boy, we need to normalize this.
 
(39:29) So not only did they start hiking rates, they also started to allow their balance sheet to reduce every single month. (39:35) So think about it like this. (39:37) The Fed, based on the nature of what they have on their balance sheet, they have mortgage backed securities.
 
(39:43) So if people sell their homes, refinance, make principal payments, they receive money from those holdings. (39:49) Treasuries, they mature and they would. (39:52) So normally assets would be falling off of their balance sheet.
 
(39:55) Now, for a long time, even after they were done outright buying mortgage bonds and treasuries, they were keeping their balance sheet, what's called net neutral, which means that it was remaining at the same level. (40:05) And any time those assets rolled off or they receive principal payments, they would reinvest them back into mortgage bonds and treasuries as to keep the same level of assets. (40:14) But in reality, they are doing buying through reinvestment.
 
(40:17) So they did that for a while and then they said, OK, we need to normalize the balance sheet. (40:21) So then they started to allow up to ninety five billion dollars a month and it was broken down to sixty five billion in treasuries, 30 billion in mortgage backed securities to fall off their balance sheet. (40:31) So in reality, the way this kind of works is that like, you know, it's almost like selling.
 
(40:37) It's not quite selling, but it's like they roll them over at auction and then they have to still be absorbed by the market. (40:42) So that was working against us from a supply standpoint, because you have all this debt coming to market. (40:48) The Fed, who was the biggest buyer, and now they're reducing their balance sheet and they're not buying.
 
(40:52) Right. (40:53) So the Fed a couple of meetings ago said, OK, we're worried about global liquidity and we want to still slow down the balance sheet or reduce the balance sheet. (41:04) But we think if we do it at a more gradual pace, we can do it for longer, ultimately being able to reduce the balance sheet eventually to a lower point than if we wouldn't have made this adjustment.
 
(41:14) So they said we're going to leave the mortgage backed security runoff of up to 30 billion a month alone. (41:20) But on the Treasury runoff, instead of allowing up to 65 billion a month of Treasuries to fall off, well, now they're only going to allow 30 billion or I'm sorry, 25 billion. (41:33) So what they're doing is they are reinvesting essentially approximately 35 billion dollars a month in the Treasury market.
 
(41:42) And at the same time, and this is through reinvestments and at the same time, the actual Treasury announced buybacks for the first time in 20 years, somewhere between eight and nine billion a month. (41:53) So, you know, the combination of the Fed's reinvestments in the Treasury market, as well as the actual Treasury doing buybacks, that will help to absorb some of the supply coming to the market. (42:04) So that's a good thing.
 
(42:06) In addition to the Fed cutting inflation coming down, maybe the economy continuing to slow. (42:11) I think the horizon for or the outlook for rates is going to hopefully be one of trending lower, but I don't think they're going to get the crazy low levels. (42:22) And we do have the spending as a headwind still.
 
(42:25) But, you know, I think it's reasonable to think that we can see low sixes or maybe high fives if we get lucky.
Mike Mills
(42:31) OK, so I was going to ask you, so, all right, knowing all that, what and you got your bingo card in front of you. (42:35) OK, this is just Dan taking a shot at the roulette table and saying, this is the number I'm picking. (42:40) Where do you think, you know, December 31st, the average like Fannie, Fannie Mae 30 year fix, where do you think it's going to be at this year and then 2025?
Dan Habib
(42:53) Boy, I mean, if I were to try to tell you with any level of certainty, you don't know.
Mike Mills
(42:58) I don't know. (42:59) Nobody just playing games here.
Dan Habib
(43:01) But if we're playing bingo here, you know. (43:04) I don't know. (43:04) End of the year.
 
(43:05) Well, let's put it this way. (43:07) Obviously, it's different from everybody's word about six point eight nine, something like that right now. (43:13) You see where I was going with.
 
(43:14) OK, so you're you're you're like six and seven eights right now is somewhere in the neighborhood.
Mike Mills
(43:19) The average like Cornyn Morgan's News Daily, the average market rate right now is on 30 year fixed fan. (43:23) He's about six point eight nine, something like that.
Dan Habib
(43:26) Yeah. (43:26) So close enough. (43:27) OK, so so.
 
(43:31) End of the year. (43:33) You know, what do you got, six months left here or five months left? (43:39) Call it.
 
(43:41) Six and a quarter.
Mike Mills
(43:42) Really? (43:43) Wow. (43:43) OK, that's that's pretty by the end of this year, you think we'll be in the low sixes.
 
(43:46) OK, I like that. (43:47) And then. (43:48) Yeah, yeah.
 
(43:49) Hey, look, I'm with you. (43:50) I love it. (43:51) I hope so.
 
(43:52) OK, so then so then what about because I think Fannie's projection by the end of this year is like six and a half or something like that. (43:58) So what do you think by the end of twenty twenty five, you think we could be into the fives?
Dan Habib
(44:03) Yeah, I mean, I think it's possible. (44:05) I think, you know, a lot's going to depend on what happens with the economy. (44:10) You know, we're going to be in a recession during recessions.
 
(44:14) You know, they're not great for the economy. (44:16) And I want I don't want to sound insensitive where you're going to see the stock market come down. (44:20) You're going to see, you know, GDP going forward, case jobs.
 
(44:24) Nobody wants that. (44:25) People lose their jobs and the unemployment rate is going to go up. (44:27) So none of those are good.
 
(44:29) But I would say a silver lining is, is that because of the economy slowing, inflation always comes down during recessions and mortgage rates almost always drop during recession. (44:38) Yeah. (44:39) So if we see a recession, which there are a lot of signs that we could see one, you know, rates could come down a little more aggressive.
 
(44:47) Right. (44:47) But if we continue to have this kind of muddle through just slowing, you know, I think the forces we talked about will help rates to come down. (44:54) But I think by the end of the year, you know, maybe six and a quarter, maybe a little bit above that by next year.
 
(45:01) You know, I hope that, you know, you can have a five handle in front of it, maybe like high fives.
Mike Mills
(45:07) I love it. (45:07) I love it. (45:08) That's awesome.
Dan Habib
(45:09) I'll see how those predictions work out. (45:11) But like I mentioned, you know, I'm a realist.
Mike Mills
(45:15) There's so many things that could impact it that, yeah, I wouldn't, I think there's going to be a lot of chaos between now and the end of the year, I think between now and the end of the year, I think things are going to be nuts for many, many reasons. (45:25) And who knows where things go? (45:26) I do want to talk about your show for just a minute.
 
(45:28) So for anybody that doesn't know, you guys do your your site, your company's called MBS Highway, and you guys have multiple partners. (45:37) But primarily what you do is you give an update every single morning about where things are with the bond market, how things are looking regarding, you know, these job numbers and everything that we're talking about. (45:48) This is something that you guys do every day.
 
(45:49) Each episode's anywhere between, you know, probably six to 12 minutes, just depending on how much data is out there. (45:55) Y'all have been doing it for years and have continued adding to it. (45:59) And your your dad, Barry, is the, you know, the kingpin of all this, been running the show for a long time.
 
(46:04) And and you have I've noticed over the last couple of years, you're starting to, you know, once you talk a little bit about the show, where that kind of came from, what your experience has been like doing that type of feedback you guys get, because you said I've been watching it for years. (46:20) I love it. (46:20) You guys do a fantastic job and give a lot of really good information.
Dan Habib
(46:24) Well, thanks for that. (46:24) Well, I'll give you a quick history, right? (46:26) So, you know, my father, Barry Habib, some of you guys listening may know him, but he was a big mortgage producer, you know, when he was younger.
 
(46:35) He owned his own mortgage company, then worked for several mortgage companies. (46:38) And, you know, I remember at one point he sat me down and he's like, you know, Dan, because there's a lot of smart people out there, you know, the difference between somebody that's smart and successful is taking action and just freaking doing it. (46:50) Right.
 
(46:50) So he was telling me this as he was telling me about this idea that he had, because he was a successful mortgage professional. (46:57) He thought that there was a platform or service he could create to help other mortgage professionals by being like fiscally literate. (47:04) And also he was brought to his attention that there was like this new technology at the time.
 
(47:09) This is back going to like 2001. (47:11) OK. (47:12) And it had to do with like dialers and like companies like Dial My Calls.
 
(47:16) And, you know, the light bulb started to go off in his head about being able to send text messages and alerts as to when lenders may repricing based on changes of mortgage backed securities. (47:26) For those of you that don't know, you know, the 10 year is a good barometer for like long duration rates, but that's not where mortgage rates exactly come from. (47:33) The 10 year can certainly influence the bond market and stuff, but they come from something called mortgage backed securities, which is a bond that trains in the bond market.
 
(47:40) They are literally pools of mortgages that are securitized. (47:44) Right. (47:44) And if that goes up or down, that is literally what lenders are repricing based off of.
 
(47:49) So by providing live quotes to our customers, monitoring the changes, you know, you can do a pretty good job of if you're watching this in real time with the right resources, determining when lenders may be in a position to replace. (48:02) So bottom line, 2001, Barry created a company then called Mortgage Market Guide. (48:08) You know, back then we were just doing written updates every morning.
 
(48:10) We were doing text messages and alerts, providing live quotes and things like that. (48:14) And that was the majority of the premise of the service, you know, written updates on analyzing the data and stuff, the economic data. (48:21) And it became quite ubiquitous in the mortgage industry.
 
(48:24) This was before Dodd-Frank. (48:26) So, you know, if we sent down an alert, you didn't have to pass that better rate on to the customer. (48:31) Customers were making 10 grand every alert based on how many loans they had in their pipeline.
 
(48:35) I mean, the return on investment of the service was very easy to quantify if we helped time a few alerts good for you. (48:42) But then you had Dodd-Frank, you know, we grew the company, we sold it. (48:46) And then about 12 years ago, after having like a non-compete for a couple of years, about 12 years ago.
Mike Mills
(48:51) Those are gone, by the way. (48:53) You saw that?
Dan Habib
(48:53) Say that again.
Mike Mills
(48:54) The non-competes, they're gone. (48:57) As of September 1st, they're no longer valid. (48:59) So.
Dan Habib
(49:00) That's crazy. (49:04) So, essentially, 12 years ago, we had a lot of people wanting us to kind of come back and create something. (49:11) So Ari, you know, called me up and said, you know, do you want to start MBS Highway or start a new company with me?
 
(49:19) I don't know if we had the name at that point, but that's when MBS Highway, the current company, was created. (49:24) And, you know, we are blessed to work with the largest banks, mortgage companies, brokers in the country. (49:31) I mean, you know, every company out there has some level of subscription with us, I'm sure.
 
(49:38) So, you know, we get a chance to help thousands and thousands of mortgage professionals every day to be advisors to their customers, to increase their conversion with market knowledge. (49:47) And we also do a lot of stuff besides like monitoring the market and giving them insights and stuff and making them a real expert. (49:53) On our site, we have a ton of data and tools.
 
(49:56) And that was really the biggest thing I think we've changed from the original Mortgage Market Guide to then MBS Highway is we really pivoted where, listen, the alerts are still important, but not as important after Dodd-Frank. (50:09) How else can we help mortgage professionals? (50:11) What we did is we really spent a ton of money on analytics on data.
 
(50:15) So, you know, on our site, you can pull up data for any zip code in the country and within a second, be able to show somebody the forecasted appreciation, quantify that, historical numbers, you name it. (50:25) And then we've created tools to help mortgage and real estate professionals to overcome the challenges they're facing in today's market, right? (50:32) So like if I were to outline for you, like the four biggest challenges right now, well, even though we talked about why rates are going to come down, right, you know, naturally a customer hears that, right?
 
(50:43) Well, maybe I should just wait for rates to come down before purchasing, right? (50:46) So there's that waiting for rates to come down. (50:50) We've created a tool called the cost of waiting because people don't contemplate that.
 
(50:53) And it's all using data for that local market. (50:56) You pull it up in seconds, but people don't realize that the misappreciation and amortization and such is going to dwarf the interest savings. (51:03) And then you can always go ahead and refi later once rates come down.
 
(51:07) But you know, people say, marry the home, date the rate, right? (51:10) And that's what they're trying to say is buy the home today and date the rate and then refi later. (51:14) But if you don't explain it and quantify it for the customer, it's just a cute set, right?
 
(51:18) So we help you to quantify that and to illustrate it very, very effectively and easily to show that, Hey, even with rates 1% higher than if you wait a year, you're going to be $26,000 better buying today versus waiting, factoring in all the costs of dating the rate and everything else and the refi costs, or, you know, the media says it's a better rent than buying every market in the country. (51:38) We'll have a real mic drop argument and factor everything in and show them why you're $250,000 better buying versus renting after nine years or the lock-in effect, right? (51:47) We have tools to help overcome every obstacle that you could brand, co-brand.
 
(51:51) And then while your competition's out there buying realtors, coffee and bagels to try to earn their business, you're creating this for their active listings and you are solving their problems. (52:01) You're coming up with solutions for them and helping them gain more business. (52:04) And we think that gives you a much better shot.
 
(52:06) So that's MBS highway. (52:06) But over the last year, we also purchased a company called list reports or a year and a half now, maybe. (52:13) So list reports, a lot of agents listening, you're probably familiar with it, but you know, list reports is a couple of parts to it where we provide all the transaction data.
 
(52:21) So you can look up agents or LOs and see, you know, how much business they're doing, who they're sending business to, and it's kind of like an MMI type product, but we make it actionable and send you alerts as to the best times to engage. (52:34) And then the other part is a whole automated marketing platform where if you're a realtor, you know, you can sign up for free for list reports. (52:41) And then within 10 minutes of having a new listing, you get like 25 pieces of marketing content, open house flyers, social media posts, text codes, property websites, you name it all done for you within seconds.
 
(52:53) So it's nice and adds a lot of value too. (52:55) And then we've created a new product called the home report, which is a competitor to like a home bot where you market to your best database, right? (53:03) So, um, yeah, I think that's going to be really important because we talked about rates normalizing and like coming down a bit over the next six months to a year, right?
 
(53:12) Well, there's been about 10 million transactions that have happened over the last two years. (53:17) The vast majority are going to be refi eligible once rates come down. (53:21) Are you ready to take advantage of that opportunity as a mortgage professional?
 
(53:25) A lot of people aren't, you know, dominating their database the way that they should be, but you need to make sure you're marketing to them right now and staying in front of them with something of value. (53:36) You know, I mean, there's some pretty amazing stats that I saw where if you do somebody's loan, if you don't market to them at all, the chances of them coming back and using you again is about 19%. (53:45) Yeah.
 
(53:46) But if you market to them with anything, that number like doubles to like 38%. (53:50) But then the key is if you market to them with something of value, the likelihood triples. (53:54) Yeah.
 
(53:55) So, you know, you need to make sure you're well positioned for what I think is going to be a big refi business opportunity over the next year or so.
Mike Mills
(54:02) Well, what you guys do that I've appreciated so much, and I think especially these days with the lack of, unfortunately, it's just the truth. (54:08) There's a lot of lack of financial knowledge out there for consumers and, you know, next generation folks coming up and to be, you know, an effective mortgage professional or an effective realtor, having knowledge that you can share with your clients and give them actual information and data and sell your brain, as I like to put it, as opposed to selling a rate or selling a product. (54:28) You're selling your knowledge as a financial advisor, not just a mortgage professional or not just a realtor and having data to be able to give them an easy access to it just makes it so much so that you're now the go-to expert for all things real estate when it comes to your clients and your database and the tools that you guys provide.
 
(54:45) By the way, at a very, very low cost for an individual is extremely beneficial for this type of stuff. (54:51) And it's so easy to plug and play and it's very easy to use. (54:55) And, you know, you did the certified mortgage advisor thing for a while, which you're still doing, which I participated in, and I just, you learn so much from that process just about how all this stuff works.
 
(55:05) So when you're sitting in, it's crazy when you're sitting in a group of friends or family and there's 15 or 20 people around and, you know, people want to ask about rates and costs or whatever, and you can sit there and just spit out all kinds of knowledge of things that you've learned, you know, just watching the update every day and then using these tools. (55:21) It really sets you above your competition in so many different levels and especially, you know, into this new market where understanding how rates are going, how quickly they're going to fall, when they're going to fall and all that kind of stuff is going to make it to where they call you first. (55:35) And that's the thing that I appreciate most about what you guys do.
 
(55:37) You know, I'm a client, I'm a customer, and I can't speak highly enough, but it's one of my favorite tools.
Dan Habib
(55:44) Well, thanks, Mike. (55:45) You know, one thing that we didn't talk about, I know we're going to end up running out of time, but there was two other things we could touch on quick. (55:53) One was just being the housing market in general and the other being crypto.
 
(55:57) But just real fast on housing, you know, we talked about where I think rates are going, but I think we're going to continue to see a strong housing market from an investment standpoint, from a price standpoint. (56:10) You know, there's a lot of negativity out there in the media talking about, like, home prices are going to come down, we have all this supply and da-da-da. (56:16) I think we're going to continue to see home price appreciation.
 
(56:21) I think, you know, this year in 2024 that we're going to see about 5% nationwide. (56:26) Of course, that can vary a little bit in different areas, but we just got numbers, existing inventory. (56:31) You know, we're still like right around, we're at like 1.3 million. (56:34) I mean, when we were in trouble, 2007, there was like 4 million existing homes for sale. (56:39) Now we're at like 1.3 million and that's still very tight. (56:43) And you have 39 million more people than back in 2007 in the population of the US.
 
(56:48) But not only that, you know, inventory is like cyclical where every single year, if you look at a chart, you know, inventory will come down and then it will start rising and then it will usually like stop rising in around June and then it'll start coming down again. (57:00) But it's going this way, it's going down to the right, but there's obviously little waves that happen seasonally and has to do with people moving, getting the kids in before the school year. (57:09) I mean, that all plays a role, right?
 
(57:11) But inventory is very, very tight. (57:13) And I think the tight inventory scenario gets even tighter when rates come down and you get a lot of demand coming up the sidelines. (57:19) But then, you know, let's talk about demand.
 
(57:23) Household formations is a really good kind of proxy for demand, right? (57:26) And like that is like you have your family, you have a mom, dad and kid living at home in one household in a home. (57:35) Kid grows of age to buy or rent a home and he moves out.
 
(57:39) Still the same family, but now you have two households, right? (57:43) So that's a household formation, just to give you an example. (57:46) And we talked about the existing inventory market, but let's talk about builders and completions, right?
 
(57:51) Well, you know, 2007 and the housing bubble and stuff, you had a lack of demand, you had a glut of supply and you had really lax lending standards and a couple other problems. (58:01) But, you know, let's start with construction. (58:05) Are we at risk of a glut of supply?
 
(58:07) Well, you know, the media will tell you that inventory has increased a lot. (58:11) I just went over with you the numbers. (58:13) It was from a very low number.
 
(58:14) So you got to be careful of percentages when you see that occur. (58:17) But also, you know, most markets are like like the Northeast is like 50 percent below pre-pandemic levels from an inventory standpoint. (58:25) We have seen, you know, in the Sunbelt, Florida and Texas, quite a bit of supply come on the market.
 
(58:30) So so that is true. (58:32) And those areas probably won't perform as good as others regionally, like, you know, from an appreciation standpoint, if there is like that glut of supply there. (58:43) But we have really good visibility into new supply.
 
(58:46) It's not like you blink your eyes and you get a new home. (58:49) So when we look at completions, when we were in trouble, builders were putting up like two million homes a year. (58:53) It's like record highs right now in order to build a home.
 
(58:57) You have to permit it. (58:58) Then you have to start it. (58:59) Then you have to complete it.
 
(59:00) Well, permits aren't even reaching like one point four million right now. (59:04) And the household formations are on track on an annualized basis of like two million. (59:08) So that's a lot more household formations than completions.
 
(59:12) Right. (59:13) So I think, you know, I think home prices should be well supported into the future. (59:18) And in fact, I think if rates come down, you're going to unlock a lot of demand on the sidelines that could even propel prices higher.
 
(59:24) So I think, you know, the media, a lot of what's out there is garbage and fear mongering. (59:28) I mean, Diana Olick on CNBC has been calling for a housing bill for like the last like 12 years. (59:33) And boy, if you listen to her and didn't buy a home, you missed a really wonderful wealth creation opportunity over the last decade.
 
(59:38) Right. (59:39) So I know that's the way I see housing. (59:42) And then on crypto, you know, I have a big passion for crypto.
 
(59:47) You know, I have a company in addition to the ones that we just talked about, one called Crypto Charged, which you can just go to CryptoCharged.com. (59:56) And, you know, if you want to check it out for free for a period of time to use my last name, Habib, it'll give you like, you know, a free 30 day membership and then you get 50 percent off when you sign if you wanted to sign up after. (1:00:06) But it's really designed for the crypto investor.
 
(1:00:10) So similar to how with NBS Highway, every day we do some education, a video breaking down the market, the macro. (1:00:17) We look at the charts. (1:00:18) We break down the economic data.
 
(1:00:21) We do a similar type of thing, but as it relates to crypto. (1:00:25) So breaking down the different coins and the use for the coins and, you know, doing technical analysis, doing something that's unique to crypto, which is on-chain analysis where you can analyze kind of investor behavior and trends and stuff, looking at the on-chain analytics because they trade on blockchain, right, or because they're on blockchain. (1:00:42) So some cool, some cool stuff, but really trying to give investors the education they need to make better informed investment decisions in the cryptocurrency market, which can be tricky.
Mike Mills
(1:00:52) Yeah, well, on the crypto side of things, you know, and I'm going to we're going to hop off here because you're a busy guy and I want to be respectful of your time. (1:00:59) But I will say that I feel like and I think you would agree that in times of possible recession, which was what we're heading into, there is also a time of great opportunity because when you look at investing in anything, real estate, crypto, you know, the market in general, when things come down historically, they always come back up. (1:01:20) Right.
 
(1:01:20) And it's just a matter of time and when. (1:01:22) So having a good knowledge base on understanding when things are going to kind of (1:01:25) head down and maybe even get to, you know, nobody can call the bottom, but you can get (1:01:30) close sometimes and when you start to see things turn around and having that knowledge (1:01:33) and having sources that you can go to, you know, and reliably trust on to start looking (1:01:38) and where can I put my money and reliably expect a good return?
 
(1:01:42) I think you guys have covered a lot of bases on that and have a lot of activity with that. (1:01:46) And I think crypto is also going to be even I wish we could use the word blockchain, because when people say crypto, sometimes, you know, if you don't understand it, people roll their eyes like, oh, this is it's it's not what you think it is. (1:01:59) And once you get into it, I think that is going to be one of the next waves of where you see, you know, millionaires made in those markets because and already have, by the way, yeah, yeah, I've already already occurred, but even more growth that's going to occur over the next several years.
 
(1:02:15) And so getting knowledgeable on that, understanding that and what the trends are and these different new activities, because when you look at crypto, it's not it's it's very it's it's a stock market. (1:02:24) That's what it is. (1:02:25) You're in most cases, you're investing in a company that has come up with a new technology that they're using and they've created a coin to create that investment for it.
 
(1:02:32) In most cases, there are the doge coins of the world and all that.
Dan Habib
(1:02:35) There's a lot of shit coins, right?
Mike Mills
(1:02:37) Yes.
Dan Habib
(1:02:38) Yes. (1:02:39) You know, they're like a meme stock, right?
Mike Mills
(1:02:40) Yeah.
Dan Habib
(1:02:41) But, you know, Bitcoin is is often referred to as like a good store of value, digital gold almost. (1:02:48) Right. (1:02:49) And that's really a supply and demand scarcity story, right?
 
(1:02:52) Only 21 million. (1:02:53) You got like 19 and James million that have already been mined. (1:02:56) And, you know, every four years, the supply come in a market every day gets cut in half.
 
(1:03:01) So, you know, that is a supply and demand story, a scarcity story. (1:03:05) And it's really gone mainstream now. (1:03:07) And you have all the ETF spot ETFs out there for it.
 
(1:03:09) Same thing with Ethereum. (1:03:10) Just this past week at the spot, Ethereum ETFs. (1:03:14) Now, Ethereum, as opposed to like more of like a store of value play is much more of like a utility play.
Mike Mills
(1:03:20) It's a platform.
Dan Habib
(1:03:21) It's a network. (1:03:21) It's a platform. (1:03:22) And other platforms can build their things on there.
 
(1:03:25) And a lot of coins have some cool utility. (1:03:28) But you have to be careful because, you know, there's like, I don't know, 100,000 coins out there now. (1:03:33) And a good portion of them are both.
 
(1:03:35) Yeah.
Mike Mills
(1:03:35) So if you watch, if you stay on crypto Twitter, you're going to see all kinds of stuff.
Dan Habib
(1:03:39) Stick with the ones that, you know, are either ones like Bitcoin that are well-known or that actually have good use case utility. (1:03:48) But I think it's the most exciting market. (1:03:50) Yeah.
 
(1:03:50) It's kind of like a stock market, except it's currencies. (1:03:53) So, right. (1:03:53) So it trades 24-7, never sleeps.
 
(1:03:56) And it's more volatile in the stock market. (1:03:58) So it's like a riskier stock market. (1:04:02) But it is still, relatively speaking, pretty early, although adoption is happening at a more rapid rate now.
 
(1:04:08) And, you know, now people that were talking bad about crypto have been flipping the script and changing their tone. (1:04:15) And now that you have these spot ETFs out there, it makes it a lot easier for somebody to say, hey, just like I talked to my financial advisors, they put 5% of my portfolio in gold, put this amount in emerging markets, a bunch of stocks, a bunch of bucks. (1:04:26) Well, now I can use those same dollars in that same brokerage account and buy crypto.
Mike Mills
(1:04:32) Yes.
Dan Habib
(1:04:32) Instead of both having to go to a Coinbase or another exchange, people are worried about the keys and losing their coins. (1:04:38) This makes it a lot more mainstream and easy. (1:04:41) And I think a lot easier for people to get exposure and edit, especially traditional money out there that's not going to do this, for them to get exposure to it and add it to their portfolio.
 
(1:04:50) And, you know, it's already the Bitcoin number one and Ethereum number two most successful by a large margin ETFs in history, which shows you based on the inflows, the level of demand from consumers out there. (1:05:04) And this is still early in the adoption story. (1:05:07) And Bitcoin at the time of this call is at $64,500.
 
(1:05:11) Yeah, I think that, you know, if you're somebody that wants to invest over a long time horizon, I have zero doubt that it's going to be much, much, much, much higher in the years to come. (1:05:22) Now, there's going to be risk involved over that period of time, but I think it gives you the best asymmetrical risk return for your money than any other investment out there.
Mike Mills
(1:05:32) Well, it's already proven that if you just look at the track record of the last five years and what you've, you know.
Dan Habib
(1:05:36) Yeah. (1:05:36) I mean, it's by far the best performing asset over the last 10 years. (1:05:40) And it's not even close.
 
(1:05:41) You know, at some point, you run out of like, you know, some of that as far as, but we're not there yet. (1:05:47) I mean, to give you an idea, my price target just over the next like year is at least double where it is right now. (1:05:54) Yeah.
 
(1:05:55) Right? (1:05:55) For Bitcoin. (1:05:56) But some of the altcoins have an opportunity to more than 2X, you know, some of them 10X.
Mike Mills
(1:06:01) They move with Bitcoin. (1:06:03) And when you see Bitcoin go up and you see the altcoins come along with it, it's a big wave of stuff, you know, that flows. (1:06:09) And really and truly, you know, I'm going to put you on the spot.
 
(1:06:11) We're going to have to do another episode just purely on crypto because we could do this for five hours.
Dan Habib
(1:06:16) Oh, yeah.
Mike Mills
(1:06:17) Five hours and go through all this stuff because I spend a lot of time looking into it, reading about it. (1:06:22) And, you know, I have some money in there as well. (1:06:24) And it's a big passion of mine.
 
(1:06:26) And I think that, you know, I teach my kids about it. (1:06:29) I'm like, look, this is something that you need to be aware of because it's going to have an impact, especially when as a U.S. government on a dollar, we're sitting at $35 trillion in debt to say that, you know, you need to have another hedge against that would not be a bad thing.
Dan Habib
(1:06:43) Well, you know what else is, you know, I mean, we got the presidential race coming up here, but, you know, I mean, just purely looking at some of the numbers and stuff, there's at least a 50-50 chance that Trump's going to win the election. (1:06:56) Some would say more than that. (1:06:57) But he is actually right now at the Bitcoin conference in Nashville.
 
(1:07:03) And it's going to be like the largest gathering of Bitcoiners in the world. (1:07:07) He is, there's rumors that he's going to speak and call for the U.S. to create a strategic reserve of a million Bitcoin. (1:07:17) You know, that would be, you know, that would be a pretty big supply.
 
(1:07:22) I remember there's only ever 21 million that can be created. (1:07:24) So, they already have it.
Mike Mills
(1:07:26) It's locked up in the FBI vaults from the, what was it? (1:07:32) The website that was the underground, dang it.
Dan Habib
(1:07:36) Oh, Silk Road? (1:07:37) Which one?
Mike Mills
(1:07:37) Silk Road, yes. (1:07:38) All the stuff they confiscated from Silk Road, they've got it still. (1:07:41) So, they've already got it built up.
 
(1:07:43) They just have to tell everybody.
Dan Habib
(1:07:44) But, like, you know, that can't be a bad thing having a president and the vice president, JD, he's also a pro-Bitcoiner. (1:07:52) So, you know, if just purely not caring if you're a Democrat or Republican, but just purely from a crypto investor's mindset, certainly I don't think it would hurt the price of cryptocurrencies if you had somebody in office that was pro-crypto. (1:08:06) And that, you know, certainly appears to be the case if Trump were to win.
Mike Mills
(1:08:09) And there's countries, I mean, all around the world that have, you know, adopted it as part of their, you know, investment strategy for the country. (1:08:16) And they're doing great!
Dan Habib
(1:08:18) Look at El Salvador. (1:08:19) Look at other countries following suit. (1:08:21) And you know what else?
 
(1:08:22) Companies that are adopting Bitcoin as a treasury asset have been crushing it as well. (1:08:26) So you have countries adopting it and going on the Bitcoin standard, but then, you know, companies, like one of the things that propels Bitcoin and crypto is priced much higher. (1:08:37) If you look at like ARK Invest with Cathie Wood, you know, they get predictions on Bitcoin over like a million dollars a coin.
 
(1:08:43) But how do they get there? (1:08:44) Countries adopt it. (1:08:46) And, you know, businesses, publicly traded companies adopt it as a treasury reserve asset, which means that instead of just having cash on the balance sheet, they can hold Bitcoin on the balance sheet.
 
(1:08:56) And companies that have done that, MicroStrategy and others, they're dropping that ones. (1:09:00) They are freaking knocking the cover off the ball, obviously, right? (1:09:04) So, you know, Michael Saylor looked like a crazy guy, but, boy, he's looking pretty darn smart now, making like $4 billion on his investment or whatever it is.
Mike Mills
(1:09:11) So he's doing pretty good. (1:09:13) You know, and everybody wants to point out when it takes a crash, like, oh, see what he did? (1:09:16) And then it spikes right back up.
 
(1:09:18) And they're like, he's like, hey, I'm still here, guys. (1:09:19) I'm still here. (1:09:20) I'm still buying.
Dan Habib
(1:09:21) Yeah, we could go on for a long time talking about crypto. (1:09:24) But, yeah, listen, I think it's something that I tell people, you know, I think it's certainly a part of the future. (1:09:32) And if you don't like it, you should invest a few percentage points to your portfolio.
 
(1:09:37) If you do, then maybe do a little bit more. (1:09:40) But even if you don't, I think I used to be a financial advisor before doing MBS Highway. (1:09:47) In that period of time between mortgage market guide and MBS Highway, I was a member of like the number one Byron's Bank financial team in New Jersey.
 
(1:09:57) And I'm always a big believer in diversification, right? (1:10:02) So, you know, you need to have your exposure to maybe like stocks, bonds, alternatives, maybe some gold. (1:10:09) But I would consider having some crypto too, if not for anything else, just for some hedges.
Mike Mills
(1:10:15) I tell people all the time, take $100 or $50, whatever you're comfortable with. (1:10:20) Buy some Bitcoin, okay? (1:10:22) When you do that, then all of a sudden your attention turns to that a little bit.
 
(1:10:26) And you learn a little bit, and you learn a little bit more, and you pay attention a little bit more. (1:10:29) And now you're interested in a little bit more, and then you buy a little more. (1:10:32) And then you look up and you're like, man, because that's what happened to me is I first found out or kind of started discovering it about five years ago, six years ago.
 
(1:10:39) And I started looking into it. (1:10:41) And I'm like, this sounds like kind of a gamble thing. (1:10:43) And I read a little bit more about it.
 
(1:10:44) And I read a little bit more about it. (1:10:45) I understand the fundamentals of it and how the blockchain works and the immutability of it and how it's kind of decentralized. (1:10:52) And it's very difficult to hack and get into and what it does to the middlemen and the banking system and all that stuff.
 
(1:10:58) And you go, wow, this has real, real utility. (1:11:01) All it's missing is adoption. (1:11:03) And what we've seen is adoption over the last five years that has been unprecedented.
 
(1:11:08) And I think just like you, it's going to continue. (1:11:11) And now it's very, very mainstream. (1:11:13) So at least for nothing else, check it out.
 
(1:11:17) Read about it a little bit. (1:11:19) Get your free 30-day trial with Dan here. (1:11:22) And I'm crypto charged and grow your mind a little bit.
 
(1:11:25) You might be surprised what you find out. (1:11:27) So Dan, I can't thank you enough, man. (1:11:29) This has been awesome.
 
(1:11:30) Like I said, we could go on for hours and hours. (1:11:32) I love nerding out on this stuff. (1:11:34) And I learn so much from you guys every single day.
 
(1:11:35) So keep up the great work. (1:11:37) Hope your dad's feeling better. (1:11:39) He's been going through some struggles lately and health-wise.
 
(1:11:43) So we're thinking about him and praying for him. (1:11:45) I hope he continues fighting a good fight because we need him out there on that wall telling us every day where these things are headed. (1:11:53) So for sure.
 
(1:11:54) Well, Mike, thank you for having me. (1:11:56) Yeah, it's been great. (1:11:57) Thank you, everybody, for sticking around.
 
(1:11:59) I will be back on Tuesday with another market update. (1:12:01) We'll talk about rates again, see where they're headed. (1:12:03) And we'll keep an eye on Dan's prediction of 6.25. I'm going to hold him to that.
Dan Habib
(1:12:06) Oh, boy.
Mike Mills
(1:12:08) All right, everybody, have a great weekend. (1:12:10) Take care, everybody.
Dan Habib Profile Photo

Dan Habib

Executive Vice President at MBS Highway

Dan Habib is the Executive Vice President at MBS Highway, a leading platform in mortgage market intelligence and sales effectiveness. With a profound understanding of macroeconomic trends and the mortgage industry, Dan has carved out a significant presence in the field, distinguishing himself from his renowned father, Barry Habib.

Dan's expertise in interpreting and communicating complex market data has made him a trusted source for mortgage professionals seeking to navigate the fluctuating landscape of mortgage rates and bond markets. Recognized as one of the "40 Most Influential Mortgage Professionals Under 40" by National Mortgage Professional Magazine, Dan continues to influence the industry with his keen insights and strategic foresight​ (HousingWire)​​ (National Mortgage Professional)​.

In addition to his role at MBS Highway, Dan is also involved in Crypto Charged, a company dedicated to educating and guiding individuals in the cryptocurrency market. His dynamic approach to both traditional and digital finance positions him as a forward-thinking leader in the industry.

Dan's commitment to consistency in all aspects of life, whether in business, personal health, or relationships, is a cornerstone of his success. He believes in taking ownership of one's choices and maintaining a disciplined effort to achieve goals​