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Welcome back to the What's Your 1 More Podcast. I'm your host, Quinton Harris. You dialed in for episode 256. Hey, in [00:00:05] this episode we're gonna talk about what the Fed must do. Now, the time has come and too many cooks in the [00:00:10] kitchen on this episode at what Your one more
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Quinton: So welcome back to the What's Your 1 More podcast. [00:00:20] So in this episode, let's get right to it. I mean, let's talk about the time has finally come. Jerome [00:00:25] Powell has finally woke up out of his senses at the most recent Jackson Hole meeting.
He has said, look, the [00:00:30] economy is not as stable as we thought it was. It. And more importantly, inflation is not running away [00:00:35] from us. The tariffs were a one-time hit, and that it's not being passed down to the consumer at the rate in which [00:00:40] they thought. They're able to get rid of the nonsense that, hey, future inflation is coming, and we have [00:00:45] to hedge against it.
They've gotten rid of the idea, this strong, powerful labor market. [00:00:50] What we've been saying on this show for how long now that that labor market is a runaway train and that the Fed has been [00:00:55] doing their policy as if they're driving a car looking through the rear view mirror, as my friend Dan Habib likes to say, [00:01:00] this has finally come to a head, and it took, I don't know, way too long for the Federal Reserve Chairman to [00:01:05] wake up and say, Hey, listen, maybe we're a little restrictive.
You think restrictive. I [00:01:10] mean, you're so restrictive that interest rates are still remaining well above the elevated rate. They should be at [00:01:15] the spreads in the market to the 10 year yield, are reflecting that uncertainty that you're distributing. [00:01:20] And in the meantime, the consumers, new homeowners, the construction side of the [00:01:25] table where homes are being built, all suffering and.
Here we are today. Here we are. [00:01:30] It is Thursday, August 28th, and we're just now seeing the Federal [00:01:35] Reserve, waking the hell up and saying, yep, you know what? We might have gone too far. And that's the thing about the Federal Reserve. They have a pattern [00:01:40] of doing this, and there's a pattern of behavior to where it's like, we're right, you're wrong.
And [00:01:45] they have all the data sets in the world. And yet someone like me and friends that I have and economists that I know can all [00:01:50] sit here and go, dude, you're blind. Like how are you missing this? So it'll be interesting to see because at this [00:01:55] point the markets and everyone have built in a quarter and they're saying, listen, a quarter's gonna happen, but a quarter's [00:02:00] not enough.
And I think that's the issue here, that everyone's debating, Hey, it's great that you understand you've [00:02:05] messed up. It's great that you're acknowledging you're restrictive. It's great that you know you've been holding back the [00:02:10] economy, but it's not enough. In the meantime, you've got Trump who's sitting back here going, listen, [00:02:15] hey Trumponomics, if you wanna call that right?
Kind of saying, listen, we're behind the [00:02:20] curve right now. A quarter is not going to get it done. And quite frankly, we need more. We [00:02:25] need a lot more. And the question is, can they get more? Is the Federal Reserve going to listen? I don't know. they [00:02:30] haven't so far, but I do know this.it's evidence to me that the Trumponomics, when you take a look [00:02:35] at, it's based on a couple of different things.
You know, it's based on trade, it's based on tax cut, it's [00:02:40] based on, interest rate cuts and growth around the country is full steam ahead. [00:02:45] It doesn't mean it's right, but it's full steam ahead. And I think the Federal Reserve is gonna have to say, listen, are [00:02:50] we gonna continue to fight this or are we gonna try to make this.
Economy better. And right now it's been a [00:02:55] fight the entire way and it's not working. You look at the labor force, you look at the labor market, the unemployment rate, it's [00:03:00] all going in the wrong direction. And Powell finally admitted at the podium, this was probably the most dovish [00:03:05] depressed Powell. We have seen the entire time at that podium.
I'm not talking about the podium, I'm coming outta the Federal Reserve meeting where he's [00:03:10] all my way the highway. The Jackson Hole meeting that he went to where he actually divulges maybe what [00:03:15] they're gonna do for the remainder of the year and talk about policy leading up. This was probably one of the most dovish and [00:03:20] also I would say uncertain stance he's taken.
You could almost look like he was beat down. He is like, [00:03:25] it's just not working. What we're doing is not working and we need to make a change. And it's about time that comes out in the market that [00:03:30] change is evident and needs to happen. So what does this mean for rates? Well. Finally [00:03:35] we're going to see some cuts in the Fed reserve.
Is that gonna be an immediate cut to mortgage interest rates? Probably not. I [00:03:40] mean, wall Street took to this and you saw the Dow go over 45,000. You saw the markets roar [00:03:45] because what does that mean? That means companies now will be able to get cheaper money, the potential to thrive, to potential, [00:03:50] borrow more, create new jobs, build new products.
Build buildings, put the new products in. There's all kinds of [00:03:55] things that come from making money cheaper. It stimulates growth, but when you're restrictive, it cuts it [00:04:00] off. And that's where we've been living for the last 26 months. And it's about time we get out of this position. It's been [00:04:05] here way too long.
And it's amazing during this restrictive policy that we've had that we haven't had more [00:04:10] heartburn than what we've already had right now. And quite frankly, Powell was backed into a corner on this. he stood his line, stood his [00:04:15] stance. It didn't work. And in the meantime, Trump's been able to ride this and say, I told you, told you [00:04:20] if you would've done what I said, we would've been better off.
Right? So it's been that kind of cat and mouse game. But speaking of [00:04:25] Trump, let's talk about this. I said earlier on the show, too many cooks in the kitchen. What does that mean? [00:04:30] This makes me laugh. So Lisa Cook, who is a Fed governor. [00:04:35] Is literally being fired by Trump. If you were to read the headlines, that's what it [00:04:40] reads.
Now, Trump can't randomly fire a Fed governor, but he [00:04:45] could force 'em to resign if they're willing to resign. And she's not, she's actually going to take him to court over this. But the [00:04:50] question is, what begs the debate here on the show is this is why, right? This is one [00:04:55] of the funniest things I think I have seen in this Trump administration thus far.
That [00:05:00] Bill Pulte, who is the director of the Federal Housing Finance Agency, right, the [00:05:05] FHFA, literally dug deep enough in the data to find out that Lisa Cook had [00:05:10] claimed two primary residences within the agencies, meaning that she has two homes right now with [00:05:15] Fannie or Freddie. Those are the agencies inside of Federal Housing Financial, finance agency.
And then [00:05:20] he's claiming, Hey, our data says on her applications. She marked both these homes as primary residence. That [00:05:25] is what we call Occupancy fraud in the industry Now. Just to put in perspective, [00:05:30] Lisa Cook is not the first person to ever do this, and to put in perspective that there are many of [00:05:35] occupancy frauds in the mortgage world that take place many a times, but to call out a federal [00:05:40] chairman on that particular rule and help have them fired over mortgage fraud is one of [00:05:45] the funniest damn things I've ever seen.
Because at that point you, you are reaching. Right? But more [00:05:50] importantly, like. W you have to go through the database of everyone else that's kind of committed such [00:05:55] things, and what's the repercussions there. But maybe it's because she sits in a higher federal government position, [00:06:00] and maybe it's one of those things you should have known better.
But the reality is this, what happened to all [00:06:05] those federal chairman Chairwomen that were involved with the Federal Reserve, that were doing all the bond [00:06:10] trading back in 2020 and 2021. When they were trading bonds, you know, on the [00:06:15] fact that they're the ones that control the 10 year yield, they control the movement up and down of all the bonds, and they [00:06:20] were literally making millions of dollars.
On insider trading of up and down on the [00:06:25] bonds during that time, and to the point to where the end of 21, early 22, it was actually stated, [00:06:30] you're not allowed to do that anymore. But before that you could do whatever the hell you want and make millions of dollars at your own decision [00:06:35] and your own discretionand that you were allowed to keep your job the entire time.
No problem with that. But [00:06:40] then there is a lady. On this particular, federal Reserve open market committee, Lisa [00:06:45] Cook. Then the chance says, Hey, listen, I'm gonna file for a mortgage and then I'm gonna get a mortgage later on and claim it as my [00:06:50] primary. Now everything I've read doesn't. So she submitted two loan applications, buying two homes at the same time, [00:06:55] and said, Hey, both those homes are gonna be my primary.
And she went to two different lenders and defrauded them. That would be a problem. Like literally, [00:07:00] if they discover later on that she did applications within 30 days of one another, and it said, Hey, I'm buying [00:07:05] primary home. Let's just use an example in California. I'm gonna get another one here in Washington.
I'm not gonna, I'm gonna [00:07:10] work with two different lenders and I'm not gonna divulge that I'm doing that. And those both close in tandem of one another. Yeah, [00:07:15] that would be occupancy. Fraud. I don't think that's what happened here. I think that she probably owned a home. It's a [00:07:20] primary residence. Months, weeks, years later, she buys another home in another part of the country, [00:07:25] claimed as a primary residence, while still having this one over here that she originally started [00:07:30] with.
That's a common thing that happens all the time. There's not a darn person in the world that goes [00:07:35] back to that first loan and says, oh, hey, by the way, I'm not living there anymore. We, you charged me a [00:07:40] higher rate for that. Like I've got rental properties that I used to live in. Like that was my [00:07:45] primary residence when I departed that I didn't call the lender years later and go, oh, hey, now it's a rental home [00:07:50] where you, up my rate and change the terms and conditions 'cause I'm renting it.
Hell no. No one does [00:07:55] that. And so the fact that this woman's being targeted for that reason, and that's exactly what's happening here. She's being [00:08:00] targetedit's a bad look to the administration. And it's funny as hell, quite honestly, because it's one of those things where [00:08:05] if it's propaganda where if I just throw it out there, you'll resign.
'cause I've kind of, I've kind of made it bad enough for you [00:08:10] and good for her for standing up. She's like, I'm not gonna resign. You're gonna have to prove that it's gonna be a hard thing for them to prove, by the [00:08:15] way. but this is a good example of just too many cooks in the kitchen, I like to say, because this is, it is quite silly.
I [00:08:20] honestly would've liked to see 'em go back to 22 and reprimand all the people that were doing the insider trading. You [00:08:25] know, ha, Rafael Bostic, and go ahead and get those individuals to return the money that they made, [00:08:30] the millions of dollars that were made on those trades on bonds when they were the ones going, Hey, we're gonna lower [00:08:35] rate.
Oh, let's go over here and, you know, buy some bonds. let's proactively do some things over here. Let's short some [00:08:40] bonds. All that stuff that was being done. Is absolutely ridiculous on the, on the aspect [00:08:45] of their controlling it and got away with that. it's kind of silly. And then this woman's being judged based on buying two homes [00:08:50] at two different times, to get her moved.
and we wonder why we got a problem with the Federal Reserve, right? We take pop shots [00:08:55] at 'em and then the administration asks 'em to cooperate and do something, and we get no cooperation. [00:09:00] Obviously, all that's gonna change in May when the, federal Chairman Jerome Powell steps down. But between now and then, I think we're gonna [00:09:05] continue to see a little cat and mouse game here.
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And I think I talked [00:10:05] about it a couple episodes before Dan was on here, is that it's actually good for Trump to have Jerome [00:10:10] Powell in office because literally that's his out on everything, you know? And as the economy [00:10:15] continues to not be as strong as we wanna project it is, it's not strong.
I mean, if the labor market [00:10:20] is not strong, the economy's not strong and the labor market is continuing to show signs of deterioration. [00:10:25] So we can say it's strong. All we want to. But we're not seeing the thriving numbers yet. I'm not [00:10:30] saying they won't change. I'm not saying they can't get better, but we're not seeing the numbers right.
and we talked about the BLS [00:10:35] report, and I don't agree with that at all as far as it being a legitimate report, but even as far as [00:10:40] firing the director from the BLS saying, listen, your number's wrong. Get, this is terrible. Get rid. Right. And they [00:10:45] did. But the reality is it's still not good. Whether you fired that person or bring someone you like, [00:10:50] you're not gonna be able to justify and alter and change the numbers to make 'em look good.
They actually have to be good. Right? And the [00:10:55] unemployment rate is gonna have to show up correctly and be better. And it's not, it's getting worse. And it has other signs [00:11:00] of pointing to giving even further worse. And I think that's what Powell was mentioning when he got to the podium there at the Jackson Hole [00:11:05] meeting.
And so. Things have to be done to correct that. And the only way you're gonna stimulate the economy [00:11:10] tax cuts, you can only do so many of that. Lowering the Fed funds rate, lowering the money in which we [00:11:15] borrow terms in which we borrow money as a economy, that's gonna help stimulate housing, that's [00:11:20] gonna help get more construction jobs out there.
That's gonna help have homeowners become future homeowners. [00:11:25] Buy, sell, move up, move down. First time home buyers refinance, stimulate the economy. Those are [00:11:30] things that you're going to have to do. Not sitting back telling us how great it is. It's going to take more of that and the [00:11:35] actions start with the Federal Reserve and putting more clarity and putting more emphasis [00:11:40] on the fact of this is what we're going to do, and not tap dancing around what you think you're going to do and give more [00:11:45] confidence to the damn markets.
I think when the markets get confidence and cook. Guessing what's going on, because we have a very back and [00:11:50] forth federal reserve. Things are going to get better, they're gonna get stable, the spreads are going to get better. And I mean, [00:11:55] at the end of the day, that's all we're looking for. That's all we're looking for as an economy is stability.
[00:12:00] And we can build on that. And I think once we get that, you're gonna start seeing some things finally be in place that have been [00:12:05] delayed far longer than they should be. The things that we're seeing right now are just,frustrating, [00:12:10] pathetic.
I mean, people. Who sit on the Federal Reserve should be here to help the economy. They have a dual [00:12:15] mandate, right? Quite frankly, they haven't held up to any part of it. They didn't really do much to help [00:12:20] inflation, in my opinion. I think inflation had to work its way through the system. I think they stalled it.
I [00:12:25] think you could almost say we had stagflation. It was there for so long. It's still lingering around, but now we've gotten to a point to where we [00:12:30] still have a two handle on inflation. There's no reason to even talk about it. Even after the tariffs, it didn't jump up over [00:12:35] 3.5% as expected. Now you've gotta worry about employment.
Now you've gotta worry about the unemployment rate. And as I [00:12:40] said multiple episodes ago, that is a runaway train. Once it starts, it's hard to put it back in the jar. [00:12:45] Well, they better get their hands around it right now because they're in a top gun danger zone, and I don't know that a quarter [00:12:50] interest rate's gonna fix that.
50 maybe. It may take more than that. A lot of pundits are calling for a [00:12:55] hundred. They're not gonna get it, but I love the fact that they're calling for it. I love the fact that's being thrown out there, and I love the [00:13:00] fact that it's time for the Federal Reserve to step up. All eyes are on them here in the month of September, my [00:13:05] cohost Dan Habib, will be back with meright after that meeting in September to talk further about that, the details and the impacts on the [00:13:10] market.
So stay tuned because there's some great stuff around the corner. We're finally going to get to the point to where we can start [00:13:15] talking about getting from restrictive back to neutral. What does that do for the mortgage industry? What does it do for mortgage interest rates? [00:13:20] What does it do for realtors and what does it do for originators?
I don't know. I got my guesses. We'll talk about that on this [00:13:25] show and more. If you guys like what you're hearing, please share this episode. Please five star, review it. Go to [00:13:30] YouTube, click and subscribe at our channel at What's Your 1 More leave your comments and feedbacks. We always love hearing from you [00:13:35] guys, and until the next episode, we'll see you at What's Your 1 More. I got one more shot. I'm gonna make [00:13:40] it one more chance. [00:13:45] [00:13:50] [00:13:55] I'm.
