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  • [inaudible]

  • Hi guys, welcome to theREsource nation.

  • We have a special treat for you guys today. Barry Habib is on yet again.

  • Thanks for coming on the show again buddy.

  • We really appreciate you taking time out of your day to hang out with us.

  • I love you guys and I love what you all do. I think it's so important.

  • The messages that you have are critical and I'm excited about talking with you

  • today. Yeah, so today we're just

  • conversation, podcast style.

  • I'm just going to rap about a few things that actually we talked about the other

  • day and I was just thinking, I was talking to you. I was like, man,

  • I wish we had the cameras cause the conversation was so good.

  • So we're going to bring a little bit of that up.

  • I also want to give you Kudos man on the show.

  • You were last on an April and you called the 10 year treasury back then.

  • You called it right back in April.

  • You said that rates were going to stay low two shows ago when the NBA and

  • everybody else will say, we're saying they're going to go in the fives,

  • you said they're going to go low, which was very controversial. Here we are,

  • they're low again. You even said on the last show, hey, hold off.

  • This was crazy. That even mean, and usually I'm kinda in step with you.

  • You said, hey,

  • hold off bellows on the roofies and that was contrarion rates are gonna go even

  • lower. And I'm, Oh my God, here we are again,

  • a 33 month low rates when even lower. So Kudos to you, man.

  • You called all those on this show today.

  • And I may ask you to make another one a little bit later on.

  • We will, we will have some,

  • some predictions and I'll give some rationale as to why,

  • because the fact of it is, it's not, it's not something that, uh,

  • that's a secret.

  • I think there's good factual basis as to why we see these things unfolding.

  • And based upon that, we'll share that with everybody. Perfect.

  • And I'm putting handcuffs, handcuffs on you today.

  • So we have obviously lender's watched the show,

  • realtors watched the show and we have a big consumer base now that's watching

  • the show. So you can't use big terms like Philip Fibonacci levels.

  • Maybe even the acronyms that we typically throw around.

  • I want you to like speak on a consumer level today. Really distill it down.

  • Okay. Is that okay? Of course we always do. Okay. Okay, perfect.

  • So my first kind of question that I know,

  • and people knew that you were coming on the show,

  • they're like ask very about what the hell is happening right now? And I'm like,

  • and so I'd ask, what do you mean? What do you mean? And they, they brought up,

  • well feds raised rates and then they lowered them. What the heck?

  • And then the Dow is at record highs,

  • but there's a recession coming and then China's manipulating currency.

  • And now Amazon's in our space. What the Hell is going on? Barry?

  • Distill it all down for us. Okay, so let's take it a step at a time.

  • So let's talk first about the obvious one is rates.

  • So what's happening with rates? Well,

  • there's a lot of different parts of this puzzle. Okay. So first of all,

  • what are some of the reasons why rates are low?

  • So the main driver of interest rates is inflation. Inflation is very, very low.

  • So just ask yourself why would rates go up significantly premiere,

  • is there a lot of inflation? No.

  • Are we looking at an economy that has pricing pressure, pricing power, no. One,

  • one of the big things that people don't recognize is debt levels in a country.

  • So whenever debt levels go up,

  • it is almost a mirror image that you see interest rates decline.

  • It's like a family that is strapped and does not have any discretionary income

  • because they Bladen themselves with debt. Yup. It happened in Japan,

  • in China, in the UK, in the eurozone. And yes,

  • certainly in the United States.

  • And if you look at the charts as debt levels go up, interest rates go down.

  • So if you think that debt levels are going to continue to be probably on the

  • rise, I certainly do with a lot of accomplishing everybody does.

  • That is going to be an anchor on interest rates. It will keep interest rates.

  • No level. Let's remember now, interest rates move in a straight line up or down,

  • right? They're going to vacillate. But if you would have this,

  • this image in your mind of a child with a Yo-yo on an escalator,

  • the escalators heading lower,

  • so while the child is Yo-yo may go up and down and you may have some

  • intermittent roofs, higher. The overall direction is going to be lower.

  • And this is very important for us to understand because if you look over the

  • longer term, I see interest rates lower.

  • I see interest rates the lowest they've ever been. We'll talk more about that,

  • but what I also see is that we have to understand this not in a straight line.

  • So there's strategies that we can employ here in the strategy.

  • If you're a consumer, the strategy if you're in a loan officer,

  • is that what you'd like to do here is see if it makes sense to refinance.

  • Now just as of this morning,

  • the data came out that 9.7 million households can not just benefit by a

  • refinance,

  • but the real big number here is if they can benefit by refinance of three

  • quarters of a percent, which is very significant. So you know,

  • roughly speaking. Okay.

  • Roughly speaking for every hundred thousand dollars it's $50,000 a month at

  • three quarter percent so what I would say to you is,

  • is if you think rates are going to go lower like I do rather than completely

  • hold off,

  • well maybe do a refinance now and do it with as little closing costs as

  • possible. You remember on our, on our talks in the past, I said,

  • you're not pay up front, am I? That's a stupid thing to do. Do not pay points.

  • That's a stupid thing to do because you will not hold this mortgage for a long

  • period of time. And what will,

  • what I see happening is the mortgage that you're doing for customers today,

  • and same thing I said to you,

  • the mortgage that you do today will be refinanced in the future.

  • Do not think of loans at one at a time.

  • Always think of them as the mortgage you're doing today and when is the next one

  • we're going to be doing. That's how you should be talking to your customers.

  • When I started doing that,

  • it escalated my production dramatically because it tied them in but also gave me

  • much,

  • much more of a advisor role with that customer because not only was I bringing

  • in the life events that that customer would have, getting married,

  • getting divorced, having kids, your empty nest,

  • all those things that occur life-wise but I'm now bringing in my expertise from

  • the economy and able to show them that we're contemplating this to make the

  • right decision for you today. So rate is a secondary issue. Rates important,

  • but it is secondary to strategy. Can you note that in cotton textile you said

  • rates are going to go lower and everybody's like, you know, happy.

  • They're at 33 months long. I mean, they're great right now. Can you,

  • what does that mean? Does that mean three and a quarter? I mean,

  • can you make that prediction here? Like, what do you think that looks like?

  • Let's just,

  • let's just jump right into it. So, uh, the, you know, a few years back,

  • I called 1.37,

  • a 1.3900000000000001 on the 10 year treasury and everybody thought it was really

  • like psycho. Okay, what's 1.37? So I was pretty darn close.

  • So it's two basis points off, but I see us going lower than that.

  • So if you take a look at today's 10 year Treasury at one 70, um,

  • could we hit the one 20th can we hit one 10 could we hit one? Yeah,

  • it's all really, really possible.

  • But I will promise you that we're going to go beneath that one 39 or one 37

  • level that we had just talked about. Uh,

  • we're gonna test that level where we may not break it the first time,

  • but we're eventually going to break it because there's too many factors dragging

  • us down. We are going to see recession. I know people say, Oh, well wow,

  • how could there be recession? The stock market side,

  • the stock market always goes up prior to recessions. You know,

  • what you really want to focus on and look for is when the unemployment rate

  • starts to take higher. So 3.7% now don't panic it,

  • but it's 3.8 3.9 but if it hits four 4.1 this is a really reliable recession

  • indicator. And then look at the, look at the yield spread.

  • There were inversions. What does an inversion mean?

  • It means that the shorter term maturity is actually giving you a higher rate

  • than the longer term commitments.

  • So it's kind of like you're walking into your bank and you say,

  • I could see a three months CD, a one year or two year, five year, 10 year,

  • and Oh my goodness,

  • that five year or 10 year is not giving me as much interest as the three months.

  • So I'm going to put my money into three months. Unnatural.

  • And you're right to think about on the analogy, correct.

  • It's called an inversion. So why do these inversions occur? Well,

  • the inversion is telling you that something is sick. Okay?

  • It's kind of like when you see somebody walk into your office,

  • they got the red eyes, the runny nose, you know,

  • not going to give you a big hug because there's stuff that stick here. Okay?

  • So what the deal here is that longer term maturities care about inflation,

  • because that's going to be around for a short term.

  • You don't care about inflation. Inflation is not going to take its toll,

  • but inflation will erode the fixed payment that you get because it means things

  • will cost more. So if you're getting a fixed payment return,

  • you can't buy as much over time.

  • So when you take a look at your longer term maturities,

  • they care about inflation. So what's gonna drive inflation? Well, look,

  • if all of us want to buy, if we all wanted to,

  • to sleep out at the iPhone store at the apple store,

  • because we wanted the latest thing out there, Apple's not gonna put it on sale.

  • Okay? So they're going to charge as much as they can.

  • A strong economy means prices. You're going to be going higher.

  • Softness in the economy means inflation will be weak.