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today we are talking about the Fed meeting

that's gonna happen on January 30th and 31st

I've got Chris Brazell

director of operations

what's going on Chris

hey hunter how you doing today

doing good man

doing good so uh

let's jump into it uh

the Fed is meeting next week uh

and uh we are going to

hear what their first announcement of the New Year is

I think every Fed meeting that happens this year

we're gonna have a lot of anticipation in the market

right now now

I don't think we're gonna see anything this time around

I think the bomb

markets currently pricing at 97.4% chance of no change

and a 2.6% chance of a 25 basis point drop

so less than 3% of the market is saying you know

we're going to get a little bit of a cut here

not gambling numbers

uh Chris talk about what that kind of does when

when you have such a

high expectation of no change in the bond market

uh right now

what is that due to

rates you know

are we getting a better rates and a lot

we had a lot of extra pricing last year um

in in the rates just because everyone was terrified

what what are we seeing right now

yep so it's

you know and again

thanks for having me on this conversation

it's always exciting talking about the Fed

you know what I mean

come on everybody let's go

but it is interesting though

because it's

the typically Fed meetings

don't get as much publicity as they will this year

so we've been in a continuously up

swinging market for the past couple years

as we all know

interest rates have gone up to their highest

levels in 20

30 years um

and so with that

everybody's kind of excited this year

cause the back in December

they talked about a potential multiple Fed rate cuts um

starting at the beginning of the year

now they've kind of dialed back on that a little bit

with the fact that now they're anticipating

probably this month nothing

um it leave everything kind of unchanged

how that affects rates is

in the past

investors were hedging with the fact that rates

were gonna continuously go up you know

that's why prime interest rate has gone up like 5%

over the past couple years

with that mortgage interest rates have gone up

so that because the investors were hedging

every time they're anticipated a Fed rate hike

now with the fact that we're hoping for

Fed to cut rates this year

um that basically what it's doing right now

it's stagnating the rates a little bit

and what that means is

we're not going up as much as we were

over the past six months

now back in November

we were dang near an 8% interest rate

yes we were

which was painful

as we all was

seeing that 8

scared the bejesus out of everybody

I mean I sevens were scary enough

but seeing an 8 in front of something good Lord

there's a new article on Yahoo

every day back then of

are we gonna see double digit mortgage rates again

that was that

that was terrifying for me

that was horrible man

double digits

I couldn't even imagine

but with that being said

they have come down a little bit

because of the fact we're anticipating

rate cuts this year yeah

so the stagnation is from the initial

I don't wanna call it a knee jerk reaction

cause nothing in this industry moves overnight

but they did have a good reaction

to the anticipation of rate cuts back in December

now with like you said

the 97.4 chance of no change at this meeting

coming up at the end of the month

I think we'll see rates stagnate

meaning we're not gonna see the major fluctuations

like we have over the past few months

yeah hopefully

you know they stay where they are

if not you know

trend a little bit lower

a little bit higher

you know just slight

changes one way or the other

and not where you wake up one day

and it's a quarter to 3/8 higher

yeah well that

that can bring me some peace of mind

as well I mean

it's not as low as we want

but also there's peace of mind

knowing that you know

for the young ELOs out there

that are fighting for every deal

you don't have to be terrified

that you lock your client tomorrow

and then the very next day

the bond drops 100 bases points

and you know

you're losing all those deals

um at the same time

you know agents who are talking to their clients

there's a little bit more um

consistency

as you know

Monday Tuesday

Wednesday goes so long

you can kind of give them the same rough numbers

if your clients are asking what rates are

because there's not as much swing

so that that is

there's piece of mind in that

that's correct

and also those agents that have

clients out there

that have been sitting on the fence

you know now

that they got so scared

that they're like

you know I don't wanna look now

cause when I find a house

my payments gonna be 50

hundred dollars higher

because rates have gone up

let's hope that this stabilization

to a certain

degree you know

barring any unforeseen

circumstances

that we can't predict

but let's hope this stabilization at least

comforts people to the fact

they can go out and start looking for houses

again that's it

that's good

yep yep um so

in December

we had higher income

or higher employment

numbers than

expected yep

and we know

we know that

the seasonal

seasonal employment

market is real

and January

does have the highest month

for layoffs

generally of the year

do you think the Fed

will you use that

or consider that information

the employment numbers

from December

when making their announcements

or do you think they're

they're pretty much

ready to wash 2023 of their hands

yeah I think

you're gonna see a marginal

reaction to that okay

because they do

there you know

even though they do base a lot of information

on unemployment figures

that it being at 3.7%

they predicted a slightly

higher number

it came in a little bit lower than

expectations

but guess what

they also revise

those numbers

too they do

so whenever they

initially come out

it used to be

low on employment

you're gonna see the rate spike

this time you know

it's not as much of

a dramatic change

just because of that

so they know

the seasonality of

December and then

like you said

January you're gonna see the

the layoffs

more people out in the job market

and what's gonna happen then

it won't have as much of a

hit then either

if the unemployment comes in higher

so they kind of wash

each other out

um and with that being said

you know it's kind of good

with the fact that they don't take it into

account as much

you know it's still

as a factor

you know unemployment

generally at a 3.7 number

is low you know

historically

speaking yeah

which is good

which usually drives

rates up um

but you know

there's other factors

involved in that you know

with the fact that

inflation is still

relatively high

compared to where they want it to be

and things like that

so they take it all into account

and so they're gonna wash their hands of it

we're gonna move on to 2024

and start using

I would say

February March

numbers are gonna have a more dramatic

impact than

December and January

yeah I think the Fed

predicted a 4.1%

average for unemployment 2024

so as you know

we see unemployment even just

just a little bit

I think that will help

inflationary numbers

as well yep

I agree with that

yeah and you know

the inflation

as we all know

they're still chasing that

2% inflation figure

which were not there

I don't think we're gonna get there

close to three

right yeah it's

sitting right around 3%

right now which is

it's better than we were

it's not where the Fed wants it

that's right

but you know

it is one of the factors that they still are using

to drive prime

interest rate yeah

so in the past

we really didn't hear much from the Fed

month to month

you know we would hear from

drone pal the

the Fed chair

at the end of the Fed meeting

but really that

that's all we got from the Fed

over the past

maybe even you know

in the last

last quarter of last year

we saw Atlanta Fed chair

Cleveland Fed chair

uh members come out and

and speak often times

opposing information

in the same week

and that would cause

a lot of turmoil

in the market

you would hear one

uh Fed chair

say you know

we're done cutting

uh we're done

increasing rates

and the other one

would say well

we need to be

considerate

and maybe there's gonna be one more

we just have to watch and react

slowly uh and

and you know

for someone who watches

the 10 year

bond man it

it would look like a mountain

range yo uh

why do you think

we're hearing

from the Fed

in between meetings now

what I feel like is

more than we have in

in years yeah

I think it I think

it has to go with the mixed

bag that we have in the economy

right now so

it's two fold

I think is what one

we're paying

attention a lot more

and so when these people

when these people talk

in the past

it'd be like

you know whispering

in the woods

almost where

you know it's

like you know

if a tree falls

does anybody

really hear

it you know

cause nobody's paying attention

but the economy

is one of the

you know in a

2024 is an election year

the number one thing is gonna be the economy

when it comes to what

people care more about

care most about

with this election cycle

and with that

people are paying

attention to

what the Fed is saying

not just Jerome Powell

but also the local Fed chair

of the major

cities and so

when they talk

people are listening

and also they want to get their opinion out there

because it is such a

mix mix bag

on one hand

people are complaining

they're saying

why are interest

rates so high

why is prime

interest rate so high

why are my credit card

rates so high

and things like that

and they're coming out and saying

it's because of acts

it's because of why

you know inflation

employment you know

consumer sentiment

you know even though

it's up you know

it's not the best thing right now

where people are still

concerned about

the economy

people are paying more for groceries

that's you know

comes back to inflation

and so these chair

uh in all the

speakers of

particular cities

and major uh

Fed chairs they're

they're talking a lot more now

and the reason is

they wanna get their opinion out there

to show hey yeah

we've said that

we may have

a rate cuts

but if we don't do it

here's why you need

to know why

and here's what our

rationale is

I'm not cutting

rates as quickly

as you may want us to

and so they don't want

it to just be

a slap in the face

when they do

release their Fed

minutes after

the meeting

at the end of the month

yeah and Jerome pal

he's an attorney right

so he's gonna

be very cautious

on what he says um

at at the end of the meeting

and and yeah

it's it's just

been very interesting to me

to hear such a

posing viewpoints

in such a short timeline

and maybe you know

they're playing

local celebrity

and they want their

15 minutes of fame

sure but damn

does it rekill on the

on the market

oh it does whenever

somebody talks

and it does have to do with

the fact that

you know in

my 20+ career

in this business

this has been

the most volatile

market I've ever

seen you know

when somebody

sneezes the

the market has moved

in the past

over the past

year and a half

and it's just because

in all honesty

nobody's ever seen this before

we came from

historic low rates

during the pandemic now

and we've never seen

a fluctuation

go from you know

two and a half

two and three

quarter interest

rates up to

what we just talked

about 78% yep

in a relatively

short period of time

usually that's

fairly gradual

over you know

a five to ten year

span this time

it was two years

that we saw that

huge fluctuation

and so people are paying

attention to it more

any kind of

reaction to the market

from the people

that dictate the

prime interest

rate IE the Fed

we're gonna see

a reaction to this

to the tenure

Treasury note

to the bond market

and things like that

which directly

affect our mortgage

interest rates

and so that's why

we have seen that

that kind of knee

jerk reaction

like you said

the mountains uh

the mountains

and valleys

on the 10 year

Treasury note

in the bond market

and things like that

all right yeah

before we end

today I wanna

I wanna get your

opinion on this um

when will the

Fed cut rates

for the first

time this year

I feel like it's the

it's the big

big question right

like when we go

start seeing

some ease and

in these things

more than we've

already seen

what's your

predicting so

if you would

ask me this

in December

I would have

said by March

okay however

literally just

saw today that

everybody's

now saying that

March is pretty much

off the table

for the first

rate cut this year

so I'm gonna

be optimistic

and I'm gonna

hope for a rate

cut come April

okay that's my

that's my bold

prediction you know

if you got five bucks

put it on it

but you know

don't come to me

if it's wrong

I'm not putting

on April I'm

I'm putting on may

you're going

may okay I do

I think the

Fed is really

gonna try and

save some face

here I think

they're gonna ignore um

ignore economic

reports that come out

month over month

yep longer than

they should

in an effort to see

tell the tell

the markets

and tell the

world hey look

we didn't react

too harshly last year

we're gonna ease

out of this thing

we really wanna get it 2%

and my concern is

they're gonna

wait until may

and by the time

June and July hits

they're gonna

see that they

took it too far

they waited too long

they put too much

pressure and

too much tightening

on the market

and now we're going into

more recession

they've been

talking about

this whole soft

landing never

before done

in the history

of the United States

has there been

a soft landing

recession however

this Fed thinks

they figured

it out and I

I think they're

they're gonna

what what is it

off their nose

despite their face

yeah yeah I

feel really old

saying that

but like that

I feel like

that's what

they're gonna do

um and you know

and it goes

back to them

just not wanting

to be wrong

that's exactly right

which is it's

it's hurting us

absolutely but

they don't wanna

be wrong so

I hope that

they you know

take their heads out of

their proverbial

you know what

and and that's

why I'm hoping

for April but

you know who knows

you could be

right with may

if they don't

do it by may

though you know

it's good I think

it's gonna make for

unfortunately

not as good of a year

better than 2023

but I'm hoping

that they do it

sooner than later

because it's been

too long yeah

so that's good

yeah now it's

time for market

in a minute

this is where

we give you

an update on

the conditions

of the market

no matter the topic

of the show

this week we saw

conflicting

reports on whether

there will be

a recession

in 2024 or not

US leading Economy

index to climb

by point one %

in December

and that followed

a point five %

drop in November

and a point eight % drop in

October now

while 1.1% drop

in November

isn't a huge drop

and it's not

even as big

as the previous

months what

it does show is a

continued drop

even in the strong

economic month

like December

we're still

seeing that

month over month

decline and

that's really what

investors are

looking for

when they're

pricing in uh

potential score

or recessions

they are starting to begin

pricing recessions

as early as

second quarter

and in the third

quarter of 2024

that's right

in line for Fed

expectations

to begin dropping rates

so interesting time there

we've seen a ton

of activity

just in the

first three

weeks of 2024

tune in next week

we'll make sure

to give you

an update again

I will look

thank you for

listening today

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