Year In Preview & Januarys Mortage Update

Year In Preview & Januarys Mortage Update

Jason Hartman talks about the year in review and looks forward to 2019. He chats with in-house economist Thomas to talk about the different trends they expect. After, he brings on investment counselor Adam for his monthly Mortgage Update. They talk about recent Fed news and how they are raising rates.

Investor 0:00
just invest. It’s still a great thing to do. I know it can be scary to a lot of people. Jason’s been doing this a long time. He’s got a lot of knowledge. We’re in an age of technology and everything’s at our fingertips into a lot of homework on your own. But, in the end, make sure you’re talking to professionals like Jason.

Announcer 0:20
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:10
Welcome and thank you so much for joining me today. This is your host Jason Hartman with Episode 1107 1107. Great to have you here today. I’ve got our in house economist, Thomas young with us, Thomas, welcome. How are you? I’m good. How are you? Good. And you’re coming to us from Salt Lake City, Utah. Right? Correct. Great. How’s the weather? What’s the temperature there? Now? It’s getting pretty

Thomas 1:34
cold cold. How cold is cold? Time to go skiing cold? Yeah. Oh, really? Yeah,

Jason Hartman 1:38
you’ve got you have the best snow in the world there in Park City not too far from you? Because it’s nice and dry. But yeah, what’s the temperature like today?

Thomas 1:47
Oh, it’s about 30 degrees.

Jason Hartman 1:49
Well, hey, I want to first answer a question that I got from one of our brilliant listeners. And maybe I presented this in a slightly confusing way. I Frequently talking about my own portfolio, and what I’m doing with my properties buying and selling or 1031 exchanging. And I may have confused you at least I know it confused one person who asked me about it. And here was the confusion. I mentioned that I was buying a personal residence. Now, as everybody knows, I am a big fan of renting a high end personal property and then owning and that’s to occupy myself and I recommend that other people do that, and owning a lot of lower end properties that you rent to other people because you arbitrage the rent to value ratios, meaning on the lower end properties that rent to value ratios are really favorable to the landlord. And on higher end properties, expensive properties. The rent to value ratios are very much in favor of the tenant. But since I moved to Florida, about six, seven months ago, I have tried to find a high end rental. And I got to tell you in the Florida market, that was no easy task, it was pretty difficult. And I have a new theory as to why that is Thomas, you may have something to say about this actually. My theory is that the rise of Airbnb has sucked a lot of these higher and higher priced rental properties out of the normal long term rental pool where I might want to lease a property for two or three years or maybe four or five years if I really like it. A lot of these have converted to short term rental properties now I’ve got something to say about that because I think the Airbnb market and and Thomas I know this is one of the projects I asked you to look into do some research on for us. I am feeling with that market is pretty oversaturated but that’s another discussion. The way it affects me though is a potential tenant looking to rent a high price property for myself to occupy the inventories just been pretty limited. So I’ve been pretty disappointed. So I broke down and I bought a home for myself, okay, I didn’t want to do that. But I kind of talked myself into it, because I was number one just weary and tired of the search for a home. And number two, because the property I purchase really would have a fairly decent rent to value ratio, if I ever rented it, which would be about a point seven, rent to value ratio. Not great, but not bad either for brand new nice home that I actually liked. And so I broke down and I bought a house for myself. And Florida also has very favorable homestead laws, and it’s a no income tax state. So there are some offsetting factors there. But at the same time, I talked about how I was doing a 1031 tax deferred exchange on an apartment complex. I own with one of my clients, these are two totally separate transactions because one of our listeners said, Jason, how can you do a 1031 exchange on a property you occupy? totally separate. Okay, so I just wanted to clarify that in case that was confusing to anybody else. These are two completely separate transactions totally separate transactions. So I am looking for a 1031 exchange up leg property. We sold this hundred and 39 unit apartment complex, we own got to find something else to buy. So I’m on the hunt. If anyone out there has something, let me know. I know that the pickings are a little bit slim but not as slim as they used to be because in the commercial property market, that market is also softening along with much of the residential market in the cyclical high priced areas, which we’re going to talk about in a moment. I just wanted to clarify that these are two completely separate transactions that I’m doing not connected with one another. So I hope that makes sense. Okay, too. Thomas, let’s do a little Year in Review. It’s the new year, it’s always a good time to do a urine review and talk about what we’re looking forward to in the new year as well. Tell us about what happened last year.

Thomas 6:12
Yeah. So on the housing prices front housing began the year white hot, and towards the end of the year, it ended with a thump and in a few areas, but mostly just, you know, slower growth across the country. Most areas are still

Jason Hartman 6:28
growing pretty healthy. The question there is always, you know, compared to what, right compared to the beginning of the year, it wasn’t white hot, like it was back then. It certainly slowed. And especially that, you know, that mainly was in the higher priced cyclical markets, not in the low price linear markets that we like, but it’s still overall the market is still decent. It’s not back to the levels, you know, a very lagging sales that we saw during the Great Recession or anything like that, right.

Thomas 6:59
You I’d say it’s, it’s healthy and in a strong sustainable position.

Jason Hartman 7:05
Okay. Okay, good. So there’s always this thing when you look at housing numbers, when you look at statistics of inventory and sales, because there’s this lag time, right, Thomas, where takes a while for a deal to close number one. So maybe that’s 45 to 60 days. And then for the deed to record, and the various companies that gather statistics, you know, companies like corn logic and all the rest out there to actually publish those statistics. So, you know, there’s this lag time, right, and we don’t know, in real time what the market is doing when it comes to housing. It’s not like the stock market, right?

Thomas 7:47
Yeah, housing statistics are always well, I guess housing starts and building permits, they arrive with a one month lag a little more than one month lag, but most other figures come out with at least a Two to three month lag.

Jason Hartman 8:01
And that three month lag is because of what I described right in terms of the time it takes for the deal to close. And then for the stats to be reported, collated and reported, right? Yeah, yeah, good. So Americans lost some real wealth in 2018. Now, granted, the question is always compared to what I mean, we were in the stock market, which was crazy how the stock market was just on fire. But most of that evaporated did it.

Thomas 8:30
So over the past decade, wealth has gone from around 60 trillion to it was headed to almost 120 trillion before the stock market took a nosedive. And that that wiped out at least 5 trillion and wealth probably more than that, you know, some of its come back today, but it’s still a good deal down from the 120 number,

Jason Hartman 8:51
right, right. But you you certainly can’t look at daily. Now when you say wealth from 60 trillion to 120 trillion. Of course, you’re just Talking about us, us residents. Right? And how is that calculated? Like, what does that number mean? Is it equity in real estate? Is it equity in the stock market? Is it savings? What do you mean by that number?

Thomas 9:15
Yeah, I’m talking about just households. And the biggest component of wealth is real estate wealth. And next in line after housing, wealth is stocks and bonds, liquid financial assets. So, you know, the liquid financial assets they dropped in value, but housing wealth, keeping things going,

Jason Hartman 9:36
Yeah, okay. Okay. So there’s a lot more volatility in Wall Street type assets and those paper assets because they can be traded so quickly. And you know, whenever you have ease and speed of trade, when the when the trading is more frictionless, then the volatility increases. At least that’s, you know, my thesis because you know, when you can trade us With a click of a mouse, and you know trading a house or even a commercial property takes a lot longer than that it’s a lot slower. So that’s what I love. I love that illiquidity because it gives you time to react. Right? Yeah. So 5 trillion and wealth has basically just evaporated completely. But it sounds like you don’t think this is enough to trigger any kind of recession. Right?

Thomas 10:23
Yeah, there’s this never ending debate among, you know, individuals that debate the issue on whether financial markets respond to deteriorating economic conditions or whether they cause them and I think the market was responding to concern about corporate earnings in the first half of 2019. So the market was looking forward to the first half of 2019 and saying, well, earnings are not going to be as strong on a year over year basis. So you know, let’s sell now, but I I think those concerns were probably overblown

Jason Hartman 11:00
This is this chicken and egg thing. Right? You know? So say that, again, it’s a cause or an effect. Right? just dive a little deeper into that, if you would.

Thomas 11:10
Yeah, the debate is whether stock markets can cause a recession. And I think if if markets were to continue to drop another 20%, then, you know, the equity market could cause a recession. But right now, Main Street looks great. Today’s jobs market came in at 312,000. Much better and expectations. The overall economies are good. Okay. Yeah. Economy wages are good. They’re 3%. They’re not at the 4% level, which would be a concern for, you know, rising inflation. Inflation is it’s actually trending down. So inflation isn’t a big problem,

Jason Hartman 11:50
which hopefully will will stop the fed from taking away the punch bowl. I don’t know about you, but I think Powell and his buddies at the Fed has been Really a bit too aggressive. I’m gonna agree with Trump that they’re trying to ruin his party. You know, I think they needed to raise rates, but I don’t know if they need to do it quite quite as much as they have done or you know, do you think I’m, I’m right or wrong on that one?

Thomas 12:15
Oh, I think, you know, just in like a nonpartisan perspective, I think Trump has a point. The Fed raised rates once during the entire Obama presidency, one time and and then after the November election, they raised it again. So two times during the prior administration, and already during the Trump administration rates have been raised seven times.

Jason Hartman 12:40
Wow. But But really, you could call it eight because what you said there was kind of interesting, you said after the election, but not Trump wasn’t in the White House yet. Right? Because, you know, there’s about a two and a half month lag before he actually, you know, takes office, right. So after the election, they raised rates right away. I’m in the stock market started booming after the Trump election. And then seven more times and they only did it to Obama one time. Wow. in eight years, and then look at the time frame, right? Because with Trump, it’s only been what? Two and a half? Not even two and a half years, two years now, right or? Yeah, yeah, two years. Okay. So, and Obama had eight years only got one increase. And wow, that’s, that’s amazing.

Thomas 13:26
Yeah. I don’t know what to say.

Jason Hartman 13:28
For Trump’s criticism of Powell is is fair, maybe

Thomas 13:32
he’s certainly got a point. Do you think the folks at the Fed are Democrats?

Thomas 13:39
You know, the other day I was looking at average rate hikes by presidency, and the three top presidents for rate hikes per year. Were Reagan Trump and bush two and the three bottom where Obama bush one and Clinton interesting

Jason Hartman 14:01
So there might be a pattern here. Yeah. That’s pretty interesting. So employment. Okay, so so job numbers right now look good. And you know what just burns me up. It just drives me crazy. Every headline I read, I open any newspaper, look at any online news, and it’s all about the trade war. This is bad, that’s bad, blah, blah, blah. Am I missing something? Or why is it the media does not connect all these trade war discussions with the job market? I mean, look at the bad side of the trade war is that, you know, it could cause prices to go up, right? Well, it will cause prices to go up. So that’s a little bit inflationary. The companies don’t like it because hey, they can’t source everything as cheaply as they could. But it causes the jobs to come back to the US and the wages for existing jobs. To increase, which is clearly happening, you know, Americans haven’t had a real dollar pay increase in about 41 years until now. I just never see the media talking about that in the same discussion, as they’re talking about the quote unquote, trade war. Those two, I mean, am I crazy or aren’t those connected?

Thomas 15:24
Yeah, they are. You know, manufacturing jobs are starting to come back. And those are high wage jobs. Generally,

Jason Hartman 15:32
they’re union type jobs. They’re high wage, you know, blue collar type jobs, right. Yep. Yeah. Okay. So one sentence to remember terms of last year.

Thomas 15:42
Yeah, there was one thing I had to say that would be worth remembering. It’s the longer inflation remains subdued, the longer the expansion will last. Okay. If inflation remains some do that pushes the fed off from raising rates and puts less pressure on stock Markets on Yeah. Inflation trends down like it is right now. The expansion will last longer than otherwise would

Jason Hartman 16:09
you know, something I’ve always wondered about. I wonder if a volatile or declining stock market Now, of course, that’s a wealth effect question. Right. So when people have real estate and stocks or any asset that has increased cryptocurrencies for you know, they’re a disaster, right? But any asset that has increased in value, right, there’s this wealth effect, meaning that everybody just feels richer, and they feel like hey, you know, I’ll take some more risk. I’ll spend some more money and there’s this stimulating effect to that. And of course, the wealth effect is a major thing. There’s no question about it. It’s very important, but I’ve always wondered

Thomas 16:54
if a declining

Jason Hartman 16:56
flat or at least volatile stock market is actually better or worse for real estate? You know, of course, if people lose all their money, and they don’t have anything to invest, then you know, forget it. Right? No wealth effect. But if there was a wall perfect, but stocks start to get a little ugly like they have lately, does money flow out and flow toward real estate? Or is it just bad overall when the stock market is, is stumbling?

Thomas 17:26
Yeah, my initial reaction is the individuals that are in real estate for investment purposes. A volatile stock market or a flat stock market would certainly cause them to shift to real estate, comparing the magnitude of that effect. It’s a bigger universe, the owners of real estate and the owners of stocks that just plan on staying where they’re at.

Jason Hartman 17:50
This one’s a toughie. It’s just anecdotal life.

Thomas 17:54
Yeah, it’s a question of size, right? Bigger investors coming in or The homeowners that have a wealth effect that now don’t spend the money because they don’t have the money. Yeah, right. Right. They’re losing wealth

Jason Hartman 18:08
can’t spend what you don’t have exactly. But if credit is available, you can always spend it on credit. You can get a mortgage, or buy your stocks on margin. Right. So in terms of this year, the New Year, what do you expect to see from the Fed?

Thomas 18:22
Yeah, so they raised rates four times in 2018. I’d be surprised if they got another two, which would put the upper range or the federal funds rate at 3%.

Jason Hartman 18:35
How does that look historically? By the way,

Thomas 18:37
yeah, rates are still low by historical standards. We’ve never seen a recession with the federal funds rate below 4%. So there’s still room they’ve already been aggressive at raising rates in the past two years, so I’d be surprised if they’re as aggressive and 2019.

Jason Hartman 18:57
Yeah, there’s been so much talk and I just Did a interview which has yet to be released. But it’s a fascinating interview by the the author of a book, his newest book is called the future is Asian. And there’s so much talk Thomas about China, and you know, trade and all of this stuff. does China matter? I mean, of course it matters, but how much? Right?

Thomas 19:23
Yeah. And the theory up to now was that the US could did a couple from China and, you know, would not need Chinese growth in order to keep things chugging along. That looks like that’s going to be tested in 2019.

Jason Hartman 19:38
What do you what do you think that test would yield, though? I mean, I it’s interesting, and I’ve talked a lot about it, really criticizing Peter Schiff for his, you know, theory that he’s been totally wrong on, you know, a few things. And one of them is he he kept saying before the Great Recession well, China is going to decouple from the US because they’re creating their own consumer climate. They won’t need us to buy all their stuff. And, you know, that prediction sucked. It’s Yeah, there’s no way that could happen. Right. But the other way around. I mean, if someone is going to become isolationist and decouple, I’d say, the US is probably I’m not saying it’s a good idea. I’m just saying if it happened, and if every country started to act that way, the US would be in better shape than anybody else. At least that’s my opinion. You may disagree, but thoughts?

Thomas 20:30
Yeah, I agree. Right now. I don’t know if it’s a lose lose battle or not. The US looks pretty strong right now. It’s definitely worse on China than it is on the US. Their consumer, which had been growing at double digits for the past 15 years. Looks like is going to drop to maybe maybe as low as five or six 7%.

Jason Hartman 20:54
Yeah. Or what are you talking percentage? What do you mean when you say what personal I’m talking

Thomas 20:58
about your over growth in retail spending in China. So retail spending had been early on in the 90s. It was 20 30%. And then it trickled down to you know, in the past few years, it’s been 11 12%. And now now looks like that could drop even more. Right? You know, six 7%

Jason Hartman 21:19
Yeah. as much of a miracle as China has been in India has been and, you know, basically globalization pulling about 300 million people around the world out of poverty. Thankfully, that’s, that’s a great thing. Those countries have a long, long way to go before they create a consumer middle class, anywhere even that fathoms the United States. I mean, the you know, the US got that for better or worse, the biggest consumers on planet earth by mile, you know, by by miles and miles. I mean, it’s not even a contest, you know, but certainly they are growing it. That’s definitely A change, no question about it. I watched an interesting video the other day on the Chinese Ghost cities. And I’ve reported on that on prior episodes. the fascinating thing about these ghost cities, you know, where they just build these buildings, and they’re all vacant and everybody buys these units, and they’re all just vacant units and in high rises, and they just sit there crazy, you know, but I guess that’s how they stimulate the economy, right and building stuff nobody needs.

Thomas 22:30
In measuring economic growth, it works for a while, but then then it doesn’t.

Jason Hartman 22:34
Yeah, yep. That it doesn’t a very good way to put it. Very good way to put it. So equity markets don’t cause recessions. You talked about that. If you have anything to add. What else you have a couple more bullet points for the new year.

Thomas 22:48
I think debt will continue to be an issue right now. The credit spreads between junk bonds and investment grade bonds is still in a healthy area. There’s no signal Yet from the debt markets that, you know, the economy is going to go completely south in 2019. And the yield curve, the yield curve is still positive, although for a little bit there came close to flipping negative, you know, economists typically use the yield curve is a

Jason Hartman 23:19
ladder. Yeah,

Thomas 23:21
yeah. If that is the case, then that still means the recession is two years down the road and you know, it gives the as he as a lead time. But since approaching negative, it’s it’s flip back to more positive.

Jason Hartman 23:34
Yeah. And you know, we should do an entire episode on the yield curve. I think we should really take a deep dive into that in the future. I took a bit of a dive, I you know, maybe a 1015 minute dive into it just myself on a monologue on a prior episode. I’d love to do that with you. So let’s plan on doing that in the future. Okay, because it’s interesting. When you look at, you know, what the yield is on long term. versus short term debt, how that impacts the economy and why it’s been a, you know, historical predictor of recessions and so forth. So, so we shall see what happens there. Alright, well, hey, you’ve got a ton of graphs and supporting material here. And we will go into that all 28 pages of it, Thomas, so thank you for that in future episodes and on the website at Jason Hartman calm and in Jason Hartman economist calm as well. Thanks for joining us today. Any closing thoughts as we wrap it up? Wow,

Thomas 24:35
life’s Good.

Jason Hartman 24:38
Good. So you are an optimist, right? Even though you are one who studies the dismal science, good stuff. All right, Thomas. Hey, thanks again for joining us.

Thomas 24:46
Good talking to you.

Adam 24:50
Welcome to the January edition of the mortgage update. This is Adam with us today is one of Jason’s preferred lenders. How are you doing today? Jackie bad what’s happening Adam? Oh, just getting through the holiday You’re ready to start the new year off, right? So for those investors who are looking at buying a investment property at the New Year, what kind of rate are we looking at? We’re actually get down into the high fives from what was the low sixes just a couple of months ago, and actually we out and of course, depending upon loan size, if you’re things I tell everybody still budget right around the 6% range, but more than likely, we’re going to be a bit lower than that the way the market has been been reacting since the last time we talked. But if you’re budgeting for a little bit higher and you’re running your numbers there is a little bit more confident in your deal as you’re going into it. Now. I assume the drop has been dude, partially to the stock market tumbling. Is that what you’re doing? Yeah, there’s a lot of movement in the mortgage backed securities market in the last few months actually, it really started turning around in early November. It was a slow climb and then just to really started to make the slow movement to work crawled back out of a pretty deep hole one of the probably the deepest hole be seen since the crash and got more to a stable position that we had seen bad In August, and so it did that with a lot of money fleeing the stock market, which is interesting. It’s the first time we’ve seen in a long time that money famous stock, a stock market good make its way into the mortgage backed securities. I think a lot of it had to do with the equilibrium of the Fed slowing down their contribution to those pools with the quantitative tightening, and then the market kind of taken over the opposition and putting enough into effect the market positively, rather than the negatives of the Fed not subsidizing it having such a negative effect on it. Now back on December 4, the two year and the five year actually inverted for the first time, I think I read in about 10 years. How did that impact the market when that happened? hormones, it’s really it had that has had its effect yet. Now, interestingly enough, there was a article was put on on Bloomberg today that the inverted yield curve not only signaled a recession, but there’s a belief that’s going to actually cause it, just the fact that it’s there. Right and so it has We founded back out of that. So it touched it just for a second, right? They came back out. So they’re no longer inverted. I don’t know that that has actually had a any real effect yet. But the fact that they seen it, the market is seen as the market acknowledges it. That’s what’s going to actually have the the negative effect on growth going forward and a negative effect in the economy, because it’s happened. So how has the mortgage market been influenced by the current climate between Trump and the Fed has that Do you think that’s impacted rates in any way or looking at in the future obviously, impacts miscibility positive things, when you start seeing the two individuals kind of back and forth from that manner, it does continue to show instability in assort and other things that would contribute to what happened in the markets. So you start seeing what’s going on in the stock market. We’re getting ready to go into looks like just yesterday. We they had staved off for at least a short window of time that bear market because of that massive move that happened in the morning. The stock market. And I think that’s the main thing that we’re dealing with here is just people are unsure of what to think of the future. And they feel that there’s a lot more uncertainty because of that. Now think that’s that’s not the only factor. There’s a lot of factors. That’s a big factor. That’s a big thing. When you have two major heads there, they’re not getting along. They’re slugging it out in that way. And then of course, you’ve got what’s going on with the Secretary of Defense and that whole situation going on just anytime you have that kind of thing, it just creates more uncertainty. And I believe that that’s being seen what’s going on our stock market yesterday. With that heavy trading, we got to see where the stocks had ended so high on the day, because one of the biggest trading days in history, but we also show when you look at the charts, that it wasn’t a trend direction change was really it seemed like it was just normal trading but heavy emotional trading. And that’s why it’s a you know, we saw the mortgage backed securities market didn’t react very negatively to it had a negative reaction but not bad. We gained back all that negative and then some Today, so we’re in a much better territory than we were yesterday in the mortgage backed securities. And we lost a good chunk of what was I think almost half of what was gained initially, stock market was lost today and open trading. So I think the direction to the economy is still going to go the way that the inversion is signaling. We’re looking at some potential recession, we’re definitely looking at some recession, according to all all the analysts I’m watching and all the analysts they’re downloading data where I can see it. And then of course, with the mortgage backed securities can be back so much ground, there’s potentially might see interest rates continue to improve. They’ve definitely improved that they’re worse levels, but then they continue to improve. And the one thing that I continue to say, over and over and over again to the real estate investor, interest rate to be damned, you need to find the deals that work for you and get involved. Those financing real estate is the most tax favored asset class that there is. We’ve heard that I’m sure many times on this particular podcast or any associated with it, that ownership of the property renting was something or buying center the stage rented out. And having a third party pay off the note is where the real value is not the cash on cash return, not the cap rate at the cash flows. It’s the paying off of the note that game that increasing your be initial investment by five times the initial investment, just by paying off the note is 20% down deal is the real value is more so than anything else. Now, the Fed has decided to raise rates after a whole lot of people thought they might take December off and not raise rates. It has that changed your thoughts about what they’re going to do next year? Or are you still expecting them to? To raise I think what did they say three more times in 2019? Well, that raise was already baked in so it didn’t affect us negatively at all. I know many many people that I have open files with were contacting my crazy with the two days leading up to it. So they’re going to rain they’re going to raise this Laughlin slot will be looking at their file and strategically decide whether or not it made sense to walk based upon when they were expected to close or the rehab was done or whatever circumstances around that property. And we counseled about that and decided to float it out because it was already baked in, you know what I expected them to bake in that race. And that’s not going to negatively affect or should fit that we shouldn’t negatively affect the rate that they were getting. But what if they didn’t raise it, you’d actually make the rate get way better, because they were going opposite of what we thought they would end up going with it. And so since it was already baked in one way, we know it improvement, we would believe it and prove it the other way. So that takes a lot of people. I’ll be anxiously sitting on their hands and watching to see what happened and it worked out to where we didn’t see a negative effect, just as we had thought it would be when they raise the rate. Now the analysts are sending out in data to us that their their belief is that the Fed is probably taper off of their plan next year, based upon certain statements they’ve been made. Also because One going back into the inversion of the yield curve on the treasuries and all these other things, we are going into a recession at some point. Now, that being the case, what the Fed Chairman Jerome Powell has done is has rapidly raised rates. So that way they can taper off the rates, if we do run into a position where we have a need, rather than going back to the old drawing board and whipping out from the old planet doing that the quantitative easing, their plan is what we do just lower rate, and that should spur it. So that will be on the back end of the quantitative easing by dumping money into the economy. So if you rapidly raise it that way, and then you can back off of it, it should have the converse effect, which is spurring the economy. That’s at least what it’s been been downloaded to me as far as information about that. Does that mean it’s going to work that way? I don’t know. So they’re looking at the local hero and Savior. Exactly. And so what’s happening here is they’re rapidly raising it creating in a way Well, I guess it’s kind of like they know, we’re heading to a brick wall. So they putting their foot on the accelerator. So it’s kind of a different thought process you if you’re going to a brick wall, you stop or you turn right, but not let you get to the brick wall faster. And so that’s what they’re going to fix the car after we hit this wall, exactly that tracks the car and everything else, and then we’re going rate. And we’re gonna see if that’s going to spark things back up and get us moving again, make it more affordable to buy a new car, I’m guessing guy, you might as well look at that. So that’s kind of the theory behind what’s going on least as I understand it. I’m not sat in any of those meetings. So I can’t speak vocally about being a first person experience. But the amount of time that I spend listening to different analysts and I spend a lot of my bias about 1500 dollars a year to get access to these analysts and their charts. And what they show is going on out there. And that’s what I see they have downloaded to the world is the plan that the Fed is trying to implement, to least keep our economy rolling accurate. We hit some sort of slow down that a recession will bring if they do decide at their next meeting. Do not raise or even, they probably won’t. But if they decide to cut rates, if they don’t raise, what kind of improvement Do you think we might see in rates? That’s a solid question. It’s kind of hard to say I think that they’re just looking back on where we had come from when they started doing the quantitative tightening. And that was course January or the end of the really a year ago. So when they started doing that, we may get to a point where we gained back about half of what was what was lost during that timeframe. And so what I mean by that is we were at a point where the Fannie Mae 4% coupon, which I follow and kind of see how that trades every day, back in January 2018 18, January 5, was traded at a value of 104 51 to close. Today we’re sitting on that same security, we’re sitting at one on 159. So as you can tell 104 5139 we can probably see getting back about a half of what law is Support bottom that was 9953. So that’s 500 basis points, basically. So we would probably get 250, I’m guessing somewhere in the range about 250 of all that back. So be somewhere right around that 102 72, one or 2123. That’s where we might end up as far as a total value in that particular security, therefore, interest rates could see another creates a half a percent improvement, but possibly, in fact, it follows that pattern. Now, I can’t say that it will. But that’s traditionally what I’ve seen when when there’s something that moves enough. You might get back about half of that. Now, does that mean that we’re going to have a complete reversal and the race continue on a downward trend? From there on, I would think that that will be the case. We’re going to give back part of it and we’re going to see probably rents are raised on a much slower increase over time, because that’s going to what’s going to drive the interest rates is going to be the amount of money flowing into those pools. those tools either they attract investors based upon what other options are available. Most of times it’s stocks or currencies, some for commodity, you know, they’re going to trade in something else. But if that’s where they believe their money is their safest, that’s where they’re going to park it. And it’s kind of hard to say how long that’s going to be the fair haired places investment. All right. Well, is there anything else you feel investors need to know, before we wrap it up, I’ll go back to what I always say, find the best team to work with, you’ve got to know the right people. If you don’t have the right people to work with, it doesn’t matter what the market does, you could have the lowest interest rate with the cheapest of every part of it, the best price house, but if you don’t have a good team to help you structure and build your business, and a good team to help you manage the properties that you’re buying, do you have anything, because it doesn’t matter how cheap it is, you’re still gonna be throwing away money and getting nothing back out of it. Well, thank you very much for your time. Thank you, sir.

Jason Hartman 36:51
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Jason Hartman 37:02
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