Credit Downgrade Chaos, Mortgage Madness & a Fijian
In this high-octane episode of The Higher Standard, Chris and Saied officially welcome Rajeil to the show—and initiate him with a healthy dose of sarcasm and button-pushing. They hop right in to Moody’s U.S. credit downgrade. What does it mean when Uncle Sam takes a hit to his credit score? It’s not just a bad look—it signals rising debt, inflation, and interest payments spiraling out of control. With 30-year mortgage rates back above 7%, the crew dives into why your rate acts more like a moody teenager than a constant, and how the 10-year Treasury is the true puppet master behind housing affordability.
➡️ But wait—there’s more. Chris explains why your home isn’t an investment, it's a utility (no, you can’t charge rent to your shower), and why “marry the house, date the rate” is advice best left in 2019. The guys talk taxes and why today’s housing market may be the most unaffordable in U.S. history—yes, even worse than 2006. Whether you’re scraping by on Top Ramen or flexing your broker’s license, this episode delivers a reality check wrapped in a warm tortilla of wit and wisdom.
💥 Have you left your "honest ⭐️⭐️⭐️⭐️⭐️" review?
👕 THS MERCH: http://www.thspod.com
🔗 Resources:
Moody's downgraded US credit rating: What does that mean? (Fox Business)
Mortgage rates climb back above 7% after Moody's U.S. debt downgrade (CBS News)
The average 30-year fixed mortgage rate today: 7.08% (Lance Lambert via X)
The housing market has never been this unaffordable in U.S. history. (Nick Gerli via X)
Consumer Sentiment Hits Second Lowest Level On Record (Yahoo! Finance via Instagram)
U.S. Tariff Revenue Soars To Record High In April (Yahoo! Finance via Instagram)
Inflation Was Stubborn Ahead Of Tariffs (Investopedia via Instagram)
⚠️ Disclaimer: Please note that the content shared on this show is solely for entertainment purposes and should not be considered legal or investment advice or attributed to any company. The views and opinions expressed are personal and not reflective of any entity. We do not guarantee the accuracy or completeness of the information provided, and listeners are urged to seek professional advice before making any legal or financial decisions. By listening to The Higher Standard podcast you agree to these terms, and the show, its hosts and employees are not liable for any consequences arising from your use of the content.
Transcript
Well, I can't start there now.
Speaker A:Headphones.
Speaker A:Is this your first time doing a podcast?
Speaker B:Oh, I forgot.
Speaker B:We're a clean show.
Speaker A:What?
Speaker B:Took all the fun out of it.
Speaker A:I don't feel like we took the fun out of it.
Speaker A:I feel like we.
Speaker A:We just got to interject it a little more strategically.
Speaker B:Yeah, and you can't call it out when you.
Speaker B:When you hear it.
Speaker A:Dude, there's no world where I'm not gonna giggle like a schoolgirl when I.
Speaker A:When I'm thinking, like, a dirty joke.
Speaker B:Welcome back to the number one financial literacy podcast in the world.
Speaker B:This is the higher standard.
Speaker B:Sitting in front of me is my partner in crime, Christopher Nahibi.
Speaker A:Yeah.
Speaker A:And sitting next to me is my incredibly well lit, sexy partner in time, the one and only Saito Marvin.
Speaker B:Thank you, my man.
Speaker B:And sitting behind the desk, we have our Fijian brother, Rajeel.
Speaker A:I didn't push all the buttons back there.
Speaker A:I left one inaugural button for you to push the clock over here by the window.
Speaker A:You got to press this center button right at the top.
Speaker B:Thank you, my man.
Speaker A:Didn't press it.
Speaker A:I'm kidding.
Speaker A:You pressed it.
Speaker A:You've officially kicked off your first show, brother.
Speaker B:Thank you very much.
Speaker B:Welcome to the show, my man.
Speaker B:So you want to give a little backstory?
Speaker B:Rajeel, you want to interview him real quick?
Speaker A:Yeah.
Speaker A:Rajeel, make sure your mic's hot, because we're going to talk, you and I, sexy.
Speaker B:All right, let's do it.
Speaker A:There you go.
Speaker A:So Rajeel was kind enough to help me out for no other reason than he's a good human being in building the show and building the space.
Speaker A:Yes, yes, yes.
Speaker A:And in doing so, we thought, what better way to say thank you to make him work for free for the rest of his life?
Speaker B:Sounds against me.
Speaker B:So we're excited to have him on board.
Speaker B:And honestly, since I've started to get to know you, man, you.
Speaker B:You're a really, really good dude, and I appreciate all the time and effort you've put into this.
Speaker A:Why are you winking at me when you say that?
Speaker A:Winking.
Speaker B:Christopher.
Speaker B:Christopher.
Speaker A:Yeah.
Speaker A:Yeah.
Speaker A:In any event, Rajeel, you've been an incredible help, and we appreciate you.
Speaker A:And I gotta let you know, you've got some really big, heavy shoes to feel.
Speaker A:To fill.
Speaker A:Sorry.
Speaker B:And to feel.
Speaker A:Yeah.
Speaker A:The man behind the booth used to watch sports, control the booth, and actually manage to do a decent job in the process.
Speaker A:While eating some snacks and coughing a lot.
Speaker B:Yeah.
Speaker A:So again, it's a multitasking job.
Speaker B:We're excited to have you on board, buddy.
Speaker B:Thank you.
Speaker B:I'll do my best, guys.
Speaker A:Yeah, we know you will.
Speaker B:All right, let's get a little Moody.
Speaker A:Oh, come on.
Speaker A:Meow.
Speaker B:Come on, now.
Speaker A:Well, as much as it pains me, I am actually a big fan of Moody's.
Speaker A:I use their data, I think very highly of their chief economists.
Speaker A:I am an advocate of their services, and they were the last domino to fall financially, which is going to impact materially, I think, some things to come.
Speaker A:So let's kick it right off the top.
Speaker A:Moody's ratings on Friday, and we are recording this as of.
Speaker A:There you go.
Speaker A:Good job.
Speaker A:Look, he's ready to go.
Speaker A:They downgraded U.S.
Speaker A:credit, and, well, on Friday, they announced a downgrade of the US Government's credit rating, moving it down a notch from the rating agency's top tier amid concerns about the rising national debt, which could have implications for.
Speaker A:For the larger market.
Speaker A:And I know a lot of people listening to the show are like, wait a minute.
Speaker A:I don't really understand.
Speaker A:I heard about this.
Speaker A:It didn't make a whole lot of sense to me.
Speaker A:And this is Wednesday, May 21st.
Speaker A:So you probably, by the time this show comes out, have heard a whole great deal about this, and it may have gone by the wayside, it may not.
Speaker A:We thought it's important for you as the listeners to explain what this means and what it means for you specifically.
Speaker B:Yeah, I think that's a really good point.
Speaker B:I mean, so they're the last of the three major bureaus to downgrade.
Speaker B:Right.
Speaker B:So.
Speaker B:So this, I guess, isn't a huge surprise, but it did shock the markets initially when it.
Speaker B:When it hit, right?
Speaker A:Yeah, it was over the weekend, and a lot of people were like, why does this happen over weekends?
Speaker A:Because they don't want to shock the market during the middle of the trading day.
Speaker A:And they certainly don't want to do this in a way where it could change the market dynamic.
Speaker A:So if the market was really positive on a Monday or Tuesday, you don't want to announce something like this on a Wednesday and have the market tank on a Thursday.
Speaker A:You know what the FOMC does all the time?
Speaker A:We don't want to do that.
Speaker A:Yeah.
Speaker A:So credit ratings are used by analysts to determine the credit worthiness of debt issued by a government or a corporation.
Speaker A:And for those of you who listen to the show, you know that the US Debt is considered the gold standard, well, up until recently, anyway, of debt, that's pretty much a guarantee to pay back, which is why government bonds in The United States typically were really, really considered a safe bet.
Speaker A:You go into bonds, you know you're going to get repaid.
Speaker A:Well, if they downgrade your credit rating, meaning that your credit risk has gone up, they're basically saying you're a little bit less safe of a bet.
Speaker A:Now, this is not a meaningful change.
Speaker A:They're going from AAA rated down to junk bond.
Speaker B:Yeah.
Speaker A:But they are saying that there is an increased risk.
Speaker A:And matter of fact, the article goes on here to say higher credit ratings at or near the top of the rating scale are viewed as less of a default risk than those that are at the lower end of the scale.
Speaker A:When rating agencies downgrade the credit rating of a country or company, it can serve as a signal to the market that the debt is riskier, which can result in higher interest rates to compensate for the additional risk.
Speaker A:Higher interest rates for the additional risk.
Speaker A:That is going to be a resounding theme tonight.
Speaker A:I want you guys all to think about that as we go on.
Speaker A:In the case of the federal government, it means more spending on interest cost incurred from the national debt.
Speaker A:So that whole problem that you and I say talked about for a great deal of time, we owe everybody and their mother.
Speaker B:Yes.
Speaker A:An unprecedented amount of debt.
Speaker A:Well, that debt is going to go up because our interest costs on that debt are going to go up now.
Speaker B:Yeah, absolutely.
Speaker B:So the interest on that debt goes up and we're now running into issues where we're actually going to be paying more in interest than we're spending on defense.
Speaker B:Right.
Speaker B:And we're also not generating enough revenue as a country to pay it back.
Speaker B:All right, so we're having to borrow even more.
Speaker B:And when we can't pay our debts, what does the Fed do?
Speaker B:They print more money, only making the inflation problem even greater.
Speaker A:Yeah, more money means that there's more money in the ecosystem and there's more money fluid in the system to buy things.
Speaker A:More buying means more buyers, less supply, which means costs go up.
Speaker A:It's very inflationary.
Speaker A:It's a very simple trend.
Speaker B:Yeah.
Speaker A:Reoccurring problem.
Speaker A:I'm going to read a little bit more than I normally do at the top of this show because I think some of this information sets a good tone for the rest of the show.
Speaker A:Okay, so Moody's, the firm, said the downgrade reflects an increase over more than a decade in government debt and interest rate payment ratios to levels that are significantly higher than similarly rated sovereigns.
Speaker A:Other countries, successive US Administrations and Congress have failed to agree on measures to reverse the trend of large Annual fiscal deficits and growing increased costs.
Speaker A:That's a really powerful statement.
Speaker A:At first it just sounds like a bunch of government bs.
Speaker A:But what they're saying is for years, frankly, for decades, we have seen this problem as a country continue to get worse and done nothing about it.
Speaker A:If you were the government, Saeed and I were the one talking to you, I'd say, Saeed, your spending has outpaced your income for years and you've chosen to look the other way.
Speaker A:And now you're in a situation where you have to file bankruptcy.
Speaker A:And while it's not bankruptcy bad, it's precipice of bankruptcy bad.
Speaker B:So I think this is the thing that really for a lot of some of my friends and family, when they hear us talk about it, they can't begin to wrap their minds around.
Speaker B:So the government has a lot of debt and you're telling me they can't afford this debt, but they get more debt to pay that debt.
Speaker B:How?
Speaker B:Why would that ever be okay?
Speaker B:How is that acceptable?
Speaker A:Well, it's not.
Speaker A:It's just that when you get to, and this is going to sound really terrible, if you're borrowing $10, it's easy to spend that $10.
Speaker A:And it's easy to say, okay, if I have to borrow $10, I've got a little bit of money.
Speaker A:I don't have a lot of easy to go broke because you don't have a lot to start with.
Speaker A:When you borrow $100 billion.
Speaker A:Okay.
Speaker A:You can spend that money over a long duration of time and it takes a long time to spend it, but when you do spend it, you have nothing and a bigger hole.
Speaker B:Yeah, exactly.
Speaker B:And usually when the typically how this is supposed to work, if the government borrows money, they should be financing things to help our future, not to pay for past debt, for things that happened in the past.
Speaker A:Yeah, it's like borrowing to pay your credit card payment.
Speaker B:Exactly.
Speaker B:Right.
Speaker B:If you're, if you were a business and you were to get a, let's call, they call it a working capital line.
Speaker B:Right.
Speaker A:Look at you.
Speaker B:Yeah.
Speaker B:Okay.
Speaker A:Seeing that middle market vernacular.
Speaker A:Well, you know what I mean, you've been in the business for a little bit.
Speaker B:Yeah, it's been a while since I've done a CNI loan, but I used to do it.
Speaker B:But typically what happens if a business has a working capital line and you can correct me if I'm wrong.
Speaker B:And that's usually used for short term expenses.
Speaker B:Right.
Speaker B:For accounts, which is typically why you.
Speaker A:See a covenant, which is basically a promise to do something that you have to pay it down to 0.0dollars owed for at least 30 consecutive days during each annual period.
Speaker B:Yes.
Speaker A:So it's an out of debt provision.
Speaker A:Contractually.
Speaker B:Right.
Speaker B:So my friends who talk about maybe starting businesses, they think that, you know, to run a business you need to have the cash and this business needs to be set up in a way to where you can constantly pay your.
Speaker B:Usually that isn't the way things work.
Speaker B:Right.
Speaker B:You have these accounts receivable, sometimes payout every 60 days, every 90 days.
Speaker B:So you need a line like this to fill the gaps.
Speaker B:Right.
Speaker A:So there's a bit of a difference between a receivable baseline of credit, like a factoring line or something like that.
Speaker A:Basically, if you have a revolving line of credit that's not based on receivables, then you generally have an out of debt provision.
Speaker A:If it's usually based on receivables like you have payments coming in.
Speaker A:Most lenders understand that you're never going to be paid down to zero because you're waiting to get paid on work that you've done.
Speaker A:So people owe you money.
Speaker B:Right.
Speaker A:And that's never just going to stop for 30, 90 days, you know?
Speaker B:Right, yeah.
Speaker B:And so to Chris's point, the way the bank monitors these loans because you have to get them renewed once a year, once every two years or so, right?
Speaker A:Typically every two years.
Speaker A:It's just more efficient for government for a bank not to underwrite you every year.
Speaker B:Every single year.
Speaker B:Right.
Speaker B:But to make sure that you're using it properly, they want to see that 30 day out of debt provision to where you pay down to zero and has to stay at zero for 30 days.
Speaker B:Right.
Speaker B:But why I bring this up is if I had a working capital line, right.
Speaker B:And I ran up all this debt, I can't go to another bank and get another working capital line.
Speaker A:That's right.
Speaker B:They won't allow you to have two words.
Speaker B:So it's like for, for all of us everyday people, we can't do this, but the government somehow can.
Speaker B:And that's the part that really I.
Speaker A:Would equate a little differently.
Speaker B:So explain that part.
Speaker B:That's why what I want.
Speaker A:Well, I'm going to try to do it as colloquially as possible here.
Speaker A:So I'm going to make this real simple.
Speaker A:If you have a first trustee on your home, a mortgage on your home, right.
Speaker A:Let's say your home is worth a million dollars and you got a first lien position of $250,000, okay?
Speaker A:Right.
Speaker A:You could probably find Somebody to give you another $250,000 behind that because you're worth about a million dollars.
Speaker B:Yeah.
Speaker B:Your home is worth the collateral, right?
Speaker A:Yeah.
Speaker A:As long as you can afford to pay it back.
Speaker A:Yeah.
Speaker B:But you're not going to find as many people, right, because they're in second position.
Speaker A:Yeah.
Speaker A:Now you're in second position.
Speaker A:There's additional risk.
Speaker A:It's going to cost you more money.
Speaker A:It's more expensive to get that second lien position a little riskier.
Speaker B:Right.
Speaker A:Let find one and let's say you can afford to make the payments.
Speaker A:Okay, great.
Speaker A:Let's say you need to get another loan on top of that.
Speaker A:Now you owe half a million dollars, but you want to get another $250,000.
Speaker A:You now want to get into somebody in the third position.
Speaker A:There are people out there with third lien mortgages out there.
Speaker A:That's an even greater position of risk.
Speaker A:There's even less equity left in the property.
Speaker A:So yeah, you can get more money because you're considered to have this value.
Speaker A:And then what happens invariably is they go, well, my home value has gone up.
Speaker A:It's now worth 1.5 million.
Speaker A:So give me a $500,000 loan.
Speaker A:So now you owe a million dollars in this property that used to be worth a million, now it's worth 1.5 million.
Speaker A:But then it's all good until values go the other way.
Speaker A:And this is where the government debt may come home to roost is that the national debt is only as good as we can afford to pay back and as good as we are seen as a strong place to borrow.
Speaker A:And to give you an idea, this is not as detrimental as I think the media is making it.
Speaker A:There's a lot of people who are worried about it.
Speaker A:There are.
Speaker A:So Moody's downgrades the US credit rating from AAA to its double A1 on its 21 notch scale.
Speaker A:Okay, so it's not like it's A, B, C.
Speaker A:Right.
Speaker A:I mean there is a pretty wide range before you get to like triple A negative and like B, you know, I mean it's not the same thing.
Speaker A:Right.
Speaker A:So this happened on the close of the market on Friday, May 16.
Speaker A:So after the market closed, they gave everybody the weekend to kind of think it through.
Speaker A:And then Monday the markets opened.
Speaker A:Right.
Speaker A:During Monday's trading session that followed that May 16 close when this was all announced, the yield in the benchmark 10 year treasury bond.
Speaker A:For those of you listening to the show, the 10 year is your best proxy for what's going to happen in the Mortgage market with mortgage rates.
Speaker A:That 10 year treasury bond peaked at 4.56% before declining down to about 4.45.
Speaker A:Yields in the 10 year.
Speaker A:Started the year above 4.5.
Speaker A:We were around about 4.3 for much of March and April before rising this month.
Speaker A:And I'll tell you right now, the 10 year is used this benchmark to track every other rate, specifically mortgage rates.
Speaker A:So this is a very important shift.
Speaker A:We've heard a lot about this tariff conversation, we've seen a lot about Fed optimism.
Speaker B:So how much of this do you think has to do with that?
Speaker B:So that's part of this that I wanted to bring up is okay, do you think Moody's held out up until now?
Speaker B:Because they see.
Speaker B:Wait a minute.
Speaker B:Well, tariffs haven't really impacted the inflation report, cpi, PCE yet.
Speaker B:That's going to come in.
Speaker B:Right?
Speaker B:So if that does come in, then the Fed's going to hold interest rates higher for longer.
Speaker B:Right.
Speaker B:We can talk June, the June Fed meeting that's coming up.
Speaker B:We like several months ago, you and I had both thought that by the June meeting we'll probably see our first.
Speaker A:Notch down consensus was June or July was your best possibility.
Speaker A:Now I think July at best.
Speaker B:And that's kind of iffy, 90% chance that nothing happens in June as of right now.
Speaker A:And the Fed telegraphed that with their rhetoric.
Speaker B:Yeah, exactly.
Speaker B:So now you, you think if you're Moody's, you hear all this, you see all this, you see what's coming down the pipe from tariffs, you're like, okay, they're not going to be able to service this debt for much longer.
Speaker B:We got, we got to downgrade, we got to save face a little.
Speaker A:So there's some things to think about here in context.
Speaker A: S and p downgraded the US in: Speaker A:That's a long time ago.
Speaker A:Fourteen years ago, during the debt ceiling crisis.
Speaker A:So we hit that debt ceiling crisis, the government then raised a debt ceiling.
Speaker A:And this has happened a couple more than a couple times since then.
Speaker A:It's like 80 something times.
Speaker B:80 times.
Speaker B:Yeah.
Speaker A: Fitch downgraded in: Speaker A:Right.
Speaker A:So that's another rating service, Fitch.
Speaker A:Moody's was the last holdout until now.
Speaker A:But more importantly, the downgrade isn't a cause, it's a symptom of the underlying problems.
Speaker B:Okay.
Speaker A:I think a lot of people are going, oh, they downgraded.
Speaker A:So look at all these responses.
Speaker A:No, this is a symptom of the debt ceiling being unaddressed.
Speaker A:Right.
Speaker A:The national debt not going the other way.
Speaker A:So to be clear here, the debt ceiling means we can borrow as a country up to this point that the Congress, the Senate and the House have approved us to borrow up to.
Speaker B:Right.
Speaker A:Anything above that requires approval from that branch of the government.
Speaker B:Right.
Speaker B:And they all have to agree.
Speaker B:And that's why sometimes you have those government shutdowns, because they're not agreeing on the budget spending.
Speaker A:Right.
Speaker A:And the legislative branch will then hold out and they'll have their big fanfare and then eventually they'll agree to increase it because guess what?
Speaker A:They don't have any other choice.
Speaker B:Exactly.
Speaker A:They don't have any of the choice.
Speaker B:Yeah.
Speaker B:Because they all need to get paid too, for their jobs.
Speaker A:Right.
Speaker A:So not the same thing as a national debt.
Speaker A:And the national debt keeps going up to that, that bar.
Speaker A:So those two things have been completely unaddressed for a prolonged period of time.
Speaker A:We've been running on financial duct tape and vibes for years.
Speaker B:Oh, the vibes.
Speaker A:Vibes, yeah.
Speaker A:I think, how would we, as the higher standards say this without sounding super like financial?
Speaker B:Yeah.
Speaker A:So vibes.
Speaker B:It's the vibes.
Speaker B:I think Warren Buffett recently said this too.
Speaker B:Right.
Speaker B:He knows exactly how to solve this debt problem.
Speaker B:If they don't get it under control, none of the Congress members get paid.
Speaker B:Easy.
Speaker A:You know, I don't, I don't know that that's actually a bad idea.
Speaker A:I got to be honest.
Speaker A:Now here's a problem though is the people that would be penalized by it have to vote for it.
Speaker A:Yes, that's a bit of a problem.
Speaker B:That'S never going to happen.
Speaker A:Saeed, I want you to hold yourself accountable to being here on time.
Speaker A:On time, but we need to vote for it.
Speaker B:Yeah.
Speaker B:Not going to pass that one.
Speaker B:What can't pass Go, chief.
Speaker B:Yeah.
Speaker A:Well, Regil, if you want to bring up the next, the next topic here, we're going to talk about rates for a little bit because guess what?
Speaker A:According to CBS News, there has been some implications post downgrade.
Speaker A:And this should not come as a surprise to anybody.
Speaker A:The average interest rate for a 30 year mortgage jumped back above the 7% threshold on Monday with the increase coming after Moody's downgraded the US Credit rating just that same Friday.
Speaker A:So literally Friday the 16th, 17th, 18th, 19th, Monday, and mortgage rates are back above 7%.
Speaker A:If you're in the mortgage industry, you're like, damn it, like seriously, Liberation Day.
Speaker A:I mean, this is, this is where I'm at now, really.
Speaker B:I think, I think a lot of people were hoping this would start to turn the Other way at, by this time of the year.
Speaker A:Oh my God.
Speaker A:Every, every financial influencer out there was like, they're gonna cut rates.
Speaker A:And I cannot stress enough how much people on social media are all acting like their chief economists now.
Speaker A:Stop.
Speaker A:And the people want to.
Speaker A:I'm gonna say this to the camera because I know people want to criticize us and say, hey, you guys aren't economists either.
Speaker A:We know that.
Speaker A:Thank you.
Speaker B:Yeah, yeah, yeah, exactly.
Speaker A:Thank you.
Speaker A:We're just presenting the facts and we're in the business.
Speaker B:Yeah, right.
Speaker A:And here's the thing is when we're talking about it, we're talking about it with data articles.
Speaker A:Well, here's referencing points.
Speaker B:Well, here's the thing, right.
Speaker B:I think we're seeing now more so than ever, no different than what we recently saw in the contagion period, that something that pops up in the media cycle can affect everything.
Speaker B:You think about Liberation Day, all of a sudden you, you hear all this tariff talk.
Speaker B:What's that going to do?
Speaker B:Something like that, where one person has so much control can affect everything immediately.
Speaker B:So it's impossible to predict six months out.
Speaker A:So it's the first time since April 11th that the average 30 year mortgage rate has jumped above 7%.
Speaker A:According to Mortgage News Daily, which covers the home loan industry, the rate ease slightly later in the day, settling into about 6.99%.
Speaker A:But in my mind that's still 7%.
Speaker A:The trade publications data shows despite the Federal Reserve's interest rate cuts last year, mortgage rates have remained near their 25 year peak because they tend to track the 10 year treasury bond again.
Speaker A:That's why the Treasuries being responsive are significant which is sensitive to economic conditions.
Speaker A: %, the highest since late of: Speaker A:So you had to know that was going to push mortgage rates higher.
Speaker A:Stock and bond prices trimmed their losses as the day progressed with the S&P 500 reversing from a loss of 1.1% to a modest gain of 0.2%.
Speaker A:This is why we say don't day trade.
Speaker A:You can't predict this stuff.
Speaker B:Yeah, exactly.
Speaker A:Can you imagine if you bought a trade on a Friday and then Monday the market opens and this downgrade happened over the weekend?
Speaker B:Oh, exact.
Speaker B:Exactly.
Speaker B:Yeah man, I don't know.
Speaker B:So right now, depending on which market that you're in, I think it's still.
Speaker B:Is it better to Rent or is it better to buy?
Speaker A:Well, only about one in five listed homes in March were affordable for households with 75, 000 in annual income, compared with about half of all listings before the pandemic, according to recent analysis provided by the national association of Realtors.
Speaker B:So I said this on.
Speaker B:I can't remember which episode we did recently, but I had.
Speaker B:I was speaking to somebody and they said when her and her husband first moved to the states, they both had jobs that.
Speaker B:Where they made under $10 an hour.
Speaker A:I wasn't here with you.
Speaker A:Isn't that somebody.
Speaker B:It was from here.
Speaker A:It was Jeff.
Speaker A:That was Jeff Fargo.
Speaker B:Oh, it was Jeff Fargo.
Speaker B:So.
Speaker A:No, no, no, that was.
Speaker A:Was that.
Speaker A:You were Jill?
Speaker B:No, that.
Speaker B:That was me.
Speaker B:I said it, but I don't know.
Speaker A:You're part of that conversation.
Speaker A:Who was that?
Speaker B:That was the cleaners.
Speaker B:The cleaners?
Speaker B:Yeah, my cleaning lady.
Speaker B:But that was with.
Speaker B:I think Jeff was here.
Speaker A:You were telling the story about your cleaning.
Speaker B:Yeah, yeah, exactly.
Speaker B:And she, she said after five years, they had enough to put down on a home and they got their first home.
Speaker A:That's right, yeah.
Speaker B:And so when you say one in five, I'm shocked that it.
Speaker B:It's one in five at these prices.
Speaker B:Right.
Speaker B:And these rates.
Speaker A:So don't be shocked.
Speaker A:I mean, the last sentence of this article kind of says it all.
Speaker A:Home buying activity tends to pick up and mortgages rates drift below 6.7%.
Speaker A:Come on, man.
Speaker A:I'm not even going to quote the source because it's a director of real estate of real estate research at the national association of Realtors who typically has the narrative of guess how you can fix the site.
Speaker B:Lower interest rates.
Speaker A:So if low.
Speaker A:If interest rates go below 6.7% here, then this whole problem solves itself.
Speaker B:Why?
Speaker A:That is inaccurate.
Speaker B:Why?
Speaker B:Why is that inaccurate?
Speaker A:We've said repeatedly in the show this is not to bastardize all real estate agents.
Speaker A:This is not to bastardize the real estate industry, the mortgage industry, but by just.
Speaker A:These are just facts, okay?
Speaker A:I don't want anybody getting salty, but generally speaking, people in the business get paid off the value of the home in either directly or by proxy.
Speaker A:So if you're a realtor, guess what?
Speaker A:You want to sell the home at the highest possible price, which means that if rates go down and values go up, you get paid more, versus if values go down and rates stay flat, you get paid less.
Speaker B:Right.
Speaker A:Or if you're a loan officer, you want to get the highest loan to value possible.
Speaker A:Well, if the home value is higher, you can get more loan dollars which you get a commission of.
Speaker B:Right.
Speaker B:And it's very, very self serving to try to maintain that your industry, the values just continue to go up.
Speaker B:Always.
Speaker B:Right.
Speaker A:That's a farce.
Speaker A:And look, there's lots of.
Speaker A:In the stock market, the assumption is that every quarter you'll outperform the previous quarter.
Speaker A:And if you don't, oh my God.
Speaker A:The raft of the traders come down on you and your stock trades down in value.
Speaker A:Right.
Speaker B:Because it's.
Speaker B:I know that the.
Speaker B:What is it?
Speaker B:Everyone says that on average the s and P500 returns you 8 to 10%.
Speaker B:Right.
Speaker B:They don't actually.
Speaker B:If you go back and look at the numbers in one single year it rarely is 8 to 10%.
Speaker B:It's an average of let's say 30 years.
Speaker A:That's right.
Speaker B:Right.
Speaker B:There's fluctuations and it comes out to 8 to 10% after that time period.
Speaker A:That's right.
Speaker B:Right.
Speaker A:Which is a big material difference.
Speaker A:And I think the understanding.
Speaker A:So all of this to say that I don't care what people say about rates being the problem here.
Speaker B:Oh, I thought you were going to say about how handsome I am.
Speaker A:You are incredible.
Speaker A:The lighting here just makes you look, I mean, surprised.
Speaker A:Scrumptious.
Speaker A:Can I say scrumptious?
Speaker B:Scrumptious.
Speaker B:I think you can say.
Speaker A:Yeah.
Speaker A:Should we bleep that out?
Speaker A:I'd be like what did he say?
Speaker A:What did he say?
Speaker B:Other things we got to worry about.
Speaker A:So I knew that the rate conversation was going to be important for us tonight.
Speaker A:So I pulled up Lance Lambert's the data that showed.
Speaker A:Thank you Rejeel.
Speaker A:I almost called you, rune.
Speaker A:The average 30 year fixed mortgage rates today, 7.08%.
Speaker A:Same day last year, 7.05%.
Speaker A:So we're actually now three basis points which is when you go out to the point 08%, point 05% each.
Speaker A:That's point 08 is eight basis points.
Speaker A:Point 05 is five basis points.
Speaker A:Yeah, that's what I'm talking about here.
Speaker A:So that being said, the mortgage rates are reflected here.
Speaker A:The 10 year treasury yield today was at 4.6%.
Speaker A:Spread today is 2.4 48 basis points.
Speaker A:248 basis points.
Speaker A:So you basically just add 248 basis points over the 10 year to get today's 30 year fixed mortgage rate of 7.08%.
Speaker B:Yeah.
Speaker B:If you ever really wanted to know where mortgage rates are going to shake out, you like Chris said, you look at the 10 year and use basically juice it by 2 to 3%.
Speaker B:And that's typically where your mortgage, a.
Speaker A:Good approximation for the mortgage rates are.
Speaker B:Going to be, Right?
Speaker B:Exactly.
Speaker A:Yeah.
Speaker A:So and this is actually really good.
Speaker A:If you're ever going to buy a home loan, you got a loan officer or a mortgage broker in between you or somebody else.
Speaker A:You're like, oh God, I feel like they're juicing the rate on me.
Speaker A:It doesn't make sense.
Speaker A:Here's what you do.
Speaker A:Okay.
Speaker A:You go out and you Google 10 year treasury, right?
Speaker A:You get a number, in this case, you get a number of 4.60% for the 10 year treasury yield, right?
Speaker A:Then you go, okay, I'm going to add about 2% and about 3% and if it's outside of about 10%, that 10 year treasury plus 2 to 3%, then somebody's playing some, you know, right.
Speaker A:Hide the sausage with the rate.
Speaker B:So if you were somebody that doesn't work in this space.
Speaker A:I'm not though.
Speaker A:I am in the space.
Speaker B:And you, what would you do if you were looking to shop to get your first home?
Speaker B:Would you go through a broker?
Speaker B:Because you trust them, knowing the process and they're going to get you the best possible rate amongst the lenders they know and they juice it a little bit because they get paid a little bit more.
Speaker B:Or would you contact lenders directly?
Speaker A:So you've touched on a couple different things which are reoccurring themes of disconnect in the industry.
Speaker B:I touch on things all the time.
Speaker B:All the time.
Speaker A:The lighting just makes you want to.
Speaker B:Right.
Speaker A:So in love are we too?
Speaker A:All right, so first and foremost, I have to define the word broker.
Speaker A:I am a real estate broker.
Speaker A:I have a broker's license in California.
Speaker B:Okay.
Speaker A:Which actually entitles me to do two things.
Speaker A:I can sell real estate and I can finance consumer real estate.
Speaker A:Okay.
Speaker A:So if someone says I have a broker, that doesn't necessarily mean that they're gonna buy a house for them or finance them.
Speaker A:You have to be clear.
Speaker A:I have a mortgage broker, I have a real estate broker is a little bit more technical.
Speaker A:Okay, Right.
Speaker A:So somebody says, hey Saeed, I've got a great real estate broker to refer you to.
Speaker A:They mean they have somebody who can buy and sell a home for you or has real estate agents working for them that can buy and sell a home for you.
Speaker B:Okay?
Speaker A:Right.
Speaker A:Or they have a mortgage broker.
Speaker A:They have somebody who has lenders direct and or banks that can facilitate taking you to them to get a loan.
Speaker A:Now that's the second part of your question.
Speaker A:Yes, second part.
Speaker A:Of your question is, hey, does it make sense to go through a mortgage broker or does it make sense to go directly through a bank?
Speaker B:You're really paying for like a service, Right?
Speaker A:You're paying for a service.
Speaker A:But there is absolutely a need and a space for both.
Speaker A:The most common pushback I have from people is I don't know where to start.
Speaker A:I don't have any relationships with lender.
Speaker A:That is likely not true.
Speaker A:Every single person listening to the show likely has a bank account somewhere.
Speaker A:That is the first place you start.
Speaker A:Does that bank that you bank with offer home loans?
Speaker A:Are you a fit for their home loans?
Speaker A:What's their guidelines?
Speaker A:You don't have to guess.
Speaker A:Go to their website, they'll tell you.
Speaker B:Because really, if you're doing this the right way, you're actually getting all this prepared and situated before you even begin to go look at homes, right?
Speaker A:Yeah.
Speaker B:You want to get people.
Speaker A:You need to understand if you're qualified.
Speaker B:You need to find out what you're qualified for and what you can actually afford versus what you actually qualify for.
Speaker B:So you shouldn't be up against the clock when it comes to these things.
Speaker A:No.
Speaker A:And we've done previous shows on this topic and I would recommend going back to our history and pulling them up and we could do a.
Speaker A:Definitely do a deeper dive again.
Speaker A:But my answer is this is, number one, never time the market.
Speaker A:I don't care who your subject matter expert is on this.
Speaker A:Don't try to time the market.
Speaker A:You don't know.
Speaker A:Number two, last several years, even we thought a recession was looming and it never came.
Speaker A:There's a big material difference that I think most people have a disconnect on when it comes to their home.
Speaker A:And I think it clouds the issue of when is the right time to buy.
Speaker A:So I'm going to be clear here.
Speaker A:Your home is not an investment.
Speaker A:Your home is where you live and it provides you a utility.
Speaker A:And yes, most Americans derive the largest portion of their net worth from the home value equity they build over time.
Speaker A:However, that is an anecdotal tertiary benefit.
Speaker A:The real benefit is you get to live and have a good life there.
Speaker A:That is your primary benefit.
Speaker B:So can't put a price on peace.
Speaker A:You can't put a price on it.
Speaker A:If you can afford that utility today and it's not going to strain your income, it's always a good time to buy.
Speaker A:So don't try to time the market in that regard.
Speaker A:It's not a casino, you're not gambling.
Speaker A:And we'll come back to that theme later on.
Speaker B:Okay.
Speaker A:See, look at you.
Speaker A:I came prepared for you today.
Speaker B:Full circle.
Speaker B:You do this?
Speaker A:I do.
Speaker A:Mortgage rates have followed Fed funds rate cuts closely because the bond market doesn't trust the Fed's plans in the current environment.
Speaker A:The 10 year treasury yield, not the Fed funds rate.
Speaker A:I should be clear here is what most affects mortgages.
Speaker A:A lot of people think oh my God, the Fed's cutting rates, mortgage rates gonna go down.
Speaker A:And typically speaking that is actually true.
Speaker A:The Fed cuts rates, mortgage rates go down.
Speaker A:But the bond market is acting very differently now.
Speaker A:And you have to understand that the treasury is impacted by a lot of outside factors.
Speaker A:So for example, even if the Fed cut rates on Friday last week or Wednesday last week, the Moody's downgrade would have sent Treasuries up because the increased underlying risk in government bonds.
Speaker A:So you need to understand the Fed cutting rates.
Speaker A:Jerome Powell coming out in his purple tie being politically agnostic saying I'm going to cut rates for you America.
Speaker A:It doesn't sound like that, does he?
Speaker B:Yeah, it's not.
Speaker B:Heath Ledger.
Speaker A:Yeah, I want to know how I got these cars.
Speaker A:Yeah.
Speaker A:It doesn't necessarily mean that mortgage rates are going to go down.
Speaker A:I think that's a very, very confusing thing for a lot of people.
Speaker A:And I get it.
Speaker A:I understand why it's confusing.
Speaker A:Markets are pricing in inflation, stickiness and fiscal dysfunction.
Speaker B:So what does that mean, stickiness?
Speaker A:So inflation.
Speaker A:Whether I like to admit it or not, the Fed may have been right.
Speaker B:Little sticky, icky.
Speaker A:Yeah, it's here to stay.
Speaker A:And remember when they said inflation was transitory?
Speaker B:Yeah.
Speaker B:Come on.
Speaker A:It comes and it goes.
Speaker B:Unfortunately it didn't go.
Speaker A:It's that unwanted House guest who stays here and never leaves.
Speaker B:Right, right.
Speaker A:It's the Sayed Omar of financial that hurts.
Speaker B:Yeah, it's a little insulting.
Speaker B:Insulting, yeah.
Speaker A:Yeah.
Speaker A:Well that being said, sarcasm notwithstanding, it is a problem.
Speaker A:The Fed is basically saying that inflation is here to stay.
Speaker A:And the fiscal dysfunction is really political dysfunction.
Speaker A:Not necessarily a shot at the executive branch, but the legislative branch.
Speaker A:We have not been able to handle the, at the Senate, in the House, politically a fiscally responsible solution.
Speaker A:And no one president in a four year term or two four year terms is going to be able to set this in motion for a prolonged period of time without the legislative branches buy in.
Speaker A:So we have a problem that is decades deep.
Speaker A:Oh yeah, so deep.
Speaker B:So deep.
Speaker B:Right.
Speaker B:I know because the last inflation report that came out, the CPI report, it was a very positive one.
Speaker B:But the reason why the market didn't react favorably to it was because they know that what is, what is going to happen with tariffs was not reflective in that report.
Speaker A:No, exactly.
Speaker A:Right.
Speaker A:So I mean a lot of these things are lagging indicators.
Speaker A:We always talk about the show that we have to wait for data people like, oh my God, you're just afraid to have an opinion.
Speaker A:You don't know what you're talking about.
Speaker A:You're not being, you know, extreme enough.
Speaker A:And it's like, no, dude, like we know everything you're seeing today is from six months ago.
Speaker B:Exactly.
Speaker B:Remember these, these reports are backward looking data.
Speaker A:Yeah, they are.
Speaker A:And some of them are farther backward looking data and some of them are not so far.
Speaker A:This is why a lot of times when we talk about the show, we talk about like new home listings, we talk about, you know, closed sale transactions because home prices are a proxy of what's happened months ago that have aggregated over time and reported in.
Speaker A:You and I both know that there's like things like owner's rent equivalent out there, which is another random number that we're going to go into that makes no sense whatsoever in modern day society.
Speaker B:And it's also why when the Fed does decide to turn this thing around and put us in a better position for all of us.
Speaker A:Is this the new mic stroke, by the way?
Speaker B:This is, I can't help, I can't help myself.
Speaker A:I thought if I got away from the perpendicular mics that you wouldn't be like doing that mic stroke thing.
Speaker B:Adjusting.
Speaker A:Yeah, you just, you need something in.
Speaker B:Your hands at all times.
Speaker A:I need to get you a fidget toy.
Speaker A:Oh yeah, I'm gonna get you a higher standard fidget toy.
Speaker B:Oh, I like that.
Speaker A:Yeah, it's going to be obnoxious.
Speaker A:Of course, of course.
Speaker A:Silent.
Speaker B:Has to be.
Speaker A:Yeah.
Speaker B:It's also the reason why when the Fed decides to cut rates that we won't be at our goal, but they'll know that we're at a, we're going towards it at a pace because it's backward looking data and they're not going to need us to hit the target.
Speaker B:It'll just need to be on its way.
Speaker A:Yeah.
Speaker A:So let's talk about how we solve this problem.
Speaker A:Right?
Speaker A:There's only really two ways.
Speaker B:Let's solve the problem, solve the Rubik's Cube.
Speaker A:I'm boiling it down to really very simple topics.
Speaker A:And this is not because I think our listeners can't comprehend.
Speaker A:You guys get it.
Speaker A:You guys are smart.
Speaker A:The government can't understand this.
Speaker A:Our politicians can't understand it.
Speaker A:Okay.
Speaker B:Yeah.
Speaker A:If you're running a business and you've ran any type of business in the world before, you know, you can either make more money.
Speaker B:I like that idea.
Speaker A:Right.
Speaker A:Or you can cut expenses.
Speaker B:Yes, that's.
Speaker B:It's very.
Speaker B:It's.
Speaker B:Honestly, it's that simple.
Speaker A:It's not complicated.
Speaker A:And how do you make more money?
Speaker A:Through the government.
Speaker B:But that's why.
Speaker B:So that's.
Speaker B:That's the whole pitch with Doge.
Speaker B:Right.
Speaker A:Well, they're cutting expenses.
Speaker A:That's the other side.
Speaker A:But let's deal with the first issue.
Speaker B:Okay.
Speaker A:How do you make more money for the government?
Speaker B:Increase taxes.
Speaker A:That's right.
Speaker A:You tax.
Speaker B:You tax.
Speaker B:You know what?
Speaker A:I didn't say it.
Speaker A:I just said you tax.
Speaker A:You filled in the blank on your own.
Speaker A:That's right.
Speaker A:You tax.
Speaker A:Or you find alternative ways people can pay you.
Speaker A:Like, for example, getting a 5 million special gold card Visa thing.
Speaker B:Yeah, that's not going to do it.
Speaker A:But that was purely dismissed it.
Speaker B:That was a pipe dream that was never going to land.
Speaker B:So the US Government makes around four to five trillion dollars a year, but somehow they spend six to six and a half trillion.
Speaker A:So there you go.
Speaker A:You cut expenses.
Speaker A:And if you're cutting expenses elsewhere, you've got to have a legislative branch that wants to cut cost, which means cutting this value proposition of service the government gives the people in one way, shape or form, or being more efficient with the people they have, which means they have to work harder.
Speaker A:You can just tell how this is just bad to get reelected.
Speaker B:Yes.
Speaker A:Right.
Speaker A:Someone's gonna be pissed off.
Speaker B:Mm.
Speaker A:So it's.
Speaker A:It's not as simple as people want to make it.
Speaker A:It's not like the president can come in and be like, hey, I'm gonna fix this problem.
Speaker A:Here's how I'm gonna do it.
Speaker B:So I got a question for you that I heard.
Speaker B:I was.
Speaker B:I watched a brief clip of Flagrant.
Speaker B:Right.
Speaker B:And they were interviewing Bernie Sanders.
Speaker B:Yeah.
Speaker A:He's a very polarizing guy in some ways because he has untraditional notions of what economics should be.
Speaker A:Right.
Speaker B:Yes.
Speaker B:And they posed him the question, which I thought was a really good question.
Speaker A:Bernie went on Flagrant.
Speaker B:Can you, bro.
Speaker B:I mean, Flagrant's out here doing it.
Speaker A:I feel like we're a better fit for.
Speaker B:Honestly.
Speaker B:And I know, but honestly, like, I love that they did that.
Speaker B:They.
Speaker B:First they had Trump on, which that just flagged the video, and I can't help myself.
Speaker B:And then now they got.
Speaker B:Now they got Bernie on.
Speaker B:Right.
Speaker B:But Schultz has always been a big Advocate for Bernie for a long time.
Speaker B:But anyways, it poses question.
Speaker B:What did they said?
Speaker B:Do you think there's a way that we could still get innovation to be what it is without capping how much companies can make and grow?
Speaker A:Yes, I do, too.
Speaker B:There should be.
Speaker B:There should be a limit.
Speaker B:I feel like I don't know how you find out that limit.
Speaker B:And then, oh, and by the way, they also had Pete on.
Speaker A:Pete Booyage.
Speaker B:Yeah, they had him on, too.
Speaker B:I mean, what's going on with this show?
Speaker A:It's because Schultz is incredibly intelligent and he understands the political dynamic in a way that I think even the politicians who cover it don't understand.
Speaker B:And they post to.
Speaker B:They post to him, too.
Speaker B:They're like, look like there's there could.
Speaker B:And there.
Speaker B:There could be a way to tax on capital gains before having to sell the capital gains, but you're not going to get anybody in Congress to pass that.
Speaker A:Look, I.
Speaker B:No different than real estate, right?
Speaker B:It's no different than real estate.
Speaker B:It's an asset that you're holding on to, like, look, we're paying property taxes every single year on an asset.
Speaker A:Let me make this painfully simple yet again.
Speaker A:We are overcomplicating as a society by trying to find nuances to point to to prove that this concept doesn't work.
Speaker A:I'll make it really simple.
Speaker A:If I am overspending because I'm buying too many things, right?
Speaker A:The only way for me to improve is to stop buying so many things and to make more money.
Speaker A:Okay?
Speaker A:If I keep the habit of buying so many things even while I'm making more money, what happens?
Speaker A:I subconsciously just continue to buy more things because now I have more money.
Speaker A:I've justified buying more.
Speaker A:I'm not cutting back.
Speaker A:And I go, okay, well, then this is what most Americans do, is most Americans make more money, spend more money, never really grow their savings, for example, they never really continue to invest and build bigger investments.
Speaker B:We talk about on the show, increase your investments.
Speaker B:Don't.
Speaker B:Don't increase your lifestyle.
Speaker A:So you really need to do both as a government.
Speaker A:You need to make more money and cut expenses.
Speaker A:So as much as we want to say, oh, we can raise taxes here, we can't raise taxes there.
Speaker A:It's painful for everybody on both sides of the equation, and that's the solution.
Speaker A:And if people feel like everybody got screwed, you're probably doing it right.
Speaker B:Mm, I hear you now.
Speaker B:Yeah.
Speaker B:That way.
Speaker B:No, no one side feels like they.
Speaker A:Want, which means your taxes have to go up.
Speaker A:The wealthy taxes has to go up.
Speaker A:Companies taxes have to go up.
Speaker B:Taxes in California are pretty high.
Speaker A:They are.
Speaker A:That's why.
Speaker A:That's why I'm a resident of Texas who just lives in California.
Speaker B:You hear stories about people, like, trying to get away with this kind of stuff.
Speaker B:I'm like, man, you're really rolling the dice.
Speaker A:The irs, well, at least prior to.
Speaker A:They've had some significant reductions before, from what I understand.
Speaker A:But the IRS was pretty vigilant over.
Speaker A:They wanted to know, like, if they audited you, they wanted to know, like, where your doctors were located.
Speaker A:They want to know how.
Speaker A:Because they got away from just proving how many days you were in a state, because that can.
Speaker A:You can.
Speaker A:Drives places and stuff like that.
Speaker A:It's easy to fake.
Speaker B:Yeah.
Speaker B:Because a lot of people say they live in Nevada.
Speaker A:Yeah.
Speaker B:Really?
Speaker B:Still live here in California.
Speaker A:What's his name from Barstool Sports?
Speaker A:Dave Portnoy Fortnite.
Speaker B:Yeah.
Speaker A:So, like, his primary residence is in Miami, but his dream home is in Nantucket, I think.
Speaker A:Okay, so.
Speaker A:Or something.
Speaker A:Yeah, something like that.
Speaker A:But he.
Speaker A:Or it's like Maine or.
Speaker A:I don't.
Speaker A:I don't know.
Speaker A:Whatever.
Speaker B:I don't know what to make of that guy.
Speaker B:I don't know whether I like him or I dislike him.
Speaker A:I think that's the sign of good marketing.
Speaker B:Yeah.
Speaker B:Yeah, yeah.
Speaker A:You never want to be, like, the guy that everybody loves because there's only one way to go, right?
Speaker B:Oh, yeah.
Speaker A:But you also don't be the guy that everybody hates either, because that's just not a good place to be.
Speaker B:Really Polarizing.
Speaker A:He's very polarizing, but he's made a tremendous amount of money doing it, and.
Speaker B:He seemed to have built something that really resonates with.
Speaker B:With people.
Speaker A:Yeah.
Speaker A:And look, there's a lot of people in life who do this, right?
Speaker A:There are people who think the Rock is a fantastic actor, and people are, like, fantastic.
Speaker A:Oh, dude, people love him.
Speaker B:I mean, no, he's.
Speaker B:He's.
Speaker B:He's hilarious, and I like his shtick.
Speaker B:But I mean, fantastic actors.
Speaker B:Again, that's a little.
Speaker A:He's polarizing.
Speaker A:He ain't.
Speaker B:I mean, if we're doing from, like, terrible actor to Leonardo DiCaprio, he's not on this side.
Speaker A:Leonardo DiCaprio side.
Speaker B:Yes.
Speaker B:He's not on that side.
Speaker A:Wow.
Speaker B:He's not Edward Norton.
Speaker A:Wow.
Speaker A:How long have you been racist?
Speaker B:Who said that?
Speaker B:What do you say?
Speaker B:Relax.
Speaker A:I know this.
Speaker B:He's not.
Speaker B:He's not.
Speaker B:He's not Denzel.
Speaker A:Okay?
Speaker A:That.
Speaker A:Why.
Speaker A:Why has it got to Be an African American.
Speaker B:You took it there.
Speaker A:As a.
Speaker A:As a Fijian.
Speaker A:Indo.
Speaker A:Fijian.
Speaker A:Are you offended by this commentary?
Speaker B:Not at all.
Speaker B:Yeah.
Speaker B:Thank you.
Speaker B:This is my guy.
Speaker A:I gotta get told you somebody else behind it?
Speaker B:No, man, this is my guy.
Speaker A:You're the second person in a row to come on the show and agree with everything that said.
Speaker A:It's really disgusting.
Speaker A:Everything he's agreed to tonight, you said.
Speaker B:That's my guy right there.
Speaker A:Oh, man.
Speaker B:If I could just get you to stay on topic.
Speaker A:I am.
Speaker A:So let's stay on topic.
Speaker A:I've got another goofy THS style quote for you.
Speaker A:I put them in bold.
Speaker B:I like it.
Speaker B:I know it.
Speaker A:High mortgage rates aren't a bug.
Speaker A:They're a new feature of an over leveraged system.
Speaker A:So.
Speaker A:And I said this because I thought it was important to point out that high mortgage rates are not going to go away if the Fed cuts the Fed funds rate.
Speaker A:Yeah, the big misconception, the system is over leveraged.
Speaker A:Until we deal with the leverage, I would expect there to be a consistent and steady upward pressure on mortgage rates and certainly not downward pressure.
Speaker B:So what, what is something.
Speaker B:Let's give an example because it could be a wide, like a number of different things.
Speaker B:What's something that could cause the 10 year treasuries to come down that would ultimately help out people in this space that are looking for cheaper mortgage rates?
Speaker A:You know, I've got a good friend who's a really fantastic bond trader who is sarcastically, for the first time ever been open to coming on the show.
Speaker B:What?
Speaker A:Yeah.
Speaker A:And he's agreed to come on the show.
Speaker A:I think he said November or December this year.
Speaker A:Really?
Speaker A:And he is good man.
Speaker B:Okay, let's go.
Speaker B:You didn't tell me about this.
Speaker A:I did not tell you about this.
Speaker A:I've got a number of guests we've talked to.
Speaker A:He's probably the one that mostly.
Speaker A:So my bond trading understanding entirely came from him.
Speaker B:Got it.
Speaker A:And when I was building the studio, I was sending him pictures and we were talking about it from time to time and he was like, you know, come on the podcast.
Speaker A:It was like, sorry.
Speaker A:I was like, he's like, no, no, no, I'll come on in November, December.
Speaker A:I was like, wait, wait, what?
Speaker B:Okay, so yeah, very cool.
Speaker A:Let's stick a pin in that because I think there's.
Speaker A:There's more to come from somebody.
Speaker A:Much more.
Speaker B:That would be a great treat for the listeners.
Speaker B:I know it might.
Speaker B:Some of it might fly over people's heads if you've never heard it before.
Speaker B:But you need to be involved and hear those conversations.
Speaker B:And then the more you hear it, right.
Speaker B:Just being around it, it starts to set in.
Speaker A:Yeah.
Speaker B:Yeah.
Speaker A:Kind of like a conversation at dinner tonight.
Speaker B:Just like a conversation at dinner tonight.
Speaker A:It was a, it was a lot.
Speaker B:I, I love being a fly on the wall.
Speaker A:Really?
Speaker B:Yeah.
Speaker A:I feel like I overwhelmed those conversations a little bit by doing too much of the shtick.
Speaker B:No.
Speaker A:Shout out to my guys, Will.
Speaker A:Sean.
Speaker A:Yeah, Kyle.
Speaker B:You know they're listening.
Speaker A:Oh, yeah, they're listening.
Speaker A:Yeah, they hear me.
Speaker A:Good.
Speaker B:Dudes.
Speaker A:Let's talk about Nick.
Speaker A:Girl in the housing market.
Speaker A:The housing market has never been this unaffordable in u.
Speaker A:S.
Speaker A:History.
Speaker A:Regil on point.
Speaker A:Well done, brother.
Speaker B:I just feel like statements are just like every time.
Speaker B:Never in history.
Speaker B:Never in history.
Speaker A:Because we have a TV between us now.
Speaker A:We can point this out.
Speaker A:That's a pretty, that's a pretty significant chart.
Speaker B:Yeah.
Speaker A:And Nick early has clearly been fighting off the housing pundits here, people who are like staunch defendants, defenders of the housing market.
Speaker A:So I'm going to read you his statement here because it's, it's pointed.
Speaker B:Okay.
Speaker A:He's trying to, you know, right in the eye.
Speaker B:Okay.
Speaker A:The housing market has never been this unaffordable in US History.
Speaker A:With inflation adjusted home prices setting a record over the last three years now we're now in the biggest housing bubble of all time.
Speaker A:That's a lot.
Speaker B:That's saying a lot.
Speaker A:That's a lot.
Speaker A: ly period that Came Close was: Speaker B:Do you take exception to this at all?
Speaker B:I mean, okay, I get it, how house prices are out of control and it's, it's unaffordable.
Speaker B: have gone a lot better since: Speaker A:That, that is a defensive stance.
Speaker A:Here, let me finish this and I'll explain why the rest of this and that answer are more complex than just saying yes or no.
Speaker B:Okay.
Speaker A:Many people like to tell you that home values will never drop, which is inaccurate.
Speaker A:They do drop over the course of history, but they tend to go up over decades.
Speaker A:So.
Speaker A:But those people who conveniently don't show you this same chart, there is no historical precedent for how expensive today's housing market is.
Speaker A:Right.
Speaker A:And home buyers know it.
Speaker A:Hence the reason we've seen a bit of a slowdown in transactional volume.
Speaker A:So to answer your question, it is.
Speaker A:Here's the problem is, over time, home values typically get more expensive.
Speaker A:If you were to zoom out at a chart of home values at the.
Speaker A:At the.
Speaker A:Fred.
Speaker A:Federal Reserve.
Speaker A:Their charts, like St.
Speaker A:Louis.
Speaker A:You just pick one, you go look at it.
Speaker B:Federal Reserve economic data.
Speaker A:Yeah, Fred data.
Speaker A:Thank you.
Speaker A:I was.
Speaker A:I couldn't remember off my head.
Speaker A:It does seem to look like a pretty normal chart.
Speaker A:The problem with the chart that Nick's showing us here is the amount of growth we saw in such a narrow period of time.
Speaker A:And if you go back and this is cool, because I can.
Speaker A:We can do this.
Speaker A:Now you look at right here at the bottom of these peaks here.
Speaker B:Yeah.
Speaker A:That's normalized ups and downs with some pretty heavy economic turmoil in between.
Speaker A: of the increase in values in: Speaker A:Right.
Speaker A:Look at the decrease at the Great Recession, the great financial crisis.
Speaker A:And now we've bounced back, well, higher than that was.
Speaker B:Yes.
Speaker A:Right.
Speaker A:These are not normal peaks and valleys.
Speaker A:Normal peaks and valleys.
Speaker A:What we experienced the last several decades, frankly, the last hundred years.
Speaker B:Yes.
Speaker A:What we're seeing now is literally unprecedented.
Speaker A:He's not wrong there.
Speaker A:This has never happened before.
Speaker A:So for me to say, oh, you know, home values generally go up over time.
Speaker A:Yeah, they do, but not this quick.
Speaker A:And they certainly don't dip like they did during the Great Recession.
Speaker A:So would I like to seen a more healthy incline over time?
Speaker A:Maybe instead of home values going up 45% in a single year, maybe they went up 15, 20%.
Speaker A:Yeah.
Speaker A:Can I definitively call this a housing bubble?
Speaker A:I can say statistically, if you just look at the numbers, this looks like we are nearing the top of what was the great financial crisis.
Speaker A:But there are, again, I don't know what the impetus for dropping values would be at this point.
Speaker B:So this is just me thinking and trying to figure out exactly.
Speaker B:Maybe one of the reasons why we're seeing what we're seeing.
Speaker B:I look at this chart starts.
Speaker B: Goes back as far as: Speaker B:Right.
Speaker B:How much of this do you think could be attributed to, you know, a working class all those years for a century.
Speaker B:Right.
Speaker B:Not being taught financial literacy and understanding that the housing market is an asset class that they could, in fact, build wealth on and pass on, you know, to, like, future generations?
Speaker A:Okay.
Speaker B:And as time goes on, people understand, they learn, and now this is something that they feel safe and secure putting their money in.
Speaker A:So let me take this and layer in an additional complexity.
Speaker A:I think all of that may have impacts.
Speaker A:You have to be an economic historian to really have an opinion that.
Speaker A:I'm not that astute on the history here, but I would also say that the time leading up to what was ultimately the great financial crisis actually happened to be the rise of the Internet.
Speaker A:Right.
Speaker B:There you go.
Speaker A:And now you're seeing an upward swing in the rise of social media.
Speaker B:I mean, I'm literally seeing teenagers talking about owning rental properties, which before they.
Speaker A:Would not have had unless they were in a network of people or knew someone personally, or they just happen to be really interested in that and were reading books which were typically published years in advance.
Speaker A:They would not have that level of infrastructural knowledge.
Speaker A:The ideology that was taught in Rich Dad, Poor dad by Rob Kiyosaki was so revolutionary to people when it came out.
Speaker A:And now it's just kind of like a generally known thing.
Speaker A:Kids know this when they're 12, when they're 14.
Speaker A:Right.
Speaker A:And they look at this stuff and they go, oh, God.
Speaker A:Like, I know that.
Speaker A:I just want to know how to get rich.
Speaker A:And I know it sounds funny, but that's the paradigm shift that we're at.
Speaker A:So maybe, to answer your question, maybe volatility like this, like the great financial crisis leading up to it, maybe that's the new normal.
Speaker A:Maybe the peaks and valleys we saw are just going to be wider moving forward.
Speaker A:Maybe we do have the great financial crisis every couple of decades or so, and maybe that's the new normal because again, you can see that there's swings.
Speaker B:But the only way we get something like that again is a flood into the market.
Speaker B:I think it was, what, like over 2 million homes coming online?
Speaker A:Yeah, but that was really more of the response to the economic crises and the lack of consumer confidence, which is going to be something we're going to talk about here shortly.
Speaker B:I mean, I don't.
Speaker A:Consumer confidence plays a big role in this.
Speaker A:If people don't feel comfort, their jobs.
Speaker B:Yes.
Speaker A:I know more people today across industries, businesses all over the country that are uncomfortable in their jobs.
Speaker A:I'm not saying they're fearing for their jobs to go.
Speaker A:I'm not saying that they're afraid to make money or not make money or be employed or not be employed.
Speaker A:There is a palpable fear.
Speaker A:I guarantee you people listen to this.
Speaker A:Whether you're in a car, driving somewhere, you're watching on social media, you know, somebody who's unhappy at their job today.
Speaker B:Absolutely.
Speaker B:So I pulled us up for the show today that University of Michigan has a consumer survey that they always like to put out.
Speaker A:Yeah, I don't spend a whole lot of time.
Speaker B:We don't.
Speaker B:I know, because we don't really like the the surveys of.
Speaker B:For these things, because it's hard to base anything off of the, the people.
Speaker A:They survey, the size of the survey, how it was done.
Speaker A:It can always.
Speaker A:It's a little, but I think consistent.
Speaker B:But I think it's pretty telling.
Speaker B:Right now it's saying that consumers expect prices to increase six and a half percent next, by next year, and they also expect weaker income.
Speaker A:So there you go.
Speaker A:I mean, if you're expecting weaker income, how confident are you as a consumer in the economy?
Speaker A:What are you telegraphing about your thoughts on how the.
Speaker A:How strong the economy is?
Speaker A:Yeah, right.
Speaker B:Not very good.
Speaker A:You're basically saying, I know everything is going to cost more money and I know it's going to impact my ability to buy, purchase as a consumer.
Speaker A:So I think there's an underlying fundamental disconnect there and a problem.
Speaker B:I think we got a real issue because maybe, you know, 20 years ago or the previous generation that maybe had gone through this, the way they were able to, I guess, solve it is they adopted a new norm.
Speaker B:Dual income households.
Speaker A:Right.
Speaker A:But we've talked about some previous shows and the new norm today is multiple income people in home.
Speaker A:So it's.
Speaker A:And so I got a couple cliche things we say in the show that when you add them all together, they spell disaster.
Speaker A:Okay.
Speaker A:The new normal is three income households with two people, two adults.
Speaker A:Right.
Speaker A:The new 401K is a side hustle, which makes sense because if you have a 9 to 5 and a 9 to 5 and mommy and daddy and then one of you has a side hustle, you both work in the side hustle.
Speaker A:That's the thing.
Speaker A:This all takes time away from the traditional familial unit, by the way.
Speaker B:I can't tell you, man.
Speaker A:Yeah, and it's, it's, it's taxing.
Speaker B:It's taxing on a fan.
Speaker B:Like, for us right now, I feel like we're going through it.
Speaker B:You know, it's like, wife works full time, I work full time.
Speaker B:And we're trying to still give the kids everything that you know, they want.
Speaker B:Luckily, we're blessed for Adam to get into a gate program.
Speaker B:Right.
Speaker B:So now he's got to transfer schools.
Speaker B:And then my daughter, it's not fair to my daughter.
Speaker B:So she's got to stay in this school.
Speaker B:And they both have after school activities.
Speaker B:And you're like, like, we can't.
Speaker B:We have to rely on other people to help us get our kids to these events.
Speaker A:Yeah.
Speaker B:Because we just physically can't be there, dude.
Speaker A:And here's here's the other side of this equation.
Speaker A:Like I, I make decent money.
Speaker A:At least now anyway.
Speaker A:Probably will change, but my wife's a stay at home mom and she gets to spend all this time with our son, but I almost never get to see him.
Speaker A:I'm constantly working.
Speaker A: o' clock,: Speaker A:And we're at the podcast recording.
Speaker A:I haven't been home since I left the house this morning at 8am Right, right.
Speaker A:So it's been.
Speaker A:Call it a 15 hour day or so.
Speaker A:I probably won't be home for like, you know, until it's a 16 hour day.
Speaker A:And like, I'm not complaining of people in New York do this.
Speaker A:I get it.
Speaker A:But at the same time, like, when do I get to sit next to my son and smell him?
Speaker B:No.
Speaker B:Something as simple as that, you know?
Speaker B:Yeah.
Speaker A:And you know, he, he woke up the other day and he was like, dad, like, are you going to, are you going to podcast tonight?
Speaker A:And I'm like, yeah, yeah, I am, son.
Speaker A:And he goes, I won't see you tonight, dude.
Speaker B:My kids are at that stage.
Speaker B:Yeah, they're literally like, they'll be like, they'll wake up in the morning.
Speaker B:Is it a pod night?
Speaker B:Yeah, you know, and I'm like, it's a pod night.
Speaker B:They go and they literally, they are so aware of the moment, they don't even want to make me feel bad anymore because they'll know, like, oh, I'm sorry, like, don't worry, we'll spend more time.
Speaker B:And I.
Speaker B:They say, oh, it's okay.
Speaker A:And it's incredible to think that we do this without you liking and subscribing.
Speaker B:I know, Go ahead.
Speaker B:You need.
Speaker B:Honestly, shame on you for not leaving an honest five star review.
Speaker A:I mean, I feel like that's necessary.
Speaker A:Necessary, necessary.
Speaker A:I drew my own urine.
Speaker A:No, I like the taste.
Speaker A:Before we get to this drill, pulled up the consumer sentiment.
Speaker A:I did, I did have a statement that I wanted to make a couple statements actually before we get to it.
Speaker A:But you leave on the screen, I mean, don't change it because you look really handsome.
Speaker B:Trigger happy.
Speaker A:Yeah, you got a little trigger hype.
Speaker A:I like that though.
Speaker B:Yeah, I like that he's trying to progress the show along.
Speaker A:Yeah.
Speaker B:Say he did bring up the University of Michigan, so.
Speaker A:Yeah, he was trying to give me a handoff.
Speaker A:He was trying to give me the, you know, the, the lob.
Speaker B:Yeah.
Speaker B:I gave him the alley.
Speaker B:He just forgot to oop it.
Speaker A:No, I didn't.
Speaker A:Because there Was more here I wanted to cover because I put more cliche statements in.
Speaker A:I wanted to read everybody.
Speaker B:Yeah.
Speaker A:You know, because everybody loves it when I read to them.
Speaker A:Because reading is fundamental.
Speaker B:We used to play ball with some guys like, like Christopher, where you literally are in the game and you throw them the alley oop and they just like, watch it go over their head.
Speaker B:And you're like, why'd you make me look like the a hole here?
Speaker B:I don't understand.
Speaker B:You should have jumped for it as well.
Speaker B:Least so many times you've done this.
Speaker A:I don't have to make you look like anything.
Speaker A:You do that all on your own.
Speaker A:So I'm going to say something that's going to really ruffle some realtor feathers.
Speaker A:Oh, there's a lot of people listening to this that are in the real estate industry who are going to be like, yeah, I knew he supported us.
Speaker A:I knew it.
Speaker A:This is proof of it.
Speaker A:Because I'm going to say something that I think is a little bit polarizing based on what we just read.
Speaker A:Despite all of this, the housing unaffordability, and this is echoed earlier, really, what I was saying about earlier, it pains me to say it because it's going to make a lot of realtors happy.
Speaker A:Realtors, they always say, realtors, realtors, there's no a in there.
Speaker A:If you're waiting for mortgage rates to drop before buying a home, you're not in a housing market, you're in a casino.
Speaker A:You're gambling on home values.
Speaker A:Even if home values go down, if you can afford that mortgage payment, and I mean legitimately afford it, not stretch that mortgage payment isn't going to change as rates go up or down.
Speaker A:If you get a 30 year fixed mortgage today, as a matter of fact, if rates go down, you can always refinance and lower your payment.
Speaker A:It does not make sense if you can afford a home today to not buy one even at today's value.
Speaker A:Yeah, you'll pay more.
Speaker B:How much, how much of this do you, if somebody were to come to you and ask you, like, hey, Chris, I can't afford this home.
Speaker B:I, I understand.
Speaker B:You hear the rhetoric.
Speaker B:Marry the home, date the rate.
Speaker A:I hate that statement.
Speaker B:I hate that, hate that statement so much.
Speaker B:But if you can afford it right now, you have to look at it for like what it is right now.
Speaker B:Right.
Speaker B:But how much do you look into how long they should be staying in the home?
Speaker A:So I have a different take on this than most people get because most.
Speaker B:People say you should stay at least in the home.
Speaker B:For five to six years, right?
Speaker A:Yeah.
Speaker A:And the reason why is that they're betting on time value of money.
Speaker A:I like to take that out of the equation, make it real simple.
Speaker A:If you get a fantastic deal on a property and home values go up from there, you're going to see people sell and migrate out of their homes and move into bigger homes quicker.
Speaker A:They'll spend less time in the home because they're going to say, you know, I build some equity.
Speaker A:I'm going to buy a bigger home.
Speaker A:I pay my bill at the same.
Speaker A:Because typically, as home values rise, rates typically go down.
Speaker A:That's the economy that you're in.
Speaker A:Right.
Speaker A:When one thing's going the good way, they're all going the good way.
Speaker A:That's really the extreme variant of what happened over the last, like, decade is you were like, oh, I bought this house.
Speaker A:Went up 45% this year.
Speaker A:Rates are going down.
Speaker A:I buy another house, bigger.
Speaker A:Rates are still in the same place.
Speaker A:So now I've got the same mortgage.
Speaker A:It makes sense, you know, and that's what happened.
Speaker A:But then let's say you bought in today's market, and let's say home values do go down.
Speaker A:Let's say there's a correction, not a crash.
Speaker A:Crash is a nasty word.
Speaker A:20% or more change in value.
Speaker A:Let's just say there's a correction.
Speaker A:10% of values go down.
Speaker A:Mm.
Speaker A:Okay, Kris, you told me to buy a house.
Speaker A:I'm now underwater my mortgage.
Speaker A:Okay, number one, nobody comes out and reassesses the value on your mortgage.
Speaker A:It's only you looking at Zillow or Redfin that you're approximating the value.
Speaker A:You don't know how much your home is really worth, but you can guess that it went down by 10%, maybe because somebody in your neighborhood sold for a similar home for less.
Speaker B:Right?
Speaker A:Okay, fine.
Speaker A:Unless your income was strained when you bought it and your income or your income has gone down, you can still afford to live there.
Speaker A:And if you bought for utility, like I told you about at the top of the show, you're still getting the same amount of joy and love out of that property.
Speaker A:But you're probably going to have to stay there longer, because generally, again, as we looked at before, statistically, homes do go up over time.
Speaker B:Yes.
Speaker A:So you might have to stay there for 10 or 15 years, which, by the way, is a third or half of your mortgage amortization.
Speaker B:You should have built enough some equity.
Speaker A:And even if you haven't, by that point in time, you're now paying down more Principal than interest.
Speaker A:Because you start off paying all interest and very little principal, and then by the end of it, you're paying all principal and very little interest.
Speaker A:Because that's the way it works.
Speaker A:It's not a flat interest fee over time.
Speaker A:So as you're paying down halfway into it, you start paying down principal at a greater cadence anyway.
Speaker A:And as values do generally pick up over time, you'll make up that loss.
Speaker A:Call it 10% in this case, and guess what?
Speaker A:You'll be able to sell and be just fine.
Speaker A:People tend to worry about the nuances of these extreme examples, when in reality, it typically doesn't play out like that.
Speaker A:Unless if you bought smart, meaning that you could afford the mortgage payment and you're not on an adjustable payment, you're not on an ARM loan, you're just on a 30 year fixed loan and you could afford it when you got it and you weren't at some weird high extreme income.
Speaker A:You're gonna be okay.
Speaker B:Right?
Speaker A:Buy the property.
Speaker A:You'll be fine.
Speaker B:You should be fine.
Speaker A:Even if it's today at today's numbers and you're worried about the mortgage.
Speaker A:Do not gamble with this.
Speaker A:This is not a gambling business.
Speaker B:Right.
Speaker B:I would.
Speaker B:You'd probably have to look at your current situation to make sure you feel comfortable, stable in your jobs.
Speaker A:As a matter of perspective.
Speaker A:My first property, I was eating top Ramen.
Speaker A:I couldn't put windows, blinds in the back windows because, you know, I just didn't have the money for it.
Speaker B:Yeah.
Speaker A:And for some of us, that's just the way you get into the game.
Speaker B:Yeah, right.
Speaker A:You know, you got to scrap by and for others, you know, you happen to have a better financial situation.
Speaker A:I wish that was me, man.
Speaker A:I'll always look back on those noodles.
Speaker A:Remember how painful it was.
Speaker B:Yeah.
Speaker A:You know, it's just part of life.
Speaker A:But let's talk about how painful it is.
Speaker A:Only 15 to 20% of homes are affordable to median income households right now.
Speaker A:15 to 20, 15 to 20%.
Speaker A:And in areas like Southern California, where there's high demand and high income, way less.
Speaker B:Yeah.
Speaker A:So pre pandemic, that number was closer to 50%.
Speaker A:So you're talking less than half of what used to be considered affordable by median income prices.
Speaker A:And this is reported by the national association of realtors and CBS.
Speaker A:So there's a little bit of bipartisan clarity here.
Speaker A:80% of homeowners have rates between below 5% and they are not moving.
Speaker A:So now you've seen this transactional volume.
Speaker B:Slow down the lock in effect, that.
Speaker A:We lock in effect, which is still very prominent today.
Speaker A:And here's the problem is that if 80% of homeowners have rates below 5% and we're now nearing what was probably almost double what their current rates are in a new environment, even if they had 45% equity in their home, but rates are double what they were and they had.
Speaker A:They're looking at a financial strain.
Speaker B:Absolutely.
Speaker A:That they don't want to take on.
Speaker B:That's.
Speaker B:I mean, they're adding to their monthly expenses in a way that they.
Speaker B:Look, you don't also want to buy a home.
Speaker B:Let's say, let's say they do cash in on the equity, they sell their house and they go buy a, a bigger, better home.
Speaker B:Right.
Speaker A:But who buys a bigger, better home?
Speaker A:People moving out of starter homes, creating more starter homes in the market for the first time, home buyers to buy.
Speaker A:Which they can't buy right now.
Speaker B:Which they can't buy right now.
Speaker B:Exactly.
Speaker B:But also you also don't want to become house poor.
Speaker B:Right.
Speaker B:Where all the money you make is going into your home.
Speaker A:And then a lot of real estate investors are real estate rich and cash poor.
Speaker B:And that's why we always talk about on the show that what is affordable to you is not the same as what you qualify for.
Speaker A:Yeah, it's stunning when you're in the business for any prolonged period of time to realize how much home people can qualify for.
Speaker B:What's my buying power?
Speaker A:This dude makes $100 a month and he can afford a million dollar home.
Speaker A:These are government standards.
Speaker A:This is a qualifying mortgage, Chris.
Speaker A:No, this is stupid.
Speaker A:Yeah, this is stupid math.
Speaker B:This is irresponsible.
Speaker A:So I always say, like, figure out what that number is for you, what you qualify for using the, the traditional qualifying QM mortgage, your general conventional conforming mortgage.
Speaker A:And your broker will tell you that you can go to chat GPT actually really good for this.
Speaker A:Now you can pop in your information and for those of you listening to the show going, Chris, I don't want to find a mortgage calculator.
Speaker A:Let me tell you right now, I've done this in chat GPT.
Speaker A:If you were honest with yourself, you can actually put your information in ChatGPT and it'll tell you exactly how much you qualify for.
Speaker A:And it is dead on accurate, bro.
Speaker B:ChatGPT today helped me create a pivot table.
Speaker B:It was amazing.
Speaker B:It was fantastic, dude, it's fantastic.
Speaker B:This is the best.
Speaker A:You know what, I even did today too, and I was going to bring this up and put in the show notes I decided not to do it because I want to be braggadocious, which is very uncharacteristic of me.
Speaker A:I was feeling humble today.
Speaker B:I mean, you are Mr.
Speaker B:Braggadocious.
Speaker A:You know, I don't want to come off with the hubris here, but I'm just saying, look, you know how I said two episodes ago, episode 281, not that I went back and looked at it, that AI was going to take people's jobs out?
Speaker A:Like, if you were a general practitioner.
Speaker B:You'Re gone at Microsoft off.
Speaker A:What?
Speaker A:No, haven't.
Speaker A:Marxa.
Speaker B:Oh, they laid off.
Speaker B:I mean, rigid, maybe you want to.
Speaker A:Go, oh, yeah, they laid off people.
Speaker B:Yeah, maybe like 7, 000 people.
Speaker B:And each of them, they write all right, script.
Speaker A:So, yeah, if you're writing code, AI's got you.
Speaker B:Think about it.
Speaker B:Those people got to be making like 200 grand a year.
Speaker A:Yeah.
Speaker B:Right?
Speaker B:7, 000 people.
Speaker A:Yeah.
Speaker B:How much money they add to the bottom line?
Speaker A:Yeah, man.
Speaker B:I mean, so that's the problem, right?
Speaker B:And then you're like, it's so messed up.
Speaker A:Rejeel coming through with the screen dynamics.
Speaker B:6, 000 employees, 3% of their workforce.
Speaker B:And you're like, man, those people have been there so long.
Speaker B:And you got to think, right?
Speaker A:Look at that Bloomberg article.
Speaker B:Some of them.
Speaker B:Some of them have been there so long asking these people to start over.
Speaker B:Like, some.
Speaker B:Some of these people have been working there like 20 years.
Speaker A:Microsoft lays off hit coders hardest with AI costs on the rise.
Speaker A:And of course, we can't afford to pay for Bloomberg.
Speaker A:So.
Speaker B:Ghetto, bro.
Speaker A:I do have a Apple news subscription.
Speaker A:I have to show it with Jill how to access that.
Speaker A:You know, I pay for that.
Speaker A:Good, good.
Speaker A:You know, I'm out here.
Speaker A:Apple one was Apple one.
Speaker A:So I looked.
Speaker A:I was looking at the news today and you know, I said that, that specialized doctors would.
Speaker A:Would be okay.
Speaker A:I was wrong.
Speaker B:Even specialized doctors are in trouble.
Speaker A:So a doctor literally posted on social media because.
Speaker A:So you know it's true.
Speaker A:I got another anecdotal story to tell you at the end of the show about social media.
Speaker A:Remind me about the social media story.
Speaker A:It's a good one.
Speaker A:Okay, so for those of you listening, it's what we like to call a teaser in the business.
Speaker A:For the good stuff, you got to wait till the end.
Speaker B:You got teaser.
Speaker A:Okay, so yeah, there you go.
Speaker A:Microsoft laying off about 6,000 people, 3% of its workforce.
Speaker A:Microsoft cutting blah.
Speaker B:I mean, to reduce management.
Speaker A:The maker.
Speaker A:Scroll down, scroll down.
Speaker B:This guy's not hurting.
Speaker A:No, he's not okay.
Speaker A:We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace.
Speaker A:Translated loosely.
Speaker B:Yeah, translated loosely.
Speaker A:Cutting costs to make more money.
Speaker A:We want more profits and we're going to cut these costs, cuz AI can do their jobs, bro.
Speaker B:This is what we.
Speaker B:We did an episode like this once and it was such a big hit and we never did it again.
Speaker B:I don't know why.
Speaker A:Translating these loosely.
Speaker B:Yeah, we, we read like statements that companies would make and you would translate it loosely.
Speaker B:And it was, I think it was from Nike, bro.
Speaker A:You want to know why?
Speaker A:Why is because this was used against me later on.
Speaker B:What do you mean?
Speaker A:Like, I heard you say that.
Speaker A:Is that what you meant?
Speaker B:Is that, oh, oh.
Speaker A:And I'm like, nah, man, it's hot in here.
Speaker B:You step outside, right?
Speaker A:I was like, that's not what I meant.
Speaker A:I said it in a different context though.
Speaker A:They're like, it was an earnest call.
Speaker A:I'm like, no, it wasn't.
Speaker B:No, it's a snowflake.
Speaker B:It's not all the same.
Speaker A:Yeah, I mean, they're very unique.
Speaker B:Very unique.
Speaker A:So the social media story that I saw today was a doctor basically lamenting that he spent 20 years learning how to read X rays.
Speaker A:And he brought up an X ray of an unknown patient and said, this patient has on the left lung, clear pneumonia on the right lung.
Speaker A:It's starting to go show a beginning of a collapsed lung.
Speaker A:And to me, it looked like a bunch of gray blotches and it looked like someone's lung cavity of their chest, but I couldn't tell that from the images.
Speaker A:And he's like, and look what AI can do.
Speaker A:And he just pulls up an image of AI and it literally has like a heat map on both lungs showing his same conclusions.
Speaker B:Wow.
Speaker A:And he's like, I spent 20 years refining this skill that AI can now do in minutes.
Speaker A:And he's like, if you're coming out of medical school, why would you spend decades refining the skill to read these X rays when now you can just literally pay for the subscription and get this.
Speaker A:And if you're hospital, you just pay for all your doctors that have this subscription.
Speaker B:I mean, it's not.
Speaker B:I know, but that's been, that, that's been the problem.
Speaker B:I think this advancement in technology will actually take into effect and be utilized.
Speaker B:Whereas, like, I mean, for a long time they teach you how to do like long division and people are like, I got a calculator, bro.
Speaker B:I'm not going to need that in the workforce.
Speaker A:Yo, let me ask you both a question, and I want you to be honest with me.
Speaker A:Have you guys turned your phone sideways to use the more complicated calculator at all recently?
Speaker A:Hell no.
Speaker B:What percentage of the buttons do you recognize?
Speaker A:Honestly, I used to use the HP12C calculator.
Speaker B:I'm saying.
Speaker B:I know.
Speaker A:I got to tell you right now, you know, my HP12C is now.
Speaker A:Yo, Chad, GPT solve this.
Speaker B:Why would you.
Speaker B:Right?
Speaker A:I don't regit.
Speaker A:When was the last time you used a more complicated calculator?
Speaker B:High school.
Speaker B:High school.
Speaker A:There you go.
Speaker A:Yeah.
Speaker A:Okay.
Speaker A:Yeah, dude, I.
Speaker A:I don't even do any.
Speaker A:Even for like, like, basic math now.
Speaker A:I'm like, hey, Chad, GPT add this together.
Speaker B:Let's see.
Speaker B:I.
Speaker B:I know I could do this.
Speaker A:I had the brain power to do it.
Speaker A:Then I'm like, damn, is this like one of those.
Speaker A:This is like a perishable skill.
Speaker B:Yeah.
Speaker A:If I stop doing math long enough, like, I can't do math no more.
Speaker B:I mean, not the base, not the basic stuff, but still, it worries me because I know that, you know, kids are going to go through school and they're right now I go over their homework with them, so at some point they're going to come in, I'm going to be like, dang, son.
Speaker A:So along the same topic, I prompted Chat GPT about the current housing climate with some basic facts.
Speaker A:And if anybody wants the prompts, I'm happy to give it to you later on, but for the purpose of the show, I just.
Speaker A:I'll forego getting the details of it.
Speaker A:And I said, hey, median home prices are still at record highs even with high rates.
Speaker A:Does that make sense?
Speaker B:Okay, median.
Speaker A:Median home prices, the average home price are still at record highs, even though we have higher rates.
Speaker A:I said high rates.
Speaker A:But high rates relative to where we were historically.
Speaker A:Right.
Speaker A:And I was very specific on the rates that we currently have today.
Speaker A:So this is not like my interpretation of high, or assuming what that is.
Speaker A:It's saying today's rates.
Speaker A:Okay, this is the answer from ChatGPT, and I wanted one short statement.
Speaker A:You guys ready?
Speaker B:Let's go.
Speaker B:You asked for a brief response.
Speaker A:Yeah, yeah.
Speaker A:This is defying basic economic logic, but the supply demand mismatch is that severe.
Speaker B:Look at that.
Speaker A:See, there you go.
Speaker B:It's that simple.
Speaker A:Supply demand mismatch is that severe.
Speaker A:But I would even argue that it's not even a lack of supply at this point.
Speaker B:Because what?
Speaker A:Lack of demand?
Speaker B:Right.
Speaker A:Because.
Speaker B:Right.
Speaker A:You know my catchphrase?
Speaker B:We haven't said this in a very.
Speaker A:Long time, man without affordability is not demand.
Speaker B:That was should have always been a T shirt.
Speaker B:Like an acronym.
Speaker A:It should have been, but we're too cheap for that.
Speaker B:Yeah.
Speaker A:Although we have the Anti Guru Guru Club shirt that is out now.
Speaker B:Fire.
Speaker A:Pick them up@thspod.com.
Speaker A:i've ordered one.
Speaker A:Site has.
Speaker B:At cost.
Speaker A:At cost, 30 bucks.
Speaker A:Although with tax and shipping, ones have been like 40.
Speaker A:And I apologize for that.
Speaker B:Yeah, but that's not.
Speaker B:Oh, it's not coming into my pocket.
Speaker A:No, we don't get anything.
Speaker B:That's Shopify.
Speaker A:Shopify.
Speaker A:And then it's also the manufacturer behind the scenes.
Speaker A:I ordered one.
Speaker B:Yeah.
Speaker A:I paid retail.
Speaker B:It's great.
Speaker A:Yeah.
Speaker A:Did you order one?
Speaker B:Not yet.
Speaker B:I'm going to, though.
Speaker A:Jill, I got.
Speaker A:I'm going to buy you one.
Speaker B:I have to order.
Speaker B:I have to go.
Speaker B:What?
Speaker A:Huh?
Speaker A:Bro, he's new.
Speaker A:He gets merch.
Speaker A:You're wearing merch now?
Speaker B:You never bought me merch.
Speaker A:I have bought you merch, bro.
Speaker B:I'll go sit behind the desk if you buy me some merch.
Speaker A:Is this because you guys are close to skin color telling them that's what it is?
Speaker B:This is unfair.
Speaker B:I feel like you like him more than me.
Speaker A:No, I'm a lighter shade of brown.
Speaker B:I'm going.
Speaker B:I'm going to hr.
Speaker A:That's it.
Speaker A:You are hr.
Speaker B:Yeah.
Speaker A:You are hr.
Speaker A:Sides, let's go on to the consumer sentiment record.
Speaker A:Lowest level on record.
Speaker A:That's where we're at now.
Speaker A:Okay.
Speaker A:Society asked earlier about how people felt and about what this means for consumers.
Speaker A:We talked about it.
Speaker A:According to Yahoo Finance, consumer sentiment hits second lowest level on record.
Speaker A:The second lowest.
Speaker A:That's a big problem.
Speaker A:So US Consumer sentiment tumbled further in May as the impacts of President Trump's tariff policies remained top of mind for Americans.
Speaker A:The latest University of Michigan study survey released on Friday show the sentiment hit its second lowest reading on record.
Speaker A:The one that said is referencing earlier.
Speaker A:The index slid to a reading of 50.8 below the 52.2 seen last month and 53.4 forex expected by economists.
Speaker A:Here's a direct quote.
Speaker A:Uncertainty over trade policy continues to dominate consumers thinking about the economy, Survey of Consumer Director Joanne Xu wrote in the release.
Speaker A:Xu added that nearly 75% of respondents mentioned tariffs spontaneously, up from almost 60% in April.
Speaker A:Well, yeah, tariffs weren't part of the zeitgeist here.
Speaker A:People weren't even thinking of talking about it ever as an economic thing unless you were in like some kind of, you know.
Speaker B:But people Understand that tariffs are inflationary.
Speaker A:They are inflation.
Speaker A:Right.
Speaker B:And a big reason why we haven't seen a spike in those inflation reports that we cite every single month.
Speaker B:And another reason why too is businesses were stockpiling.
Speaker B:They were stockpiling inventory.
Speaker B:They knew that these were coming down the pipe.
Speaker B:For instance, I think Apple did like they airlifted over a million iPhones.
Speaker A:Yeah, it was interesting.
Speaker A:You see today Home Depot said they're not going to raise prices in response tariffs.
Speaker B:Oh, really?
Speaker A:That was really.
Speaker A:That was a good PR move.
Speaker B:That's great.
Speaker A:We're America's brand.
Speaker A:We're not going to raise prices on you.
Speaker A:Yeah, because we ordered inventory in advance.
Speaker B:Yeah, gang.
Speaker B:Yeah.
Speaker B:But we will once this inventory runs out.
Speaker A:But that won't be in response to tariff.
Speaker A:That'll be in response to the secondary market telling us we need to increase our revenue.
Speaker A:So we didn't lie.
Speaker B:Yes, true.
Speaker B:See the loopholes, man, the loopholes are real.
Speaker A:Yeah, See, and this is why I can't give away secrets on this show.
Speaker A:Let's go on to the next Yahoo Finance article.
Speaker A:Because we were talking about tariffs, right?
Speaker B:Yeah.
Speaker A: pts from Customs duties since: Speaker A:So this one takes a little bit of explanation, so I'm going to have to read it to you.
Speaker A:I apologize in advance.
Speaker A:The US collected a record amount of revenue from tariffs in April, helping to limit a few further widening of the budget deficit.
Speaker A:Okay, okay.
Speaker A:Maybe something's working here.
Speaker B:Sounds positive.
Speaker A:Sounds positive though through President Trump's search for trade deals with targeted nations may scale back future amounts collected.
Speaker A:So this may have been a one month thing.
Speaker A:This may be an increase incrementally over where it's been, you know, historically, but certainly not to where we saw last month because they were big tariffs.
Speaker A:The treasury department recorded a $16 billion in customs duties revenue for April, marking a $9 billion or 130% increase in this over the same month a year before.
Speaker A:That's the biggest monthly take for customs in at least a decade, according to data compiled by Bloomberg.
Speaker B:Man, before everyone gets super excited about this, let's just say that, let's look at it from on the bright side.
Speaker B:If it did, if they do continue to make $9 billion more a month.
Speaker A:They won't.
Speaker B:They won't.
Speaker B:Well, let's just give them the benefit of the diet as if they were.
Speaker B:That means they will make an extra 108 billion for the year.
Speaker B:Right?
Speaker B:For over a year.
Speaker A:No, ChatGPT did that right here yeah.
Speaker B:Right off the Dome, and we're still in over $1 trillion in deficit.
Speaker A:Yeah, it sounds like a lot of money.
Speaker B:Yes.
Speaker A:Yeah.
Speaker A:It's like me telling Jeff Bezos, I'm going to.
Speaker A:I'm going to give $1,000.
Speaker B:You know, he's not even going to stop to pick it up because it's a waste of his time.
Speaker A:Yeah, dude, if I send somebody there to pick it up and it cost me a couple thousand dollars because I'm.
Speaker B:Not bending over to get it.
Speaker A:No, I got somebody for that.
Speaker B:Yeah, he only bends over when he does.
Speaker A:Deadly.
Speaker A:Zuckerberg, Pick this up.
Speaker A:You're a Brazilian.
Speaker A:Jiu Jitsu.
Speaker A:Used to be on the floor.
Speaker A:Roll over there.
Speaker B:Yeah.
Speaker A:You like the roll?
Speaker B:Yeah.
Speaker A:So.
Speaker A:And to your point, Monday's data came out hours after the US Reached a tentative deal with China to remove a swath of escalatory tariffs.
Speaker A:Treasury Secretary Scott Bessette.
Speaker A:I always screw that up.
Speaker A:And U.S.
Speaker A:trade Representative Jameson Greer announced that America.
Speaker A:American levies on Chinese goods would come down from 230% for now from 145%.
Speaker A:So you've already lost a good portion of this income.
Speaker A:There you go.
Speaker A:Additional income as part of the trade policy.
Speaker A:You know, maybe it'll involve in something else, but it's okay.
Speaker A:Let's talk about inflation next, because these are things.
Speaker A:So we have consumer confidence, consumer confidence, pointed to inflation, said, hey, I'm sorry, pointed to tariffs.
Speaker A:So consumers say, hey, I don't feel good about things.
Speaker A:Tariffs, tariffs, tariffs.
Speaker A:In the conversation, tariffs, well, they generated some money.
Speaker A:But did that solve or hurt inflation?
Speaker B:Well, I don't think it remains to be seen.
Speaker A:Inflation was stubborn ahead of tariffs.
Speaker A: % target since January of: Speaker A:Now, it is early in the data cycle.
Speaker A:Could get some good data prints, could get some bad data prints, but as far as the Fed's concerned, they don't have enough data to know whether it's actually beneficial or negative at this point.
Speaker A:That's why they've chosen not to cut rates.
Speaker A:So the tariffs could add 2.25% to a key inflation gauge over the next year.
Speaker B:Oh, that's not good.
Speaker A:Add means inflation goes up, right?
Speaker A:Yeah.
Speaker B:And it means away from the Fed's target.
Speaker A:That means that they would not be inclined to cut rates aggressively unless inflation, unemployment.
Speaker B:Right.
Speaker A:Was kicked in the Ding, ding.
Speaker B:Right.
Speaker A:That's a technical term, by the way.
Speaker B:That is a technical term.
Speaker B:Right.
Speaker B:So they.
Speaker B:Yeah, they would only decide to cut rates because they have a dual mandate.
Speaker B:Right.
Speaker B:They look at these inflation numbers and they need to get inflation under control.
Speaker B:And the only other reason why they would cut is if people were to start losing their jobs.
Speaker A:New estimates from Goldman Sachs suggest President Trump's proposed tariffs could drive inflation back to levels not seen since the post pandemic surgeon.
Speaker A:Now, I don't know if that's the proposed tariffs at 145% on China or at 30% on China.
Speaker A:The question therein lies.
Speaker A:Don't know.
Speaker A:But if it's at 145%, then I would say that's material misrepresentation.
Speaker A:If it's at 30% and they're being looking at today's numbers, then I would say, yikes.
Speaker B:Yeah, I'm worried about what this is going to do to a lot of small businesses.
Speaker A:Yeah, I am, too.
Speaker A:I think it's fair.
Speaker A:It's fair concern.
Speaker B:Yeah.
Speaker B:You know, I'm not, I'm not too concerned with what's going to happen to Home Depot.
Speaker B:Clearly they can foot the bill for now.
Speaker B:Right.
Speaker B:But the mom and pop shops are the ones I'm worried about.
Speaker A:Yeah, well, I mean, mom and pop shops are your first line of defense.
Speaker B:They make up a huge portion of the labor force.
Speaker A:Federal Reserve's preferred inflation measure, core personal consumption expenditures, or PCE, rose 2.6% over the past year.
Speaker A:It went up, not down.
Speaker A:The fight against inflation we are losing.
Speaker A:Now, granted, it's not 9.1% like it was at its height, but you know, it's going the wrong direction.
Speaker B:The whole point, though, is we're going away, away from where the Fed wants it to go.
Speaker B:And if it's going away, then we're not going to get to where we want to be because the Fed's going to keep things right where they are.
Speaker B:And the reason why we want the Fed to cut rates is it stimulates the economy.
Speaker B:Right.
Speaker B:The economy continues to grow and we're supposed to be swimming in a pot of gold.
Speaker A: y December, the highest since: Speaker B:If that happens.
Speaker B:Oh, my gosh.
Speaker A:Yeah.
Speaker B:I mean, at that point.
Speaker B:At that point.
Speaker B:Are you talking about increasing rates?
Speaker A:First of all, that would be such huge political fodder between the, the executive branch and the Fed.
Speaker A:There would be a lot of narrative in the economy from the media covering it because you're now having a bit of a standoff.
Speaker A:It would certainly be sensationalized.
Speaker A:I hope we don't get there, sincerely.
Speaker B:Yeah.
Speaker A:But part of me wishes that we would really, because it would help correct home values, which to me at least gives the consumer the opportunity to grow financially and maybe a buying opportunity.
Speaker B:Maybe.
Speaker B:But then you got to also look at it from the another side too, where we know a lot of people are racking up a lot of debt.
Speaker B:We're seeing.
Speaker B:What is it now that the student debt payments price for their student loans.
Speaker A:Yep.
Speaker B:They're starting to garnish wages.
Speaker B:And I know that a lot of these people have were those that bought homes, you know, over the last five years and maybe they need the equity so that they could sell so that they can pay off some of their debts.
Speaker B:You know, I mean it's, it's a dual edged sword.
Speaker A:So I've got two stories in the.
Speaker B:Show today, tonight with social media.
Speaker A:No, we're there at the end this last one actually.
Speaker A:Let's go there.
Speaker A:We'll go first.
Speaker B:Still teasing.
Speaker A:We'll go there first because last one I think is a middle finger to you.
Speaker A:And I like that.
Speaker A:I was watching television.
Speaker B:Oh, man, I know where this is going.
Speaker A:No, no, you don't.
Speaker A:You don't.
Speaker A:I mean, you might, but watching Television Today and realtor.com had a website that looked like a tick tock post.
Speaker A:Had the same font.
Speaker A:It uses the same captions.
Speaker A:Really, like from the third.
Speaker A:It basically was made on cap cut.
Speaker A:It was literally, you could tell it was made on cap cut to look and function like a social media post where it scrolled up and down and I gotta find.
Speaker A:So I was drawn into it because I recognized it looked like a social media post.
Speaker A:But I'm not gonna lie, it sucked me.
Speaker A:And I was captivated.
Speaker B:You were in.
Speaker A:I'm like, damn it.
Speaker A:It works on television too.
Speaker A:And it's such a brilliant post because even though it's in wide format, it still did like the scrolling up thing and going to the next scene in a very like social media like thing.
Speaker A:It had the captions on it and it was the same ones that transitions.
Speaker B:Oh.
Speaker A:And I was like, damn it, it sucked me.
Speaker A:I watched the whole commercial.
Speaker B:Wow.
Speaker A:It was such a brilliant marketing move.
Speaker B:What was?
Speaker A:I was so pissed off.
Speaker A:It was a realtor.com.
Speaker A:it was just a realtor.com commercial and it was just like scrolling up and showing.
Speaker A:I was like, this is such a brilliant.
Speaker A:Whoever thought about this?
Speaker A:Yeah, let's make a traditional commercial like a social media post and people will watch.
Speaker A:And it sucked me in.
Speaker A:Yeah, I've never in my life watch a realtor.com commercial.
Speaker A:I was sucked.
Speaker A:And, dude, I was like, damn it.
Speaker A:This is brilliant.
Speaker A:I was so mad, I didn't think.
Speaker B:That's actually a really good question to pose, like, outside of that one.
Speaker B:Obviously, that's your answer right now.
Speaker B:But what marketing commercial, like, stands out to you from that you've seen over the years?
Speaker A:That I've seen over the years?
Speaker A:Yeah.
Speaker B:What's one that you remember that really stands out?
Speaker B:Remember there was that one super bowl ad that came out.
Speaker B:The, like, QR code.
Speaker B:That was.
Speaker B:That was brilliant.
Speaker B:Everyone.
Speaker B:Everyone scanned it.
Speaker B:Everyone goes in.
Speaker A:This is gonna sound really corny.
Speaker A:The Jean Claude Van Damme one where he actually did the splits in between two Volvo big rigs as a way to.
Speaker A:That was a real shot, by the way.
Speaker A:That wasn't cgi.
Speaker A:No, I know.
Speaker B:Yeah, yeah.
Speaker A:That one to.
Speaker A:Stood out to me because there was such, like, media fanfare around it, and there was a second wave of fanfare around it, but because people were like, wait, that wasn't cgi.
Speaker A:That was real.
Speaker B:Yeah, yeah.
Speaker A:People were like, wait, what?
Speaker A:That's insane.
Speaker A:But it was all about Volvo trying to highlight how precise their driving mechanisms were.
Speaker A:And.
Speaker A:Yeah.
Speaker A:I mean, he risked his groin to prove it.
Speaker A:Yeah.
Speaker A:Jeez.
Speaker A:I mean, it's real.
Speaker B:Yeah.
Speaker B:What about you, Rail?
Speaker B:Does one stand out for you?
Speaker A:He forgot he was listening.
Speaker B:Yeah.
Speaker B:Oh, yeah.
Speaker B:No, I'd say the Doritos.
Speaker A:Close to the mic, baby.
Speaker A:Kiss that thing.
Speaker B:Doritos.
Speaker B:Which one was that?
Speaker B:I don't remember, actually.
Speaker B:Oh, no, the most recent one with Seal.
Speaker B:Oh, yeah, yeah, yeah.
Speaker B:My kids.
Speaker B:My kids saw that and they asked me.
Speaker B:Yeah, they asked me.
Speaker B:They're like.
Speaker B:They didn't.
Speaker B:Obviously.
Speaker B:They didn't get.
Speaker B:They didn't constantly like, oh, his name is Seal.
Speaker B:And then they're like, okay, well, you have to understand, the song was a major hit.
Speaker A:There was a.
Speaker A:There was a hot boy summer that I listened to nothing but Seal all summer long.
Speaker B:Stop it.
Speaker B:That's not being honest.
Speaker A:No, seriously, I wouldn't admit that.
Speaker B:Was it.
Speaker B:Was it because he did.
Speaker B:He did a song for Batman, right?
Speaker A:No, it was.
Speaker A:Well after that.
Speaker B:No, but he did, Right?
Speaker B:Yeah, yeah, yeah.
Speaker B:I can't remember.
Speaker B:What song was it?
Speaker A:I should know.
Speaker A:It's in my head.
Speaker A:I'm singing it.
Speaker A:I'm not.
Speaker A:I'm not giving you that satisfaction.
Speaker B:It's a Hot Boy Summer.
Speaker B:It's a hot boy Summer.
Speaker A:I'm not giving you the satisfaction of acknowledging that.
Speaker A:I know that.
Speaker B:Oh, man.
Speaker A:I'm doing it.
Speaker A:I'm not doing it.
Speaker B:Love it.
Speaker A:Pull it over to the center a little more there.
Speaker A:You get in there nice and deep like.
Speaker B:Yeah.
Speaker A:Oh, this is such a good commercial.
Speaker B:Brilliant.
Speaker A:All right, so my last one for you.
Speaker A:Bitcoin jumps to a new all time high, surpassing prior record in January.
Speaker A:Everybody in the crypto space dming me, sending me message saying good for said.
Speaker A:I hope he likes it.
Speaker B:When.
Speaker B:When was this again?
Speaker B:When did this.
Speaker A:I like this guy riding a rocket here next to it.
Speaker A:I think this is called the Saeed meme rocket to the moon, baby.
Speaker A:Currently $110,753.10 as of tonight on the show.
Speaker A:Price of the flagship cryptocurrency rose to a high according to coin metrics.
Speaker B:Okay, so there's a lot of things that have happened, obviously that you.
Speaker A:I think you need to apologize to the crypto bros, man.
Speaker B:No, I'm never gonna apologize.
Speaker A:You should do it.
Speaker A:You should apologize to him, man.
Speaker B:I'll do it.
Speaker A:You should apologize just to protect me on social media.
Speaker A:Because they come at you in my DMs.
Speaker B:Well, I know, I know.
Speaker B:They don't even come.
Speaker A:That's not right, bro.
Speaker B:They come to me.
Speaker B:Well, here's the thing.
Speaker B:A lot of things have happened and transpired to legitimize this further.
Speaker A:You know, just because you're throwing some like, seriousness on this doesn't take away from the fact that you are a paper.
Speaker B:No, no.
Speaker B:Yeah.
Speaker B:Paper hand.
Speaker A:Yeah, but you got wet paper towel hands.
Speaker A:This is paper towel hands.
Speaker B:So frustrating.
Speaker B:So JP Morgan CEO Jamie Dimon says the bank will let clients buy bitcoin.
Speaker A:That's right.
Speaker A:That's right.
Speaker B:Like, who.
Speaker B:Who could.
Speaker B:Who could predict something like that?
Speaker B:Like a year ago, two years ago?
Speaker A:I can answer that question.
Speaker A:Who?
Speaker A:All the holders who have diamond Hands.
Speaker B:No, they couldn't have.
Speaker A:That hurts, doesn't it?
Speaker A:They got Diamond Hands dime and Jamie Diamond Hands.
Speaker B:Is that why he did it?
Speaker A:He's the guy who.
Speaker B:Oh, my God.
Speaker A:That's Jamie Diamond Satoshi.
Speaker B:Imagine this just.
Speaker A:In America.
Speaker A:Jamie Dimon is found to be Satoshi.
Speaker B:Wow.
Speaker B:That would be a total.
Speaker B:Yeah.
Speaker B:Plot twist.
Speaker A:The inventor of cryptocurrency is the one and only.
Speaker A:Jamie Dimon dumped all of his money into bitcoin.
Speaker B:I mean, talk about the greatest ending to a movie.
Speaker A:It'd be fantastic.
Speaker B:Yeah, it's.
Speaker B:And he lately started early.
Speaker B:Diamond Hands Paper.
Speaker B:Oh, God, it's brilliant.
Speaker A:Nice.
Speaker A:Well, that's a show, kids.
Speaker A:How do you feel?
Speaker A:Your first show?
Speaker B:I feel great.
Speaker B:Thanks for having me here?
Speaker B:Yeah, man.
Speaker A:What do you mean?
Speaker A:Thanks for having you here.
Speaker A:You work here now?
Speaker A:Yeah.
Speaker A:This is.
Speaker A:This is.
Speaker B:That's your desk?
Speaker A:No, that's my desk, but you can see that from time to time.
Speaker B:Oh, no, that's.
Speaker B:Yeah.
Speaker B:Come on, give it to him.
Speaker A:No.
Speaker A:Okay.
Speaker B:Why are you so mean?
Speaker B:See, this is why he doesn't like.
Speaker A:You, because that's where I work most the time.
Speaker B:Okay.
Speaker B:Well, we appreciate the listeners staying in.
Speaker B:If you haven't yet, please leave us an honest five star review.
Speaker B:If you're watching us over on YouTube, subscribe, hit that, like, button, ring that notification bell, do all the moist goody good stuff.
Speaker A:And if you haven't noticed, we added some branded booty holes to the mic.
Speaker A:Branded booty holes?
Speaker A:If you're listening this far, you don't know what kind of brandy booty hole I'm talking about, I guess you have to watch it on YouTube.
Speaker B:Yeah.
Speaker B:We appreciate you, Brigil.
Speaker B:Thanks for doing this with us, man.
Speaker B:Great addition to the show.
Speaker B:All right, you got anything else, say it.
Speaker A:Say it to me.
Speaker B:Brigil, you got anything else?
Speaker B:No.
Speaker B:All right, good night, everybody.
Speaker B:Bye.
