Hi guys, welcome to theREsource nation.

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

Thanks for coming on the show again buddy.

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

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

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

today. Yeah, so today we're just

conversation, podcast style.

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

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

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

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

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

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

You called it right back in April.

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

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

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

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

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

You said, hey,

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

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

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

You called all those on this show today.

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

We will, we will have some,

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

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

that's a secret.

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

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

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

So we have obviously lender's watched the show,

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

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

Maybe even the acronyms that we typically throw around.

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

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

So my first kind of question that I know,

and people knew that you were coming on the show,

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

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

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

And then the Dow is at record highs,

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

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

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

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

So what's happening with rates? Well,

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

what are some of the reasons why rates are low?

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

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

is there a lot of inflation? No.

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

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

So whenever debt levels go up,

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

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

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

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

certainly in the United States.

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

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

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

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

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

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

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

the escalators heading lower,

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

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

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

longer term, I see interest rates lower.

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

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

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

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

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

Now just as of this morning,

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

refinance,

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

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

roughly speaking. Okay.

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

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

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

hold off,

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

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

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

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

period of time. And what will,

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

and same thing I said to you,

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

Do not think of loans at one at a time.

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

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

When I started doing that,

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

much,

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

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

getting divorced, having kids, your empty nest,

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

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

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

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

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

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

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

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

Let's just,

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

I called 1.37,

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

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

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

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

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

it's all really, really possible.

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

level that we had just talked about. Uh,

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

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

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

how could there be recession? The stock market side,

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

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

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

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

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

There were inversions. What does an inversion mean?

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

than the longer term commitments.

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

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

and Oh my goodness,

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

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

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

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

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

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

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

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

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

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

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

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

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

you can't buy as much over time.

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

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

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

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

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

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

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

Softness in the economy means inflation will be weak.

We don't have pricing power so because of that it's telling us that the economy

is not as robust or as strong as you might think.

The shorter term cares about things like the Fed and the Fed at it's present

levels.

Even with the most recent rate cut is still at least what the bond market's

telling us.

It's still too high and I'm telling you the Fed is going to cut at least twice

more, probably three times more.

Maybe four or five times is what you get from the Fed and I know nobody's

forecasting this that as many times,

but you're going to get a series of rate cuts from the Fed. They love doing it.

They don't want to do it,

but we have to do it because we want to stay competitive currency wise.

We want our exports to be okay, we have to do this.

The bond market is forcing us to do it.

I was going to ask you a question and you kind of already hit it about,

you know, the economy being sick with the inversion is a,

is that also indicated by the feds wanting to raise rates but not being able to

do so and so quickly happening to come off of that, is that our Reese,

are we sick as an economy? So, so here's the thing, if you look the,

the world is so interconnected today, okay?

If you look at the numbers in much of Europe,

if you look at the most recent numbers that came in Germany, I mean, yes,

there is that economy is hurting right now. Same thing in Japan for a long time.

China's numbers are appalling. Okay? China is a geriatric ward, okay?

Our age is 41 years old. In China,

they have the male to female population totally distorted because of bad

policies that they had and they are in trouble.

Now when we take a look at the United States,

we're in better shape, you know, however,

we have some weaknesses and when the world gets sick,

it's very difficult for us not to catch that cold. Okay.

It's women easing and sniffling. Yeah, we are going to pick up some of that.

Okay.

So what's going to happen is we will see this slow down and we're going to see

it from levels that we're actually quite vulnerable.