Anniemac
Inside Track

Market Update from Our CEO- 06.24.16

 

Daily Quote:  Enjoy the little things in life... For one day you will look back and realize they were the big things. Kurt Vonnegut

Fun Fact Of The Day: Can you regrow brain cells?  The apocryphal tale that you can't grow new brain cells just isn't true. Neurons continue to grow and change beyond the first years of development and well into adulthood, according to a new study.

If You’re Just Understanding “Brexit” Now You’re Part of the Problem

Any major business news channel can bore you with the details of what’s occurring in Great Britain as it pertains to its participation in the European Union (EU).  But Great Britain’s exit from the EU is merely a symptom of a greater sickness that is becoming more and more pervasive across the entire globe.  So I’m going to share with you some comments I emailed to our COO Jim McKenzie early this morning because I feel it pretty well sums up the sickness versus the side effects. 

In my mind GB’s exit from the EU is a global referendum on all things “establishment”.  Donald Trump and Bernie Sanders are another sign of this.  All the geniuses who think the “establishment” can’t be challenged are being proven wrong. 

So what’s the main issue here?  Simple.  People don’t trust their politicians or the political system.  They feel as though they are not really being represented by their leaders and they feel as though there are different standards within their society that they don’t get to benefit from.  So now they are finally coming out to vote…more out of frustration than logic. 

But in reality who fault is this?  In large part it’s the fault of the same people who are revolting against the establishment.  Where were these same people year after year as they let their politicians do irreparable damage to laws, trade policies, etc.   I think I know.  They were sitting at home most likely watching reality TV, posting their latest meal on Facebook, watching sports or downloading pornography.  

So ask yourself the following question:  When was the last time you voted in your Congressional district?  How about for Senator?  President?  The Pew Institute researched which countries make the most of their democratic rights and guess where the US fell?  4th from the bottom. 

http://www.pewresearch.org/fact-tank/2015/05/06/u-s-voter-turnout-trails-most-developed-countries/

This is the danger of government by proxy.  If you don’t vote, don’t hold your elected officials accountable, and then wait until you’ve reached a point of frustration before you reengage, then whose fault is that?  Now as these same people reach that boiling point they latch onto a person or a cause they don’t fully understand only to put themselves even more in Harm’s way (see: Germany in 1930 although I am not suggesting we’re heading there).  Einstein said there are two things in the universe that were infinite…hydrogen and human stupidity…and he wasn’t sure about the former.  It’ll certainly make for an interesting month, it’ll take the Fed off the table for now, it’ll make traveling to England as cheap as shopping at Walmart, and it’s going to wreak havoc on pull-through and servicing valuations.

What Does This Mean For Mortgage Participants?   

I’ve been pounding the table on this point for well over a year now – don’t focus on the daily fluctuations of interest rates!  Today’s housing market is much more about inventory and jobs than interest rates.  So your job, as always, is to provide the kind of service that gets qualified borrowers into a home they can afford.  Period.  That means getting them a pre-qual, submitting a quality file, and getting them to the closing table as quickly as possible so they don’t lose that home.  If there is one thing you can feel reasonably certain of, home prices one year from now will be higher than they are today.

For now the market will need a week or two to digest all of this…so expect rates to be all over the place.  And then more fun…we get another Jobs Report on July 8th which can add even more uncertainty regardless of whether the report strong or not!  So for those of you wishing for lower rates…be careful what you wish for.  Oh yeah…and for Heaven’s sake please take the time to learn the issues and exercise your right to vote this November.  Believe it or not your vote and voice really do matter.

 

Economic News/Activity:

Sure – we received some Durable Goods data this morning but it’s meaningless so why bother discussing it.

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