BREAKING NEWS: Everyone Missed this About Fed Meeting

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Alrighty folks, never a dull moment in the mortgage markets after Fed Day.

We need to understand that yes, the Fed did not cut, but they certainly changed the narrative.

They've certainly changed the timeline.

And we are about to see some dramatic impacts in short-term, long-term, mortgage spawns,

all kinds of crazy stuff.

Dustin, how you doing, man?

Good.

How are you?

I'm doing well, man.

I got to tell you, you know, the Fed meeting, the Fed decision yesterday was a

complete nothing burger, but that press conference, the dot plots.

I think they spoke volumes and I think they really changed or at least attempted to change

the mindset.

I think they, I think they were a lot more hawkish than maybe the market was expecting.

I agree.

I think what you started at the very beginning of changing the narrative was the biggest

thing that I think you'll see on the news and what I took away from it is, you know,

Mike's months ago is kind of a party about how many rate cuts are we going to see and

why are they going to come in 2026 and I think the narrative definitely switched to more

so, what if inflation's here longer?

Are there going to be any rate cuts in 26?

Like, is there going to be one?

I don't know.

No, right?

Because that's definitely the narrative that was put on, at least from what Powell said.

And I think you're going to have probably correct me, but I think only one Fed president

said he was okay with the rate cut.

This go around I think six on the dot plot saw one, maybe seven, yeah, so it was 11

to one.

Yeah, 11 to one.

Ted Moran said rate cut, he's, he's always been on the rate cut side.

He's always been a dissent since he's been there.

And it was actually six Fed president said zero rate cuts in 2026 was the, was the headline.

Which is interesting, because again, I think what I think yesterday was, and I've said

this to Jonathan Twanley, my multifamily investor, I think yesterday was a dramatic shift

and we're going to see the multifamily market really evolve here in the short term.

But let's, let's stay residential for a minute.

I think what the Fed did yesterday is it was their first step to a rate increase.

Think about what I just said.

The next rate move is not down.

It's up.

So what was yesterday, in my opinion, yesterday was simply going from we are in a rate cutting

cycle, right, which was what we were in, like series of rate cuts.

And what yesterday was, was a saying that we're done with that.

We're higher for longer.

They talked about in the Fed meeting that some Fed presidents wanted to talk about a rate

increase.

Again, this is all theater.

So the next time they get together in six weeks, it'll suddenly be half the room is talking

about rate increases.

So I think yesterday, most people missed it.

The rate cutting cycle is over.

The next move is up, not down.

That's what I took from yesterday.

Kind of crazy.

Yeah.

And I think when we had our videos three months ago, six months ago, and we are predicting

one, two, maybe three, et cetera, I would say that I'm not just this podcast or community

or the other ones at the end, John, have been on.

I've always been maybe on the lower side, and it's not to beat my own chest, but I had

a feeling there was going to be some sort of not, not a, not black swan event, but like

a light beige, gray swan event, which is what's going on in the Middle East, right?

And that was very telling because I think oil itself is going to be a very big fact.

There now, on top of inflation with what the feds are going to have to try and, you

know, control or figure out.

And I know you told me this a few weeks ago, but I wanted to ask you because you always

seem to be ahead of the curve here.

What made you know or think that it was time to kind of pull out from the markets a

month ago, three weeks ago?

That was once again really good timing, right?

And again, I shared this on the channel, right?

You, Convoy helped me extract, you know, multiple, multiple six figures of equity in

cash.

So I appreciate that.

And it wasn't, to me, it wasn't really timing the market.

It just felt to me like we got to the bottom, right?

We've been in this range for two years where 599 always seemed to be the bottom.

And, you know, working with you, working with, you know, top, top guys like you, I was

able to get 599 on a cash out refi, which basically was like, I don't know.

I don't think I can do better than this.

And on the other side of that, I see tremendous opportunity coming in the debacle that is

multi-family.

And I needed to have cash so I could write crazy offers.

So it wasn't like I saw an Iran conflict coming.

It was just a realization that I thought we were at the bottom of the trading range.

And I needed cash.

So, you know, you guys helped me with that.

Now I look like a genius because I don't think I couldn't get six and a half today on a

cash out refi.

Yeah.

You know, I'm very thankful that, you know, we pulled the trigger and you guys got it

done for me.

But yeah, it was, it was more about the low end of the range than necessarily timing the

market.

But damn, I look like a genius today for sure.

Yeah, no, and it's, I mean, I don't want to sound as if we've been boring, concrete,

self, but how many times and how many videos have we said we can get 5859 last year and

a half or two years and people were still inching and waiting and sitting on the sidelines

for that five, six or five, five or five, seven, right?

You got to know, you got to know when you're in a range and you got to take the low end.

Stop, stop hoping for it to break below it because it's, it didn't, it didn't once

again.

Yeah.

No, it's, it's all true.

And then also interesting, I think every time the Fed speak, you know, consumers and

investors in the market are always looking, what are the treasuries still?

What happened, right?

Fed didn't cut rates, but then treasuries go up or down, right?

They went up.

And that's all because of understanding that when Paul came to speak and hearing his

comments after, that's what, you know, the uncertainty is always going to drive treasuries

up.

That's exactly what happened.

But I want to make sure that everybody, because we get this all the time.

And yes, maybe yesterday it wasn't as much as it was Tuesday or last week that people

think the feds are cutting rates and to understand that the feds do not directly

influence mortgage rates.

They will have an indirect correlation by, you know, no, no arguments on that.

But it's very important to note that 99% of mortgage rates are going to follow the

treasuries plus a little margin, you know, in there.

And right now we're at that low end.

We're at the pretty, you know, COVID margins of 1819.

You know, 2022 to 24 basically, we're at 280 to 300 basis points, just know that it's

very easy for market makers and lenders to raise that spread from 180 to 210 to 200.

It's going up.

That's, that's the key.

Again, I really think probably over the weekend, people are going to realize what Jerome

Powell and his cronies did.

And they basically announced the end of the rate cutting cycle.

And I don't think people picked up on that.

And I think they really are starting to plant the flags at the next discussion is about

a rate increase.

And here's the deal.

If this Iran war is still going on in four to eight weeks, which it really seems like

it's going to, it's, and it will also get worse before it gets better.

We're talking about people dropping bombs on oil refineries and depots and natural gas

and all of this.

If we're not careful, oil and gas could be 200 bucks a barrel.

And you want to see wild demand destruction.

You want to see pass through inflation?

Woo.

And the last thing out.

Yeah, the last thing I'll tell you is every recession, except the pandemic since World

War 2 was preceded by an oil shock.

I'll say that again.

Every recession, X the pandemic was preceded by an oil shock.

What do we have today?

It is that simple.

No, I know, I, it's, I don't want to do one of those.

You always say it, but the doomer's, doomer's sorry, doom and gloom I was thinking.

But what, what do you think, what, what do you think the actual biggest and most important

tasks at the feds have to get under control oil is kind of going to be difficult.

They can't get their, you know, I would say hands on fixing that like we've had, you

know, consistent like job wage growth, which was great.

But then that's been put to the sideline because now our target inflation is what two,

two six, two seven, two eight was to like, how do we fix this?

What would you do if you were sitting at the, the hell?

Oh, man.

First off, I'd quit.

Um, but, but you know, the fed is for all it's, the fed isn't a really tough spot because

this is what I see happening.

And again, you can go back and study these to World War 2, which I've done.

We have an oil shock.

I guess where this anchor is for me is I do not believe the Iran war will be short.

I just don't.

I see it getting a lot worse.

And because I think that I think oil is going to 150 and 200 is not out of the question.

Damn.

Then we have demand destruction.

Do you, I mean, think about gas doubling from here, doubling.

That's going to cause mom and dad to not drive as much.

We're going to see horrible demand destruction.

We're going to see inflation, even in court, now energy and gas is not in head, or in

headline, not core, but you're going to see airline in food and all these other things

that because gas is in everything, oils in everything, right, shipping and all of that.

So inflation is going to be a problem for a while.

But the Fed can't fix oil.

The Fed has zero tools to fix oil.

They can't.

It's not, it's like, hey, that's, you know, that's not my puzzle to fix.

But here's the problem.

Demand destruction leads to job losses.

Now the Fed's in trouble.

Now the Fed's in trouble and a recession and bingo, bingo, rate cuts.

So the Fed might be in this environment where they're almost forced to increase once or

twice into the teeth of a growing recession.

And then it's right back to zero rates.

I mean, that's a possibility.

I don't really have a great answer, Dustin.

It looks, I am not a doomer by any stretch, right?

You cannot look at the content I put out for eight years and say, I'm a doomer.

But I got to tell you, I'm afraid for the next six months.

This could get, this could get out of control.

No, and that's what I think it, because I have, oh, we lost sound.

The Fed's in and kind of work out on, yeah, you're good.

Like it now.

OK.

It was at like two or three p.m. Pacific standard time.

And I had a call with a, I mean, he's a very well off, you know, owns multiple properties.

But joking about the fact that like Fed's in and cut rates were good.

We'll just keep riding through this.

But I don't think until I digested the whole, you know, post conference as well as he

did that this, this meeting yesterday was a lot bigger than I think even the news outlets

right now are really, they're just saying Fed remains, you know,

that's it.

But they aren't talking about what we actually could see in front of us and I'm not trying to be a doomer either.

But I think it's very, very, very important if you're in this, this world, especially in the investor world,

even if you're not to keep track of what's going on in the Middle East and what that's going to do to the,

you know, federal funds rates and all of that.

So let's break it down to what, again, we have a lot of investors in our community.

What would I be doing today?

I don't think it's too late to extract equity, right?

If we are heading into an environment that's recession-like, I don't know about you,

but I want to have more cash than not.

Even if you've got to pay six and a half because you didn't read five when I did some six,

it's a half point.

It is what it is.

You can't go backwards.

Extracting equity today to sit on more cash, not a horrible idea.

Second, being a home seller today, a flipper today,

the exit sucks, just sucks, not the environment you want to be selling into.

But know that, offer the discounts.

I mean, do everything you can to get it off your book's ASAP.

And if that means take a loss, take a loss, because this could go sideways.

And then third, if you're an investor like me looking to buy,

write even more disrespectful authors.

Because we are heading into an environment where supply is going to go up,

and the demand is going to crash.

And it's going to be relatively easy to find motivated sellers.

So again, when there's chaos, there are tremendous opportunities.

So yeah, for like 15 or 20% of us out there,

the next six to nine months are going to be amazing because we have cash.

And we're writing crazy offers.

I would not want to be a seller in this environment.

No thanks.

No, I agree.

And we've touched on this a bunch of times when the rest of this community

that's watching and all the investors, if you can take advantage of times

like this, where you can actually write this respectable offers,

that's where you should be the most excited.

Yes.

Not when everything's all high and dry and are not high and dry,

but high and pretty and everybody can make an offer.

Not everybody's making offers right now.

No, it's so funny.

I had a hate or this morning, leave a comment saying,

basically saying, I wish we were back to 21 and 22 instead of today.

I'm like, you are a complete moron.

21 and 22 were horrible years.

Where's the worst?

Yeah, everybody in their brother thought they were a guru

and they were overpaying for anything.

Yeah.

You know, that's not the environment I want.

I don't want an environment where you got to be fast and pay cash.

I want an environment where there's no competition,

growing inventory, growing days on market.

You know, and I could just write stupid offers.

And that's what I want.

And that's where we are.

So don't tell me you want 21.

You telling me you want 21 and 22 just tells me you're an idiot.

No, I want today.

I want 26.

I love it.

Well, if somebody wanted to get something started with you,

do an equity extraction, look at a deal, what not.

What do they do?

Go to ConwayHolones.com.

And just mention that you came from over at that way.

You can speak to me or John and not want to burn in place.

You don't want to be in a queue.

You want to talk to the man myth the legend yourself or your partner, Jonathan.

All right, Dustin.

Take care.

Have a good day.

Thanks, Mike.