I really respect the guys with grey hair...That was a very sobering interview for someone who is 40 and used to living in continuously falling interest rate regime.
Good interview! It's nice to hear a rational perspective we don't get that on RUclips very often . The best way to beat the mortgage rates, don't have a mortgage. Buy a house that's cheap enough to pay off in the first few years. And people would do better if they knew all rates are not equal, a mortgage is amortized, therefore a rule of thumb never ever refinance a mortgage when it's halfway through the term, because the second half the interest rate doesn't matter. And never ever compare simple interest rates with amortized interest rates, the two are vastly different.
The buying power of the 7 is the passive investment strategies of institutional investors. That might shift, but to what? What investment prospect will compete with MSFT, AMZN, AAPL? I would think these need to be balanced by essential commodities but it's hard to think the 7 will crater even though they are overvalued. Underlying market fundamentals have to change first.
I've been wondering that as well. Passive strategies mechanically pour money into the mag 7...Most are at the higher ends of their historic P/E ratios, but yea, as long as people are employed and plowing money into their 401k's, what is the catalyst for this machine to reverse on itself? I personally don't own direct exposure to the mag 7 because I've been through the tech crash and 2008 crash and just have a gut feeling, but I can't back that feeling with data.
@@TheNewCarryTrade The leaders will falter at some point but I think it takes a melt-up first and then earnings and labor market weakness to bring them back to earth. But who knows if "buy the dip" will prevent any real serious correction unless there is a global crisis. There's just too much liquidity floating around the world and I expect it's all headed here to the US.
I suspect the housing market will not correct in the same way as in previous cycles and that may differ greatly between adjustable rate mortgage markets and fixed rate markets. In the US existing homeowners refi'd at 2.5-3% for 30 years. This means the US resale market is completely frozen as sellers are at 3% capitalization prices and buyers are at 8% cap rates. I would think this means the housing cycle in the US will be extended much longer than in the past. Builders will be affected at the margin of the housing starts market but if they continue to face strong demand with wide profit margins, they can afford to use rate buy downs to entice buyers into a 2-3 year mortgage commitment at lower rates.
Can someone please explain GW would praise the 30 year fixed mortgage market in US. Surely it simply transfers this cost to the banks, rather than home owner? Is one so much better than the other as GW suggests?
You answered the question yourself: The costs/risk to the loan gets (got) transferred to the banks in the 30 year mortgage. Great for the borrower, not so great to the loaner, but ....better than the borrower unable to meet the interest rate. Perhaps that’s why Australia/Britain/ Canada won’t give a fixed loan of 30 years. What do you think the home owner in US with a 30 year mortgage which gets adjusted every 2/3/5 years would be doing if his mortgage payment increased by 100%? It’d be a bloodbath. And also for the banks/investors as the asset value backing those loans could possibly plummet in value. So possibly, loans failing and asset value falling.
Just found this video. We just sent a letter to our investment manager an hour ago to pull everything out of investments and we are paying cash for a house. It’s so scary but we did a lot of math and it’s right.
Massive outflows in TLT means the price is going to completely collapse as the ETF sells to redeem investor funds. I can only think the Fed will be forced to backstop this.
As @robertstilson9294 mentions.TLT holds $60B in assets which are trading between 15% and 55% below par...Its impact is insignificant to the $3.9T of marketable treasury securities in that universe (as of 9/30). Even if they were trading at par, that's only 2%... That's not nothing, but I'm personally more worried about what's driving the other 98%. I think Ted and Grant did a great job explaining the overall trajectory.
People talk In the moment it was 2010-11 they should of been ending Fed and vote in free market rates. No way should rates be Zero it’s the unreal trap problem to get rates up it’s painful and the gov fed try to avoid pain it’s idiotic policy thinking
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“Nothing matters to anybody until it matters to everybody “
Excellent as always
Grant has some real wisdom.
Grant Williams is one of the best. Thanks Ted (you're one of the best as well)
Two very respected commentators, Grant and Ted.
I really respect the guys with grey hair...That was a very sobering interview for someone who is 40 and used to living in continuously falling interest rate regime.
Amazing show. Thank you so much.
Hey Melody, I recognized you from your channel...I really like your work as well!
@@TheNewCarryTrade Thank you so much!
Mr. Oakley, thank you for this interview!
This is a wonderful interview full of great advice and observations. Really enjoyed this discussion. Ted does a fantastic job with his interviews.
Outstanding video - Grant is a great guest and that was a terrific job interviewing him. Thank you!
Two wise men. Thank you.
Excellent interview, thank you for sharing.
Thanks Ted...great guest and interview. Really appreciate it.
Great, Great, Great! You're making us all smarter. Will re-re-Watch this. Thanks!
Great stuff as usual on Oxbow!
So incredibly good. Thank you!!
Great interview as always, Ted
Thank you very much...
Great interview. Thanks!
Great interview, always appreciate Grant's thoughts and insights.
Thanks Ted!!!
I wish i had the opportunity to work under Grant.
Excellent!
Good interview! It's nice to hear a rational perspective we don't get that on RUclips very often .
The best way to beat the mortgage rates, don't have a mortgage. Buy a house that's cheap enough to pay off in the first few years. And people would do better if they knew all rates are not equal, a mortgage is amortized, therefore a rule of thumb never ever refinance a mortgage when it's halfway through the term, because the second half the interest rate doesn't matter. And never ever compare simple interest rates with amortized interest rates, the two are vastly different.
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank as subscriber to this channel 😊
Love it!!!!!!!!!! like Japan 1989....MeltUp!!!!!!!!!!!!!
The buying power of the 7 is the passive investment strategies of institutional investors. That might shift, but to what? What investment prospect will compete with MSFT, AMZN, AAPL? I would think these need to be balanced by essential commodities but it's hard to think the 7 will crater even though they are overvalued. Underlying market fundamentals have to change first.
I've been wondering that as well. Passive strategies mechanically pour money into the mag 7...Most are at the higher ends of their historic P/E ratios, but yea, as long as people are employed and plowing money into their 401k's, what is the catalyst for this machine to reverse on itself? I personally don't own direct exposure to the mag 7 because I've been through the tech crash and 2008 crash and just have a gut feeling, but I can't back that feeling with data.
@@TheNewCarryTrade The leaders will falter at some point but I think it takes a melt-up first and then earnings and labor market weakness to bring them back to earth. But who knows if "buy the dip" will prevent any real serious correction unless there is a global crisis. There's just too much liquidity floating around the world and I expect it's all headed here to the US.
I suspect the housing market will not correct in the same way as in previous cycles and that may differ greatly between adjustable rate mortgage markets and fixed rate markets. In the US existing homeowners refi'd at 2.5-3% for 30 years. This means the US resale market is completely frozen as sellers are at 3% capitalization prices and buyers are at 8% cap rates. I would think this means the housing cycle in the US will be extended much longer than in the past.
Builders will be affected at the margin of the housing starts market but if they continue to face strong demand with wide profit margins, they can afford to use rate buy downs to entice buyers into a 2-3 year mortgage commitment at lower rates.
Can someone please explain GW would praise the 30 year fixed mortgage market in US. Surely it simply transfers this cost to the banks, rather than home owner? Is one so much better than the other as GW suggests?
You answered the question yourself:
The costs/risk to the loan gets (got) transferred to the banks in the 30 year mortgage.
Great for the borrower, not so great to the loaner, but ....better than the borrower unable to meet the interest rate.
Perhaps that’s why Australia/Britain/ Canada won’t give a fixed loan of 30 years.
What do you think the home owner in US with a 30 year mortgage which gets adjusted every 2/3/5 years would be doing if his mortgage payment increased by 100%?
It’d be a bloodbath. And also for the banks/investors as the asset value backing those loans could possibly plummet in value.
So possibly, loans failing and asset value falling.
Just found this video. We just sent a letter to our investment manager an hour ago to pull everything out of investments and we are paying cash for a house. It’s so scary but we did a lot of math and it’s right.
Can someone please put the link to Grant with Neil Young!
Requires membership subscription, I suggest
Howe not Young
Massive outflows in TLT means the price is going to completely collapse as the ETF sells to redeem investor funds. I can only think the Fed will be forced to backstop this.
Wait till the sheep start dumping index funds like S&P 500. Ain't seen nothing yet.
$tlt assets about $40 billion…an insignificant sum in terms of the treasury market which is multiple trillions
@@robertstilson9294 Valid point. Thanks.
As @robertstilson9294 mentions.TLT holds $60B in assets which are trading between 15% and 55% below par...Its impact is insignificant to the $3.9T of marketable treasury securities in that universe (as of 9/30). Even if they were trading at par, that's only 2%... That's not nothing, but I'm personally more worried about what's driving the other 98%. I think Ted and Grant did a great job explaining the overall trajectory.
And what if the Fed does not backstop this?
There's nothing riskless about the long-term Treasury market with a fiat currency regime.
Interesting to speculate about housing and university costs. These have skyrocketed with low rates. But what will happen when the bull market ends.
Why grant think buying tlt is buying falling knife ?
It start to be a good coupon while waiting a eventual rates cut before 30 years from here ?
It’s not the inversion…it’s the revert (disinversion) of the curve that correlates with recessions.
Yields are annual
You dont get 5% in 3 months, you get 5/4 in 3 months about 1.33% real return
No shit
People talk
In the moment it was 2010-11 they should of been ending Fed and vote in free market rates. No way should rates be Zero it’s the unreal trap problem to get rates up it’s painful and the gov fed try to avoid pain it’s idiotic policy thinking
Buy and hold still good? Probably not
I see how your framing this inflation theory but we have had inflation since 1971 in spades you only have to look at the decrease of buying power
Another great vid. Thank you.