A (3:20)

Now there's different positions as well. So if you're an experienced loan officer and you just want better pricing, better support and more loan products, we've got a position we call the independent loan officer that we will help you close more deals. And if you're a person who's like, hey, I want to be plugged in, locked in, I want to really pursue excellence at this. We have what's called our in house or our team model where we give you direct support, the company leads, training, you will become an insanely good loan officer. And then we've also got options if you're brand new or you're just getting licensed. So reach out to us in any of those situations as well as if you are a real estate agent and times are slow. Let's just be honest. Houses are not selling as much. Christian and I are structuring things so that you can do loans and real estate at the same time. This is completely ethical. It is not a. What's the word that everybody uses to describe this? That doesn't make sense to me? A conflict of interest. Yeah, it's not it's. It's not a conflict of interest at all. It would be if you required your clients to use your loan services, which you won't. You will give them an option. You're just going to beat whatever rates and service they could have got from somebody else. It doesn't make sense for people to think of it like that. That is typically coming from a loan officer who's afraid that they will lose your business. If you're a real estate agent, they'll tell you it's a conflict of interest. Christian, before I met him, was doing this all the time. And it's much more smooth when you're the agent and the loan officer, and you're good at both. You can negotiate better, you can get better rates, you can advise your client. And there's a lot of things that don't get lost in translation. So I've always been a fan of this. I prefer to have a person who's really good at everything in real estate, managing all the components for their clients together. If you're like me, I own property. So does Christian. I manage properties. I am a real estate broker. I've been a real estate agent, and we do loans. If you're good at all of them, your client saves money and saves problems, and you learn tricks to help them with every single transaction. So if you're someone who's ready to step up and say, in 2026, I want to be better than I was in 25, I want to learn more. I don't just want to wait for something in life to magically happen and leads to fall from the sky. I want to go make things happen. Seriously, reach out to us. Christian's going to leave his contact information at the end, and you can always get a hold of me@davidgreen24.com Just use the chat. Fe. All day long, people reach out to me, and I've been connecting them, whether it's help with social media stuff or property management stuff or getting them connected with loans. I go live on Instagram. And also we're going to be starting a new free bonus for everybody that listens to the podcast. So probably a good time to announce that, too. It's gonna be called Real Talk Training, so it's sponsored by Real Talk Real Estate. And I will be there every week. Christian will be there as well. Not every week, but when he can make it. And we're gonna be giving free sales training to any real estate salesperson, period. So if you are a real estate agent, if you are A real estate broker, if you're an title officer or an escrow officer that has to go get business for your company, if you're a loan officer, if you're a mortgage broker, if you work in direct lending, if you're a property manager, any form of business owner or sales operator that wants help serving their clients better and nailing more leads and being better at their job. We will be offering free free weekly training to all of them because frankly, brokers are dropping the ball and we're going to be picking up the slack. So you can reach out to me as well on the website. I'll get you a a little form to fill out. We will get you a Google invite on a calendar invite and you'll have an opportunity every single week to come and get free training. An hour long ask all your questions. It'll be based on stuff that I've written in books. It'll be based on stuff that I learned from people that do this at a very high level. Ed Mylett and I have done talked quite a bit about sales stuff and he's taught me a lot about how to sell and how to do it ethically. So you'll be getting exposure to all of that for free. This is not a $15,000 course. It's because we really appreciate you listening to the podcast. So that being said, Christian, unless you have anything you want to add, we can get into today's show topic feel good. All right, so today the Fed cut interest rates again for the third straight time amid uncertainty over the labor market and inflation. And we're going to talk about what the article says and what's going on in the economy. The biggest thing to know is you're probably not going to see lowered mortgage rates because this has already been priced into the market. I'm gonna let Christian explain that, but we are going to talk about the why behind why they're lowering rates and what this means at a large scale. Bigger picture, what you can expect as far as how this decision and mortgages in general are affecting all of real estate. Christian, do you want to just share your thoughts on if you think this is going to lower interest rates or not?

B (8:06)

I do not. If you spoke to me in the last couple months, I think there's a little bit of a decoupling between the fed funds rate and mortgage rates that we've seen in these last three rate cuts that is very unique. Usually there's a correlation I think that is uncorrelating a little bit, and it's mainly because of the demand to buy bonds. And we'll get into that as we, as we go through this.

A (8:32)

All right, so let's get into the article here. The Federal Reserve on Wednesday announced its third interest rate cut of the year as policymakers move forward with the cut to support the labor market despite elevated inflation. So a little bit of a background on understanding what they're referring to. The Fed controls the prime rate. They control the interest rate that banks charge each other to lend money. When they lower that rate, it tends to make things more expensive, which the layperson refers to as inflation. But it will usually create jobs because when rates are low, more people are borrowing money, more people are spending money, which means businesses are receiving income, which means they need to hire people to service that income. When they raise interest rates, the exact opposite happens. Unemployment goes up, but the cost of goods and services theoretically is. Goes down. So they typically. I don't love how they do this. I don't know your thoughts. I don't think I've ever asked you, Christian, on how you think they should do it. We just talk about what they do. But they typically will look and see, well, are things expensive? How's unemployment? And wherever they see them moving, they'll just adjust rates up or down in little teeny ticks to try to make it happen. It's not creative, it's not foundational. It's not creating jobs. It's not looking for other ways to make goods or services cheaper. They don't look at the big picture. They, for the most part, just use the Fed prime rate. And then occasionally they'll issue Treasuries or buy Treasuries, they'll kind of try to control the money supply a little bit. So they looked and they are concerned about unemployment. So while we may hear this and say, hey, this is good, this is good for interest rates, mortgage rates are going to come down, which they probably are or should be. It is bad or it's a sign that things are bad in the overall economy. Any thoughts, Christian, before I keep going?

B (10:21)

Yeah. I mean, basically, when they're dropping inflation, it means there's a needed, there's a needed increase of. What David refers to very frequently is the velocity of money, right? When rates are high, people borrow less. It's just, it's just plain math, right? Everybody who's sitting in their 2% houses right now don't want a 7% house. Right? There's just less transactions happening. There's less businesses borrowing money on SBA loans. There's less businesses borrowing Money on, you know, business loans from their local credit unions. There's, there's less people charging money on credit cards. Now that's not really true right now because that's at an all time high in America. But, but fundamentally the higher rates are, the less money is transferred. Right. That's just kind of how the American economy works because we're a debt economy. Right. So by dropping interest rates, they've seen whatever signs they need to see that indicates that a freeing up of capital is needed in the economy. And typically that's based on the mix of inflation and unemployment. Right. Where if they feel like they can sacrifice a little bit of inflation, which like David shared, lower interest rates is typically inflationary by nature because there's more money, which means more purchases, you know, and they're trying to save, quote unquote, or at least help what they see as potential cracks in the employment market. Right. And then there's the whole non spoken factor of America's got a lot of interest payments to make here. Right. So there is a, there's a part of this argument that very often goes unaddressed, which is America is paying a lot of interest. Right. So when they drop this rate, it helps America refinance its debt to lower interest rates.

A (11:58)

That's because they're paying off money that they've already borrowed with, with money that they're borrowing closer to what rates are today. That's when rates go up, which they feel like slows inflation. It makes the money that they have to spend more money to get money to pay their previous debt off, which actually add to the Fed deficit. The new range is going to be 3.5% as opposed to 3.75% where it was before. Policymakers have been tracking economic data that shows a slowdown in the labor market in recent months as companies adjust to shifts in trade and immigration policy. I don't understand what that has to do with anything. When my grandma used to say, what does that have to do with the price of tea in China? That's what she used to say.

B (12:41)

Mine used to say it as well. Really? Yeah.

A (12:45)

Shifts in trade. Sounds like they're referring to tariffs and immigration policy. I don't. Is that like, are they taking a shot at the fact that companies are losing their employees and so as a result of that they're doing less business? I just, I don't, I hate when they make comments like that. Don't explain to you what their logic is?

B (13:04)

Yeah, there's a lot of ways that that the Fed and really Everybody was thinking that companies would respond to tariffs and, and the majority of people just said they would make their prices higher, right, to offset the increased cost of getting things into America. Now, the long term argument is that they're going to start producing things in America. And that's where Trump likes to, you know, flaunt a little bit about all the money flowing into America. But these things take time, right? You don't just build a factory overnight, you don't just build a plant or a distribution warehouse, right? Those are times that, you know, maybe this has stimulated a little bit of investment in America and that's a good thing long term, but it doesn't really help us short term. They still have to get their goods, right? We got to get timber from Canada, we got to get chips from Taiwan, we still got to do all this stuff, right? So what this is saying is that what the Fed previously, if you guys remember our Mortgage Monday episodes last year when tariffs were first being discussed, the Fed was holding rates high at that time because they were concerned about inflationary effects from tariffs. All that, that's fancy words. All that means is things cost more to get to America, so prices should go up to offset it. Instead, what we saw a lot of companies do is instead of increasing their gross profits, they decreased operations. So the big part of that that it always goes to is usually layoffs. I'm sure all of you guys have heard in the news, Meta and Amazon and Google, everybody's laid people off, right? Walmart, all the big American companies, right? The gas companies, they're also trying to decrease costs. So whether they're trying to be more efficient or buying chips less often for a lot of these, you know, AI and tech driven companies, you know, there's, it seems like the, and I think this was a lot of pressure from Trump that the big response to tariffs has instead been to increase prices. It's been to lower costs so that the companies can maintain their same profit margin. And that's good for inflation. Basically that just means the, the hit for tariffs are going to a company's bottom line. It's bad for unemployment, which is, I believe one of the driving factors of what led to yet another rate cut. We have three rate cuts in a row for the last three Fed meetings with the 60 day government shutdown in the middle there, or 5051, however many days it was almost two months, right, where, you know, it's looking like the Fed likes the response that companies gave, which means what Trump was pat on the desk for last year. That cut rates and, you know, and tariffs won't lead to inflation. He's kind of proven to be right, at least so far. Now we'll see if that's the long term response. But what inflation did not kick up by unemployment made up for. So that's still not a net positive. Right, which is why rates are coming down to stimulate movement of money.

A (15:51)

And that's why we're recording this episode today. We don't know. Christian and I don't have crystal balls. I don't know why. It just seems like most of the stuff it I feel coming ends up being the case. But I am worried. I am much more worried about people having zero jobs and making zero income than I am. Things costing 10% more, neither of those are good. One of those is a lot worse. And so by hiking rates as fast as we did to try to slow the cost of goods and services going up, we kind of killed the employment base. It slowed the velocity of money. People stop spending money. That ultimately leads to not needing employees to work in your company. Companies weren't having nearly as many sales as what they had before. And so they have to lay people off. Now, all of you real estate investors that are listening to this, how does this affect you? Your tenants may not be able to make their rent. All of your real estate agents that are selling houses, your clients may not be able to close that escrow or buy buy a house at all if they don't feel like they have a job. If you are someone who's trying to flip houses, you may not have someone to buy it. If your area has been hit hard by layoffs, there will be a significantly less number of people interested in renting houses, buying houses, or making their mortgage payments and making their rent payments. This is very concerning if you're a real estate investor. If you're one of those people that tends to listen to YouTube channels or podcasts that talk about the new cool strategy that everybody's using. And you like to look at real estate that way. I get it, it's cool, it's shiny, it's exciting, it's probably not realistic and it's probably not helpful if they're trying to teach you some really cool technique of swimming, but the entire ocean's becoming polluted. It's not benefiting you to be thinking of it that way. If we're heading into an economy that people don't have jobs, you're going to have foreclosures, you are going to have significant problems. And there's conversations to be had about can you buy short sales? Can you buy foreclosures? Is this a good time to be jumping in to buy? My argument has always been that's what everyone thinks because they all talk about 2010. Christian, you're probably 4 years old at that time. You don't remember. I remember because that's when I got into real estate. We all talk about it like it was the golden era of real estate, when to buy. But in 2010, nobody wanted to do it because it seems so stupid. Why would you buy a house when everybody is foreclosing? This in my mind would theoretically be significantly worse than 2010 because in 2010 people were letting go of their houses because their rates were adjusting, they couldn't afford their payment. They were not letting go of houses because they were losing their jobs. Really the only people in 2010 that were significantly affected by layoffs were people who did a job in real estate or people who made their money selling something to people that were financially reckless. The helocs that people were taking and buying boats or buying campers, RVs, time shares, those kind of people got laid off. They didn't have a job to do. But basic standard stuff that everybody needed. We didn't have significant layoffs at that time. This would be worse than that. If what I'm seeing happening ends up happening, you could see. And again, it's very market specific. So this doesn't mean the entire country will be affected. But if you're in an area where layoffs are happening, I don't see a positive outcome for real estate. And you're not going to go buy houses when prices go down. If you're a real estate investor because you may not have talent tenants to rent them. Do you have a dissenting opinion here or do you think that this is a significant problem?

B (19:34)

No, I mean, I think obviously real estate is very location based. I mean, it's the same counter argument, right? If they knew, you know, big manufacturing facility is being created somewhere in the Midwest and is there a benefit to, you know, go buy a property there and see property value spike? You know, this happened with Austin three, four years ago, right, when the mass exodus happened from California and all the the SoCal in the Bay Area people were in Austin with the tech companies that moved there. It happens, right? And I mean location is going to drive, you know, a huge percentage of your success or your fail rate. And it's really based on the tenant pool, it's based on the buyer market as well. And that that impacts your property value. But that's, that only helps you when you sell. Right. It doesn't help you when you hold. And most of the people who listen our show or who are clients of ours, you know, they're in it for the long haul. They're looking to hold real estate. So this is definitely something to be on the lookout for. Right. And I mean if you guys are just looking at the federal unemployment number, which is right around 4% right now, but you also are hearing on the sideline that Google, Facebook meta, Amazon just laid off like over a million people I think combined right now. Like, you got to take all things into consideration because remember the, the jobs report is all industries. But I've said this before on the show. If a Facebook tech, you know, big, big name person making 3,400k a year gets laid off and they go work for Uber, like that's not technically a lost job, but that's a significant amount of lost revenue in the, you know, in the environment of the economy. Right. You're taking a 3,400k a year employee and having them go make whatever you're making, drive an Uber in your area. Right. That's still a job. I get it. I'm not beating up Uber drivers like they're valuable to the economy, but it's not the same level of job of a multi hundred thousand dollar a year earner. Right.

A (21:22)

Yeah.

B (21:22)

So you just be careful when you, when you see employment data, take it with a grain of salt. Also read all the other news, read the layoffs of the high profile companies, read the layoffs of, you know, how are those companies pivoting? And I, I think there's, I don't know of a big tech company that's like mass hiring right now. I don't, it's, I, I haven't heard it. At least maybe you guys have heard it, but I haven't. Right. I don't know. Amazon desperately looking for a hundred thousand new employees. You know, it's usually where they're trying.

A (21:49)

To cut jobs because technology improves and replaces jobs.

B (21:53)

Yeah.

A (21:54)

So you have that happening at the same time that you have less money being spent, Velocity money going down, that's a death sentence for the labor market. It's a lot.

B (22:01)

Yeah. I mean, you even think of something that the most stable things that you can probably think of in the world, Starbucks just closed, I think like 3% of their stores nationwide and laid off a bunch of people. Like that's Starbucks. That's on every corner. It's like arguably one of the most successful businesses of all time. Right. What other company do you know that has a brand recognition like Starbucks does? And they're laying people off, you know, so they're not untouchable, you know, so just keep these things in mind, Right. And I know Starbucks isn't the multi hundred thousand dollar a year tech jobs, but they're still very valuable jobs in the economy. Right? Just, you know, when, when you're, when you're reviewing everything that the Fed says, you have to take it with a grain of salt. Okay. And especially location specific. If you hear, you know, the. I know a lot of cities in America are like, primarily driven. You look at Detroit, what happened decades ago, they were like 90% the auto industry. And what happened to Detroit when the auto industry collapsed, like they didn't have other jobs? There was nothing else to do there. Now Detroit's like the lending capital of the world. But they pivoted, right? They, you got to pay attention to what's happening in your local market. What's happening in California doesn't impact you in Kansas.

A (23:07)

He says, with today's decision, we've lowered our policy rate 3/4 of a percentage point over our last three meetings. This further normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2% once the effects of tariffs have passed through. During the press conference, Powell asked if the Fed is now on hold on rate cuts until there is a clear signal about how the economy is evolving, particularly with respect to jobs and inflation. And he said the Fed's fund rate is now within a broad range of estimates of its neutral value. And we are well positioned to wait to see how the economy evolves, which is a lot of syllables and a lot of very big words to say. Very little. I don't think he answered a whole lot.

B (23:48)

Basically just saying wait and see. Yep. So all the people who are expecting 3, 4, 5 rate cuts in 2026, if you guys have talked to me about mortgages or I've talked to a lot of people the last three months that have reached out. This has been my consensus. I don't think I'm as, you know, bullish on 2026 as a lot of pundits have been, because I think the Fed is happy to just kind of sit still where they are. I think they did their rate cuts and, you know, had the desk pounded for Trump. Now a lot of people counter me and say, in March or May, whenever it is, when Jerome pals out, maybe Trump puts a one guy in who's Just going to bulldog everybody and lower the rates, maybe. So that's the, that's the, the wild card. Right. But if they follow what the Fed has historically followed from an economic standpoint, I don't see that happening. I see rates continuing to trickle down, but mainly kind of holding still into 2026, you know, and they're in that wait and see approach. And if tariffs do end up impacting inflation, if there are impacts that we have not quite seen yet from our monetary policy, those will be taken into account when the Fed decides.

A (24:52)

If you're listening to this and you're thinking, guys, I don't know why you're screaming. The sky is falling. What's up with Chicken Little? It doesn't look that bad to me. I don't see a lot of foreclosures. I think that there's a fatal error people make when they wait to see the lagging indicator before they believe that it's a problem. They wait and see. I need to see the evidence of it before I believe it could be happening, because by then it's too late. My concern is that we continue to trickle down interest rates like we are doing, and we don't see a significant improvement in jobs or the economy. I think their logic is if we lower rates. I believe he even made a statement where he said we should see an improvement in the economy. If they keep dropping rates, but we don't see jobs created and we don't see the economy turn around, there's a cost to that because you're, you're giving up the only bullets you had in your gun in the first place. And if we don't see an improvement, but we continue to trickle down to 4%, three and a half percent, like we saw before, but now we're not seeing the crazy hot economy that we had last time, you're in big trouble.

B (25:56)

Yeah. You got 100.

A (25:58)

That's it. That's it. You use medicine that doesn't work anymore and you can't kill the virus. It's adapted and it's fighting back against you. I don't know what we do at that point. That's where we would see the mass problems that I'm worried about.

B (26:14)

Yeah. And everybody who hears, you know, Trump's side of the equation, you know, Jerome, too late, pal. And everything. It's funny, right? It's, it's a funny nickname. Everything. And I, I get, you know, obviously why, why that, that benefits, obviously, the current administration. But if you guys remember what were our rates? You guys know what the fed funds rate was during COVID Like, we almost got to zero percent. They had no more bullets in the gun. That's why we saw record inflation immediately following Covet, because we were already on that price cut routine. And then covet happened. So if a black swan event happens after you shot all the bullets, you got nothing left. You got to just kind of ride it out. And that's why we dealt with Almost, you know, 9%, 10% inflation, probably in all reality a lot higher than that in certain markets. Right. We didn't have anything left to fight it. Right. There was no, there was no more, you know, cost cutting. There was no more anything. It was at zero. We're not going to go to negative interest rates. Right. I know some European countries have done that and varying levels of success or fail there, but America's not going to go to negative interest rates anytime soon. They're not going to pay you money to borrow money. Right. That's. That's like system breaking, you know, that's.

A (27:18)

What you just said was my next point. That is what the talk was. When we were near zero percent and we still didn't have the economy that they thought we should have, the talk was, should we go to negative rates? Because Europe had done that where that was the question, how does that work? Does, like, do you pay the bank to put your money there?

B (27:37)

Yeah.

A (27:38)

Right. Like, how does negative interest rates happen to where the idea is if you got to pay the bank to put your money there, you have to take your money out and you have to spend it because keeping money hurts you. Right. When you lowered the interest rate, it doesn't help you to save, but they were considering a scenario where it hurt to save.

B (27:58)

Yeah.

A (27:58)

And the odd thing is with this, we ended up with that anyway because that's what inflation does. You just don't see it show up on your, on your bank statement, but it still is killing your purchasing power. And long story short, if you're asking Uncle David why it didn't work is because we didn't actually create jobs, we just lowered rates.

B (28:16)

Yeah.

A (28:17)

You got to get people that want to make things, provide services, use stuff, buy American made. You have to get people in the country to say, I want to work, I want to produce, I want to do something. I don't want to sit around in my house and play video games and do nothing. I don't feel comfortable that the government's going to provide for my health care and my education and my food and my rent through Section 8 and everything else. I gotta get doing something. If we have a resurgence like that, we can stave off what we're talking about. If we don't, there probably is a big problem coming. Now, if you're sitting here thinking, well, what should I do? I mean, take comfort in this. Doesn't matter what you do. You're in the same boat as everyone else. There is nothing to do. There is no safe place to put your money. There is no way to avoid the hammer that's coming. You just mentally prepare for the fact it could be coming, and you adapt to the new situation, which. My two cents. If we end up in that scenario and there's no bullets in the gun, there's nothing we could do. That's probably where socialism gets introduced. That's where the whole trajectory of the country moves away from capitalism and into socialism. And then I'll, you know, let the historian say how that plays out. In the meantime, if you are the person who's willing to work, make hay right now, it's not there yet. We have a chance to do this. Make your money, save money, make smart choices with it. Prepare yourself for bad situations that could be coming. Think about where you're buying and make sure you're getting your real estate in areas where people still work. When I see, like, the worst areas getting hit the hardest, it's often the areas where the least amount of people want to get after it. So it's one of the reasons that we're trying so hard to recruit people to come to the one brokerage, because we have an opportunity right now to make good money, to train people, to build people, to develop character, to develop skills and to improve work ethics. And if you come here, it's kind of like joining a CrossFit gym. You are guaranteed to get in good shape, and that's because we got a really good leader at the helm. Christian, you're doing a great job spreading the knowledge and teaching guys how to be good at their job. Do you want to just explain what you'd like to see as far as people coming to work with us, what people should do if they want to get a loan through us, and where they can go?

B (30:31)

Yeah, I joke around. A lot of time. It's like the NFL draft, right? I can teach mechanics, I can teach fundamentals, I can teach a playbook, but I can't teach drive. Just like in football, you can't teach speed. Sometimes the fastest guy is just faster, right? I want fast guys. I want people with good minds, I want people with good commitments. I want People with good character. Right. I think as everybody who watches the show kind of has a sense of mine and David's character and our commitment to, you know, whether it's a religious background or wherever we get it from, it's. It's an idea that we want to do the right thing. Right. We want to represent people the right way. We're an integrity based company. And you can't teach that. You can't like, teach integrity. Right. But I can teach the fundamentals, right? So somebody who, you know, does have that drive, does have that commitment to, you know, learn and grow. That's all I need. I can work with the rest of the.

A (31:23)

That's it. We got a couple of people right now that are getting their mortgage license to come work at the company. They're not even existing loan officers. They're either real estate agents or they're transitioning out of their last job. Maybe they got unemployed themselves and they're coming to work here. So if you've ever thought about it, if you like real estate, if you listen to this and you're like, man, I'm not selling houses, but I got all this knowledge and I want to do something with it, or you're in an industry and there's talk of layoffs coming, don't wait. Take action now so that when that wave hits, you're the one position and you're ahead of the group. And don't say we don't love you because we're sitting here sounding the alarm. As much as we can appreciate you being here today, Christian, also, we appreciate every one of you that is listening to this. We, we really do. We are providing real talk training to give back to you guys. And we're always here. So go to davidgreen24.com and use a chat option to get a hold of me. Or you can reach out to christian@the_1_ broker on Instagram or check out our new website at the1brokerage.com also make sure you subscribe to the channel if you're not already doing so. And check me out on YouTube at David Green show where we grow live. Sometimes Christian joins me whenever there's. That's our biggest fan right there.

B (32:33)

He loves the mortgage butt sign off. Right?

A (32:37)

That's it. Whenever there's a big update in the real estate world, we've tried to go live and introduce you guys to it and announce it right away. So thanks for being here, everybody. Thanks for being here, Christian. We'll see you next week on mortgage Monday.