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They Sky Might Actually Be Falling

Updated: Sep 6, 2023

Happy Market Update!

Wow. If you don’t already know, we have had a series of banking problems. I started in the mortgage industry in 2004. We allowed stated income and even 100% loan to value investment purchases. Yes, there were premiums for more “riskier” mortgages, but man, what a time to be alive. And then…man, what a time to not be alive! From 2007 until 2010, things did not look good. You may be old enough to have lived through it like me. You may be too young to remember, other than maybe watching your parents freak out. It was bad.

Now? This is different…but only kinda since it’s still based on monetary policy. Just not my industry’s fault! Woo-hoo! Is this a “hey, we got it. It’s good,” like we heard from DC Monday morning? Not a chance in hell. I wish they would stop lying to the American people. I believe this is a house of cards. Most have heard about this from Twitter, talking heads, and even TikTok. A quick sum up? Sure.


Silicon Valley Bank (SVB) did not have a proper risk management. And regulators chose to ignore it. That, my friends, is why it seems familiar. There are hedging tools (called options) that are used for insurance to protect for things like this. I’m not a scientist in this field, but I do know what I have been taught by market makers…and that is to have a spread to protect. It does limit the potential win…but, yep, it limits the potential loss too. Anybody in that position should know better.

But if you believe a Fed that tells you inflation is transitory, why would you bother? Anyone who believed the Fed never saw this inverted yield curve coming. But you STILL protect! A lot of people to blame…who, like in ’08, won’t go to prison. And of course, the government played no part. Shame on them all for not owning it.


Okay. That’s off my chest. Be lucky you were not in my Monday pipeline meeting. Man did our team, branch, and region get an ear full! But it’s all good. We made it through ’08…we will make it through whatever this mess is too. Heads up. Work and save. Each day we are hearing about the next bank, infusion of money, and (ugh) bailout.


By the way, one of the banks that did fold? Signature Bank. One of the board members? Here he is. Not familiar with him? Does Dodd-Frank ring a bell? Mortgages. He’s part of the reason people hate our appraisal system which increased the cost of appraisals. That same legislature is now being discussed as a major reason SVB, and so many other banks, are struggling. Well, his bank failed. Oops.

Speaking of oops. A Russian jet collided with an American drone today (as reported by the WSJ). OMG. I guess the radar was broke? (not so funny joke). Probably Trumps’ fault.

Also, Top Gun: Maverick didn’t win a lot of Awards? Fix is in! Give me a freaking break.


But back to money…yikes. This is a scary chart. I’ll find a not so scary chart next. Interesting that this is happening with a bank crisis right now…and probably why we cannot believe DC when they say it’s fine. No, it’s not.

Another chart…but not so scary (albeit the bar was pretty high from the last chart). Reserves is a big deal in our industry. You want a loan? They would be important to you too. Nearing 0% for some banks? Wow. Hello regulators?

CPI came out today. Still cruising at high levels. Shocking, I know. CORE is what we look for (per Fed). Month over month went up. You feel it too, like us. Year over year…their target is 2. We have a long way to go…with banks failing. What now, Fed?


10yr yield: wwwooooo, doggie. That was a fun 4 days. And looked, it bounced around that 200 day moving average (again). That’s the yellow line we hit twice earlier this year. I do think this is the end of the highest rates. But it’s going to be volatile day to day, depending on what news or complete BS comes out.

MBS: You will notice that MBS did NOT hit the 200 day moving average. That’s the purple line we hit back earlier this year. That’s because mortgage rates don’t move in our favor as fast as the 10yr would suggest.

So we shall see what later this week brings. You are probably reading this Wednesday or later. Retail sales are coming out, inflation outlook, housing building permits, fed business indexes, and, uh oh, consumer confidence. You feeling confident right now? I’m not. But you knew that. Look, this Fed policy had a lot to do with the bank problem. And they still don’t have inflation under control. So what to do next week at their meeting? Go 0 (or negative) and not fight inflation like you promised? Or go 50 and fight it…but damage more banks? Does 25 do anything at all either way? I’m glad I’m not the Fed. But, as my newsletters have indicated, I would have started much earlier. You could have moved 25bps in early 2021 to test the waters. Hindsight is 20/20. Go read my newsletters. I said it then. But I guess this is what you get from people who never ran successful companies. God Help Us.


Tim Lindsey

Originating Branch Manager

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