For our Clients, Colleagues, and Friends,
This is from the MBA, showing mortgage employment as of August 29th. The data comes from the Bureau of Labor Statistics as well as the MBA’s Quarterly Performance Report, the report we always tell you is an absolute must-have:
What this chart tells us is what we already know: The industry was too slow to make cuts in personnel after the boom year of 2020. If you look closely, you’ll see that cutting jobs didn’t really happen until 2022.
And speaking of graphs and tables, if you’re an MBA member, they send you an always interesting table, chart, or graph every Friday. And speaking of MBA membership, I once spoke to a Wall Street investment banker who covered multiple industries, and he said he had never seen an industry whose members were as positive about their trade association as mortgage bankers and the MBA.
How much do the mortgage GSEs guarantee? Fannie Mae guarantees $4.1 trillion in mortgages, while Freddie Mac guarantees $3.6 trillion. If they go public, will they have PE earnings multiples like insurance companies? In theory, they should, as they’re essentially in the business of insuring a buyer of their mortgage securities against loss. Aside from guaranteeing their MBS, Fannie Mae owns about $85 billion in mortgages, and Freddie Mac owns about $97 billion. So that will probably argue that they'll also be viewed as a mortgage REIT.
If a single mortgage-backed security is an MBS, what do you use for the plural? I see the acronym MBS used for the plural mortgage-backed securities, as well as a single one when written, but when people are talking about them in the plural, I usually hear the word MBS’s (pronounced as em-bee-ess-uz). How do you say it when you’re speaking about them in the plural?
Who is the luckiest man in Trump’s cabinet? It’s hands down Howard Lutnick, the Secretary of Commerce. Lutnick was CEO of Cantor Fitzgerald, with his office on the 105th floor of the Twin Towers, and on 9/11, his wife was sick so he had to drive his kid to childcare. This caused him to be late, and he wasn’t in his office when the terrorists crashed a plane into the tower, causing it to collapse.
An interesting story about Disaster Recovery plans: Cantor Fitzgerald lost 68.5% of its New York employees on 9/11, with 658 out of 960 workers killed, more than any other single organization. Remarkably, the company was up and running on September 13th, not even 48 hours after the attack.
Since 1980, there have been nine Fed easing cycles. Across those cycles, the reduction in the 10-year Treasury averaged 72 bps. Around a recession, the decline in the 10-year Treasury averaged 156 bps. But outside of a recession, the slide in the 10-year Treasury was just 6 bps. A recession, unfortunately, is key to getting the 10-year Treasury down, and because mortgage rates generally track 10-year Treasuries, this theoretically puts the mortgage industry in the camp of rooting for a recession.
When it comes to investing, I’ve always thought that boring can be better. Maybe that’s my rationalizing for not investing in tech stocks rather than admitting that I simply don’t understand tech. Here are three examples of how boring can be better:
(1) Let’s look at Tractor Supply (TSCO), which sells exactly what you think it would. This ag retailer has outperformed Apple every year since 2001. In the past five years, Tractor Supply has more than doubled, compared with Apple’s 83% gain.(2) Next is Old Dominion Freight Line (ODFL), which is up 57% in the past five years, compared to Amazon, which is up just over 33%.(3) And what could be more boring than a pizza company? Going back to 2007, Domino’s Pizza (DPZ) has outperformed internet giant Alphabet. Like we said, boring can be better.
Wretched excess: A trading card signed by Kobe Bryant and Michael Jordan was just sold at an auction for $12.9 million.
Whoever bought it, what do they do with it? Invite their guy friends over and sit around and look at it?
The so-called San Francisco 'Doom Loop' is dying, and maybe even dead. Office space leasing is back to pre-pandemic levels. A big part of it is all the AI companies signing big leases.
The Institute of Family Studies just issued a report called "The Sex Recession." The report says that of people 18 to 29 years old, a full 24% said they hadn’t had sex in the past year, twice the number who said that in 2010. Young people, what’s the matter with you? Get out there and have some fun!
How many mortgage loan officers are there? The NMLS registry has reported that there are 82,500 MLOs in 2025, down from a high of almost 125,000 MLOs in 2021. As for the 42,500 who are no longer loan officers, what do you think they’re doing?
A big birthday is coming up: In two years, in 2027, Farmers Bank & Trust (in Kansas) will be 120 years old. We did a project for them somewhere around 2012, and then again, last year. The bank was founded in 1907 with $10,000 of capital. Current Chairman W.R. Robbins bought it in 1971 when it had $4 million in assets, and today, Monte Robbins runs it with $210 million of capital and about $1 billion in assets. Baseball manager Leo Durocher famously and cynically said, “Nice guys finish last.” He never met Monte or W.R., two of the nicest people you’ll ever meet, and both savvy bankers. That’s Monte on the left and W.R. on the right.
Question from last week on the meaning of the 26’ x 40’ foot patch of land and how it led to the student rebellions of the 1960s: The University of California had a sort of understanding with the state legislature and state government. The University would stay out of politics, and the state legislature wouldn’t interfere with the University, which was mostly relating to the Berkeley campus.
Even the most innocuous of political debate was not allowed on the Berkeley campus, and in 1956, even the Democratic candidate for president, Adlai Stevenson, wasn’t allowed to speak on the Berkeley campus. Students weren’t allowed to raise money for political causes, pass out fliers, or speak on the campus itself, but the University owned a small 26’ x 40’ strip of land just outside the campus border, and it allowed students to use this for political activities, giving speeches, and so on.
In 1964, the University changed its mind and no longer allowed free speech on this small piece of land. A former graduate student violated that rule, was arrested, a big sit-in ensued, and the Free Speech Movement was born. This big sit-in and protest movement on the Berkeley campus spread to campuses across the nation, and these student movements morphed into massive protests over the war in Vietnam. And it all started in Berkeley.
And look at how these students dressed. Women in dresses and men in coats and ties. How times have changed.
Earlier in the year, we wrote that Hungary might have a viable anti-Orban candidate in Peter Magyar, someone dynamic enough to knock off Viktor Orban and become the Prime Minister of Hungary. Well, we just read an article that Magyar’s party leads Orban’s party by five to ten percent in the polls. In the end, it might not matter, as Orban will probably rig the election in his favor. On the left, the glowering 60-something strongman Viktor Orban; on the right, telegenic 40-something Peter Magyar.
The L.A. Lakers recently shocked the world when they were sold for $10 billion a few months ago. An economist then devised an investment index of the NFL, NBA, MLB, and NHL teams that were sold going back to 1980. The index shows that owners of clubs in those leagues have, since 1980, averaged a return of 13.1%, versus 10.4% for the S&P 500. If you could invest in such an index, would you?
You probably haven’t heard of Citadel, the nation’s largest hedge fund, at $68 billion. It was founded in 1990 and has averaged a gain of 19.2% per year ever since. One million dollars invested in Citadel in 1990 is now worth a whopping $452 million.
Lindsay Lohan has a new movie out, and she’s happily married and raising a child. All of us who loved her in The Parent Trap are happy for her. With all her DUI arrests, time in rehab, and times in jail, she was kind of our generation’s version of Judy Garland. My own point in time for when she hit rock bottom was 2021 when she was so broke that she’d do personal videos for $300. She recorded the following for my daughter Hannah’s 30th birthday: Lindsay Lohan, Birthday Video.