Logan Mohtashami with a preview of Fed week and jobs week

HousingWire

On this episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about what he thinks will happen this week, which features both a Fed meeting and the monthly jobs data.   Related to this episode:   ⁠The battle over rates: Trump vs. Fed Chair Jerome Powell | HousingWire⁠  https://www.housingwire.com/articles/the-battle-over-rates-trump-vs-fed-chair-jerome-powell/  ⁠⁠⁠⁠⁠⁠⁠⁠HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to give a preview

00:11of this week, which is both Fed Week and Jobs Week. Logan, welcome back to the podcast.

00:17It is wonderful to be here. It is Friday morning. We're all enjoying the little event yesterday

00:24with Powell and Trump on the construction site. A lot of good takes. I thought Josh Brown had a

00:33really funny one where Powell's reading the letter and instead of reading what they gave about the

00:40previous project, Josh Brown, who's a well-known stock trader, said, cut 50 basis points or El

00:48Salvador. It is what it is. This is what we're doing. It was entertaining just to see Powell's

01:04reaction and like, no, no, that's not right. That's not right. But what do we say? Theatrics,

01:10right? Before the event happened, you and I talked about it. I said he's going to do some

01:14kind of a Zelensky event where he gets something in the camera. That's just how he operates out

01:22there. So, yep, this is the world. Like we said, popcorn from July, the second half of 2025. Get

01:30your popcorn out. It's going to be a lot of entertaining visuals out there. Okay. Well,

01:35let's talk about, we've had some interesting things happen regarding the dollar. So let's get into that

01:41before we talk about what happens next week. Well, of course, for our, how we looked at

01:46the White House's game plan since November 7th, 2020, we said they, they really probably want

01:51three things to happen. They want a lower dollar, lower energy prices and lower rates. And a lot of

01:58people say, well, if you get a lower dollar, that's inflationary because what you import will be

02:02costing more. And then you're on top of that, you have tariffs, you know, but in any case,

02:08Trump's always been a lower dollar guy. So what he said on TV, he said, Hey, I'm always for a strong

02:14dollar, but you make a hell of a lot more money, you know, when the dollar is lower. So, you know,

02:20and he's always been a lower dollar guy. It's just getting the dollar lower has been always

02:26challenging because the U S is so much bigger, so much more powerful economy than everyone else

02:31buy a lot too. So there's just, you know, that was in a sense why the Euro was created to kind of

02:38offset the dollar strength. But with that said, you know, energy prices are lower. The dollar's

02:46lower. The White House is probably deeply frustrated that the 10 year yield is the only thing left. And,

02:51you know, traditionally you would see if the dollar goes down, the 10 year yield goes down with it.

02:56Uh, and the 10 year yield has come down throughout the year versus, uh, where it was at the peak,

03:03but not to levels that I think I, I mean, honestly, three 80 to 4% on the 10 year yield with better

03:10spreads, they would, they would be happy with that. They could run with that because to me,

03:15Trump's so much of a visual person that if people see lower gas prices, lower mortgage rates,

03:21whatever goods inflation comes on a few items being, you know, he, he believes he could offset

03:28that. And these are things that did not happen under the Biden administration. And they would

03:33highlight that. And that's just, just how we operate. So that's why the Trinity game plan was

03:38kind of the focus, but it's the third thing that hasn't occurred. Uh, and this is why they're,

03:44they're just hammering a Powell at lowering rates and lowering rates.

03:48How do you get the dollar lower? I mean, does that, does that have a negative implication

03:53for what you're doing in the economy to get, I mean, can you really get the dollar low enough

03:59to make yourself an exporting economy? I don't believe you can. Um, and then there's like,

04:06what do we call the crazy people who always say, you know, the dollar's on the verge of a collapse.

04:11The U S is broke, you know, and then I always go, so you're, you're in the belief that Canada's

04:17currency and Mexico's currency are going to be so much stronger because we're broke. And Canada

04:22could then go buy New York and Mexico could buy California. And we always say, this is a dying old

04:27man cult, right? One group of people, Sarah, just one group always doomers for life. And in this case,

04:38um, it's very difficult to get the dollar like low enough to where, you know, it, as a consumption

04:45based economy, you know, you want a strong dollar and stuff like that. Cause we consume goods and

04:50food, but if you want to, if you want to be a manufacturing economy, it's just like,

04:54you know, it, it, part of it is difficult in the sense, cause you know, if you, if you want Japan to

05:00buy more cars from America, well, Japanese don't buy big cars, right? That's not what they do.

05:06You know, we build big cars here. We love big cars. We love big houses, Japan. No, you know,

05:13so there it's, there's, there's limits to what you can export out to, you know, but if you just want

05:20to increase the share manufacturing, the share of GDP or something like that in the big scale of

05:26pictures, it can't be tremendous, but if you're trying to do something on the minor side, you can

05:32maybe pull it off. But I wrote that article in, on, you know, December of 2016, you know,

05:38manufacturing under Trump and how it, things were limited, uh, on what you can do when you're,

05:45when you're a wealthier country, you become, uh, you just consume more goods and services,

05:49right. And that just grows as a population. So, I mean, China's trying to get itself kind of away

05:54from a exporting manufacturing, uh, because you know, they, they, they want more consumption

06:00there. Uh, so it's, it's, it's a difficult task that I just don't fundamentally believe in. But in

06:06this case, you know, when, when he made that statement about the dollar, not shocking whatsoever,

06:11not shocking. Okay. Let's turn. We are recording this on Friday morning, but this is going to go

06:17live on Monday morning of both fed week and jobs week in a very key time. Is it shark week too? Is

06:25it, are we getting close there? I don't know, man, if you get fed week, shark week and jobs week

06:30together. Oh my, then we've got to give it a dinosaur week in there somehow. And just, there we

06:34go. So, uh, yeah, this is, I mean, big, big, big, big, big on multiple fronts. Uh, Friday morning,

06:40not much was happening with a 10 year yield. And again, if, if the labor market isn't breaking and

06:46consumption is still going where fed policy is the 10 year yield between four 35 and four 70 is,

06:52is acceptable. If the fed guides down and talks about, we're going to get rate cuts in everyone

06:58kind of adjusts, uh, to that. And just for a lot of people that said, you know, the 10 year yields

07:04can go to five or 6% because Japanese long bonds are, you know, at all time highs, they're 34 year

07:10that did not happen. Right. We, everything is kind of in-house to the degree and 65 to 75% of

07:16where things could range as fed policy. So of course, paper, rock, scissors, labor over inflation,

07:22right? So it works both ways. Inflation expectations were increased, not by a lot,

07:27but increased, uh, um, and talked about, you know, uh, if, if the growth rate of inflation

07:34goes back up to 3%, which isn't a lot from where we are now, you know, this is why the

07:39feds have been a little bit more mindful. You know, there's consequences with taking that

07:43approach now, but, uh, um, Godzilla tariffs, obviously the market doesn't believe Godzilla

07:49tariffs would stay, but eventually you got to make some deals and then we'll, we'll push it

07:53out to see what, obviously they're not cutting rates, but what does Powell say specifically?

07:59What's, what's the goal to get that September? A lot of people are in the September cut. And again,

08:05none of this matters if the labor data starts to get weaker. And I think I, I, like we've constantly

08:10said this entire month that if government jobs actually shed at 15,000 instead of created, what,

08:1873,000, whatever that number was, um, we would all be having a different discussion because then

08:26we would all acknowledge that private payrolls are slowing down noticeably. And this is where,

08:32uh, Christopher Waller differs from why wait until the labor market breaks. This kind of slowdown,

08:39uh, uh, is, is evident because it's been here really for 18 months, actually close now to 18 to 24

08:46months. But in this case, you know, the language is key, but you kind of want to see what's, what's

08:53the metric for the September cut out there. Cause remember the fed funds rate where growth rate of

08:58inflation is it's modestly restrictive. Uh, they want to get down to neutral to me, the neutral policy,

09:04three and a half, 3% eventually it's a, it's a, it's a moving target that doesn't have too much value

09:11because what happens in the economy will just strip that away, uh, in seconds. But, uh, I think that's

09:18the key of verbiage and how does the bond market react? But if jobs Friday is bad, hypothetical, let's

09:25just say 64,000 jobs were created, government jobs, nothing was created there, private payrolls. Then I think

09:33the, the Christopher Waller's, um, talking point becomes more apparent. It would have been more

09:40apparent this month, but government jobs, oh, it's just the most hysterical jobs report ever where

09:45government jobs really just threw everything to a loop. But, uh, that, that's, that's the thing going

09:51on in the future. And always remember the fed looks at how consumers are consuming goods and services,

09:56jobless claims are still low. So they're just going to remember the whole, the whole premise of 2020,

10:00they will stay as restrictive as possible until the labor market breaks. And then they'll go, okay,

10:05we have catch up, right? I think, uh, Cleveland fed president, Beth Hammock, she really, really

10:12emphasized it in a, in a clear way. We would like to play catch up. Catch up means you don't get

10:18forward. Christopher Waller, fed chairman Waller says, we don't believe in catch up. I've already seen

10:25it enough. So you're going to start to see divergence within fed presidents out here. Uh, and I think

10:31another story that came out this morning on Friday that Powell kind of told everyone, Hey, listen, I'm

10:36going to stay here until the very end. I don't care how bad it gets, you know, uh, uh, and, and, and to

10:42his, to his defense, he can't resign because if he resigns, you know, the King is dead. The pawns are going to

10:49be easier to knock off. So this is kind of why he has to hold the ground just on that principle alone.

10:56He can't leave his soldiers, you know, for the oncoming armada. Uh, so he's going to take the

11:03stance. No matter how bad it gets, uh, uh, he is not going to resign. Yeah. I mean, I think that that's

11:10been his stance all along. I don't think you, I think it's a principled stance. I don't think you can

11:14pressure him into resigning because he's doing it for a reason, right? No, I mean, New York bully

11:20ball, you know, just going out there trying to find something, make, make it media, uh, make the

11:26highlights out there that this is bad or this is, I can't believe they did the third building trick.

11:32That was actually funny. They just added a third building. So then it would add to the, to the

11:37total. He goes, I don't know about that. And so Trump shows in the paper, he goes, you added a third

11:42building. I was like, I sat there and I was like, he really did. He brought the third, third building

11:47trick in there. Oh, by the way. Um, in any case, we, we, we, we, we've dealt with this for, for some

11:53time now. So we're, everyone's kind of up to speed, but again, fed labor data, job openings, data,

11:58job openings, data was fine last time. Uh, the ADP report, uh, again, um, you know, the, these are

12:05things that we have to categorize. What's more important job openings to me is the, the number

12:12three most important data line out here, but the federal reserve loves it. The federal reserve

12:16loves job openings. If job openings were down to 6 million and the, uh, fires ratios were, were,

12:22were, were, were, were picking up, uh, uh, that's, that's a different equation because they, they love

12:27that data line. Not a lot of people do that. The ADP is the least important jobless claims have

12:32gotten better. You know, the fed, they sit there and they go, okay, jobless claims break. Logan's

12:37right. We will break and, and, and start cutting, but we're not there yet. Continuing claims, which

12:43is the second category of jobless claims data. That's very, that's elevated at a three year

12:47high. It's not at recessionary levels that we would see, uh, uh, in previous, uh, recessions,

12:52but it just shows that the labor market software. So the, the, I mean, for me, it's just trying

12:57to get to neutral policy pastor where Trump wants emergency rate cuts and you get the fed

13:01funds rate below inflation as an extremely accommodative policy, uh, uh, right now, but,

13:07um, well, we'll see. And then jobs Friday, just remember jobs Friday, pay private payrolls,

13:13residential construction, wage growth, right? What was the model we used for wage growth?

13:18Sarah Wheeler for the last few years, 3% wage growth because the fed believes productivity

13:23is at 1% and that's how you get 2% inflation. So wage growth has been slowing down. That is something

13:29material because the fed doesn't want, even though if they don't admit it to the public,

13:34they don't want private payrolls to slow down and wage growth, slow down. And the fed funds rate

13:39be elevated. That that's why they harpered so much attack the labor supply, attack, attack, attack.

13:45You know, people are making too much money, attack it, attack it, bring wage growth down.

13:49You people can't consume goods and services. So they believe if they can get wage growth down to 3%,

13:54they would, they would have a party. I'm, I'm telling you, Jerome Powell will have a party

13:58in the federal reserve and the other building that, you know, they try to tag them on the third

14:04building that have popcorn and have chips and balloons. They got wage growth down to 3%,

14:09which to me, I thought was the primary goal, even though they say wage inflation doesn't create

14:15inflation. We don't. Yes. All you talk about is a labor supply attack. So that's something that,

14:20you know, keep an eye on jobs Friday. So I think the timing of this is so interesting because,

14:25um, like you said, what we're looking for is what are, what are, what is the language around it?

14:32Because there, there are no July rate cuts, even though we talked about it because of the last

14:35labor report, because this job's Friday is this comes out after the fed meet. So,

14:39so it's not going to influence this fed meeting anyway.

14:43It isn't the, the, the, the thing is that where the 10 year yield is right now, it's perfectly

14:49acceptable to fed policy as crazy as that sounds that it, it doesn't look abnormal. And if

14:55you look at the last few years, I can make a case that the 10 year yield never got as high as it

15:02probably should have in to some degree. Right. I always, I always bring people back to the 1990s,

15:07like the 1990s, Oh God, the federal debt was lower. The deficit was lower, you know, uh, debt to GDP

15:14was lower, but the 10 year yield was like six, seven, 8% mortgage rates are much higher. Like what,

15:20you know, people forget the 1990s, but in this case, by the way, Hulk Hogan passed away.

15:25I don't, we have had a whole raft of people this, this week, uh, you know, Theo from the Cosby show,

15:33we had Hulk Hogan. I mean, I do so much Hulk Hogan gifts as a kid of the eighties, you know, growing up

15:43and, you know, Hulkamadia and so much of my attack on the American bears and the Russians and the

15:49Chinese and Iranians, I always do throw Hulk Hogan at them all the time. So always remember,

15:54you know, everyone living in America, you are so privileged to live in this country, this day and

16:02age, y'all don't know how crazy it is out there and how bad it used to be like, you know, in the

16:07past. So, uh, you know, growing up in the eighties and Hulk Hogan, it's just like, I'm just brought that

16:13into the adult stuff. That's why I use Hulk Hogan a lot and a lot of the music. And, and I always

16:18remember during COVID when the COVID-19 recovery model was, we need the 10 year yield to go up

16:23higher because that shows that the economy is getting better. Right. So it was an odd, odd thing

16:28for me, but I was, every time the 10 year yield go up, I would put Hulk Hogan gifts out there and,

16:32you know, American flag. So, uh, rest in peace, brother.

16:37I have some things to say about Hulk Hogan that I will keep to myself since he is somebody that you

16:43looked up to. Um, yeah, it's been a weird week with that. I think, uh, that's crazy.

16:49Yeah. But you know, but for, for, for jobs week, Fred, we keep it simple. Labor data runs

16:55everything. Fed statements are our key and, uh, um, high always put job openings and, uh, uh,

17:03the BLS Friday report, primary jobless claims comes out every, every Thursday. So that data

17:08has gotten better recently, but wage growth and keep an eye on that private payroll. Cause we,

17:14I think people forget manufacturing jobs were lost last year, right? And manufacturing and

17:19residential construction jobs are typically late cycle things that, that, that go away. So we,

17:24we always want to keep an eye on that consumption is still holding up, but we're talking about getting

17:29to neutral, which I think is different than everyone else. Everyone else. And the people are

17:32talking about emergency rate cuts or rate cuts down to very low levels where we try to keep,

17:37keep it to consistency of what we talked about is how do you get to neutral in an acceptable way

17:42without needing the labor market to break at that point. And, and, and then that's,

17:49that's the discussion, uh, uh, that at least I want to have, uh, uh, Trump has his own kind of agenda

17:54out there. That's a little bit different, but that, that jobs Friday report, if it comes in week

18:00bond market can get ahead. We don't need to wait for the fed.

18:03Yeah. I mean, I honestly, if government jobs lost 15,000 and we were, you know, uh, running a sub

18:1160,000 payroll, uh, total non-farm payroll report with private payrolls, where it was, I think this

18:17entire month of July would have been different. That's why the irony was government. I mean, it was

18:23almost like the gods were playing a joke, you know, the, we, it was so much of everyone's discussion

18:28points all altered when government payroll was the leading, uh, job, uh, gainer in their last jobs

18:35report. So, um, we'll see, it'll be a very interesting jobs Friday. We will see. And as

18:42always, everyone look for the housing market tracker, all of those things that we look at

18:47every single week. I know that Logan will be working on it tonight. Uh, it's my last night in

18:52London, so I'm not going to be editing, but he's going to be writing that, uh, that tracker and,

18:57and looking at it so that we can, uh, have that out on Saturday.

19:02Yes. And again, for the tracker, I think it was, I think it was a very good week in explaining

19:06things like the purchase application data. I think people started to understand that, you know, that,

19:10you know, we are seeing unbelievable double digit percentage year over year growth. We haven't had

19:15that in a very long time, but if a lot of that are sellers waiting for buyers, it's a little bit

19:19different. Uh, um, and again, the, the, the tracker is designed not just for housing inventory,

19:25but it's demand and mortgage rates. It's the whole housing ecosystem put together

19:29in one fresh weekly report. So everybody could be ahead of the curve. Cause this is like months

19:35ahead of normal reports. So you don't get shocked about something happening. And I think, I think,

19:40I think the last, this last week with existing home sales report, I think a lot of people were

19:44shocked that inventory fell just a little bit. A lot of people were, a lot of people were

19:48looking for an accelerated inventory growth and price growth to be negative on a year

19:53over your basis, not pick up just a little bit on a tad. So again, let the tracker guide

19:58you. And, uh, uh, you you'll always be somebody that says, I, I knew it before you guys, because

20:04I read and Logan says the history of human civilization has always taught us that those that read have

20:10benefits over those who don't read. Amazing. Logan, thank you for being on. Talk to you again soon.

20:19you

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