Mortgage Market Insights w/ Raoul Pal & Jeff Moore

"We haven't had the 'aha' crisis moment that we had in 2008 because the mortgage market is incredibly healthy."

Jeff Moore runs more than a trillion and a half dollars for Fidelity’s fixed-income portfolio. The veteran portfolio manager has had skin in the game for the past 23 years, so when Raoul wants to know what’s going on in the bond market, he turns to Jeff.

In this fascinating discussion, the pair dissect whether we’re in a generational trend shift in bonds, what that means for markets, and where opportunity still exists for investors.

As he notes, “this is a pretty decent time for bonds,” so be sure to pay attention. Recorded on February 27, 2023

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[zerocarbdoc]

Food for thought, but with recent spending and easing it is a different beast than 2008 and 1990.

[nadinemaag]

What did he mean with the cardboard boxes that count as capital? Which assets are not accounted for properly? And in what market? I didnt understand this.

[JohnTaylor-tswk]

The US was not ground zero in 2008, Europe was hit much harder.
The introduction of the Euro created an enormous debt bubble which fueled a housing bubble bigger than that in the US.
The US encouraged its own housing bubble in a number of ways, including the creation of the liquid MBS market funded by repo with crazy low rates.
The housing bubbles fed off each other in many ways as our financial and banking sectors intertwine. It was a truly global crisis.

[tiko]

Really hard to follow him as a not native speaker

[xyz]

Sellers aren’t selling because they r under water. This is normal. The selling is always done by the Banks in reset. Delinquencies are going to record highs.

[davieb]

Can American's redraw against their existing loan at their current interest rate or does it get a fresh current market rate ?

[hikerstl]

Boy, this video didn't age well. Those bumps in the night are the holder of those long term bonds and holders of mortgages, ie banks, Blackrock and others. So a bank run forces these institutions to sell those normally safe assets at a loss. Not a good position to be in. So the difference in 2008 was the households were holding the risk. In my neighborhood at least half the households when into bankruptcy.

[Larrye]

The food store near me now charges $10 for a Home Run Inn pizza. It was $6.79 about 2 years ago. Prices are going to double before Brandon retires.

[Giveup]

Good luck with your theories, don't agree with them. People always say it's different this time, but it's not.

[buggsmcgee]

Can we all stop dwelling on 2008.. That event was unique...a true black swan. What we have is a Dot Com scenario.

[michalmaziarz]

I don’t know Raul. We are at peak prices and increasing rates. If the FED takes rates to 5.5 it will cause incredible stress. The MBS and CMBS market will show a lot of weakness. Companies are starting to walk away from their commercial investments. The FED has a lot of MBS they need to sell at the time of weakness in the market. Why would the banks buy them instead of treasury bonds at safe 5%?