The StoneZONE with Roger Stone - Barry Habib ｜ 05-12-25

00:00:00.000 this is the stone zone with roger stone they went after a guy named roger stone who's sitting

00:00:15.640 in the office and i'll say this in front of roger he's no baby and right now he's cleaner than

00:00:20.340 anybody in this place now they treated him very unfairly now get in the zone it's the stone zone

00:00:28.560 here's roger stone and you're back in the stone zone joining me now is barry habib he is the chief

00:00:37.700 executive order officer of mbs highway more importantly he is one of the country's leading

00:00:43.980 authorities on both housing and the mortgage industry uh he is the go-to guy on mortgages

00:00:52.780 and housing but also a keen economic analyst he is widely credited with saving the mortgage industry

00:00:59.940 back in 2020 from margin calls due to federal reserve actions it was barry habib's presentation

00:01:06.560 to the fed that created stability at a crucial time he is now the four-time winner of the crystal ball

00:01:14.560 award given by fannie mae pulsonomics and zillow for the most accurate real estate forecasts

00:01:21.140 uh among the 150 top economists in the country we're always honored to have him because

00:01:27.160 it had economic matters simple and understandable barry habib welcome in to the stone zone

00:01:35.040 always great to be with you roger thanks for having me so uh barry we had some momentive uh momentous

00:01:42.120 announcement yesterday the united states and china have agreed to slash tariffs for 90 days

00:01:48.280 uh do you believe this will lead to a longer and more permanent agreement

00:01:53.020 i do and i think the incentives on both parts uh the u.s is about to feel the pinch of it you got

00:02:01.240 to remember roger that as of friday no ships left chinese ports for the u.s and i think that was a big

00:02:08.940 incentive to making sure there was a deal put together from the u.s side because from the consumer

00:02:13.560 standpoint if you hear you know you've been hearing about tariffs you haven't really felt it too bad

00:02:18.560 so far um but where it really could hurt is that there's an item that you want that you can't have

00:02:25.460 access to and i think that that was going to actually manifest itself as we approach the next

00:02:31.800 30 to 45 days because it takes from ships leaving china about 30 days to reach the west coast of the

00:02:37.340 united states 45 days the middle of the country about 60 days to reach the east coast so in the next

00:02:43.300 45 days ish or so we may see a void on some of the items that people are accustomed to having

00:02:50.700 readily available and that's when people start to get antsy so this could be very very good as a

00:02:56.520 preemptive move now i'd like to just discuss the level of tariff whenever you'd like roger because

00:03:01.800 the percentages do make a difference you anticipated my next question professor proceed

00:03:07.340 so uh you know that 145 and we've talked about this and that's window dressing once you get above

00:03:14.540 50 you essentially shut down viable trade because it's just too costly so dropping to 30 starts to

00:03:23.280 make it viable again and maybe there's room to negotiate so this 90 day period is going to be really

00:03:28.840 good hopefully that it can extend beyond that i think it will as i said the incentives are there

00:03:33.940 but roger let's take a look and understand how the tariff works because what i've discovered is

00:03:39.360 there's so much confusion out there and and let's let's use an example of of a shirt that you buy from

00:03:46.100 china so let's just say there's a tariff of 10 now the confusion starts with who pays the tariff

00:03:53.840 some people think china is paying the tariff they're not paying the tariff if you have a shirt that

00:03:59.840 you're importing from china and let's just say that shirt is 10 and there's a 30 tariff on it

00:04:06.620 that means the importer is going to pay a three dollar charge for that tariff now what happens

00:04:14.480 after that's important because then nothing else is tariffed there's markups that importer is going

00:04:20.560 to send it to a wholesaler they're going to mark it up a couple of bucks that wholesaler is going to

00:04:25.480 send it to a retailer and they're going to mark it up a couple of bucks and then the retailer when

00:04:29.760 they sell it to the consumer will probably mark it up at least 100 percent if not more so you could

00:04:35.440 have an item that does have a 30 percent tariff which sounds onerous but the cost of the item

00:04:43.640 might only change from 45 to 48 instead of like being 44.99 being 47.99 so while that's certainly

00:04:56.380 something that's meaningful and something that makes a difference when we look at a number of 30

00:05:02.000 percent we start to think oh my gosh that's 30 percent that seems like an awful lot and in some

00:05:07.760 cases like if it's a vehicle that we're imported and everything's imported it could be but on much of

00:05:14.700 the items that we get people often forget that the other markups to the wholesaler to the retailer to

00:05:21.520 the consumer are not subject to the tariff so the tariff is only on the raw imported item at that

00:05:29.440 percentage it gets diminished on a percentage basis before it hits the customer obviously secretary of

00:05:36.020 the treasury beset made this announcement about of a trade deal with china at a time that the

00:05:41.140 stock markets were closed how did the markets react this morning to this news

00:05:46.700 you had a huge rally in the stock market obviously trade is very important we know that it also means

00:05:54.740 a lot to the job market because you know the dow today responding by up over 1100 points

00:06:00.820 this is this is a sign that the stock market really loves this news because look it means a lot for jobs

00:06:07.340 those people that unload the ships that transport the goods the retailers that have to have those goods

00:06:12.560 on their shelves it's very important for the economy to keep the economy in good shape well in addition

00:06:19.080 to that there are things that could come out of it bilaterally if there is a more fair platform for

00:06:25.200 trade if it does help american workers if it does help american exports that in addition to it will also

00:06:32.320 help the u.s economy so you know president trump's negotiating tactics are not conventional um but maybe they

00:06:40.220 shouldn't be because they in the past some of the more conventional ones have not been effective

00:06:45.240 but if we do get something good out of this this could be this could be a very effective way

00:06:50.920 to have a more level trading partnership with china and something else that seems to have come out of it

00:06:57.600 that president trump was also discussing was that china will be more cooperative in restricting

00:07:04.220 fentanyl from coming into the u.s too which obviously is something really critical

00:07:08.340 so you have been a pretty articulate critic of the federal reserve chairman jerome powell

00:07:14.720 i saw recently where he announced that he was essentially not going to hike rates he was going

00:07:19.860 to do nothing with inflation down to 2.4 percent from a 9.1 percent rate in june of 2022 under biden

00:07:29.200 seems to me the president is already stabilizing the economy what should the fed be doing at this point

00:07:35.480 if anything they should they should be cutting rates clearly jerome powell is like a deer in the

00:07:40.780 headlights who is more concerned with his legacy than doing what's right because he has zero in

00:07:49.040 the way of backbone or gumption and i was very critical of jerome powell because he was complicit

00:07:55.300 after after after biden went with that 1.9 trillion dollar budget buster which was going to be

00:08:02.500 inflationary jerome powell was complicit and potentially politically motivated by keeping

00:08:09.160 interest rates at zero and to add gasoline to the fire keeping quantitative easing going which then

00:08:15.220 caused inflation to explode explode as you perfectly articulated to 9.1 percent inflation like we had not

00:08:22.240 seen in 40 years jerome powell has a lot of dirt on his hands for that but one of the reasons why

00:08:28.400 he had so much dirt on his hands is because he looked at data that has a very long lag unfortunately

00:08:35.720 the data in the united states not only has a long two-month flag on the pce inflation reports before

00:08:42.740 it's reported so you'll get you'll get may's report at the end of this month i'm sorry you're going to get

00:08:47.320 a report within the month of may for the end of this month but that's going to be for the beginning of

00:08:51.600 april so it takes two months for it to come out you don't get it till almost the beginning of june to

00:08:56.320 see what happened in april and that in of itself is a delay but the components within it that we've

00:09:01.960 discussed in the past like shelter which is the largest component 44 of course cpi these reports

00:09:09.980 have a lag of nine to 12 months so he's looking at that it's like trying to drive your car down the

00:09:15.620 highway but only looking in the rearview mirror he's not looking ahead now i have a lot of issues with

00:09:20.720 jerome powell but i also feel that he has been inconsistent so let's just take apart a few things

00:09:26.340 from jerome powell number one is policy the by his own words we are in a restrictive policy stance

00:09:34.700 that means that interest rates are currently designed to slow the economy by his own admission

00:09:40.400 and john williams the new york fed president articulated it very well he said if you take the fed

00:09:47.240 funds rate 4.375 you subtract the rate of inflation let's use round numbers it's about two percent

00:09:53.160 the difference between the two and then he thinks there's a number there that they call this fancy

00:09:58.300 name called r star you add that above the inflation rate which means the difference between the two will

00:10:04.680 tell you where the neutral rate should be we are currently one and a quarter percent restrictive

00:10:09.620 that's pretty restrictive roger we are pretty restricted so we are designing it the the fed is

00:10:15.440 causing the economy to forcefully and purposefully slow which i think the labor market's a lot weaker

00:10:25.080 than we think and i think inflation is heading in the right direction yes there are uncertainty of

00:10:29.460 tariffs but we are forcing the economy to slow down and that's why president trump has been i mean

00:10:36.260 maybe a little overboard in his comments but he has a lot of merit in the things he's saying about

00:10:42.180 and the fed roger they're like a bunch of freaking lemmings okay these guys they follow each other 0.77

00:10:48.140 they're afraid of their own shadow look at the uk the uk just had a vote five four four dissenting votes 0.94

00:10:54.580 that's a meaningful discussion where people are not afraid people's voices are heard they represent

00:11:00.120 different thought problems the fed is like a bunch of leather like a bunch of freaking penguins jumping

00:11:05.420 in the water one jumps in the rest of them jump in nobody has their own mind nobody has their own

00:11:10.820 backbone and jerome powell is just worried because in february of next year he goes off into the sunset

00:11:17.160 right and what he does he's so fearful that it's going to have oh he let inflation get out of control

00:11:23.100 that he's willing to risk the health of the u.s economy because of his reputation but there is no

00:11:29.320 evidence that that inflation is getting out of control if anything inflation's come down

00:11:34.260 you you're a hundred percent correct the only uncertainty is is these tariffs which is what

00:11:40.420 they're running for cover under because tariffs potentially it's different than inflation because

00:11:45.520 it is a one-time price adjustment whereas inflation is persistent year over year however inflation is

00:11:52.300 something that that has been improving but there is a period of uncertainty but you are a hundred percent

00:11:58.600 correct it has been coming down although i will tell you that the run rate for the last three and six

00:12:04.640 months is above the year over year rate so there is reason to believe that potentially it could nudge up

00:12:10.520 but not in a meaningful way and not to risk the health of the economy and labor market there is one

00:12:16.040 other thing that i'd like to talk about is one more inconsistency of joan powell so we recently had

00:12:21.920 first quarter gdp first quarter gdp came out with a negative number it's the first time in three years

00:12:27.380 we've seen that clearly a red flag but your own powell in this particular instance roger was able to

00:12:34.320 say hey you know what let's use a little critical thinking here so he rationalized it by saying and

00:12:40.500 he was correct that a lot of it was front-running imports the calculation for gdp takes imports minus

00:12:46.960 exports so you you then are reducing gdp artificially by this front-running so therefore you could say okay

00:12:54.220 well he's probably right but yet it's amazing to me but he doesn't use the same strategy when

00:13:00.240 contemplating the lags he just looks at data in other words ddp no but i don't like the number so

00:13:06.220 i'll rationalize and i won't look at just the data but the job report last month 177 jobs i'm pulling

00:13:12.220 bs on that one because first of all it was 60 000 revisions they'll be revised lower so it was a much

00:13:18.480 weaker number and the numbers came from imputed data we've talked about in the past this birth-death

00:13:22.820 ratio which accounted for about 80 000 of the jobs this number was really closer to a 50 000 job

00:13:28.560 report it was a lousy job number but yet your own powell looks us in the eye and says economy's in

00:13:34.720 great shape labor market's in great shape he knows all too well that's bs and he's able to be critically

00:13:40.660 use critical thinking on the gdp number when he doesn't like it but the jobs number no he's just

00:13:47.120 going to take any face value that's a double standard i'm calling bs on it barry how do you

00:13:52.620 think the president's announcement regarding lower pharmaceutical prices for all americans

00:13:57.380 will affect the economy well i think that could be that could be a great thing so long as it does not

00:14:05.040 discourage research and development i think it could be one of the greatest things for us because

00:14:09.980 it is an unfair playing field we pay so much so much more but we are also the breadbasket of

00:14:17.540 all these new breakthroughs so so long as there are still incentives in place and there's a way to

00:14:24.440 thread the needle by keeping the incentives in place but reducing the cost it could be one of the

00:14:29.060 greatest things that happens to us we have about doing an amazing job uh we have about two minutes

00:14:34.240 before we have to go to a break and we'll be back with more of barry abib barry how important is it

00:14:38.980 that the president's tax cuts be renewed in january well as you know i've been kind of involved in this

00:14:45.360 on a couple of of committees that i belong to and i think it is very important if you uh if we if they're

00:14:51.880 not uh the stock market will not like it roger it will not like it one bit um but by the same token

00:14:59.440 we do have to be careful that we don't take the budget so far out that i know that we're going to

00:15:05.700 play the come here we're going to say look it will increase revenues and and all that is true

00:15:09.540 but if you do blow out the budget further than the bond market is willing to accept

00:15:14.460 it can potentially backfire so they have to again this is a matter of threading the needle and using

00:15:20.700 and using just enough to get the tax cuts extended without loading it up with too much i know he wants

00:15:27.100 the big beautiful bill but he can't get the bond market to the point where you get the bond vigilante

00:15:32.160 he's saying hey you know what the deficit the deficit's going to be too big there's going to

00:15:36.160 be too much supply coming to the market and we see interest rates increase dramatically that will

00:15:40.320 also hurt the stock market so if we've got to be careful uh when we come back on the other side i'm

00:15:46.020 going to ask barry habib the chief executive officer of mbs highway one of the leading experts on the

00:15:52.580 housing and mortgage industry as well as the overall economy about the national debt uh and the

00:15:58.600 deficit so please don't go away we'll be right back uh in the stone zone with more of barry habib

00:16:04.640 uh and a breakdown on the economic news of the day donald trump keeping a number of his key promises

00:16:11.080 and the impact of those announcements whatever you do don't touch that dial because we'll be

00:16:16.880 right back this is the stone zone with roger stone the stone zone

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00:16:55.740 set as a new preferred customer by using discount code pod this is the stone zone now get in the zone

00:17:11.760 it's the stone zone here's roger stone

00:17:15.820 and we're back in the stone zone my guest barry habib the chief executive officer of mbs highway more

00:17:25.060 importantly one of the most brilliant economic analysts in the country specifically an expert

00:17:30.260 on housing and mortgages but also a shrewd economic analyst who has won numerous awards for his accurate

00:17:37.820 real estate forecast joining me here in the zone uh barry how concerned should americans be about the

00:17:45.280 national debt uh that was allowed to grow so exponentially under joe biden and what is the very best way

00:17:52.060 to address it you know roger it's a great question and we're not left with many good choices right now

00:17:56.500 because the time for making good choices is tough the can has been kicked down the road

00:18:01.800 and it's been exacerbated by the biden administration now when we look at the size of

00:18:09.100 the yearly deficit it's about two trillion dollars so we're not going to be able to get this down

00:18:16.200 in one shot but if we can get the trajectory to be reduced that's why the president is so concerned

00:18:22.940 about gross domestic product it's not necessarily the size of the deficit but its relationship

00:18:30.140 to gross domestic product this is the key you can have a two trillion dollar deficit be manageable

00:18:36.980 if the economy is growing at a much faster pace that's why jerome powell has to wake up and has to

00:18:44.520 understand that we should keep this economy accelerating and not contracting and not in a restrictive

00:18:49.980 stance because that exacerbates the level of debt as to the gross domestic product so what we want to

00:18:57.600 try and do is we want to try and see if we can a through doge and other spending cuts try and

00:19:04.000 eliminate waste fraud abuse but also try to make some reasonable cuts it's hard to do because nobody

00:19:11.240 wants to see cuts and when you think about the compensatory spending that you have you have very

00:19:18.220 little discretionary that's left unless you start to touch something like medicare or obamacare because

00:19:24.400 that's where the big money is and that's where you can really make some cuts but they may in turn

00:19:29.120 be unpopular and you know nobody knows better than you how that could you know influence midterms or

00:19:37.200 presidential elections so these are things that you know i'm sure that they need to be very cautious and

00:19:42.220 strategically minded uh with making these cuts but we do need to get this deficit down

00:19:47.480 last time we talked about this you pointed out that there were three legs of the stool that yes the

00:19:52.840 president needs to use the tariff stick to get better trade deals for the country we have to renew the

00:19:59.020 tax cuts in fact if you're opposed to renewing the tax cuts in january well then you de facto supporting the

00:20:06.160 largest tax increase in american history but we have to get serious about spending elon musk has

00:20:12.000 shown us the way with his doge project uncovering not millions not billions but trillions of dollars of

00:20:18.800 waste fraud and corruption all right i want to thank our guest barry habib the chief executive

00:20:25.280 officer of mbs highway uh and the the voice i respect the most when it comes to the overall

00:20:32.260 economy in america barry thank you so much for joining us today in the stone zone thank you roger

00:20:38.780 you're the best thank you uh to those out there in our stone zone audience god bless you and god

00:20:44.460 speed until we meet again please remember to tune in tomorrow for more of the stone zone we talk

00:20:50.420 news history politics culture food well particularly food and uh we'll see you tomorrow god bless you

00:20:58.060 thanks for listening to the stone zone with roger stone you can hear the stone zone with roger stone

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00:21:40.080 so you never have to wonder what the heck is going on here

The StoneZONE with Roger Stone - May 13, 2025

Barry Habib ｜ 05-12-25

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