Scott Bessent was my client + Monetizing Gold → lower mortgage rates?!

Quick housekeeping: My interview with Max Chernov has reached 350,000 views. Check it out if you haven’t, where I talk about global real estate investing and financing. Lastly, please follow me on my new Instagram page @theglobalmortgageguy.

Please scroll down for Upcoming speaking events in Singapore and on our various YouTube channels.

Let’s start.

In my past life, I started one of the first hedge funds in Hong Kong and subsequently ran global hedge fund coverage desks for some of the top investment banks - in fact, my exact role was Harper Stern's, and eventually her boss Eric's job in the HBO Series, Industry.

Soros was one of my clients and Scott Bessent specialized in geopolitics and macro - my area of focus. I was the "China Guy" for many global hedge funds as China was the biggest theme globally, especially when it entered the WTO in 2001. 

Scott and the folks at Soros (and other hedge funds) in the 2000s were some of the brightest minds in the world - he certainly knows what he's doing, and bringing in a market participant to manage the current environment is a smart move.

In this week's Bloomberg Interview, Scott talked about the need to bring down the entire yield curve, particularly the 10-year as it relates to the cost of funding (mortgage rates) and monetizing the asset side of the government's balance sheet.

A few weeks into the job, and here are my takeaways: 

1. He criticized Janet Yellen for not "terming out" existing debt but then continued the same monetary policy. That tells me that there are no alternative options currently (Scylla and Charybdis).

2. DOGE is an incredible and long-overdue initiative. The U.S. simply spends too much.

However, -> the amount saved is still not enough to affect the deficit meaningfully.

Taken from Luke Gromen’s FFTT February 7th, 2025 => ”To frame this properly: Assuming $5T in Federal receipts this year (flat) and the annualized spending above, the U.S. could cut DoD spending by 100%, as well as cut all other Federal spending by 100%...and the U.S. would STILL run a $140B deficit. “DOGE” is gonna need a bigger boat.”

3. Any and all “out of the box” ideas are going to get attention - starting with the one below…

4. The Fed may revalue their Gold holdings at $42/oz (not a typo!) to the current market price of $2800/oz immediately adding nearly $1TN to the Treasury’s General Account. Read this fantastic FT Article from Sunday by Gillian Tett!

Here is the FT excerpt: 

=> This would lessen the need to issue longer term debt which will have the same effect as QE.

The big ticket items on the Annual Federal Budget

• Health & Human Services $1.8TN
• Social Security $1.5TN
• Gross Interest Expenses $1.4TN
• VA $400BN

Luke argues that the only thing that can be reduced is Gross Interest Expenses which relies on a much lower 10-year bond yield. 

If we get $500BN in savings from DOGE + $1TN revalue from Gold, and cut interest expenses to $800BN = then we are back in the game!

=> I think they have no choice but to engineer this to happen. There may be some short-term pain, mostly from equities, but imagine a world where mortgage rates are 3-4%.

Similar to 2019, the market priced in 2 rate cuts and we ended the year with 4 - NO ONE is expecting rates to fall this much! 

=> I think 10-year yields could end the year at 4-5%, falling to 3-4% in 2026

=> Needless to say, this is very bullish for U.S. home prices. 

Upcoming Events (DM me if interested):

1. Speaking in Singapore: U.S. Real Estate Investing @ American Club on April 2nd; U.S. Tariffs & Market Impact @ 67 Pall Mall on March 18th; Hubbis Private Wealth Forum Singapore on April 9th.
2. The Real Asia Show (YouTube): Jieun Wrigley (Goldman banker, turned Nutritionist); David Jacob (Marsh CEO, Global DJ, Tennis Champion); Renu Chainani (Indian Interior Designer); Rosanna Ocampo (Philippines and Milan Fashion Designer) and more.
3. Global Mortgage Group (YouTube): MilkChoc (Australia Real Estate)
4. America Mortgages (YouTube): Short Term Rentals (Rob Mehta, Founder, Rob Mehta + Partners LLC); How to Use an LLC for U.S. Real Estate Investing (Lucee Cesena, CEO/Founder, Nobility Consulting Services)
5.  U.S. Realtors: Christine Najem (Boston); Mike Fiteni (Philadelphia); Steve Kim (Atlanta); Lily Ly (Irvine)