7.14.26 Fed Progress; MCT's Leslie Winick on Strategy; Benign CPI Report

Today’s episode includes a look at the progress the Federal Reserve is making against inflation, and toward an all-Treasury balance sheet. Plus, Robbie interviews MCT’s Leslie Winick on the evolving role of a Chief Strategy Officer, exploring how technology companies can stand out in the AI era through customer-centric strategy, operational excellence, effective change management, and goal alignment. And we close with reaction to the release of lower than expected inflation figures.

Thanks to Zillow Home Loans, Zillow’s in-house mortgage lender, for sponsoring this week’s podcasts. By integrating Zillow’s real estate platform with financing, Zillow Home Loans helps buyers move from dreaming about a home to holding the keys. With tools built for modern lending, Zillow Home Loan’s loan officers can focus on guiding buyers with care and confidence. Zillow Home Loans is an equal housing lender. NMLS #10287.

The Chrisman Commentary is your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

Transcript

Speaker 0:02

Welcome to the Chrisman Commentary, Daily Mortgage News Podcast. I'm your host, Robbie Chrisman. Topics on today's episode include the progress of the Federal Reserve, the resilience of financial markets, my interview with MCT's Leslie Winick on the evolving role of a chief strategy officer, how technology companies can stand out in the AI era through customer-centric strategy, and the latest from Capital W. Here, take a listen, do a little preview.

Speaker 1 0:32

Last time I saw you in person was in New York for MBA's secondary conference, and you mentioned a couple things that stuck with me. Customer focus, operational effectiveness, and change management expertise. Can you break those three areas down a little bit and discuss how you ensure maximum success in each?

Speaker 2 0:48

And I don't remember saying that to you, but I'm so glad it stuck with you.

Speaker 1 0:51

I must have been someone else.

Speaker 2 0:53

Yeah, no, it sounds like words I would use. Okay. For me, customer focus is the North Star. So you're mapping out the experience you want clients to feel as they interact with your teams, right? That's essential. And I'd say about 10 years ago when I started working with MCT, we mapped out the five key touch points that a client has with us: prospects, sales, onboarding, manage, and exit. And back then we were about at the 30,000 foot level of how we wanted clients to experience their, you know, what they wanted to experience with MCT. Today, we have that map down to the 300-foot level and sometimes the 30-foot level. And mind you, we keep these experience plans evergreen. So as technology changes, as our processes change, as we have new talent come on board and bring new ideas, we change those maps. But that's customer focus, really being intimate and really understanding the experience you want them to feel. Operational effectiveness is an outcome of the customer focus. It's the core processes. It's the processes that are delivering that experience. And with operational effectiveness, it's it's important to talk about two components: capability and capacity. Capability is the skills, the talent, the know-how. And capacity is the volume, the amount, the bandwidth of that talent and know-how. So if you have a process that needs five people and you only have two who know how to do it, you have the capability, but you have a capacity gap of three. So you should identify three more people and have those other two people train them. But if you need five and no one knows how to do it, then there's both a capacity and a capability gap. And I think it's important to know that just because you have gaps doesn't mean there's a problem. You might have a new solution or a new product coming online and you've got to figure out how to deliver that experience. So identify the capabilities and the capacities you need the first time. So it's it's not a negative unless you don't identify it and address it, right? It's just an opportunity area at that point. If you stick your head in the sand, then we have some chatting to do. So that's customer focus and operative operational effectiveness. And the last one you said was change management. Again, to me, but it if client focus is a North Star, then I'm gonna say change management is the holy grail. And having people feel that they're being seen and heard, you know, really see that, that's essential for any organization. And it's and especially if new processes or products are being released. And this means team members, clients, and your business partners, anyone involved in that new process. So I really believe that change management isn't a soft skill. People call it soft. I think there's art and science to it, but it's essential. And it's essential in every facet of life: business, personal, all of it.

Speaker 4:02

Thanks to Zillow Home Loans, Zillow's in-house mortgage lender for sponsoring this week's podcasts. By integrating Zillow's real estate platform with financing, Zillow Home Loans helps buyers move from dreaming about a home to holding the keys. With tools built for modern lending, Zillow Home Loans loan officers can focus on guiding buyers with care and confidence. Zillow Home Loans is an equal housing lender. NMLS number 10287. U.S. Treasuries and agency mortgage-backed securities open the weak gaining in yield due to rising oil prices and renewed geopolitical tensions surrounding the Strait of Hormuz. Treasury yields and Fed rate hike expectations have climbed recently on renewed concerns that higher oil prices will reignite inflation. In the absence of economic data, markets remain focused on Iran-related developments, while rising or firmer expectations for additional Fed rate hikes continue to pressure the front end of the yield curve. Short-term treasury yields hit new 2026 highs yesterday, and longer-term yields lifted closer to their May peaks. Yet financial markets have remained surprisingly resilient. Oil prices have risen only modestly, suggesting investors believe any gulf shipping disruption will ultimately be temporary. While equities remain near record highs and treasury yields have moved higher only gradually, attention now shifts to Fed Chair Warsh's first semi-annual congressional testimony, which will help shape expectations for the July 29th FOMC meeting and beyond. With markets showing limited signs of stress, there is little immediate pressure for policymakers to de-escalate the conflict, although a prolonged closure of the strait would eventually tighten global oil supplies and increase inflation risks. Investors remain alert to the possibility that a less transparent Fed under Walsh could increase meeting-to-meeting policy uncertainty, making incoming data and Fed communication more influential and driving short-end treasure yields. The Federal Reserve continues to make slow but steady progress toward its long-stated goal of returning to an all-treasury balance sheet, with agency mortgage-backed security holdings declining by $17.7 billion in June, the fastest monthly runoff in a year, as legacy low coupon securities gradually roll off. While the Fed's balance sheet is unlikely to return to its pre-quantitative easing size given its ongoing role in money markets, its mortgage holdings have already fallen roughly 28% from their 2022 peak and should continue shrinking over time to passive runoff rather than active sales. With the bulk of those holdings concentrated in deeply out-of-the-money low coupon MBS, rapid prepayments remain unlikely, particularly as higher treasure yields and mortgage rates have sharply reduced refinancing activity. Refinance applications have fallen dramatically since the recent rise in rates, reinforcing expectations that the Fed's exit from agency mortgage-backed securities will remain a gradual years-long process rather than a meaningful source of near-term market pressure. The Fed has also created task forces to review and potentially improve its monetary policy framework, focusing on communication, the balance sheet, data quality, productivity, and employment, and inflation, as the economy and policy challenges evolve. Chairman Warch has emphasized the Fed's commitment to price stability and maximum employment, while acknowledging the need to modernize its analytical tools, particularly as declining survey response rates reduce the reliability of key economic data. Markets will closely watch his congressional testimony this week for clues on whether the Fed will adopt a less transparent communication style. The minutes from his first meeting remain very transparent, in contrast with little colored directly in the wake of the rate decision. While housing affordability is expected to be a key topic on Capitol Hill, despite the limited ability of monetary policy to reverse the effects of past low-rate policies on home prices. For today's interview, I wanted to welcome to the show MCT's Leslie Winick to talk about the evolving role of a chief strategy officer and how technology companies can stand out in the AI era through customer-centric strategy, operational excellence, effective change management, and goal alignment. As I mentioned, she's chief strategy officer at MCT, where she's responsible for charting MCT's long-term strategic path and overseeing critical initiatives in pursuit of company goals. She's also on point for forging relationships with industry participants.

Speaker 1 8:31

We will get to CAPW, which is something that is a passion project of yours and something that I can't say enough good things about. But I want to talk about your day job, primary day job first, and that is as chief strategy officer of MCT. High level, can you talk about what the role of a chief strategy officer entails at a technology company in this modern age? There's a lot of strategy around tech currently.

Speaker 2 8:59

That's right. Well, first, let me say thank you for inviting me on your podcast. I am a big fan. I listen actively, and um, and I was uh really grateful that you asked me to be here. I think strategy is different at every company, but it's really personality dependent. A strategist and how they operate in their own company can be unique. And so I'm just gonna tell you how I approach it and the aspects that I bring to my role. So, first, we look beyond mortgage and financial services in general. We look for trends and drivers of change that would likely impact our sector. So I'm talking about demographic and societal, governmental, regulatory, environmental, economic, and like you just said, technology. Looking at lots of clusters of trends. And when coupled, they help us look into the future. You know, where should we be planted today for the strategies that we need tomorrow? So that's the first thing. And at the same time, I didn't come up with the phrase, but right now we really believe there's so many known unknowns. You know, the future. If you if you go back to 2020, you never thought there'd be a pandemic. And now the way AI is transforming and all the catalysts have changed, there's so many known unknowns, so much rapid change in technology. I'm even rethinking my role right now. I've been a strategist for over 30 years. And back in the day, we would do strategies that were like 10 years long, if you can imagine, usually around five. Over the last 10 years, MCT is, we've been running it three-year clips. And uh it just so happened that at the beginning of this year was the start of our three-year plan. Well, we've stopped doing that. We're building plans for 18 months and adapting. And we always go back and refine and reflect and change them as the year goes along. But the time horizon is really shortened because of the pace of innovation and the pace of the known unknowns. Second, I really think a strategist and strategic plan needs to cascade throughout the organization. And that means nonstop communication. You know, I'm chatty, you know, I'm a talker, Robbie, but it's communicating the strategy. And so strategy clearly states who are we? That's your mission statement. That really shouldn't change if you've nailed it. And then it says, what are we gonna do? And also very important, what are we not going to do? Right. You don't, in big organizations, especially, people get pet projects or a phrase could be called a skunk work where they go off and start developing their own technology and onboarding processes or client experiences that might not be in a line with the strategy. So you really try to say what we're not going to do so those pet projects don't launch. They can be confusing and eat up resources for an organization. And, you know, a strategy is tied to a company's goals. So it's tied to their objective and key results or their annual budgeting or their quarterly business review process, product roadmaps, individual development planning. You see, a strategy directs all the things that are business 101 and organize and run a company. So if a strategy is structured at the top of the house and you've got these high-arching elements, then you take that and you cascade it to the functional levels or the business lines and you make it more micro and tailor that to those divisions. A strategic plan is a map and it's not the answer. And I spend a lot of time getting plans embedded in our core business processes. So we're not talking about the plan, we're executing against the plan. Next and really most important, my role is a change agent. And yeah, actually, that word agents used a lot now. I didn't even think about that for a second. But what I'm talking about are getting humans to understand and embrace change. It is so naturally opposed to most people's DNA. And it can be hard and it can take, again, a lot of communication. There's that word again. But I've seen the best plans, the best plans die because the logic wasn't clearly communicated, or the people that you needed to accept that direction and understand that change and be part of it killed it for the organization. That's really important. I think we say, what is the plan? Thinking broadly, cascading it, change agent. And then finally, you need this balance between strategic and tactical. Once the plan is set, you've really got to roll up your sleeves and get into the weeds and the action. So there's an important balance between strategic and tactical.

Speaker 1 13:47

I've learned that here at CRISPA where we we had some great concepts from some consultants and the operationalization aspect didn't have the same attention to detail. And so some of the things kind of petered out. And so figuring out the right way to operationalize, or when I think culture, you know, if you're not actively instilling a culture, one is going to instill itself, and it's probably not the one that you were hoping to get.

Speaker 2 14:09

So no kidding, the bing bing bing, dead on there. Yeah.

Speaker 1 14:13

When it comes to best strategic planning practices, thoughts there, pitfalls to avoid you. You've obviously had some experience in what has worked, what has not worked, what's been successful, what's been less successful.

Speaker 2 14:28

Great question. I I guess again, I'm taking this from my seat in the ballpark, but uh let's let's start with pitfalls. Set it and forget it. Let's develop a plan and never look back on it again. Or even taking the time to create the plan and then just putting it on a shelf and or maybe even you shared it once with the organization, but then you shelfed it. I think I said earlier, long time horizons. I wouldn't look at anything past two years now. Another pitfall would be assuming just because there's a plan, people are gonna follow it. That's a big uh watch out. What else? Uh being too tactical and not an identifying enough green spaces. So companies should make room for creativity and exploration in the strategic planning process. Not every idea that comes out of that thing is a good idea, but you're getting people to think out of their normal day-to-day tactical, because sometimes the best ideas come from the 30,000-foot level. And finally, I'd say one of the biggest pitfalls I've seen in my career is budget or growth targets does not a strategic plan make. You know, just saying we're going to grow X percent or revenue needs to be Y, that's not a strategic plan. Those are the, I think, some of the biggest pitfalls I've seen. It's for best practices. Uh, I've already said a few of them, but involve the people you know you need to execute and own that plan. They have to be part of the creation of it. And it might be consulting them. They don't have to be in every decision, but they need to feel involved. The second one I think is really challenging your organization to think differently. And in order to do that, again, why I said the trends and drivers earlier, you need to look beyond your industry. And then once that context is set, not only ask how you can delight your current clients, but what new clients could you address? Or is there an extension of a product or a service you have now that could drive revenue that you didn't have before? And additionally, you got to think what new solutions could we develop, not what you do today. That's the external thinking differently about your company. And then you said it a second ago, Robbie, culture. Internally in strategic planning, I think companies should reflect on and challenge their current culture. And that includes retention and reward structures and succession planning. Because at the absolute bottom line is at the end of the day, a company is as good as its people. Period. You are not going to delight a client if your people are not happy. That would, I think, the challenge the organization differently is really important. And then finally, overcommunicate. I said it earlier, I'm going to say it again. That's overcommunicating. But you have to communicate and cascade, communicating communicate and cascade.

Speaker 1 17:25

All good points. And I'm going to steal a phrase that you use there. This the my seat in the ballpark. And for my seat in the ballpark at CRISPN, I see a proliferation of AI companies. And there's all this talk of we could do this, we could do that. And actually, I to the industry's credit or to the technology provider's credit, we've moved from what can things do to what are they doing? And that's that's a great step. And things obviously continue to push forward. But there's a lot of noise out there. And obviously, MCT has competitors, CRM has competitors and LOS has competitors, an AI company has competitors, PPE has competitors, hedging provider does too. And so what when we talk one tech or service provider versus another, how do you differentiate yourselves? And I mean this very much in the practical sense because everyone says I can do this, I can do that, and then who knows what means. And maybe it gets back to what you said about people at the end of the day or make a big difference.

Speaker 2 18:23

You know what? It really does. I'd even take it up a little level. How does any service provider differentiate themselves? Banks have been struggling with this for as long as I've been consulting them for 30 plus years. They all offer the same thing. So why is a client going to go to you versus another one? And you know, in 2020, uh, we lost a really great thinker by the name of Clayton Christensen. He authored, you know, a bunch of seminal books, but one of my favorites is called The Innovator's Dilemma. And in that book, he posits there's three ways to earn a client support and to grow a company. And they're price, innovation, and customer intimacy. And price would be, as an example, Walmart price slashing. Like they compare.

Speaker 1 19:16

I was always told product, price, service, pick two when it comes to any product.

Speaker 2 19:20

Well, there you go. Yeah. And Christiansen said you can only pick one back in the day when you wrote it, like and be really good at it. Because think about it, your organization is structured around that. So if Walmart's price slashing, they know that they have the have the shelves stocked a certain way, the checkout counters is operate a certain way, their online channels operate a certain way. It's all about the price and moving uh products quickly so that you can get that economy of scale and make enough money. Innovation was the second one. So think about an Apple. Think about they created an iPod and then an iPhone. No one, no one had it before. Well, how that organization was structured was the best and brightest software designers and coders. They were incented a different way. They were paid more, their marketing operated differently. You know, compare a Walmart to an Apple, real different company structures, right? And and how and the type of people they attract and retain. The third one he talked about, Christensen, intimacy. And that would be like uh back in the day when Virgin Airlines started. They said, okay, there's a whole slew of airlines you can take, but we're gonna rethink food. We're gonna rethink how we deliver food and drinks, we're gonna rethink uniforms, we're gonna have an app. No one had an app. They thought about every touch point in air travel and changed it to make it intimate in an already crowded field. So back in the day, again, he said you have to pick one and you structure a company around it. And I really practiced that methodology at companies across the globe for many, many years. And about 10 years ago, when I started working with MCT, we challenged that. And we have leaned into innovation in tech, but client focus and intimacy, both. They're intertwined. And it's been a really fun and rewarding balance. You know, you mentioned too, but to hone that strategy and company culture around that, it's very hard to do two because you're not only looking at your clients, you're getting your team members involved in that commitment and your network partners, the ones who bring the whole value proposition together. So it's really about client focus to me. That's like my number one listening, listening, listening. But you never, you never stop evolving. You you say customer intense and tech, that just keeps layering. But listening is the secret sauce. I think right now there is a whole lot of noise in the universe. We've both heard it. We've we talked about it even before we started recording this podcast. And it seems Like the people who shout the loudest are the ones being heard. But I firmly believe, I really do. I firmly believe the ones who listen deeply that they're the ones who will apply that feedback and differentiate most.

Speaker 1 22:16

When you were saying all that, I kept going back to kind of the Henry Ford quote in my mind, it's not apples to apples, but it's if I asked people what they wanted, they would have told me a faster horse. And it's like, no, you got it. Sometimes you got to think a little differently. However, I've heard a lot of successful tech companies out there are figuring out where to meet their clients. And in theory, a company's goal should be aligned with their clients' goals, but how do we ensure that both provider and client are aligned?

Speaker 2 22:47

Yeah, that's a that's a really good question. And it's a hard one. If a c you know, if a company solves a client's problem or serves their general need, there's some immediate alignment. You've identified something and you have a solution for it. But that that doesn't necessarily mean that the value proposition is totally met. And you just said, Henry Ford, let's talk cars. Cars get you from A to B, right? Cars get you from A to B, and that's solving a problem andor need, but not all cars look, drive, or feel the same. Somebody's gonna a consumer is gonna select a Honda and another consumer is gonna select a Mercedes. And just because someone selects the Honda also doesn't mean that they couldn't afford the Mercedes. It just means that they don't value the features at that set price.

Speaker 1 23:36

So I selected a Mercedes and I came and afforded a Mercedes. Holy smoke.

Speaker 2 23:40

Well, that's a that's a different client need and a different client profile. But it's very hard to delight every client type. It's actually near impossible, I think. So earlier, when I said uh, what are we gonna do and what are we not going to do? There's another question companies have to ask, and it's what clients are we just you know deciding not to serve, or what clients can we only serve if it hits the following threshold of price? Because obviously most companies are not nonprofits, they have to create a profit. So there's that balance of I'm providing you a good or service. Here's the value I believe it's set at. And that client has to feel always that the price they're paying based on the expectations you set on its performance, on your team members' performance, and also on the price that's been set against it, deliver. Based on the economics, companies can design for projects and processes tailored to the to the clients. And um, it's really, I think it's a virtuous circle. It's a that value proposition and the value the client feels, it has to work in harmony.

Speaker 1 24:53

And finally, I'd be remiss if I didn't ask you about capital W. And for those that may not know, can you explain what it is and let listeners know how efforts are going? I mean, maybe I asked that selfishly. I want to know how their efforts are going.

Speaker 2 25:07

Thank you. Thank you. Well, Capital W Collective, it's hard to believe uh it's been two years since we launched our nonprofit to educate, elevate, and empower the leaders of today and tomorrow in mortgage capital markets. But for those who are not familiar with us, we create homegrown content and we aggregate and share content we think is valuable. We share Chrisman content as an example when we think is valuable. We're also partnering with the MBA. Uh, we've taught classes the last two years to their C-suite and board series on capital markets. And we're in the process, I'm not sure if you know this yet, even, but we're in the process of creating a school of capital markets, much like the School of Mortgage Banking, the MBA has. They've asked Capital W to co-create it. And we'll be teaching these courses uh starting late 26. And they'll be taught by Capital W community members, including and especially by our corporate sponsors who are who are getting behind us. And we're we've also extended our reach to state MBAs. So we've partnered with the lights of California, Texas, Virginia. We rely on the generous support of individual individuals, um, but mostly our corporate sponsors. So I would be remiss if I didn't give a shout out to MCT and Agile, Cat and Citizens, Polly, FICO, big supporter FICO, ArchMI, thank you, thank you, thank you. They're companies who truly believe in our mission. And we also have dedicated committee members who are on our education committee and marketing committees. And another thank you goes out to you, Rob, Robbie and Rob, Dad Rob. You actually, the Crispin Network broke Capital W Collective two years ago, right before the secondary. Like we didn't even realize people had knew we were percolating under the surface. And you wrote the first blurb about us. So that was that was incredible to have your advocacy and you've been wonderful supporters since we started. So I would say check us out on LinkedIn. Please follow us on LinkedIn and react to the content and reach out to me and other board members, Deb Jones, Amy Creeson, Laureen Good. If you'd like to learn more and get involved, we need more committee members. We always welcome uh corporate sponsors, and we're just getting started.

Speaker 1 27:30

Happy to help however we can. I love the mission. I adore you. I really appreciate you making the time. This is this is long overdue. And I just want to thank you sincerely for making the time. Thank you very much.

Speaker 2 27:41

Uh-huh. Thanks, Robbie.

Speaker 27:42

I really do appreciate today's economic calendar kicked off with June's NFIB Small Business Optimism Index, rebounding to its highest level in four months. We also received the all-important June CPI, which was down 0.4% versus expectations of a 0.1% decline and a prior reading of 0.5%, up 3.5% year over year, and core CPI was unchanged versus expectations of a 0.2% increase and a prior reading of 0.2%. It was up 2.6% year over year. It's a very benign inflation report. And it's even more pivotal as investors assess whether geopolitical energy risks will overshadow what would have been an otherwise inline inflation reading. But this is good news all around. Though court services inflation was expected to temper on lower travel costs as well as primary shelter. Later today brings Red Book's Aimstore Sales and Fed remarks from Vice Chair for Supervision Bar, Chicago President Goolsby, and Governors Cook and Bowman. After the inflation data, agents CMBS prices are better than Monday's close by about a quarter, the two years yielding 4.17, and the 10 years yielding 4.53 after closing yesterday at 4.61%. Let's wrap up with a joke and some housekeeping. Sam Neal, who rest in peace, was asked how long it had been since he'd watched the original Jurassic Park. He replied, The last time I watched it in its totality, was sitting next to Princess Die at Leicester Square at the London opening. On one side of me was my son Tim. He was 11 and completely swept away by it. But suddenly, about the time the T-Rex turns up, Tim started to fart. And the draft was drifting across me to royalty. I spent the whole film in a muck sweat thinking, Princess Die is being exposed to the horrors of a little boy's fart. But she's going to think it's me. Am I going to be subliminally blamed for my son's crimes? And I don't think she'll talk to me afterwards. But she was well brought up and didn't mention it. Jeff Goldblum, who also starred, interjected in the interview to say, I love that story, Sam. I've heard him tell that a couple times, and it's just amazing the lengths he will go to to still blame the boy. Thanks again to Zillow Home Loans, Zillow's in-house mortgage lender, for sponsoring this week's podcast. By integrating Zillow's real estate platform with financing, Zillow Home Loans helps buyers move from dreaming about a home to holding the keys. With tools built for modern lending, Zillow Home Loans loan officers can focus on guiding buyers with care and confidence. To learn more, visit Zillow.com/slash home loans.