Klumps: "I loaded up on TBT at 36, there is not much downside only can go up of stay same. UUP is solid too."
Downside in UUP and TBT is just beginning lol.
I also own AGNC but now I favor ARR as it only has 38 million shares to support...AGNC has well over 300 million shares and they really pulled back on there mortgage investments...The ARR JMI purchase is a real game changer for ARR as it will put there B/V at $30.00 and increase earnings to support the Div...ARR only pays $84 million and gets like $20 million cash back that JMI has and best of all zero dilution for ARR shareholders...ARR should go to at least $23.00 after the JMI deal closes...The safest income play is my biggest NEE-PC FPL Preferred Guaranteed Trust that pays 5 7/8 but must call back the shares for $25.00 by june of 2044...
I am with you. I have a large positin in ARR. I am looking at AGNC for a little diversification in the mREIT environment.
.33 cent Div. on $20.00 share, plus they are buying JVI for $84 million cash, no dilution and will add over $5million net income per 1/4er. Book Value will be $30.00 a share.
But not for everyone, AGNC is my biggest holding and I will never sell one share, I have been adding on every dip and will continue to do so. In 10 years the SP will have doubled and the divvy will be 2.00 a share. The clumps clan will be on the street begging for dollars just to feed their fat faces, Pay no attention to the so called doctor and make your on decisons if you are a big boy and stay for the long haul. Go AGNC and Gary Kain, You are a winner.
Sentiment: Strong Buy
This condition can only be alleviated not by monetary or fiscal policy, but rather by raising wages of the working poor - bringing them into the middle class - or by increasing the wages of the lower middle class directly.
But such policies should end the moment inflation rears its ugly head.
To that end, Europe should end their versions of QE and concentrate on policies that reduce the cost of doing business and prompt them to hand out raises to their lowest paid employees and/or hire more low to middle wage workers.
Without the demand that a large middle class represents, any economy will face stagnation and deflation. All the odd QE programs in Europe could mask this trend and give them stagflation; which could cause them to react improperly. But I doubt this scenario will happen. More likely, they will continue to combat deflation with QE without addressing the underlying cause - the destruction of their middle class.
Thanks for the return. Not everybody does.
But now you have a 'chicken and egg' situation. You first claimed that inflation would cause them to lose control of fiscal policy (now I know you're talking about the Fed and their European equivalents). And then you claimed that a loss of fiscal control will result in inflation.
However, the American Fed is already weaning us off of the 'free money'. Meanwhile, the last economic downturn was notably marked by deflationary pressures despite interest rates already at or near zero (note the term 'demand destruction'). QE was necessary to combat deflation without actually paying banks to borrow money. By that metric, it was an unqualified success here in the U.S.. And I quite agree with the slow demise of the program now that the specter of deflation is all but gone. This is just in America, as I'm not confident in speaking for Europe. They have their own problems - not the least of which is their inappropriate insistence on a universal monetary policy for their union, imho.
A declining EU will have a modest effect on the U.S. economy. My concern is the combination of EU and China. The simultaneous decline in the value of both currencies would be disastrous for U.S. production. With this in mind, if you are correct about European inflation, it might be better to invest in ForEx appropriately.
We already know how to deal with stagflation; an event which the phillips curve does not adequately predict. By simultaneously raising interest rates and lowering the cost of doing business (tax incentives, price controls, increasing competiton, deregulation, etc.). But I think another, much more fundamental, force is in play here. I think we're witnessing the effects of a shrinking middle class, both in Europe and America. With it goes their buying power. If I'm right, inflation will never be a problem as we will have too many goods chasing too few purchasers.
(s0rry accidentally cut myself off)
......assets. Borrowers issued massive amounts of low grade debt to MLP's and M-REIT's all to create SPO's to fill this insatiable demand for yield, I call all this the QE BUBBLE. It encouraged mal-investment in oil production, oil transport, and other unproductive projects that will only make sense in a short horizon and would never get funded with massive issuance of low-grade debt at a very very low hurdle rate, remember the IRR of a project is a hurdle rate for the long term, 20-30 years not 1-3 years. You know how the housing bubble ended, this one will end too and not so nicely.
Loss of fiscal control will result in inflation, as the value of assets are very questionable when valued in real dollars, hence more dollar to purchase. Right now global bankers were playing a game of who can create the most psychotic variant of quantitative easing, Ben Bernanke's grotesque brainchild, which should lead to irretrievably destabilizing the global financial system once again. It was an incorrect understanding of the Phillips Curve which overlooked the relation between quantitative easing provokes neither inflation, neither unemployments, neither industrial production, nor real investment, nor consumption. The entire operation involves buying up income-producing bonds and replacing them with zero-interest money, the goal was to produce discomfort with the form in which investors are forced to hold their savings, which doesn't encourage people to save less, they just look for alternative forms of savings in more wildly distorted investment theme, such as MLP's in energy, Highly Levered Mortgage REIT's. etc/. So investors splurged into very SPECULATIVE/RISKY
Exactly how will inflation provoke a loss of fiscal control? Are you talking about the Govts or individuals? Are you talking hyper-inflation? Right now, without details on that, you sound like just another internet idiot.
I would like to be the first person of all the mortgage REIT message boards to introduce the subject of "REVERSE YIELD SPREAD" or "NEGATIVE YIELD SPREAD".
Unlike positive yield spread, which was popular during the FED distortion of "ZERO PERCENT" monetary policy, I would like to introduce the mortgage REIT message board community to negative yield spread.
It is spreading in Europe negative yields......but this is the endgame in Europe, which will end soon, last weeks action by the ECB is evidence of increasing panic. Other economies are not far behind. The greatest risk is that Mario Draghi may get their wish for higher inflation, but not at all as they intended. All of this distortion may finally create inflation by provoking a loss of fiscal control. I believe a lot higher inflation is coming with a bang and along with is "NEGATIVE YIELD SPREAD".
I WOULD INVEST IS DECLINE RELATED etf's and bet on total loss of control. I loaded up on TBT at 36, there is not much downside only can go up of stay same. UUP is solid too.
Bought in long ago, I have been buying back on every dip. My biggest holding as of now. Great Mgt here, love my payday every month just like clockwork, 3 more years and I will hit a home run, What more can I say, Thank you Gary Kain.
Sentiment: Strong Buy
Why do you seem surprised. As interest rates rise (FED), book values of Treasuries will drop, all maturities. That is a widely held truism in the investment world. We had 7 - 8 years of lower rates and now rates will slowly rise and book values will slowly decline. When AGNC dropped from mid 20's to 16, that is what the market was telling you. This temporary blip up is just traders. The market is made up of positives and negatives, investors are constantly fine tuning valuations. Hence, 18/21 is 85.7% of book is very very high for a decline related stock. For those who want safe yield, the preferred like AGNCB which I loaded up at 23-24, is a very very very safe investment in a rising rate environment, 8 - 9% nominal yield, taxed at regular income tax rates (doesn't qualify for qualified dividends).
If you want a tad more risk, I bought some TBT at 36, figuring it was at the bottom and with spring here, oil and gas always move up due to seasonal driving demand so the traders are bidding up oil, along with inflation which will give the FED's a green light to do the second rate hike. I think TBT can go to 45-48 by May, if it goes higher, better for me.
Had you owned it for 2 years, you'd have a lot more.
So its not as bad as it looks.
But that's its really great either.