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Annaly Capital Management, Inc. Message Board

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  • bubblerforever bubblerforever Oct 19, 2009 4:25 PM Flag

    How will inflation affect Nly?

    Deflation is here currently (ala no cola increase for social security) and it is still a big risk going forward. Gentle inflation of 1 to 2% is much more desireable and will reflect a healthy demand and economy. How will inflation affect NLY? You'll have pleanty of time to see it coming if and when it starts. If there is continuing deflation, then this sector will be negatively impacted as most equities will be since this will cause investors to go to cash and bonds. Inflation causes people to take cash and bonds and buy equities. Also US inflation historically moves with worldwide inflation rates, much the same as interest rates world wide go up in sync with other countries and same as equity prices worldwide move in the same direction. The US is intertwined with the worlds economy.

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    • Deflation is experienced by those who bought houses when they were higher priced. The day-to-day expenses of heating and cooling and gasoline and food and insurance are going up not down. Services like cleaning and washing clothes are up, not down. The commodoties like metals and oil are up and going higher and their costs spread throught the economy. I am retired and my expenses have been going up steadily. Medical expenses are and have been going up. I don't see any deflation outside of the housing problem for a minority of people and banks. I live in an apartment and my rent has gone up, not down. Interest on bonds are not up because the Fed has been printing trillions of dollars which is translating into inflation for the general economy as the dollar goes steadily down. Gold and silver are up. I don't see how anyone can call this deflation. Except for housing, I don't see andything going down.

      • 1 Reply to yh_bob
      • Right, the only deflation occurring is in real estate, as people loose jobs they cannot (or choose not to) carry their mortgages. Dollar weakness will continue until the US trade imbalance is normalized, IMO.

        We've all got to live, and as 1)supply destruction occurs or 2) the dollar weakens, prices rise. Job loss causes supply destruction.

        The deflationistas just aren't watching the $USD or gold, the FED has been working to bring the $USD down in an effort to avoid further economic damage (job loss). We shouldn't fear inflation though, it was deflation which brought the economy to a halt and still threatens more damage. The FED has more refined tools for controlling inflation than deflation.

        Buy dips

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