If the Fed is going to ease the stimulus wouldn't the REITs be rebounding since the stimulus caused their drop in the first place? This does not seem correct that the $85B buying was undermining the REITs attractiveness but easing the continue to drop... thoughts?
its a bit more complicated than that....remember that this market is based on expectations and disbursements about a year out. The very low interest rates were good for REITs and that is why this long term trend of very very low interest rates has been great for NLY. Now that rates are rising and squeezing NLY profits, you see a drop and a big one. May go below $10. If you can't figure it out, get out. You can pop back in 2 days before the ex-dividend date to get the dividend...then get out again....but do not just sit here and watch. It is going down, period.
I was reading an article about annaly being the best reit to own and all well positioned for anything down the road.. of course the price went down. because the dividend is lower. now the big guy can load up on more shares.
NLY's earnings are extremely high, NLY's profits are extremely high, and will only increase. In fact, for the first 75 basis points of increase from March, NLY's net interest income increases by 20%. The problem (the only problem) with the widening spread is that their MSBs are all at one value based upon a set rate, and as that rate climbs the book value drops.
The 10 year bond hasn't had a rate this high for almost two years. It is now well beyond where it was when the Fed started buying. Since then, inflation fears have dropped substantially, the economy has continued to grow at a moderate pace, housing is recovering. There is zero reason for this rate spike, even if the Fed quit buying tomorrow - the rate would likely be lower if the Fed had never bought anything at all. Bill gross, who knows bonds, also believes these rates are nuts. They should take profits on their hedges, let the rates drop down to a normalized level and do it again and again.
my thought exactly. this is bazarro world over-reaction. all i can figure is people are viewing this as a precurser to higher interest rates, which would negatively affect REITs.
logic and common sense doesn't work in the stock market...its been controlled by the media and who has the money to move the stock price around. Eventually when their coffers is filled the logic and common sense will be back again and stocks will go back to normal.
by that time most p..eople already sold for a loss
. and the ones that did hold will sell at break even. that is when the stock price will continue to climb. and people will say I should have not sold
. relax and collect a nice fat dividend. I will get $836. that is real money take it
sch, It sure weird the way this is going down but then again the whole Market is Throwing Up good or bad stocks are taking Big hits the stop loses are Not Helping out just adding more selling pressure!
Wish Ben would change his schedule and make announcements when the 401K money going in can get better deals. Hitting this on the off weeks is making 401k funds by high to get crushed the following week. Anyone else think this is fishy?
The reaction is just not intuitive or logical especially for the REITS. As for energy service companies, what they are going to make less because the oil companies will be ok with making less and not continuing to drill or renegotiate contracts today. This is very odd.