spreads are improving this selloff will not continue but im glad weak hands are getting out it sets the stage for a nice rally when they report x dividend date in 2 weeks
Based on changes in the prices of RMBS, the book is currently as low as $25, plus whatever gains they were able to achieve with trading and hedges. They will not repurchase shares unless the book, according to their daily calculation, is at least 5% above the stock price. Therefore, they man not yet have repurchased any shares.
the chance that the fed will raise the discount rate anytime in the next 5 years is zero - if it did the us government would go broke and the post that it did it in the past is delusional because its never been in this predicament before with public debt in the trillions
From the "Those who cannot remember the past are condemned to repeat it" Department:
The irony (and idiocy) about this recent selloff in AGNC and NLY is that when the federal government began buying MBS, the analysis at the time was that the Fed's buying program would hurt REITs because (1) it would keep interest rates artificially low thereby eliminating the interest rate spread REITs partially rely upon for income; (2) the Fed would effectively be competing with the REITs to buy such securities; and (3) the continuation of lower interest rates would lead to more re-financings and pre-payment risks (which have been viewed as bad for the REITs).
Now the Fed is talking about scaling back such purchases, interest rates have risen, and re-financings have dropped dramatically. Either the original analysis was wrong (given the recent earnings report, I doubt that) or, if it was correct, then these recent developments should be viewed as a positive for the REITs including AGNC. The world is upside down it seems--perhaps, rationality will eventually return to this market.
Is anyone worried about the Fed stopping QE? Why would they be worried about that? That is a good thing. I think people worry about the Fed raising the funds rate which impacts old loans and as you said no one is refinancing so how will they be able to buy profitable new loans?
I think that everyone might be assuming that when the Fed starts to unwind that they would leave the funds rate unchanged. Why would people imagine that the Fed would do that? Based on what? Certainly not the past. So now the Fed is going to do something it has never done before just because it will be good for mREIT investors and banks? Since when has the Fed ever used that as a consideration?
If one doesn't margin too heavily one doesn't need to be well financed to be strong through a selloff. I've got no "lock loss" orders and my strength comes from value analysis. This morning's prices were a fantastic value. I am very very pleases to have bough calls and shares at this morning's bargain prices. Now I'm on margin but I'll still buy a bit more if it drops even lower this week. As long as I stay far away from a margin call the lower AGNC goes the happier I get. I suppose once I've loaded up the truck till the tires rub the fenders I'll stop being happier and happier. I'm pretty conservative on margin, I never want to get shaken out by a margin call, but there's always those 0% for 6 month credit card cash advance offers to go for if it gets even lower next week.