Seems to me the problem with the dividend is not so much spreads but the de-leveraging. By de-leveraging taxable income is reduced by realized losses in MBS sales. You also have to consider the environment we were in and the cost of hedges. Both greatly affect what is available for distribution.
The Fed reduced the purchase of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month. If this signals a slow steady and more predictable rise in rates where mreits can adapt then we may see the de-leveraging process begin to stop and hedges come off.
Most got caught with their pants down so this process my have to play out a couple of quarters but we should know something by the next earnings season.
Long-term interest-rates may stay low through mid-2014 after the Federal Reserve said it would be reducing its bond-buying stimulus at a modest pace, calming investors fearful of rising yields, said Peter Hayes , head of BlackRock Inc.'s (BLK) municipal-bond group.
The projection came after Treasury and municipal debt prices posted muted reactions to the Fed's announcement it would begin to trim its bond purchases by $10 billion a month in January. Treasury 10-year note yields, a benchmark for long-term municipal bonds, gyrated after the Fed decision but settled back at 2.88%, little-changed from levels seen earlier in the day, according to Tradeweb.
The bond reaction suggests investors expected the Fed to trim its bond buying by a modest amount, Mr. Hayes said. In addition to the Fed's signals, the combination of a less-than-robust economy and slow inflation "probably keeps a lid on rates over the next several months," he said.
Steady long-term rates could spark purchases of fixed-income investments-- including municipal bonds--by investors who had been on the sidelines waiting for yields to rise, he said.
BlackRock's muni-bond managers earlier this week said they expected investors would gravitate back to municipal bonds as a weak 2013 performance has created " compelling valuations" in the debt. Recent muni-bond issues have been well subscribed.
It is possible the taper will be so watered down and open-end, rates could drop the day of the announcement. hehe What that would do for Mreits?
I have to ask the question, where are they going to get the money for the buyback? If it comes from CPR and leverage remains about the same.... that's fine. If they plan on selling a bunch of 3.5s that originally cost 106 for 101, then GAAP income will suffer (see last 10-Q) and more importantly would have realized losses greatly cutting into taxable income. Then the dividend begins to suffer.
You can probably give a big hardy thanks to carl icahn for his remarks today.
Looks like a rebalanced of the portfolio. A massive sell off of 30 yr and a move to 15 yr generating realized losses (+ hedging losses) of 1 Billion as compared to net interest income of only 400 million. Looks like they are protecting book value at all costs. Taxable income of only 29 cents with a UTI of about 50 cents has the divvy in doubt.
AGNC seems to expect higher interest rates and has aggressively taken action.
Starting in 2014, health insurance plans can't refuse to cover you or charge you more just because you have a pre-existing health condition. However if you want insurance prior to 2014 you can and will be turned down for a pre-existing condition.
The plan I have is a PPO plan with Anthem. I called Anthem at 1-888-537-3304 where they looked up my doc's names. They said they had a list of 557 pages long however I was told all my Docs were "in the network" and that all would take the insurance. I called the doc's office and they told me the same but I guess I really will not know for sure until I try to use the insurance for the first time.
BTW, Anthem sales representatives are swamped and was told it was because of all the Obamacare questions, so expect a wait of about 10 minutes or more.
I will be retiring next year so will be losing my health insurance. I made application to Anthem and my entire family was turned down for what they say were pre existing conditions. Had my doctor to write them a letter saying everyone on the policy is fine but they still denied the application. Asked what my options were and was told I could participate in the Anthem high risk pool at 6k a month... ahh no.
My only option was Obamacare and I had no problems in Kentucky which set up their own exchange. Took me longer to gather the information than to complete the enrollment process, about 30 minutes. Got a good PPO gold policy and paying $400 / mo less than paying now. My Doc says he'll honor the coverage.
So far seems like a deal.
yes I think you have a understanding of velocity of money. But instead of trying to define, look for ways of increasing. QE is one way, but there are others and that requires some legislation ... ACA, immigration, tax reform and a review of free trade agreements.
Reading talking points and hiding under a rock is not an option.
Prices for some people who already buy their own insurance will rise above today's level, however, largely because the health care reform law doesn't allow insurance companies to exclude people with pre-existing conditions, guarantees a minimum benefits package, doesn't allow women to be charged more than men, and limits how much more older people must pay.
don't forget those making over 200k/250k in "unearned Income" a 3.8% tax on interest, dividends, annuities, royalties, rents, and gains on the sale of investments over the threshold.
man, I feel for those hedge fund managers.....
I think you are using a family of four all being adults over the age of 21. Try using family of four with two children. . For example 2 adults and 2 children and 38k of income would have a Unsubsidized annual health insurance premium of $9,869 and a tax credit of $8,151 so the Amount you pay for the premium: $1,719. For 90k of income, the premium would be $9,869, tax credit of $1,319 for out pocket of $8,550.
38K income: $8,151 tax credit... Cost of health premium: $1,719
44k income: $7,364 tax credit... Cost of health premium: $2,506
88k income: $1,509 tax credit... Cost of health premium: $8,360
90k income: $1,319 tax credit... Cost of health premium: $8,550
93k income: $1,034 tax credit... Cost of health premium: $8,835
95k income: $0 tax credit... Cost of health premium: $9,869
95K is over 400% of the poverty level for the household so no tax credit is given.
kff dot org / interactive / subsidy-calculator /