It falls under 2% when there is a flight to safety when markets go down for several days in a row. The spread of the 3 and 5 yr. to the 10 yr. has tightened EXTREMELY TIGHT, which is not good for m-REIT's, especially agency ones. The treasury curve is almost a straight line in the 3 yr to 10 yr., very negative for YIELD SPREAD. On top of that, the 30 yr is trending toward the 10 yr.
DITTO again for today, I see production is picking up steam and prices are in free fall again. How long can this go on, everyone is increasing production.
Can you focus a tad more, outline your due diligence on First Merit Bank, out of Akron Ohio. What do you think for a buy and hold type investment for the intermediate and long term? Discuss business strategy or value merit if bought at current price and yield?
Right now, today, under 2% yield? I am tempted to back up my brinks truck at schwab and short the bejesus out of the 10 yr and go long the 3 and 5 year? Anyone see the opportunity here?
I like to start my daily diary on the AGNC board with something funny.
WHAT DO YOU CALL A STOCK THAT IS DOWN 90% IN VALUE?
Cendant did the same with JACKSON HEWITT TAX SERVICE.
There is a lot of companies that borrowed heavily with very junk like covenant debt with very low rates that make no sense business wise, the ability to pay the debt back is almost impossible, almost like the Federal Government. This is a good area to find these companies and short them, very good gains with very little risk, the debt load is impossible to service.
It went from high around $1.28 in 1928 to .05 - .10 in 1933, over a 95% drop. Back then our deficit was nothing like it is now and our production is godzillions higher than now. With all this debt, the oil field producers just kept pumping more and more to sustain revenue to service their debt which just triggered bigger price decreases. It is funny, but this is exactly what is happening now. This happened after the longest running bull market in history with no corrections for 8 years in the 1920's. VERY SIMILAR TO 2015 TODAY.....same dynamics at work, more supply to pay the hugmongous debt of a misguided economic policy of zero percent interest rates.
The global oil industry faced a classic squeeze in the spring of 1933: falling prices and expanding supply just like 2014 -2015..
This brutal dynamic would exacerbate the international tension and economic havoc already roiling the world's markets during the Great Depression. And it would help set the stage for a century of energy politics.
The world's oil producers blamed the U.S.
"In all the oil fields outside America, restriction of output is being enforced," the Economist wrote. But in the U.S., "the twin evils of over-production and illegal production" were preventing efforts to maintain prices.
Several American states mandated reduced pumping, and some operators' associations agreed to scale back. Other independent producers ignored restrictions, and in states where these producers were politically powerful, governments refused to act. Some oilfield producers pumped more to sustain their revenue, but they only triggered price collapses.
In 1932, U.S. heavy crude oil averaged 87 cents per barrel (about $12 today), and light crude averaged 82 cents. By spring 1933, heavy crude had fallen to 44 cents and light crude to 66 cents. Then the bottom fell out.
Texas oil companies led the price decrease, with some resorting to "dime-a-barrel" deals. Four gallons of crude cost a penny.
The price decreases spread. "The wrecking of the midcontinent market was due to a deluge of cheap oil from East Texas," said J. Steve Anderson, an Oklahoma City oil operator.
The big corporations sought to force prices so low that independent companies with smaller reserves would incur heavy losses unless they shut down. By May, prices had increased to a quarter a barrel, still a losing proposition for smaller companies. Twenty-six companies in the Oklahoma City area refused to pump at that price. The market was a mess.
Come one, just try a red pill once and see the real world, please.
Get off of them blue pills man, they will warp you psychological moral fiber. Your cognitive dissonance is showing for all to see. Get in touch with reality, your in a 'BLUE PILL INDUCED BUBBLE".
This does not look good, I don't know how anyone could recommend an overpriced stock, Cramer said the earnings estimates and ratings on big oil way to high and stocks are way overpriced today, he wouldn't even go near them.
My analysis parallels Doug Kass and a lot of others. I look for stuff undervalued or special situations, I do not buy and hold long term during distorted money policies, very dangerous, too risky. I make the same or more with less risk with shorter duration strategies.
Hey, thanks a billion. Regional Banking for financials....do you have any undervalued specific names?
Natural Resources......is that limited to oil and gas, or is their metals in there and other stuff?
So you still don't believe in the New Year's Eve Omen or Curse. My OH my, I feel sorry for you. This is the real deal here. This is the burning hot TRUTH. Remember the movie, "THE MATRIX". Morpheus offered Neo the choice of two pills - blue to forget about the Matrix and to continue living in a world of illusion, or the red pill, to live in a painful world of reality and truth..........what do you want, the blue pill or the red pill. PS, I only can offer you the red pills, the Federal Reserve is passing out the blue pills..
I remember when the retailers go in a gas war with discounters for market share, gas plummeted to $.15/gal. I couldn't believe it, I was using pocket change to fill up my tank. Quarter dimes and nickels. I think we are headed to the 1960's in gas prices, as demographics kick in.
If it goes below 45, the next support is 14-15. Production is increasing to make up from lost cash flow from declines, these companies need to service their debt or they are bankrupt. Production is rising double digits now, and gas and oil war is in full bloom.
Anyone positive on oil is suffering from cognitive dissonance, they are aware of two opposing beliefs, yet the weakest belief they reinforce while suppressing the more likely belief to relieve the conflict and pain. It would be nice to wish away unpleasantries but this shakeout and collapse is long overdue and the odds of OIL going to $14 is going to flush out 50% of the producers in order to bring supplies into balance.
BP is over 7% and should go over 10. There is lots of distribution going on, look at the volumes and the descending triangles of major overpriced oil. The funds are raising cash, because BP, OXY, TOT are way overpriced compared to the small cap oils, which have yields of 10-27% now. Money flows to the highest rate of return (the value proposition), it will leave the Oxy's and go into the best values.
I would like to help you, but could you ask a reasonable question. I hope you are in cash. Banks have MMA rates at 1% or above. Synchrony has 1.35%. Many others are 1.15%. Get into safety not stocks, wait for the massive sell-off.
BEWARE OF DESCENDING TRIANGLES - oil stocks have been in multiple triangles now, multiple descending triangles will become more frequent as distribution rises.
The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern. There are instances when descending triangles form as reversal patterns at the end of an uptrend, but they are typically continuation patterns. Regardless of where they form, descending triangles are bearish patterns that indicate distribution.
Because of its shape, the pattern can also be referred to as a right-angle triangle. Two or more comparable lows form a horizontal line at the bottom. Two or more declining peaks form a descending trend line above that converges with the horizontal line as it descends. If both lines were extended right, the descending trend line could act as the hypotenuse of a right triangle. If a perpendicular line were drawn extending up from the left end of the horizontal line, a right triangle would form.