Yes the gold miners index which NUGT is based on (symbol $GDM on stockcharts) is sitting right on the 50 dma after declining some 11%. There doesn't look to be any support until another 15% down, which would send NUGT off a cliff since it is a 3x ETF. GLD also looks like support is giving way, although the downside doesn't look as bad. Maybe DUST is the play for now.
Also read an article that said that excess reserves are down, as they were going into the Dec hike. Maybe Lucy won't pull the ball out this time.
Ed, I bought the preferred of another Zell company, EQC. It's an office REIT and Zell has been selling off some properties. I think they have some NOLs so they weren't paying common divies, so that's why I bought the preferred.
Also the GP announced they were buying shares. Technically, since the plunge on the dividend cut, the stock has been basing. MACD turning up. Might be worth a gamble, however before a 3 day weekend when the market is waiting with baited breathe on Yellen, it might be worth waiting till Tuesday.
For an accountant and long time investor, I am amazed at how DH doesn't seem to understand very simple finance topics. Banks are levered more than 10 times so a 25-50 bp increase in their yield on investments should raise their gross margins by 2.5 to 5%. Similarly, mREITs depend on making a spread between their cost of funds (which is tied to repo rates) and the yield on their investments, which they lever up 6-8 times. While they hedge their borrowing costs, those hedges have a spread (e.g. profit for the bank taking the other side of the hedge) and have to be continually added as they roll off over time. Anything that cuts into their spread, is going to hurt their earnings which hurts their divies.
If there actually is a rate hike (and that's still a very big if), I think the harm to mREITs is greater than the good for banks and BDCs because this will likely be the last rate hike for the year, and banks and BDCs need both strong loan growth and increasing rates to really get the momentum going. mREITs were already at thin margins -- this is not a case where their spreads were at 4% and will be cut to 3.5%.
Bob, I wonder what the rationale is for the upgrade on VNR. They got their line of credit slashed and have to repay principal before they can even pay their junior bonds. Wonder if Stiefel is just trying to get a client out.
Ed, since Sarge has me on ignore (his loss) he may have missed the item on the Hedgeye attack on TEP/TEGP. They supposedly released their analysis this morning and that is likely pressuring the stocks.
Talk about revisionist history. Chegerar,you are the king of revising history. Let's rewind the tape. First, as is clearly set out in the proxy of the APL merger with NGLS, the Cohens were first approached by Kinder. Then they were approached by several other midstreams MLPs. There was a feeding frenzy for acquisitions and the sector was hot. Yes, they got a pretty good deal from TRGP/NGLS, who themselves were a potential target from ETE/ETP. But you are also forgetting that the merger price was off of the highs that APL had earlier reached. And you are also conveniently forgetting that (1) the Cohens' overpaid for at least one of the acquisitions in South Texas and (2) the distribution growth at APL had flattened out, contrary to previous projections by the Cohens.
Second, you are completely wrong about the sale to Chevron. In that case, the Cohen's had messed up their hedging at APL and ended up in a situation where they had to sell the most profitable part of the old APL to Chevron in order to pay down their bank debt (sound familiar). They also had to suspended APL's distribution which caused the price to collapse into the single digits. That was a good thing for me because I was able to buy some APL when they finally paid down the debt enough to reinstate the distribution.
If Cohen had the best crystal ball, he would have sold ARP and ATLS at the top of the market to some other e&p MLP, but he ran it into the ground. He also wouldn't have bought the properties they did at the top of the cycle. The cycle will eventually turn and the remnants of ARP/ATLS may return in some form or another with the Cohen's at the helm and no doubt you will be back to say they were geniuses with more revisionist history of how ARP survived due to the Cohen's.
Are you related to them or are you an i.r. mole?
Ed, I have a bunch, but several in the Invesco family, which used to be Van Kampen. Blackrock, Putnam, Nuveen and PIMCO also sponsor many. I've avoided the PIMCO ones because they tended to trade at a premium to NAV and why pay $1.10 for $1 worth of assets when you can buy that at 0.90 or 0.95. The CEF connect website has a bunch of info as far as historical discount/premium to NAV and the amount of UNII and ratings etc. I have VCV, VGM, VMO, NPV, NTC, VKI, PMO, VKQ, IIM PMM FMN and MUH. Some have higher discounts to NAV, and some have slightly higher yields. Don't trust the yahee info on the yields -- you have to calculate it yourself.
They have rallied tremendously over the last year or two, but if you believe the economy will continue to weaken, they should continue to perform well, but may be vulnerable to a correction especially if the Fed raises rates. VGM took a tumble the other day under its 50 dma and is now fighting to retake it.
Hedgeye is issuing a negative report on TEP/TEGP arguing that their distributions will go to zero in 2020. They issued the announcement yesterday, which caused a selloff, and are issuing their "report" and conference call on the 26th.
Bob, my comment is not on this deal in particular as I don't follow ARCC. It's just that I have seen this type of m&a action before, particularly leading up to the financial crisis. As I said, it can go on for some time before the sector becomes overvalued.
Ed, on the muni retreat, yes many of the muni CEFs have pulled back from their earlier highs from the first week of May. Many of the names that I own have pulled back and sometimes pierced their 50 dma. Some are attempting to retake those levels. A lot of this retreat accelerated when the Fed governors started talking about a June rate hike. If rates are actually raised, I would expect a further decline, but that's a very big if. However, if rates are not raised in June, I think the sector will rally, especially if there is further evidence that the economy continues to slow. Many of these muni CEFs are up 15-20% SINCE December, with their 6% annual divies not included in the price increase. They were well overdue for a correction. There are still a few that are still selling at good discounts to NAV, but many are approaching par.
Typically when we start to see mergers and acquisitions in a sector that usually marks the beginning of the end of the bull market. The reason is understandable. The companies can't keep increasing their returns through the normal process of getting business so they try to "buy" it by acquiring competitors and sometimes using their (sometimes overvalued) stock as currency. We have already seen this in some of the mREIT names. This trend can continue for awhile and will probably put a floor under some of the names in each sector as if they trade too far under book, they will be forced to consider selling out.
Bayman, the book I mentioned has a chapter on the history of the big bank versus small bank problem. Part of the reason why the Fed was created and why the New York Fed in particular seized power from the other Federal reserve banks, was because of this big versus small battle.
William, I agree with your point. They have been rolling up the industry for years. It's what happens in many industries where a large firm, which can use the capital markets to supply lower cost financing, to buy up smaller players who don't have the heft to compete. There was a TV show on Showtime several years ago called six feet under which had that as a minor theme. But it would seem that they have a long way to go before they have completely consolidated the industry amongst a small number of players. There has been plenty of disagreement among those who are long the stock versus the doubters.
Tried to post this last night but it didn't take. I know some here own STON. After declining from a high of 29, it is now 23 ish. They did an spo back in April and recently missed their quarter estimates dues to a decline in the death rate. However, the stock looks like it stabilized on a two-year uptrend line. I owned it a long time ago and it has been controversial. Now that the yielld is close to 12%, it could be a good entry point. Not sure how it will hold up if the whole market declines.
Not sure about that with how the accounting works with credit cards. Typically, the receivables of a credit card transaction are sold through securitization transactions
stagg, you have it almost right. The Fed doesn't create money until it purchases assets from its member reserve banks, either outright or through repo. The banks are the ones that actually create the money. When a bank makes a loan, the loan becomes an asset on the bank's balance sheet which it can then lend out 9 more times because the Fed only requires that the bank keep 10% of the loan as a reserve. When a bank makes a loan, that loan also becomes a deposit -- if it is a working capital loan, the funds are placed in the borrower's account, or if it is a loan used to finance the purchase of an asset, the proceeds become a deposit in the seller's bank account, which are then turned into another loan.
The Fed has been a failure. It was created to lessen the number of depressions and stabilize the value of money, but we had the Great Depression in 1929, the market crash of 1987, the savings and loan crisis in the late 1980's and the financial crisis of 2007-8. The value of the dollar has depreciated over 95% since the Fed was created. While asset prices (including stocks) have increased in nominal terms, but measured in inflation, the gains have been much less.
I highly recommend the book "The Creature from Jekyll Island" for a complete history of monetary policy throughout time, and the creation of the Fed.
Most of us probably won't be around to see it, but the current system will probably end as it always has for any country that had a fractional reserve money system and who destroyed their currency through printing. The Romans, the Spanish and the Britains (and many others in between) all had that fate. In the future, the Chinese will probably develop a gold-backed currency and then they predictably will abuse it and destroy that currency too.
I'm told that the Fed does not have legal authority to buy equities. However, other central banks do have the authority (the Swiss central bank owns a ton of Apple stock and the Japanese central bank owns a ton of Japanese ETFs and stocks). While the Fed does not have authority to buy stocks, it does have authority to engage in swaps, so they could have their proxies buy stocks and then enter into a total return swap. The Treasury also maintains an Exchange Stabilization fund and I don't know if there is any requirement to report the activities of that fund.
seed, I haven't been in WMC since gracie advised to exit at $15 and I agree they have been terrible. All of the retail yield chasers are probably out of the stock after the combo of divy cuts and book value declines. But I seriously doubt that there's a risk of going under because they are trading at close to a 23% discount to book value. The book was $10.90 at quarter end and they said on the call that it had increased 3-5% since then. The stock could fall further because of the Fed talk, which I think is just a bluff, but the stock is now oversold with an RSI at 21. It could go lower, but that would widen the discount to book. At some point, that is going to attract someone.