Mind on Money

This is Big Deal

I’m old enough to remember when we had “Fed Watchers” as a very expensive job function on Wall Street.  Their track record was probably as bad or worse than the average meteorologist on the local news, and they only had eight meetings a year to predict.

I was already amazed, as a bond guy, when the Fed started telling us how long they thought they would hold short rates at zero (until at least second half of 2013).  Comments here and here.

Today comes the news that the Fed will share its musings on the future path of their Fed Funds rate as part of their release of meeting minutes.  Gadzooks!  Think how far this is from the days when they told us exactly nothing, and people got paid millions of dollars to guess what the current policy might be.  Fuggedaboutit if you wanted to know what they were thinking about the future.

Never thought I’d see this day.

hh

Disappointed in ANH

For a couple of years I have taken a lower return from Anworth than my other mREITs simply because they are so conservative.  If you listen to the hard money folks or watch the perennial game of chicken the politicians we elected in 2010 play with our national credit rating, it’s a non-trivial risk that we could wake up one day and find the 10-year Treasury note trading at 5% rather than 2%.

Just ask the Europeans how that feels.  If that were to happen, then the fully hedged amREITs will survive, but the ones playing the duration gap too aggressively may not.

Still, the announcement from ANH that they are converting to “externally managed” is not in my best interest as a retail shareholder.  These arrangements are typically set up so an affiliated company owned by the management provides asset management for a fee. Continue Reading Disappointed in ANH…