Another Benchmark Record

January 26, 2012

A cyber-bud just posted the fact that the five-year Treasury Note has traded at 0.75% yield, another record low.

Think about it.  The world capital markets are willing to give the US money for five years, and get their dollars back with a whopping 0.75% interest per year.

The real money is shouting at us that our deficits are not the issue.  Are you listening?

On another front, speculators and hedgers got a new toy today, or, more precisely, gave the unwashed masses access to one of their leveraged toys.  My inbox this morning had a short blurb from Jody Shenn at Bloomberg about a house price index opening up for public trading on the CBOE (the options market). Read the rest of this entry »

Cooperationist Conspiracy

January 10, 2012

Most conspiracies start in secret.  Sometimes the secret is so well-kept that even the conspirators don’t know until they get charged by The Man.

I’m here to do my bit to start a conspiracy right out in the open.  Call it reality-based planning for the post-rapacious economy.  As many readers know, George Ure was a survivalist before it was popular, and he stayed on the cutting edge of that world when he shifted to “prepper” a few years back.

He and I even wrote about 300 pages of a (rough draft) book that let us continue our multi-decade argument over what’s happening and what can be done about it.

In today’s column (linked above), if you scroll down to the section titled Coping:  A Fifth Order House, you’ll see a different George than the one I’ve talked to these past dozen years (plus).  I even called to ask what had happened to real George after reading it. Read the rest of this entry »

This is Big Deal

January 3, 2012

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.


Disappointed in ANH

January 3, 2012

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. Read the rest of this entry »