<holding head> :0) Hello pezz, we must anticipate a need, get in front of the line, turn around, and taunt the late comers.
Last Night's Report, confirmed now, shorted Annaly Mortgage (NLY) quote.bloomberg.com April Puts 17.5 at 2/shr pcquote.com (yes, I moved the market, because I was the only seller)
It is considered a REIT but is actually not. It is a pile of highly toxic paper managed by a bunch of quantitative folks who have constructed a ‘synthetic bank’ with a derivatives moat around it. They specifically and effectively borrow short term money and lending long term by buying mortgages, hedging out a number of risks, and payout 95% of the goodies each quarter (thus qualify for REIT treatment).
If we believe Maestro Greensputin will continue to successfully keep short term rates lower than long term rate (steep yield curve), and I do, ala Japan, then Annaly puts represent free money, direct from the coffers of Greenskaput.
And so, synthetically, I have started to indirectly borrow from the US, in USD terms, by providing artificial Federal Deposit Insurance Corp (FDIC) services for the stakeholders of a synthetic bank. Maurice, are you paying attention?!
To protect myself, I will use the proceeds of the insurance premium to buy make-belief paper gold, in case Maestro Greenspew messes up, NLY blows up and Jay gets putted a pile of toxic paper with hedge fund characteristics, that pretends to be a true REIT but is actually a fake bank. Have I made myself clear on this trade?
Chugs, Jay |
