REIT Watch – courtesy © buchachon – Fotolia.com

Annaly Capital Management Inc (NYSE:NLY) — 12.2% YIELD

Annaly Capital is of particular interest not simply for the high yield, or for their president’s purchase of $1.39 million at the end of 2012, but for the positive news about the REIT. What makes this group a solid one “to watch” is the Q 4 2012 net income of $700.5 million. Wellington J. Denahan, CEO of Annaly, expressed the mood for this stock via their last reporting:

 “In our market, indeed every market, decisions made by policymakers continue to have exceptional influence on pricing and behavior. Nevertheless, as our results demonstrate, we continue to navigate through these uncertain waters to identify attractive relative value opportunities on both sides of our balance sheet. These market conditions are likely to persist, however, as structural imbalances here and abroad continue to affect economic activity. In this environment, we believe that remaining conservative in our management approach is in the best long-term interests of shareholders.”

Keys: Essential to this REITs value is their ability to continue outmaneuvering not only competitors, but  the FED at buying the mortgage backed securities.

ARMOUR Residential REIT Inc. (NYSE:ARR) — 13.6% YIELD

ARMOUR is another high yield REIT focused on mortgage backed securities. If insider buys have anything to do with a stock’s value, then the several hundred million key ARMOUR execs have purchased recently give clues to another group to watch. Why is this stock interesting? Beyond the high yield, ARMOUR Residential just announced last week their offering of Series B preferred. Looking at yesterday’s close, the movement seems to trend upward 7.11 +0.06 (0.85%) 

Keys: Not unlike Annaly, movements by the FED impact ARMOUR heavily. Despite the fact the stock is undervalued, a lot depends on competition for the dwindling pool of securities they thrive on.

Two Harbors Investment Corp (NYSE:TWO) — 18.0% YIELD

Two Harbors, harbors all the potential return the other two REITs do, but with a much bigger bang. 18% is a whopping yield, but the aforementioned Oasis of securities drying up has to shake confidence in these securities backed funds. Here, insider investing is a lot less confident too, the key people at Two Harbors only having only invested several hundred thousand compared with the tens of millions competing groups have in their own wares.

Keys: Can the robust stock break out with a better return on equity? Will the conversion of Silver Bay Realty Trust Corp. (SBY) shares next month render the expected value? Everyone says “buy” this one.

American Capital Mortgage Investment Corp. (NASDAQ:MTGE) — 14.2% YIELD

America Capital is another real estate investment trust which focuses on mortgage instruments of several types. Just yesterday the group announced their IPO of some 20,000,000 shares, just after having announced Q4 2012 earnings per share of $1.40 per. On the face of this stock, everything suggests “buy”, but a few too many press releases focused on their movement puzzles this writer.

Keys: Confidence by the investment reporting community. Somehow so few seem willing to rate this trust either way? The stock closed yesterday at 25.70 -0.87 (-3.27%)

AG Mortgage Investment Trust Inc (NYSE:MITT) — 12.6% YIELD

Ditto for AG. Again, mortgage backed securities will  spell win or lose for this trust. Insider investment here has not been robust compared with the others mentioned. What makes this stock a real horse to watch is the strong dividend history exhibited. Forbes points to this in an evaluation here, but given the yield and the relatively fantastic price to book ratio, it’s no wonder lots of eyes are on this investment.

Keys: Figuring out whether or not MITT can maintain this same strong dividend legacy. WATCH THIS ONE

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Apollo Residential Mortgage, Inc. (NYSE:AMTG) — 12.6% YIELD

AMTG sits in the top spot in the Dividend Channel’s list, in part because of the clear upward trending of the fund. What’s interesting for us about Apollo is that the fund has so little news related to the movement of their shares. Other than the announcement for their Q4, the fund seems to chug along unassumingly. However, yesterday’s close trended more toward the stock tanking than triumphing. However, the dividend trail tells of a stock rock steady throughout the last 12 months.

Keys: Maintaining this dividend yield strength, something that is to a degree dependent on the funds competitiveness at buying. So far the trend shows they are top notch shape shifters where reacting is concerned.

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US Federal Reserve – courtesy Wikipedia

Last month Bankrate released their most recent forecast on mortgage rates, which outlined the Federal Reserve’s continued vestment in mortgage backed securities. The moves, aimed at reducing the burden of unemployment on the economy, also has positive effects for those interested in buying homes, as well as those interested in refinancing for gain. Barring a slowed economy for whatever reason, very low interest rates are here to stay for the near future.

We spoke earlier today with McBride (below right) about the Fed, the so called fiscal cliff (the effects of the Budget Control Act of 2011), and the overall economy. McBride offered this with regard to the generalities of Bankrate’s position:

“2013 will be favorable to home buyers and refinancers alike, with 30-year fixed mortgage rates staying between 3.5% and 4% for much of the year owing to the slow growth economy, high unemployment, and active Federal Reserve.”

A “go to” analyst who has appeared on hundreds of financial broadcasts including NBC “Nightly News,” CBS “Evening News,” and ABC’s “World News Tonight,” Greg McBride provides not only in-depth commentary, but practical advice for consumers.

According to many experts, interest rate stability and the overall economy depends greatly on how well Congress deals with the potential negatives that can arise via the “fiscal cliff” harbinger. On top of these concerns, I spoke with the Bankrate analyst about overall economic issues, for one, consumer confidence and spending. Even despite these continual low interest rates, the seeming inability of the administration and lawmakers to instill confidence seems at the core of America’s economic conundrum.

Regardless of actions by the Fed, which McBride pointed out at simply re-instituted past policies, investor and consumer confidences have to be shored up. In short, the biggest reason for the lukewarm economic recovery resides in infirmities from the problem solvers themselves, namely our own lack of confidence in decision-makers in Washington. Be that as it may, Bankrate and other analytics companies understand the public’s purse strings (corporate too) remain very tight. But in ending our conversation this afternoon, McBride pointedly suggested those with the wherewithal to buy a home, needn’t hurry to closing, he say’s these rates are with us for a while (6 months out).

Even as I write this, various financial reporting entities are announcing both concern and tentative actions being considered by the FOMC where this bond buying actions are concerned. The minutes of the meetings back in December can be read here, and the video below of the press conference with FOMC Chairman Ben S. Bernanke, offer more insight into what Bankrate and McBride partially project from.

Meanwhile, from the BBC to the Wall Street Cheat Sheet reports suggest these same FOMC board members have concerns that spending upwards of $85 billion dollars a month buying these bonds may kindle an inflationary fire America and the world does not need. A last note, McBride actually commented on the basic physics of the economic situation in our conversation, the point of our discussion being how action on the part of the Fed or other regulators always leading to a counterpoint elsewhere. The take away here should probably be, the Fed using “same old” tactics, will not likely affect a big fiscal change.

We’ll keep you updated.

Federal Reserve has done all it can to help, but even that wasn't enough © Aaron Kohr - Fotolia.com

Officials from the Fed, along with several economists and representatives from a number of foreign central banks, recently met at the US Monetary Policy Forum to discuss the continued effect the housing crisis is having on the US economy. The general consensus from the meeting was that there was little more the Fed could do to help, reported CNN Money.

History shows that during hard times, the Fed can lend assistance to the housing market by reducing interest rates and consequently, lower mortgage rates to help borrowers. However, this unprecedented housing crisis has already seen interest rates reduced to near zero, and mortgage rates are lower than they’ve ever been before – but even that isn’t enough to pick things up.

Friday’s meeting discussed the possibility of reducing interest rates even further, through something called quantitative easing – which involves unconventional methods such as asset purchases – but it was thought that such a move would have little impact as most borrowers able to qualify for the lower interest rates have already refinanced their mortgages.

Michael Feroli, an economist with JPMorgan Chase, told CNN Money that the problem was pretty much out of the Fed’s hands.

“Housing cannot be easily addressed by monetary policy,” insisted Feroli.

James Bullard of the St. Louis Fed agreed, adding that “To the extent that you would have policies that are going to help the housing market, they’re not going to come from monetary policy makers.”