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Hey, it's Garrett |
The most profitable trading lessons come from the most unexpected places - like being held hostage during holiday dinners. |
I have been held at family gunpoint during Thanksgiving conversations about why NLY is such a unique proposition. |
That's because of Tim - my father-in-law, a banking expert who likes mortgage REITs and closed end funds and alternative investment structures. |
Most traders see Annaly Capital Management (NLY) and immediately fall asleep. A mortgage REIT paying 12% dividends? |
"That's for my grandfather's portfolio. I'm here to trade momentum, not collect boring income." |
That's exactly why they're missing one of the most reliable liquidity indicators in the entire market. |
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The Real Edge Hidden in "Boring" Dividends |
Here's what Tim taught me: NLY isn't a dividend play. It's a leveraged bet on the repo market - the financial system's plumbing that most traders ignore until it breaks. |
NLY borrows money through repurchase agreements, then uses that cash to buy higher-yielding mortgage-backed securities. |
The profit comes from the spread between what they earn on assets and what they pay on borrowings. |
This is pure financial engineering. They're borrowing money and utilizing mortgage-backed securities as collateral to squeeze capital out of the repo system. |
Sound familiar? |
Because this is exactly what every leveraged hedge fund, every investment bank, every major institutional player is doing. |
When our momentum signal goes negative on the S&P 500 - those big moves that signal systemic stress - NLY's chart swings just as wildly. When the S&P 500 is aggressively falling, that's usually leverage unwinding. And when leverage unwinds, bond prices fall as yields rise. |
NLY sits right in the middle of that storm. |
The Pattern That Pays |
When we have these extreme periods - when everybody's panicking and our momentum signal hits the basement - it's usually a leverage issue. Always. |
The Gilt crisis. The SVB financial crisis. The bond panic when the 10-year hit 5%. These are all liquidity events linked to leverage unwinding. |
But here's the edge: When they pump, when they print, when they bail you out - watch NLY. |
This thing went from $17 to $22 while paying 15-16% dividends at the same time. You can buy something at those extreme lows where the dividend hits 15-18%, and people say "that's impossible." But you can trade it and collect the dividend along the way. |
How to Time the Liquidity Cycle |
NLY tells us exactly when liquidity gets injected back into the system. When the Federal Reserve pumps money into the repo market, when Japan prints $117 billion - NLY goes up. |
It's literally just money. Just plumbing and leverage. |
Look for the extremes. When our momentum indicators hit the basement, when leveraged players are forced to unwind - that's when NLY hits those $17 levels. |
The correlation is beautiful. Insurance companies, regional banks, even Berkshire follow a similar pattern because they're all operating in the same liquidity ecosystem. |
The Signal Within the Signal |
Most investors see NLY's 12% yield and think "income play." They buy expecting stable dividends and get shocked when it moves like a growth stock during liquidity events. |
But that volatility is the feature, not the bug. The dividend's not guaranteed, and it's historically been way less stable than property REITs. This sensitivity to liquidity flows is exactly what makes it valuable as a market indicator. |
When NLY gets crushed alongside everything else, that's your signal that leveraged hedge funds are unloading equities and bonds simultaneously. When it recovers despite "high interest rate concerns," liquidity is flowing back into the system. |
The Timing Framework |
If you know how to time it - and it's not that complicated because I talk about it every day - you look for these extremes. |
When there's policy-related liquidity injection, NLY becomes one of the easiest ways to be profitable. |
This is how the financial system works: leverage builds up, leverage unwinds, authorities intervene, liquidity flows, cycle repeats. NLY sits at the intersection of all these flows, making it a perfect real-time indicator of what's happening in market plumbing. |
The next time everyone's panicking about systemic risk and NLY is trading at extreme lows with an 18% yield, remember Tim's lesson: you're not buying a dividend stock. You're buying a front-row seat to the liquidity cycle that drives everything. |
And unlike most market indicators, this one pays you to wait. |
Stay Positive, |
Garrett Baldwin |
P.S. I'm going live tomorrow in the pre-market to walk through my contrarian energy play. We've got Bank of Japan, triple witching, and everyone asking "is this the bottom?" RSVP HERE |
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When Everyone Else Is Celebrating, He's Watching The Prints | Markets popped today on softer inflation data. S&P up 0.8%. Nasdaq climbing 1.5%. Micron ripping 11%. | Everyone thinks the coast is clear. | Brandon's Ghost Prints Surveillance Console is showing something different. | While retail celebrates cooler CPI numbers, institutions are repositioning. XLB and IWM still flashing bearish signals. The weakness in AI names? Just the beginning. | Tonight at 7pm ET, Brandon's revealing what the console shows—potential pullbacks that could deliver quick profit opportunities before year-end. | His recent Ghost Prints trades delivered 62%... 67%... 62%... 42%... and 46%. Past wins include 375% on KSS in 13 days and 150% on RKT in 25 hours. | You'll see the bearish prints, the institutional positioning, and his exact framework for executing profitable put trades when sentiment shifts. | | |
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