TWO

Two Harbors Investments Corp

Oil

Oil Prices Hit My December Targets Early; Here Are Two Ways to Profit

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As of yesterday morning, crude oil prices were holding tight near a two-year high. Despite the misgivings of short-sellers who use falling oil as a means to make money, the global market has finally stabilized.

As I write this, WTI (West Texas Intermediate) was at $57.33 a barrel, nicely above the upper limit of the end-of-year $55 to $57 range I forecast last month. The consensus indicates our next resistance level is around $60.

Meanwhile, London-set Brent is trading at $63.97, convincingly higher than my Dec. 31 range of $58 to $60 a barrel.

This adds up to one fact…

We're now in the perfect environment to make some nice money with the presence of two crucial ingredients: a degree of predictability and low volatility.

So, while I develop my new, upgraded crude oil forecast for the first quarter of 2018, let's take a look at why this is happening and, more importantly, how we can make some money in the oil patch...

Commodities

Two Worlds Have Started to Collide for Our "Red Metal" Trade

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Yabor City, Fla., has always captivated me.

This historic neighborhood in Tampa is Cuba meets the "Deep South."

It has the energy of Cuban music mingled with laid-back southern charms.

I got to know the area well back in my days as a chemical engineer with DuPont after making dozens of trips out to two prospective water desalination projects nearby. You know you spend too much time in a place when the Airport Marriott staff knows you by name…

100 years ago, this "city within a city" was the cigar capital of the world, producing 500 million cigars a year – even more than Havana did at the time.

Even though the area has seen some hard times since the demise of the cigar industry, it still emits an energetic vibe that attracts thousands of visitors each year.

I mention Yabor City today because it has an interesting parallel to our copper play – Hudbay Minerals.

Just like the Cuban/southern fusion that first drew me to Yabor City, two worlds have started to collide for this mining stock – fundamental and technical.

And today we're going to take a look at how this unique intersection creates a profit sweet spot for our favorite "red metal" play...

Trading Strategies

These Two REITs Can Be Safer Than Bonds When Rates Are Rising

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Many investors believe that rising rates are bad for real estate and, by implication, for Real Estate Investment Trusts, or "REITs" for short. So they're starving themselves of badly needed income by lightening up their allocations or abandoning them entirely.

That's a huge mistake – if you understand how to pick the right REITs.

Contrary to what a lot of investors believe, REITs have historically done well when the cost of money is increasing. Between 1994 and 2017, for example, there were nine time periods when interest rates rose by more than 1% (or 100 basis points in trader speak) as measured by the 10-year U.S. Treasury note.

Six out of nine of those times, REITs provided positive returns despite the fact that those rate changes were roughly four times larger than the measly 0.25% hike Yellen just made and the three additional hikes she says she's going to make in 2017.

What most people miss is deceptively simple.

Namely that there's a big difference between a sharp rate spike in the mold of Chairman Paul Volker's 1970s "torpedo" and the slowest interest rate normalization in history that's now Yellen's legacy until, apparently, the end of time.

The former is a mechanism designed to shut down inflation and rein in speculation, while the latter is intended to maintain all the things policy makers believe free money makes possible – an improving labor market, consumer spending, and overall demand.

To paraphrase legendary executive and former presidential candidate H. Ross Perot, "lemme show ya a chart"…

To paraphrase legendary executive and former presidential candidate H. Ross Perot, "lemme show ya a chart"...

Cashing in on Commodities: Two Ways to Profit From the World’s Newest Markets

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Editor's Note: This is the fourth installment of a new Money Morning series highlighting investment opportunities in the global bull market in commodities. By Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report Many people are in sticker shock thanks to high gas prices and oil that punched through the $135-a-barrel level recently, before sliding […]

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