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For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Risk Factors in our most recent Annual Report on Form 10-K and all subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.I will now turn the conference over to Michael A. J. Farrell Chairman, Chief Investment Officer and President. Please proceed Mr. Farrell. Michael Farrell Good and welcome to the Annaly Capital Management's earning call for the first quarter 2011. I am Mike Farrell. Joining me here today are Wellington, Kathryn and Nick Singh. As usual I have prepared remarks to begin the call after which we'll take your questions. These remarks can also be found our website. Today's mission is called too much of a good thing. Most humans are uncomfortable in silence. To avoid it, modern humans subject themselves to constant stimulation, mostly in the form of information. We used to simply read a few newspapers each day or watch TV. Now we are bombarded with emails, texts, blog posts, newsletters, tweets, Internet news outlets and cable TV channel for every possible purpose. Markets efficiently decipher all this information or so it’s believed. Regulators and policy makers are also privy to the same, if not more, data in their quest to provide the guideposts of commerce. When we started as an investment team back in 1991, the internet was still a gleam in Al Gore’s mind and fax machines were still the norm, but we thought we had all of the information we needed to manage our portfolios. I reminisce simply to ask the question: Has all this information made us smarter?
In 2000, the Tech Stock bubble was in full deflation mode, but if you think about the information preceding the burst you will recall that Alan Greenspan’s infamous “irrational exuberance” warning was made in 1996. Over the next three-plus years there were countless news articles questioning the validity of the rise in prices and the quality of the IPOs being underwritten and yet many people still had a look of shock when it inevitably came down to earth.The housing bubble started to deflate in 2006 and a simple news search shows that it, too, had hundreds of articles written about it in the three years prior, stories that called into question the underlying strength of personal incomes to support a home purchase, mortgage structure and availability as well as outright fraud. It wasn’t just news stories that were out there. We were not the only ones talking about the end of the bubble in our 2006 quarterly commentaries “The Goldfish is Dead, Senator” and “The One-Trick Pony.” I also recall attending the Grant’s Interest Rate Observer spring conference in 2007, which preceded the collapse of Bear Stearns, Lehman Brothers and AIG, and listening to a hedge fund manager present an interesting picture of how Wall Street was packaging chicken parts into securities and the rating agencies were stamping them with approval to be sold as steak. His colorful description of ABS CDOs was a “heads-up” on the impending collapse of the debt bubble in 2008 that kicked off the credit crisis. Again, many were surprised not only when it burst, but that there was also a strong link between debt growth and GDP growth. As we mentioned on our last call, monetary stewards have spanned the spectrum, from Paul Volcker’s days of unannounced policy actions, to Alan Greenspan’s ubiquitous opaque chatter and predictable incremental 25 basis point moves, to now Ben Bernanke not only speaking clearly and telegraphing his actions but also disclosing the thoughts behind his every action. You could say we have a new bubble in information. The Federal Reserve, in a push for transparency, now publishes more detail on the range, central tendencies and inputs into the economic projections of the Board Members and Bank Presidents. The Chairman does interviews and goes on ‘60 Minutes.’ In the past, the FOMC meeting minutes were released with a five year lag, then 90 days, then during Greenspan’s reign it went to three weeks. Now Mr. Bernanke gives a press conference following the FOMC meeting. I don’t think the market is any better at managing with all this information; I would argue that more of it has only intensified the bubble that follows. Read the rest of this transcript for free on seekingalpha.com