Authored by Andrew Latham via RealClearDefense,

When AUKUS—an unprecedented defense pact between the United States, the United Kingdom, and Australia—was announced in 2021, many Canadian defense commentators expressed concern that Canada’s exclusion from the agreement marked a significant setback.

To some, it signaled a diminution of Canada’s standing as a so-called middle power, a nation accustomed to “punching above its weight” in the international peace and security field. This perception led to calls for Canada to seek formal inclusion in the pact, particularly in Pillar 2, which focuses on advanced military technology development, from cyber warfare to artificial intelligence. However, while there are valid reasons for Canada to consider joining AUKUS, this decision must be made with strategic restraint and in line with Canada’s long-term security interests. In particular, Canada’s involvement in AUKUS should not draw it into an Indo-Pacific security alliance that could distract from its more pressing obligations in the North Pacific, Arctic, and North Atlantic.

The Strategic Logic of Pillar 2 Participation

AUKUS was conceived primarily as a response to rising tensions in the Indo-Pacific region, especially concerning China’s growing influence and assertiveness. While the agreement’s first pillar involves Australia acquiring nuclear-powered submarines—a development less relevant to Canada’s immediate military needs—Pillar 2 offers a more attractive opportunity. This component focuses on advancing cooperation in high-tech fields such as artificial intelligence, quantum computing, cyber capabilities, and advanced undersea technologies.

Canada’s participation in Pillar 2 would offer several advantages. First, it would allow Canada to access and contribute to innovative military technologies that are vital to modern warfare and national security. Canada’s defense capabilities in areas such as cyber defense and artificial intelligence are limited compared to larger military powers, and AUKUS Pillar 2 could provide a critical opportunity for enhancing these capabilities. Additionally, collaboration with close allies such as the United States and the United Kingdom could strengthen Canada’s ability to defend its national infrastructure from cyberattacks and to maintain a competitive edge in military technology development.

Yet, while the opportunity to join AUKUS Pillar 2 offers clear technological and defense benefits, it is essential that Canada approaches this decision with caution. The logic of participating in AUKUS should not be driven by a desire to uphold Canada’s traditional middle-power status or to be seen as an essential player in global security forums. Instead, it should be guided by a sober assessment of Canada’s own defense needs and its core regional interests.

Avoiding Indo-Pacific Overextension

Canada’s involvement in AUKUS must be carefully calibrated to avoid being drawn into the larger strategic focus of the pact: the Indo-Pacific. AUKUS was designed in large part to counter China’s growing influence in that region, and while the Indo-Pacific is of significant importance to Canadian trade and foreign policy, it does not represent Canada’s most pressing security concern. For Canada, the key security challenges lie in the North Pacific, the Arctic, and the North Atlantic. The country’s vast and vulnerable Arctic region, in particular, presents growing concerns amid climate change and increasing interest from Russia and China. Meanwhile, the North Atlantic remains a critical theater for Canada’s NATO commitments and defense of the North American continent alongside the United States.

Joining AUKUS should not be seen as an opportunity to expand Canada’s military presence in the Indo-Pacific at the expense of these more critical regions. It is imperative that Canada’s defense strategy remain focused on securing its northern flank and fulfilling its NATO obligations in the Atlantic. While a presence in the Indo-Pacific may be warranted in specific circumstances, such as freedom of navigation operations or peacekeeping missions, Canada must resist the temptation to overextend its limited military resources in a region where its core security interests are not at stake.

By focusing on Pillar 2, Canada could enhance its technological capabilities without being drawn into the full scope of AUKUS’s Indo-Pacific focus. This would allow Canada to reap the benefits of the agreement—improved cyber defense, advanced technologies, and closer military cooperation with key allies—while avoiding a deeper commitment to Indo-Pacific military operations that do not align with its security priorities.

The Limits of the Middle Power Mentality

Canada’s foreign policy has long been shaped by the idea that it is a middle power with a responsibility to participate in global security efforts, even in regions far from its own borders. This mentality has often led Canada to participate in international coalitions and interventions, from peacekeeping missions in Africa to military engagements in Afghanistan. However, in the current era of great-power competition and rising regional tensions, Canada must reassess its role in the international system.

The belief that Canada must join every significant defense initiative to maintain its middle-power status is misguided. Canada should prioritize its own security needs over any perceived obligation to project influence globally. In the context of AUKUS, this means recognizing that Canada’s inclusion in the pact should not be driven by a desire to uphold its middle-power identity, but rather by the practical benefits it can derive from participation—specifically, in the realm of advanced military technologies.

Furthermore, the notion of Canada as a global middle power no longer aligns with the realities of the international security landscape. The geopolitical environment has shifted, with regions such as the Arctic and the North Pacific becoming increasingly important for Canadian security. Canada must embrace its identity as a North Pacific, Arctic, and North Atlantic power, focusing its defense strategy on these regions rather than spreading its resources thin by participating in global military alliances that do not directly serve its interests.

Balancing Opportunities with National Interests

In considering formal participation in AUKUS, Canada must carefully weigh the potential benefits against the risks. While participation in Pillar 2 offers significant opportunities for technological advancement and military cooperation, it should not lead to a shift in Canada’s strategic focus away from the regions where its core security interests lie.

Canada’s defense establishment is already facing significant challenges, from underfunded procurement processes to recruitment shortfalls and aging military infrastructure. Committing to AUKUS’s broader Indo-Pacific objectives could further strain Canada’s limited defense resources and distract from the more urgent task of securing its northern and Atlantic approaches.

At the same time, Canada must not shy away from opportunities for technological collaboration with its closest allies. By participating in Pillar 2 of AUKUS, Canada can enhance its military capabilities and ensure that it remains competitive in the rapidly evolving field of military technology. This is not only essential for national defense but also for maintaining Canada’s credibility as a reliable ally within NATO and the broader Western alliance.

Conclusion

Canada’s decision to potentially join AUKUS must be grounded in a clear-eyed assessment of its national interests. While the technological benefits of participation in Pillar 2 are significant, Canada must avoid being drawn into the broader Indo-Pacific security focus of the pact. Nor should Canada’s involvement in AUKUS be driven by an outdated sense of middle-power identity. Instead, Canada should embrace its role as a North Pacific, Arctic, and North Atlantic power, focusing its defense efforts on securing these critical regions while selectively engaging in global security initiatives that directly serve its national interests.

By participating in AUKUS on its own terms—focused on advanced military technology development rather than broader geopolitical ambitions—Canada can enhance its defense capabilities without sacrificing its strategic priorities. This is the path of restraint and pragmatism that should guide Canada’s approach to AUKUS and future international security partnerships.

Andrew Latham is a professor of international relations at Macalester College in Saint Paul, Minn., a senior Washington fellow at the Institute for Peace and Diplomacy, and a non-resident fellow at Defense Priorities in Washington, D.C. He regularly teaches courses on international security, Chinese foreign policy, war and peace in the Middle East, Regional Security in the Indo-Pacific Region, and the World Wars. Professor Latham has been published in outlets such as The Hill, The Diplomat, Canadian Defence Quarterly, The Conversation, Wavell Room/British Military Thought, Defense One, and Responsible Statecraft.

Authored by Cynthia Cai via The Epoch Times,

The largest cannabis delivery company in California will shut down by the end of the year, according to a letter from the chief executive officer Sunday, joining a growing number of marijuana businesses in the state that are going belly up.

In the note published on LinkedIn, Eaze CEO Cory Azzalino said that “ongoing challenges” in the state’s cannabis industry led to the foreclosure of company assets on Aug. 6.

He added that the San Francisco-based company is “winding down” current operations and is expected to fully close around Dec. 31.

Eaze’s management team is working with a group to transfer the assets under new ownership and to determine whether operations will reopen next year.

Around 500 workers could face layoffs as a result, according to United Food and Commercial Workers, the union representing those employees.

Founded in 2014, the company says on its website that it provides on-demand delivery to adults across California and Michigan. After California legalized recreational marijuana in 2018, the business rapidly grew to become one of the largest cannabis delivery companies in the state.

It was once valued at $700 million, but top executives have faced financial issues over the years. Former Eaze CEO James Patterson pleaded guilty in 2021 to conspiracy to commit bank fraud. His case was related to that of Hamid Akhavan, a consultant for the company, who was convicted of deceiving credit card companies into processing marijuana transactions, according to the U.S. Justice Department.

In that same year, tech investor and co-founder of Netscape James Henry Clark invested in the company but was embroiled in lawsuits with other investors in the following years. In 2022, he loaned Eaze $36.9 million but foreclosed on the company at the start of this year, according to federal court documents first reported by WeedWeek.

Then in August, Clark took ownership of Eaze after purchasing the company for $54 million at auction, but his plans for the company are currently unclear.

The Epoch Times reached out to Eaze and United Food and Commercial Workers for comment but did not hear back by deadline.

The delivery company joins a growing number of cannabis-related businesses in California that are closing. Five companies have downsized or closed since 2023. This includes MedMen, which faced financial difficulties earlier this year, leading the company to close all but two of its stores. Similarly, Herbl, a cannabis distribution business, closed at the end of 2023 due to a financial collapse. Flow Kana closed early last year. High Times sold some assets after failing to repay roughly $29 million in loans. GrassDoor also closed late last year after liquidating its assets.

A report by GreenWave Advisors found that marijuana companies owe California around $732 million in unpaid sales, excise, and cultivation taxes which include penalties and interest. However, 72 percent of those taxes are owed by businesses that are no longer in operation.

This comes as California Gov. Gavin Newsom last month proposed emergency regulations to ban THC from foods and drinks accessible by people under 21 years old. Meanwhile, he signed Assembly Bill 1775 last week to allow cannabis consumption lounges to operate statewide.

Authored by Jingduan Yang, M.D. via The Epoch Times (emphasis ours),

Fasting helps with weight loss and activates the body’s autophagy, allowing deep-seated cell repair and improving cell health. As a result, fasting has been found to help prevent various diseases, slow aging, and effectively treat some illnesses.

What Is Autophagy?

Autophagy is an important function that every cell possesses. As the name suggests, it means self-engulfing and is an essential cellular self-cleaning process.

Each cell contains multiple parts that keep it functioning continuously. Over time, these parts may become defective or stop performing and become waste inside an otherwise healthy cell. For example, when damaged proteins, discarded organelles, or other wastes appear inside our cells, the efficiency of normal cell operation is reduced.

Autophagy is equivalent to the body’s cellular recycling system that decomposes and recycles cell parts and waste. At the same time, it repurposes the salvageable bits and pieces into new, usable cell parts to generate energy and repair the cells, keeping the latter healthy and helping to prevent the incidence of diseases.

A 2013 study published in Ageing Research Reviews has found that with normal autophagy in place, the body is able to resist disease effectively and can even delay aging. When autophagy slows, the waste removal process from the cells becomes less reliable, which may lead to various health issues, culminating in neurodegenerative diseases, metabolic disorders, and even cancer.

Fasting and Autophagy

How are fasting and autophagy related? When we fast, our cells sense a decrease in energy supply, signaling that they need to start cleaning up their internal “inventory,” initiating autophagy to recycle and utilize the resources already present in the cell.

Studies have shown that autophagy is a dynamic catabolic process that is strictly regulated. Adenosine monophosphate-activated protein kinase (AMPK), known as the “cell energy regulator,” acts like a switch to energy-saving mode in the cell organelle. It is activated whenever it senses a low energy condition, and the cell will then reduce the synthesis of new proteins and start autophagy.

Fasting triggers the autophagy process, and cells will automatically enter self-repair mode. This helps to remove waste from our bodies and improves the health of cells.

Research has found that regular fasting can reduce weight and improve aging-related health problems, including cardiometabolic, cancer, and neurocognitive outcomes. Another study found that metabolic profiles related to lung and colorectal cancer risk were reduced after fasting during Ramadan.

Case Sharing From My Medical Practice

1. An older man with Alzheimer’s disease: After trying various treatment options, the man’s family decided he should try an intermittent fasting program of fasting for 14 to 16 hours a day, eating only between an 8 to 10-hour time span. After four months, his cognitive function improved significantly. Scans of his brain showed a decrease in the buildup of proteins associated with Alzheimer’s disease. This improvement may be closely related to the autophagy process activated during fasting, which helps clear harmful proteins from the brain.

2. A breast cancer cancer patient: This patient fasted for 48 hours before chemotherapy. The side effects from chemotherapy were significantly reduced while producing a much better effect from chemotherapy treatment. This is because, during fasting, the autophagy process helps clear damaged cell structures and promotes the regeneration of the immune system, thus enhancing the effectiveness of the treatment. However, some cancer patients suffer from cachexia or are unable to eat at all. In these cases, fasting is not appropriate.

3. A middle-aged woman with lupus erythematosus (achronic autoimmune disease): This patient found that her symptoms improved significantly after intermittent fasting, and her dependence on hormonal drugs was significantly reduced. This is because autophagy effectively cleans up waste in the body and reduces the inflammatory response.

These cases demonstrate that fasting can profoundly affect the health of our cells and even help treat diseases.

However, fasting is not for everyone. People with chronic illnesses or special health needs are advised to consult a physician or nutritionist specialized in this area before beginning any fasting program.

Two Popular Fasting Routines

Healthy adults who want to try fasting can start with short-term or intermittent fasting.

16:8 Fasting: One of the most popular intermittent fasting methods. Fast for 16 hours a day and eat within the remaining eight hours. For example, restrict yourself to eating only between 10 a.m. and 6 p.m.

5:20 Fasting: Eat normally for five days of the week and limit your daily caloric intake to 500 to 600 calories on the remaining two days. This approach is also effective at kick-starting autophagy while making it easier for you to stick with it.

Fasting is not about starving yourself, but rather managing your diet more intelligently so that your body has time to repair itself. During the fasting period, drink enough water and keep up with nutritional balance by choosing the right foods in your meals to ensure adequate nutritional intake.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

This chart, via Visual Capitalist’s Pallavi Rao, ranks America’s most popular cars amongst different generations. Data was sourced from Insurify, as of August 2024.

To create this ranking Insurify analyzed car ownership rates by brand and model across different generations, based on 4.5 million customer applications between 2023 and 2024.

They followed the Pew Research Center’s definition to categorize the generations:

• Baby Boomers: 1946–1964

• Generation X: 1965–1980

• Millennials: 1981–1996

• Generation Z: 1997–2012

Rankings are based on a car model having the highest rate of ownership in a generation versus the national average for that model. Please visit the source (linked above) for full details on their methodology.

America’s Favorite Cars by Age Groups

The Ford F-series pickup truck is the most popular vehicle for Baby Boomers and Gen X.

However, for Millennials, the Ford pickup ranks sixth by ownership, and it doesn’t appear in Gen Z’s top choices at all.

Trucks in general do better with older generations, as evidenced also by the Chevrolet Silverado’s presence. It’s ranked fifth for Baby Boomers and Gen X, 10th for Millennials, and once again not in the top choices for Gen Z.

Older generations also seem to like—and can probably afford—bigger cars. Baby Boomers and Gen X both have SUVs in their top 10 (Ford Escape, Honda CR-V, Nissan Rogue, and the Chevrolet Equinox) while Millennials and Gen Z have none.

Across all generations, the Toyota Camry and Honda Accord consistently rank in the top five. Interestingly both car brands rank in the top five for reliability.

These are about car models, how do generations feel about brands? Check out America’s Top Car Brands, by Generation. Spoiler: Hyundai ranks 6th across all four.

Update (2045ET):

Official.

Hurricane Milton has officially made landfall at 8:30 pm ET near Siesta Key, Florida as a 120 mph Category 3 storm. pic.twitter.com/H6k9xlxzCZ

— MyRadar Weather (@MyRadarWX) October 10, 2024

BREAKING: Hurricane Milton makes landfall near Siesta Key, Florida with 120 mph winds pic.twitter.com/yTbxgQd61p

— BNO News (@BNONews) October 10, 2024

Ominous sign. 

The water has been sucked out of Tampa Bay by Milton.
Happened fast. pic.twitter.com/8ghtF5SZYx

— Brian Entin (@BrianEntin) October 10, 2024

*     *     * 

Update (2030ET) 

Milton is about to make landfall as a Category 3 storm on Wednesday evening on Florida’s central west coast. 

The eye wall of Hurricane Milton has arrived!!@EdgarONealWX @localmanweather pic.twitter.com/wtoxtkAGie

— Reed Timmer, PhD (@ReedTimmerUSA) October 9, 2024

“The northern eyewall of Hurricane Milton is beginning to move onshore of the Florida Gulf Coast near Tampa and St. Petersburg, where an Extreme Wind Warning is now in effect. Please shelter in place as these extremely dangerous hurricane-force winds overspread the region,” NHC warned.

Hurricane #Milton is making a hard right turn. It’s going to make landfall near Sarasota County. This will keep storm surge out of Tampa Bay and areas north. The storm surge will be highest south of the landfall. #FLwx pic.twitter.com/kv7lZzjtKn

— Spectrum Bay News 9 Weather (@bn9weather) October 9, 2024

The storm’s landfall location is between Bradenton and Sarasota. 

Tornado mania across South Florida. 

10/9 – As of 6pm:
55 Tornado Warnings issued today solely by NWS Miami.
98 Tornado Warnings issued today by NWS Tampa Bay, NWS Melbourne, and NWS Miami today.
At least 9 Confirmed Tornadoes today in our NWS Miami area (Preliminary). https://t.co/G1s6jWa944 pic.twitter.com/un02o7OzrI

— NWS Miami (@NWSMiami) October 9, 2024

Half a million customers are without power. 

514k electric customers are without power in #Florida as #HurricaneMilton nears landfall.
[2024-10-09 7:58 PM EDT]https://t.co/8cAFt3AeyM#PowerOutages pic.twitter.com/UAKsPJPgiz

— PowerOutage.us (@PowerOutage_us) October 10, 2024

A dire warning from NWS about “catastrophic flash floods”… 

#WPC_MD 1100 affecting north-central FL Peninsula, #flwx, https://t.co/Z2YYBHBcsd pic.twitter.com/3yxIkfLJVF

— NWS Weather Prediction Center (@NWSWPC) October 9, 2024

 Scenes from Sarasota:

Very sad situation now here in Sarasota looking out towards the outer barrier islands. Power flashes have now started dotting the sky, and Bird Key is being swallowed by extremely strong winds and storm surge as #Milton’s eye drifts slowly closer. #FLwx #HurricaneMilton pic.twitter.com/4hrNWSrKgi

— Ben McMillan (@WeatherLiveTV) October 9, 2024

This is the scene currently in Sarasota, Florida at Tuttle Rd & Fruitville Road.

Landfall of #Milton is imminent. #FLwx pic.twitter.com/hASbVvVoBu

— ☈ Chris Jackson ☈ (@ChrisJacksonSC) October 9, 2024

Just before eight o’clock in Downtown Sarasota. Power flashes, shrieking winds, big gusts funneling between the buildings. #Hurricane #MILTON pic.twitter.com/A2tkEzwpNW

— Josh Morgerman (@iCyclone) October 10, 2024

Live with @NateTWN in Sarasota, Florida, as debris is pushed down a flooded street as Hurricane #Milton makes landfall. Get the latest updates in our livestream: https://t.co/FGZMW2uDEt pic.twitter.com/YFjK2ysWKU

— The Weather Network (@weathernetwork) October 10, 2024

Live weather cameras: 

*     *     * 

Milton strengthened overnight into a devastating Category 5 hurricane with maximum sustained winds in excess of 160 mph. The National Hurricane Center reported early Wednseday that Milton was located about 300 miles southwest of Tampa, traversing the warm waters of the Gulf of Mexico towards the northeast at 14 mph.

“On the forecast track, the center of Milton will move across the eastern Gulf of Mexico today, make landfall along the west-central coast of Florida late tonight or early Thursday morning, and move off the east coast of Florida over the western Atlantic Ocean Thursday afternoon,” NHC wrote in an advisory note.

The latest forecast states Milton will make landfall near Sarasota between 0200 ET and 0600 ET Thursday morning as a Category 4 storm.

One of the main concerns across the Tampa to Sarasota region will be the storm’s dangerous eye and eyewall unleashing record storm surges. Warnings have already been posted for much of Florida’s western coast. 

Storm surge plus wave heights. Not good pic.twitter.com/SPpSM0o4MY

— The American Storm (@BigJoeBastardi) October 9, 2024

Not good. 

Wow! Watch this catastrophic simulation of Hurricane Milton

Milton is predicted to hit as a Category 5 hurricane with storm surges up to 15 feet in the Tampa area then will move across Florida

If you are in Milton’s path with evacuation orders, leave now

Do NOT wait pic.twitter.com/Nfv6LIQ8Bv

— Kylie Jane Kremer (@KylieJaneKremer) October 8, 2024

“Tampa is on a knife’s edge, but Sarasota, Siesta Key, Venice, Englewood, Port Charlotte, and Punta Gorda continue to look to experience the worst of the storm surge under this scenario,” Ben Noll, a meteorologist with New Zealand’s National Institute of Water & Atmospheric Research, wrote on X. 

The overnight ECMWF nudges slightly north with #Milton, with the eye forecast to pass near the southern end of Tampa Bay.

Tampa is on a knife’s edge, but Sarasota, Siesta Key, Venice, Englewood, Port Charlotte, and Punta Gorda continue to look to experience the worst of the… pic.twitter.com/DAqnVxHJ4v

— Ben Noll (@BenNollWeather) October 9, 2024

Noll continued. 

As of early Wednesday, #Milton remained a category 5 storm with a central pressure of 907 hPa, continuing to rank in the top-10 most intense Atlantic hurricanes on record from a pressure perspective.

Landfall in #Florida is only about 20 hours away from now. pic.twitter.com/wUO3TdJ3za

— Ben Noll (@BenNollWeather) October 9, 2024

Since Sunday, evacuations in the state have been the largest since 2017. 

According to the Florida Division of Emergency Management, here are the areas under mandatory evacuation orders:

Charlotte County; Citrus County; Collier County; Hillsborough County; Hernando County; Lee County; Levy County; Manatee County; Pasco County; Pinellas County; Sarasota County; St. John’s County and Volusia County;

And voluntary evacuation orders:

Glades County; Okeechobee County; Dixie County; Hardee County; Miami-Dade County and Union County.

Evacuation order map: 

GTFO.

Officials are urging residents along Florida’s Gulf Coast to evacuate ahead of Hurricane Milton, with the Tampa mayor saying, “If you choose to stay in one of those evacuation areas, you’re going to die.”⁣ pic.twitter.com/NTg683IJRH

— AccuWeather (@accuweather) October 8, 2024

Massive evacuations in Florida due to Hurricane Milton. This is I-75 in Tampa. pic.twitter.com/owHfH8v8sj

— T_CAS videos (@tecas2000) October 8, 2024

A mass evacuation is in progress in Sarasota, Florida, following the upgrade of Hurricane Milton to a Category 5. Here’s a look at the northbound traffic on I-75 as residents make their escape.@MyRadarWX #flwx #hurricane #milton pic.twitter.com/vC2pEvxLR2

— Jordan Hall (@JordanHallWX) October 7, 2024

Meanwhile, Tampa-area Sheriff Chad Chronister of the Hillsborough County Sheriff’s Office told residents anyone who has not evacuated is “on their own.” 

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Numerous reader requests following our article, Agency REITs For A Bull Steepener, prompted us to write this follow-up with more detail about how to analyze agency REITs. This article doesn’t recommend specific agency REITs, but it does lay out some of the fundamental basics of the largest publicly traded agency REITs. In doing so, this analysis and the prior article provide a solid foundation for further evaluating agency REITs.

Before diving in, it’s worth noting that most agency REITs offer preferred shares. While we do not discuss them in this article, preferred shares may also prove rewarding and less risky in the current bull-steepening interest rate environment. 

(Disclosure: RIA Advisors has a position in NLY and REM in its client portfolios.)

Managing A REIT

An agency REIT is only as good as its portfolio management team. As we wrote in Agency REITs For A Bull Steepener, the portfolio management team has to buy rewarding assets and issue appropriate liabilities to fund the investments, but it must also constantly hedge the portfolio for interest rate and mortgage spread risk. Furthermore, they actively trade derivatives to transform the terms and conditions of their liabilities.

Due to the leverage employed by the agency REITs, a firm making poor hedging decisions could be forced to sell assets or issue liabilities at inopportune times. Poor management can result in reduced or missed dividend payments. 

Conversely, the costs of over-hedging can eat dearly into the REITs profits, resulting in minimal dividends. Finding the right balance between assets, liabilities, and hedges is a tall task. The portfolio manager’s skills in managing the portfolio can make a big difference in returns when comparing REITs.

We cannot quantify portfolio management skill levels, but we share information on each REIT to help you better understand some differences between the largest agency REITs.

Evaluating Agency REITs

Due to the unique agency REIT business model, evaluation requires tools different from those commonly used for stocks. Agency REIT investors prefer metrics like price to book value, leverage, interest rate spreads, dividend reliability, and value at risk. Earnings, sales, and traditional margin and valuation calculations are not as helpful.

The following table shares information on the top publicly traded agency REITs. Further sections below focus on three factors that help determine risk and investor returns. The tables in those sections show the latest respective data, the ten-year ranges, and the size of the ranges to provide better context for the current figures.

Price To Book Value

The price to book value tells investors how much portfolio value or equity (assets minus liabilities) they own per share. The ratio varies due to the whims of investors. Investors should prefer a price-to-book value ratio below 1.0 as they essentially buy the portfolio for less than 100% of its value. However, a price-to-book value ratio well below 1.0 may indicate trouble.

Due to the volatile nature of agency REIT assets, liabilities, and hedges, the book value is in constant motion. Unfortunately, most agency REITs only report the book value quarterly. Accordingly, caution is warranted because the book value is always stale, while price changes are current. In other words, there are only four days a year when the price-to-book value ratio is correct. There are ways to estimate book value to help overcome this problem.

Agency REITs are incentivized to grow as a larger portfolio creates more income for the company executives and the portfolio management team. Growing entails issuing more equity.

Agency REITs often offer new shares to the market when the price-to-book value is above 1.0. Doing so allows them to raise more money per share than the net portfolio value. New issuance often causes the stock price to decline toward a price-to-book ratio of 1.0. When the price-to-book ratio is below 1.0, issuing shares is not as economically beneficial to the REIT; however, it adds value to existing shareholders.

The table below shows the latest price-to-book value of the eight largest publicly traded agency REITs. In most cases, these are about three months old. Since bond yields fell over the last few months and the spread of mortgages to liabilities tightened, the portfolio values are likely higher than last reported. That said, many share prices of the stocks also increased in value.

Leverage

To better appreciate the importance of leverage, we share the following simplified summary of the creation of an agency REIT. It is from Agency REITs For A Bull Steepener.

Hypothetically, let’s start a new agency REIT to help you appreciate how they operate.

• We solicit $1 billion from equity investors.

• A significant portion of the $1 billion is used to buy mortgage-backed securities (MBS).

• We then borrow $4 billion from a bank using the $1 billion of MBS as collateral.

• The proceeds from the $4 billion loan are also used to purchase MBS.

• Our new REIT has about $5 billion of MBS against $1 billion of equity and $4 billion of debt.

• As a result, the REIT has 5x leverage.

The amount of leverage is an essential gauge of risk. If, in the example above, the REIT borrowed $50 billion with only $1 billion of equity, resulting in 50x leverage. A 2% adverse move in the portfolio would wipe out the entire equity value. Conversely, 5x leverage takes a 20% loss before equity holders are wiped out.

Not only is the amount of leverage essential to track, but how and when the leverage changes can help us gauge the portfolio manager’s stance toward present risks. Also of equal importance to those gauging risk is the hedging activity. Specifically, how is the portfolio management team using derivatives to transform liabilities and manage risk?

Solid hedging skills can partially offset the risks of high leverage. Conversely, a REIT may have low leverage but still poses high risk due to poor hedges.

Dividend Reliability

Given the outsized dividend yields on agency REITs, the reliability of the REIT’s dividend is important. Like other key metrics, we should compare the current dividend to its historical range to appreciate how it can potentially change in favorable or adverse environments.

An Agency REIT Alternative

If you are uncomfortable picking specific agency REITs, we recommend diversifying among many to reduce idiosyncratic portfolio risks.

One way is via the iShares Mortgage Real ETF (REM). The ETF’s two largest holdings, accounting for over 25%, are NLY and AGNC. Bear in mind some of its holdings are not agency REITs. Accordingly, they may contain assets that the government does not guarantee.

Summary

Without a background in managing a portfolio of mortgages, analyzing agency REITs can be challenging. However, putting in more homework than is typical for a stock investment can provide investors with returns often uncorrelated with the broader market, thus offering a unique form of diversification. If you decide to research agency REITs, we highly recommend you read their quarterly and annual reports, which are incredibly detailed and insightful.

Agency REITs are not for buy-and-hold investors. They tend to perform well in specific economic and interest rate environments and poorly in others. We believe the current bullish steepening shift in the yield curve could offer investors opportunities with the agency REIT sector. However, we stress REIT portfolios can gain value while its shares lose value.

After yesterday’s ugly, tailing 3Y auction, which saw a plunge in foreign demand as a result of the recent spike in yields as faith in the Fed’s easing plans has been deeply shaken in recent weeks, moments ago the Treasury sold $39BN in 10Y paper (in the form of reopening of 9Y-10M cusip LF6), in a sale that was substandard at best.

The auction stopped at a high yield of 4.066%, up sharply from last month’s 3.648% (which was the lowest since May 2023), and tailed the When Issued 4.062% by 0.4bps, a big reversal from last month’s 1.4bps through auction (but nowhere near as bad as the 3.1bps tail in August).

The bid to cover was subpar, sliding to 2.481 from 2.637 in September, and was also below the 6-auction average 2.50.

Curiously, the internals were not bad at all, perhaps as foreign central banks sought to load up on US paper now that yields are back over 4%, and the Indirect takedown rose to 77.6%from 761%, and just shy of the all time high hit in Feb 2023 when indirects took down just under 80%.

And with Dealers awarded 13.9%, that left Directs holding just 8.4% of the auction, the lowest since Nov 2018.

Overall, this was a curious auction, one which saw near record foreign demand yet where the metrics were subpar at best. Which is probably why after rising to a session high 4.07% just before the auction, yields were unchanged after the result. Meanwhile, stocks continue to push ever higher to new all time highs, completely obvious of the latest surge in yields.

In the last 24 hours the governments of Russia and Turkey have effectively banned the Discord social media platform. Both countries cited the failure of the US-based messaging app to clean up illegal content.

Roskomnadzor, Russia’s censorship body, specifically said Discord is blocked for “violation of laws” and that the company had already been warned been times, which included a previous fine for failure to conform.

Compliance is required to “prevent the use of the messenger for terrorist and extremist services, recruitment of citizens to commit them, for drug sales, and in connection with unlawful information posting,” an official statement said.

Roskomnadzor had in the recent past ordered Discord to immediately remove about a thousand pieces of “illegal content.” It received several violations in September, leading to the new ban.

But Western media is also alleging this is part of Russia’s ongoing crackdown on speech and freedom of expression:

In addition to actually dangerous organizations, the Russian censorship laws target the opposition and non-governmental bodies critical of the Kremlin as “extremist” to limit their reach. Pro-Ukraine messaging and LGBT content are also banned under Russian laws.

Russia’s announcement came Tuesday, but merely hours later, on Wednesday, Turkey unveiled its own ban.

Turkey has said it moved against the platform to “protect” children and young people from online abuse. Turkey’s BTK communications authority referred to a court finding in Ankara which raised “suspicion” the app has been used for “the sexual abuse of children and obscenity”.

“We are determined to protect our young people and our children… from harmful and criminal publications on social media and the internet,” Turkish Justice Minister Yilmaz Tunc said.

Additionally, AFP writes that “Turkish media reports said some Discord users had posted messages hailing Friday’s double murder of two 19-year-old women in Istanbul while others had been using the platform to harass under-age girls.”

POV: You went to Turkey for vacation and scheduled a quick D&D session over Discord with a couple of mates who remain in Russia. pic.twitter.com/VSNmppqImR

— Ivan Khoroshev (@devancheque) October 9, 2024

Starting in August video game platform Roblox was banned in Turkey over immensely controversial content, including pornographic scenes, which authorities have blasted as harmful to children.

Authored by Bill Pan via The Epoch Times,

A Delaware judge has refused to dismiss a defamation lawsuit against online sports magazine Deadspin over an article accusing a 9-year-old boy of wearing “blackface” to a football game.

In an Oct. 7 ruling, Judge Sean Lugg of the Superior Court of Delaware rejected Deadspin’s argument that the article in question was opinion and thus protected from defamation liability.

“Deadspin published an image of a child displaying his passionate fandom as a backdrop for its critique of the NFL’s diversity efforts and, in its description of the child, crossed the fine line protecting its speech from defamation claims,” Lugg wrote.

The lawsuit was filed by Raul Armenta Jr. and his wife, Shannon, on behalf of themselves and their son, Holden, who is of Chumash Indian descent.

According to the complaint, Holden painted his face black and red – two of the colors used in the Kansas City Chiefs logo – and wore a Native American headdress during a Nov. 26, 2023, game between the Chiefs and the Las Vegas Raiders. He was shown briefly during the television broadcast of the game, with his red-and-black face paint visible.

The next day, Deadspin writer Carron Phillips published an article calling out the boy’s attire, with a featured image of the child that showed only the side of his face covered in black paint.

“It takes a lot to disrespect two groups of people at once,” he wrote in the column.

“But on Sunday afternoon in Las Vegas, a Kansas City Chiefs fan found a way to hate Black people and the Native Americans at the same time.”

The author then questioned the NFL’s commitment to its “social justice initiatives,” saying that the organization has not been doing enough to foster a more “sensitive” culture among fans.

Specifically, Phillips argued that the NFL should have been more “aggressive” in pressing the Kansas City football team to drop its “Chiefs” name, which he deemed as culturally insensitive as “Redskins,” a name bore by Washington Commanders for decades until its rebranding in 2020 amid nationwide unrest and debate over racism.

“This is what happens when you ban books, stand against Critical Race Theory, and try to erase centuries of hate,” he wrote.

“You give future generations the ammunition they need to evolve and recreate racism better than before.”

The article, according to the lawsuit, drew hateful messages and even death threats to the Armenta family. In December last year, the family demanded a formal apology and retraction from Deadspin, which the magazine declined, prompting the lawsuit.

In defense, Deadspin argued that Phillips’ statements were expressions of opinion and therefore not subject to defamation claims. However, Judge Lugg disagreed, stating that the article portrayed Holden as someone who intentionally used “blackface” to “hate Black people,” which amounted to a provably false assertion of fact.

“The court concludes that Deadspin’s statements accusing [Holden] of wearing black face and Native headdress ’to hate black people and the Native American at the same time,’ and that he was taught this hatred by his parents, are provable false assertions of fact and are therefore actionable,” Lugg wrote.

Of course, the full picture showed that Armenta had the other half of his face painted in red paint – the Chiefs colors. It also turns out that he is Native American.

Indeed, his grandfather is serving on the Santa Ynez Band of Chumash Indians.

Deadspin also sought dismissal based on jurisdiction, arguing that the case should be filed in California, where the Armentas reside, rather than Delaware, where Deadspin’s former parent company, G/O Media, is incorporated. The judge rejected this argument as well.

In March, just one month after the Armentas filed their lawsuit, G/O Media sold Deadspin to Lineup Publishing, a European company that decided to not retain any of the website’s staff members.

As of this publication, the article in question is still up on Deadspin’s website but has been updated to remove photos and identifying details about the boy. The headline has also been revised “to better reflect the substance of the story.”

“We regret any suggestion that we were attacking the fan or his family,” Deadspin’s editors wrote in a note.

The Armentas are represented by Clare Locke, a firm specialized in defamation cases.

“The Armenta family is looking forward to taking depositions and presenting this case to a jury at trial,” Elizabeth Locke, an attorney for the Armentas, said in a statement.

A spokesperson for G/O Media said the company had no comment.