Direxion Daily Real Estate Bull 3X (DRN)

[rjunior79]

This ETF will surely be a winner in the long run!!


While interest rates are low and massive fiscal stimulus is record breaking, and unemployment has not reached record levels, the real estate market will benefit from increased inflation and is therefore likely to increase in price, possibly substantially. According to Moody's Investors Service, "When the period of monetary stimulus ends, the demand for real estate, as reflected by the rise in housing prices, is likely to rise dramatically."

But this is not the time to be complacent about a recession, but the upside is that such recessionary environment will only last for a short time. It is important that you remain vigilant. When your economy turns down, demand can temporarily increase, because of the increased value of real estate.

The Consumer Confidence Index continues to fall, and it looks like more consumers are looking for ways to save money. Banks are showing a lot of concern over the housing market, and many have increased their lending requirements.

During this time of great concern, the Federal Reserve is currently in the process of purchasing mortgage backed securities (RMBS) and other assets from the largest financial institutions in order to keep inflation under control. If the consumer wants to keep their money, they must help keep inflation under control.

The fiscal stimulus plan is also being used to continue the home foreclosures process. When these homes are sold, they can be turned into tax losses for the federal government, which could make it profitable for the government to sell back additional foreclosure properties and take in some additional money, as well.

This has an adverse effect on inflation, which is already at a low level. This sort of action could actually encourage the real estate market to increase in price, because the government makes more money when the housing market increases.

It is critical to understand that when the real estate market increases in price, there will be increased demand, and that will lead to higher inflation. A stronger dollar has an adverse effect on inflation, and the government is using this as a reason to increase the monetary supply, but if we could have more gold to stimulate the economy, we would have done so already.

Even in places like Canada, real estate prices in Vancouver, North Vancouver and Lower Mainland is rising dramatically:
Look at these cities for example:
https://www.strawhomes.com/mls/vancouver-west-condos/
https://www.strawhomes.com/mls/vancouver-east-condos/
https://www.strawhomes.com/mls/vancouver-east-homes/
https://www.strawhomes.com/mls/vancouver-west-yaletown-condos/


The current inflation problem is more due to the Fed keeping rates low than it is due to the factors listed above. The Consumer Confidence Index does not necessarily reflect the state of our economy, as the index includes items such as debt consolidation, credit card debt, and other items that might be inflated because of the Fed's stimulus program.

If we had a certain rate of inflation that was a lot higher than the current inflation level, there would be a huge problem. It would not matter whether or not we were in a recession.

The best strategy is to continue to gather and interpret new information, and to use that information to your advantage. When I received a report from a brokerage firm, it showed that the MLS sales had increased about five percent in a month, but mortgage rates were still very low.

That tells me that there is a possibility that the real estate market is not inflated, and that the credit crunch may just be a temporary phenomenon. The US Dollar is moving in an upward direction, and the situation with interest rates is not the reason for this move.

I do not think that the Federal Reserve is playing a role in increasing inflation, as I believe they are trying to keep inflation under control. If the Federal Reserve knew that we were in a housing slump, they would not be buying trillions of dollars worth of Treasuries and mortgage backed securities, and the spending cutbacks would not be occurring.