Ellington Residential Mortgage REIT (NYSE:EARN) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 11:00 am ET

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Ellington Residential Mortgage REIT (NYSE:EARN) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Residential Mortgage REIT 2019 Third Quarter Financial Results Conference Call. Today's call is being recorded. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for your questions following the presentation.

[Operator Instructions] It is now my pleasure to turn the floor over to Jason Frank, Deputy General Counsel and Secretary. Sir, you may begin.

Executive
Jason Frank

Thank you. Before we start, I would like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature. As described under Item 1A of our Annual Report on Form 10-K filed on March 8, 2019, forward-looking statements are subject to a variety of risks and uncertainties that could cause the Company's actual results to differ from its beliefs, expectations, estimates and projections. Consequently, you should not rely on these forward-looking statements as predictions of future events. Statements made during this conference call are made as of the date of this call, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Joining me on the call today are Larry Penn, Chief Executive Officer of Ellington Residential; Mark Tecotzky, our co-Chief Investment Officer; and Chris Smernoff, our Chief Financial Officer. As described in our earnings press release, our third quarter earnings conference call presentation is available on our website, earnreit.com. Our comments this morning will track the presentation. Please note that any references to figures in this presentation are qualified in their entirety by the end notes at the back of the presentation.

With that, I will now turn the call over to Larry.

Executive
Laurence Penn

Thanks, Jay. Good morning, everyone. As always, we appreciate your time and interest in Ellington Residential. On our call today, I'll begin with an overview of the third quarter. Chris will then summarize our financial results. Next, Mark will review the performance of the residential mortgage backed securities market during the quarter, our portfolio positioning and our market outlook. And finally, I'll provide some brief closing remarks and then we'll open the floor to questions.

The third quarter began with a quiet July. Interest rates were range bound, US equity indices reached record highs, and on July 31st, the Federal Reserve cut short-term interest rates by 25 basis points and announced an end to its treasury portfolio run off two months early. Sentiment flipped in our August, however, and significant market volatility returned. As messaging from the Fed shifted hawkish, concerns over global growth intensified, and US trade negotiations with China grew tense.

During the month, various volatility indices surged. Domestic equities fell, interest rates plummeted, and big parts of the yield curve inverted. The Federal Reserve responded to the increased volatility by pledging more monetary stimulus, if