Why high-grade debt issuance increased more than three-fold
In the week ending August 8, weekly investment-grade bond (LQD) issuance surged by 222%, week-over-week to come in at $24.975 billion over 19 deals. Issuance was driven by refinancing older and costlier debt, acquisition related financing, share-repurchases, and other general corporate purposes.
How Would Rising Charge-Offs Impact Major Banks’ Earnings?
To make the most of growing consumer spending, major banks focused on their consumer banking business. They’re lending out more consumer loans.
Must know: Stress tests and the likely timing for rate increases
On March 26, the U.S. Fed released bank stress test results indicating which banks can increase dividend payouts and share buybacks.
Financials Overview for the Week of June 26–30, 2017
Major banking stocks rose after the Fed approved huge payout plans. Wells Fargo (WFC) rose 2.7% and Citigroup (C) rose 2.8%.
US Dollar Index Fell on Weak Economic Data
The US Dollar Index fell to 93.8 before closing on October 14. It fell due to the release of weak domestic data in the form of the PPI and retail sales.
Why low inflation in the US shows that resources are being wasted
The speech took an interesting turn when Kocherlakota questioned his audience on they should care that inflation is too low.
5 Big Banks to Report Their Earnings this Week
This week, five of the top six commercial and investment banks will report their quarterly earnings.
How Do Analysts Rate Rio Tinto?
Citigroup (C) upgraded Rio Tinto’s (RIO) rating from “sell” to “neutral” on June 6, 2016. The broker also raised the target price for the stock from 20 pounds to 21 pounds.
JPMorgan’s Trading Revenues Fall 7% in 2Q15
JPMorgan’s revenues from fixed income markets declined 10% year-over-year in the second quarter of 2015. The drop excludes the impacts of one-off items.
How Global Weakness Drags down Wells Fargo’s Profitability in 4Q15
Two key elements gripping the US banking sector and Wells Fargo include the near-zero interest rate and global uncertainty, which have dampened earnings.
Morgan Stanley Posts Highest Profit Since 2007 in 1Q15
Morgan Stanley (MS) reported net income of $1.18 billion, or $1.18 per diluted share, the bank’s most profitable first quarter since the 2007 financial crisis.
Blue Ridge Capital exits stake in Citigroup
Citigroup posted a $3.4 billion net income, up by 8% with revenues of $19.6 billion, and the net interest margin increased to 2.91% for 3Q14.
Why Wells Fargo’s Energy Loan Losses Could Rise in 2Q16
At Wells Fargo’s investor day presentation, chief financial officer John Shrewsberry warned investors of more losses on energy-related loans.
Is Citigroup’s Restructuring Exercise Benefiting the Company?
Citigroup’s CEO, Michael Corbat, continued his efforts to try to slim down the company’s operations and clean up its balance sheet in the second quarter.
What Goldman Sachs Thinks about Bank of America
Bank of America (BAC) is currently trading at $25.26. Its 52-week high is $25.80 and 52-week low is $12.05.
Can JPMorgan Beat Analysts Estimates in 2Q16?
In the past few quarters, JPMorgan has posted better-than-expected earnings and has topped revenue estimates.
Turn to Financials and Healthcare When Fears of Rate Hike Loom
With classic safe havens providing little protection, turn to financials and healthcare sectors for opportunities. Healthcare stocks usually hold up well in the run-up to a rate hike.
How Wells Fargo Creates Value for Shareholders
Wells Fargo has consistently performed well in stress tests. This performance has let the company increase its dividends annually.
Bank of America’s Continued Efficiency Maintains Margins
Operating margins In 3Q17, Bank of America’s (BAC) non-interest expenses fell sequentially and YoY (year-over-year), reflecting strong operating efficiency. This fall was partially offset by continued investments in technology. The bank’s expenses fell to $13.1 billion in 3Q17, compared with $13.5 billion in 3Q16 and $13.7 billion in 2Q17. Commercial banks (XLF) are focusing on reducing operating spending, targeting huge investments in technology […]
How will the Federal Reserve go about policy normalization?
Monetary policy normalization refers to two aspects: the federal funds rate and the Federal Reserve’s balance sheet.
Citigroup’s Focus on Efficiency Could Boost Its Profitability
Citigroup’s 2Q15 efficiency ratio was 56% and was 66% in 3Q14. The bank has focused on efficiency through cost controls and exiting low-return segments that led to a lower efficiency ratio.
Why JPMorgan and Wells Fargo Are Trading at High Multiples
In spite of a rather weak performance, Wells Fargo (WFC) commands the highest premium due to its strong franchise, mortgage concentration, and high net interest margins.
Travis Perkins Rebounded, Led EWU by 5.09%
Travis Perkins was at the top of the iShares MSCI United Kingdom ETF on October 23, 2015, as analysts showed positivity toward the construction industry.
Why Facebook Has Been in Talks with Banks Lately
According to Reuters, Facebook (FB) is currently in discussions with banks about improving customer service through its apps.
Why Wells Fargo leads in loans
The bank has always focused on its bread and butter revenue-earning stream: loans. Over the years, Wells Fargo slowly realized its goal of achieving a strong market share in lending.
Why Goldman and Macquarie Don’t Think Iron Ore Rally Will Last
Goldman Sachs (GS) has warned the Markets that iron ore prices will slump below $40 per ton as supply growth outpaces demand.
Will Dividends Please Wells Fargo’s Investors Worried about Scandals?
In June, the Federal Reserve approved Wells Fargo’s (WFC) capital plans after it found that the bank could keep lending in a severe economic downturn.
What Do Analysts Recommend for JPMorgan Chase and Wells Fargo?
In a Bloomberg survey of 37 analysts, 19 analysts (51%) have assigned a “buy” rating to Wells Fargo (WFC) while 13 (35%) have rated it as “hold.” The stock currently has five “sell” ratings.
Moore Capital lowers its stakes in JPMorgan Chase
JPMorgan’s latest 2Q14 results beat estimates. Meanwhile, net income was down to $6 billion from $6.5 billion in 2Q13. The earnings per share (or EPS) was $1.46, compared to $1.60 in 2Q13.
How Did Bank of America Perform on 2016 Stress Tests?
Bank of America boosted its dividends by 50% to $0.075 after it cleared the Fed’s 2016 stress tests.
Does Citigroup Look Attractive at Its Current Valuations?
Currently, Citigroup trades at a discount of 40% to its book value. It trades cheaper than peers such as JPMorgan Chase, Wells Fargo, and Goldman Sachs.
How Rate Hikes and Tax Rate Cuts Could Play Out for Bankers
The Fed is targeting one last rate hike in December 2017 to bring the federal funds rate from 1.25% to 1.50%.
Major Litigations End, but Bank of America Faces New Challenge
In March, the Fed issued a conditional non-objection to Bank of America’s capital plan. It must resubmit its plan and address certain weaknesses.
Bank of America’s Efficiency Could Improve to 63% in 2017
Bank of America (BAC) has put in place a strong expense control mechanism that has resulted in lower growth in operating expenses compared to revenues.
JPMorgan Chase Gained 4% after Its 1Q16 Earnings: Was It That Good?
On April 13, JPMorgan Chase reported 1Q16 earnings of $1.35 per share. It beat consensus estimates of $1.28. Its shares rallied 4.2% after the earnings beat.
Did the Fed Really Hint About a Negative Interest Rate?
A negative interest rate policy (or NIRP) may still be a far-fetched idea in the United States, but the Federal Reserve wants banks to prepare for it.
US Banking Sector: Key Trends and Outlook
Changes in technology have reshaped the banking sector. Banks are increasingly collaborating with fintech firms to improve their customer service.
Roy Hill Has the Potential to Push Iron Ore Prices Further Down
Australia’s billionaire Gina Rinehart’s $10 billion Roy Hill iron ore project expects to start shipping iron ore to world markets starting in October 2015.
Why the Bid-to-Cover Ratio Rose for 2-Year Floating Rate Notes Auction
The US Treasury introduced two-year floating rate notes (or FRNs) in January 2014.
BlackRock Shares Its Views on Fixed-Income Strategy for 2016
BlackRock is not upbeat about fixed income in 2016. It’s more optimistic about stocks than it is about bonds, specifically European and Japanese equities.
Banks That Look Riskier in the Brexit Aftermath
Banks with significant exposure to the United Kingdom and the European Union are the riskiest investments in a post-Brexit environment.
Citadel Advisors Starts a New Position in Altera Corporation
During 4Q14, Citadel Advisors started a new position in Altera Corporation (ALTR).
Market Participants Make a Beeline for 2-Year Floating Rate Notes
The US Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.
Must-know: Is Wells Fargo making boring attractive for investors?
Wells Fargo’s (WFC) broad operation level strategy over the long run can be described by two words—slow and steady. It doesn’t take many risks. It’s stable and boring.
PLVVX: Weak Emerging Economies Lead to Poor Performance
The PIMCO RAE Low Volatility Plus Emerging Fund Class A (PLVVX) is an alternative mutual fund that mimics the long/short strategy to construct a portfolio with low volatility and high-income securities.
When geopolitical risk takes precedence over interest rate risk
The total returns on municipal debt came in at 3.32% in the first quarter of 2014, as measured by the Barclays Municipal Bond Index.
Why Overall Demand Tanked for 2-Year Floating-Rate Notes
Overall, $13 billion worth of floating-rate notes were auctioned, the same as in February’s auction.
Morgan Stanley’s Expense Cuts Are Key Part of Recovery
Morgan Stanley’s 2Q16 earnings beat analysts’ estimates, as the bank reported considerably lower legal expenses.
JPMorgan Chase Could Beat the Fourth-Quarter Estimates
JPMorgan Chase (JPM) is scheduled to announce its fourth-quarter financial results on January 15.
Morgan Stanley and Goldman have bigger bond exposure than Bank of America and Citi
Bond underwriting exposure could be risky for investment banking departments, as interest rates begin to rise and refinancing slows.
Must-read: Key takeaways for investors in the banking sector
The longer term outlook for Eurozone banks does look more positive than a year ago given reasons including the substantial deleveraging, capital raising by local banks and the European Central Bank (or ECB)’s recently announced ABS purchase program.
High Discount Margin: Highest Ever for 2-Year Floating Rate Notes
The US Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.
Wells Fargo remains number one in low-cost deposits
Wells Fargo continues to remain a sector leader in raising low-cost deposits. It grew its noninterest deposits by nearly 7.0% compared to 4Q14.
Why Wells Fargo’s future goals will help it grow more
Management sets the vision for an organization. Wells Fargo’s vision is large, but it’s already halfway there. Wells Fargo is the largest bank in the U.S.—by market capitalization.
Will the Financial Sector Continue Its Rally Next Month?
The financial sector has had a strong performance so far in September 2017. The Financial Select Sector SPDR Fund (XLF), which tracks the performance of the financial sector, rose nearly 4.4% on a month-to-date basis.
How Does Wells Fargo Compare on Energy Exposure?
Wells Fargo (WFC) seems secure when it comes to risks arising from energy-related loans. Wells Fargo’s energy loan portfolio of $17.8 billion made up 1.7% of the total loan portfolio in 1Q16.
Understanding the Latest Upgrades and Downgrades for Senior Gold Miners
Along with analyst ratings, it’s important to look at the recent changes to recommendations and target prices.
Demand Nose-Dived for Two-Year Floating Rate Notes Auction
Market demand for two-year floating rate notes in September fell sharply to 24.7% of the accepted competitive bids—its lowest mark ever—compared to 43.6% at August’s auction.
Why Analysts Think Bank of America Is a Better Bet Than JPMorgan
Financial stocks have been rising after a better-than-expected 2Q16. Despite this, Citigroup has downgraded JPMorgan Chase to a “neutral” from a “buy.”
How Have Equities Performed since the Brexit Vote?
Investors lost confidence due to the uncertainty surrounding the vote, which led to the expectation of the other member nations’ following in the United Kingdom’s footsteps.
Evans suggests using macroprudential tools for financial stability
An example of macroprudential tools are bank stress tests, conducted regularly by the U.S. Federal Reserve.
Major Movers of the Financial Markets in the Past 20 Years: Part 2
The global financial crisis of 2008 proved to be the major mover of the financial markets in the last 20 years. Internet companies and the banking sector took a beating.
Banks Relying Heavily on Interest-Related Income Suffered
In the third quarter, banks that relied heavily on interest-based income suffered, reporting record-low net interest margins.
Why low funding cost is an advantage for Wells Fargo
If a bank is able to keep its cost of deposits low, it will have a competitive advantage. Wells Fargo has the lowest cost of deposits among its peers—despite having a very high deposit base.
Citigroup’s Profitability Boosted by Lower Expenses
In terms of profitability, Citigroup’s return on equity (ROE) fell to 8.0% from 9.1% in the previous quarter but rose sharply from the 5.3% reported in 3Q14. Return on assets fell to 0.9% from 1.1% in 2Q15.
Why Wells Fargo focuses on non-interest income
Wells Fargo wants to maintain a balance between its interest income from loans and non-interest income. Non-interest income accounts for nearly 49% of Wells Fargo’s revenues.
Why cross-selling is part of Wells Fargo’s strategy
Wells Fargo’s (WFC) first, and possibly the most important, operational strategy is focusing on cross-selling. It’s the most important pillar of its operational strategy.
Overview: TPG-Axon Capital Management’s 2Q14 positions
TPG-Axon Capital Management LP is a privately owned $4 billion hedge fund firm. It was founded by Dinakar Singh in February 2005.
US Stock Indexes Rally with Japan’s Stimulus and Robust Jobs Data
The three US stock indexes that we review in this weekly series rose from July 5–12, 2016. Robust US jobs data boosted investor sentiment and eased the fear of an economic slowdown.
Get Real: Breaking Down and Bouncing Back
In this morning’s edition of Get Real, we saw that WeWork’s layoffs are taking a toll. Meanwhile, the cannabis industry could be bouncing back.
US Industrial Sector Hit Hard by Currency Wars
The industrial sector accounts for about 12.5% of total US GDP. It’s also a main source of demand for goods and services in other sectors of the economy.
What Could Drive Citigroup Stock in 2019?
Citigroup (C) reported mixed fourth-quarter results on January 14. However, the stock is trending higher.
Why Wells Fargo is leveraging technology to cut costs
Online banking is the cheapest mode for servicing the customer in the long run. Online banking involves a one-time fixed cost. After that, the maintenance cost is very low.
Why Wells Fargo uses human resources as a strategic tool
Wells Fargo (WFC) believes that people are a competitive advantage source. Integrating sound human resource practices lies at the core of Wells Fargo’s strategy.
Why Goldman Sachs Says the FOMC’s March Policy Was Ultra-Dovish
Economists Zach Pandl and Daan Struyven from Goldman Sachs believe the March 2016 monetary policy statement released by the FOMC was one of the most dovish of this century.
Low-cost deposit growth is a key strength for U.S. Bank
U.S. Bank does well in increasing its low-cost deposit base. In 4Q14, money market deposits grew the fastest at 19.7%—compared to 4Q13.
Understanding the Phenomenal Growth of ASEAN Nations
The growth of the ASEAN member nations has been extraordinary, to say the least. The GDP for the region expanded at a whopping 313% between 2001 and 2013.
Bank of America and Wells Fargo: Comparing Interest Rate Exposure
Since Donald Trump’s presidential victory, Wall Street analysts have raised their forecasts for the major banks’ (XLF) net interest margins as they anticipate rising interest rates and economic growth.
What’s Expected for Bank of America’s Global Banking in 2018
Global banking’s key drivers Commercial banks (XLF) will likely see subdued credit offtake in the United States due to interest rate hikes and tax rate cuts allowing for higher operating cash flow. However, economies are buoyant, and interest rates are still lower outside the United States. Banks with global exposure could target higher consumer and commercial loans. Bank […]
Which Bank Could Expand Its Loan Book the Fastest in 2018?
Wells Fargo is following strict underwriting guidelines in an effort to reduce its historical provisions. It’s expected to follow this strategy into 2018.
Manufacturing Expands in March: A Positive Sign for Banks?
The manufacturing PMI (purchasing managers’ index) for March released on April 1, 2015. It decreased to 51.5% from February’s reading of 52.9%.
US Stock Indexes Almost Flat after Release of FOMC Minutes
The three US equity stock indexes we review in this weekly series were mostly flat from August 11–18, 2016. This came after the minutes from the July 26–27 FOMC meeting.
Why Citigroup Shareholder Payouts Are Now Rising
Citigroup (C) has consistently enhanced payouts for shareholders in recent quarters as its operating performance improves.
Wells Fargo’s Loan Growth Outpaces Bank of America and Peers
Wells Fargo (WFC) has the largest loan portfolio in the financial sector (XLF), anchored by its mortgage portfolio.
How Monetary Policy, Jackson Hole Could Impact Bank of America
Commercial bankers (XLF) in the United States have benefited from rising net interest margins due to rising rates over the past year and a half.
Analyzing ITHAX’s Sector Allocation Compared to Other Funds
ITHAX, MSIGX, and TINRX have the highest exposure to the information technology sector.
Why personal income and outlays rose in June
Income and spending were up, while inflation numbers were restrained at the core level. Personal income rose by 0.4% in June, matching the pace of the month before and meeting consensus expectations.
Goldman Sachs Is Down 15%: What Will 1Q16 Earnings Have to Offer?
Analysts expect Goldman Sachs to post 1Q16 EPS of $2.48, which is 45% lower than the corresponding period last year.
Citigroup or Bank of America: Which Is a Better Buy?
Citigroup and Bank of America have recovered well from the financial crisis. They have generated steady profits in the last few years and have strengthened their capital.
How Rate Hikes Could Impact Citigroup in 2018
As the Fed targets higher interest rates, credit offtake could be further dampened, partially offset by the Trump administration’s push for domestic manufacturing.
The Future of PayPal: Interpreting 4Q16
PayPal’s faces competition from almost all angles. But its peer-to-peer payment service, Venmo, has become a source of great hope.
What Wall Street Analysts Expect from Goldman Sachs’s Earnings
Goldman Sachs’s earnings per share (or EPS) is expected to be $5.12 for the quarter, higher than the $1.98 reported in 2Q15 and the $4.69 reported in 3Q14.
Why financials are likely to benefit from rising rates
Financials are likely to benefit from rising rates. I expect that rates are likely to moderately rise from here and continue to increase in coming years, as the U.S. economy strengthens.
Morgan Stanley: Can Dividend Hikes Woo Investors in 3Q16?
Morgan Stanley boosted its dividends by 33% to $0.20 after it received conditional approval from the Fed’s 2016 stress tests in June.
Wall Street’s Estimates for Bank of America’s 3Q16
Investors on Wall Street (SPY) eagerly await earnings releases from the financial sector, as it serves as a barometer for economic health.
What to Expect from Citigroup’s Expenses and Credit in 1Q16
Citigroup’s CFO expects core expenses in Citicorp to be flat in 1Q16 over 4Q15, and its repositioning reserve of $400 million will be higher than expected.
What’s Been Offsetting Citigroup’s Trading Decline?
Citigroup (C) has managed an improved performance through investment banking, private banking, and securities services revenues.
2Q15 Was a Record Quarter for Bank Earnings
The 6,348 banks in the US earned aggregate earnings of $43 billion in the second quarter, an increase of 7.3% from the previous year.
Why Wells Fargo’s Net Interest Income Could Rise in 2018
Commercial banks (XLF) have managed to improve their net interest margins (or NIMs) across the board and offerings in 2017, as the Fed has raised rates continually in order to reverse monetary easing.
Must-know: The banking landscape
There a large number of players that are each vying for share in the same market—there are a few large players who are present across the U.S., but most banks have pockets of strength.