Financial Select Sector SPDR® ETF
Disposable Income Is Still Below Historical Averages
Disposable income refers to the income available to a household or individual after paying off personal current taxes. Disposable income is still below historical averages.
Why tight credit spreads usually mean a period of global expansion
Today, most measures of credit conditions are positive, with tight spreads across all of fixed income. Even high yield spreads have come in after a short scare last month.
The Great American Deleveraging: Fact or Myth?
The great American deleveraging has largely been limited to the financial sector (XLF) (IYF). Non-financial debt is still much higher than historical averages.
Rate hike horizon: September’s jobs report was largely positive
After September’s strong jobs numbers, a Fed rate hike could be on the horizon early next year. Russ explains two equity market implications.
How Would a Rate Hike Impact REITs?
If rates do rise in December, as most experts are expecting, a mass selloff in REITs will likely occur.
TD Ameritrade’s Valuation Falls alongside the Industry
Historically, TD Ameritrade traded at a discount to its peers because of average operating margins. The sector’s valuations fell in the recent past.
Wells Fargo Isn’t Out of the Woods
Wells Fargo discovered that employees in its wholesale unit altered information related to customers’ records without the company’s knowledge.
Blackstone Is Attracting New Capital
The launch of innovative ideas at the right time can help Blackstone attract a good amount of new capital through its dedicated network.
How Did Citigroup Stock Perform in November?
Shares of Citigroup (C) returned 9% during November. Last Monday, Citigroup’s share repurchase plans worth $1.75 billion got approval from the Fed.
Morgan Stanley Investment Management Thrives in 2Q15
Morgan Stanley’s (MS) Investment Management segment reported a 7% increase, bringing total revenues to $751 billion compared to $705 billion in 2Q14.
What Analysts Are Saying about Charles Schwab
Ratings for Charles Schwab Of the 21 analysts covering Charles Schwab (SCHW), eight recommend “strong buy,” five recommend “buy,” seven recommend “hold,” and one recommends “sell.” There were no “strong sell” recommendations. Ratings for SCHW’s peers Of the 28 analysts covering competitor (XLF) Goldman Sachs (GS), seven recommend “strong buy,” six recommend “buy,” 13 recommend “hold,” one recommends “sell,” […]
Morgan Stanley’s Capital Position Remains Strong
Since the financial crisis of 2009, there has been intense pressure on US banks to raise capital levels to meet minimum requirements.
Third Point adds stake in Citigroup
Citigroup is the third largest US bank with assets of $1.9 trillion and ~200 million customer accounts worldwide.
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.
Prospect Capital: Could Yields Stabilize or Rise in 2018?
Prospect Capital (PSEC) has experienced yield compression in recent quarters, largely due to its efforts to reduce risk and focus on quality credit.
Wall Street’s Expectations for US Bankers in Q3 2018
Broader markets have risen in the past few months on corporate earnings and slower rate hike expectations due to the Trump administration’s criticism of the Fed’s hawkish policy.
Analyzing U.S. Bank’s strong 4Q14 results
U.S. Bank (USB) reported strong 4Q14 results on Wednesday, January 21. The bank reported revenue of $5,169 million for 4Q14. This was a growth of 5.7%.
How Will Prospect Capital Fare in 1Q18?
Prospect Capital has generated a return of 4.1% on its assets on a last-12-month (or LTM) basis.
FIS’s Acquisition of SunGard to Become a Key Catalyst for 2016
In 4Q15, Fidelity Information Services (FIS) acquired SunGard, expanding its top line by nearly 50% and entering the capital markets and asset management businesses,
How Is BNY Mellon Controlling Expenses?
The Bank of New York Mellon’s (BK) cost-cutting program has been effective, and activist investors are appreciating the measures it’s taking to improve profitability.
Bank of America’s Q3 Revenues Surpassed Wall Street Estimates
Bank of America (BAC) reported third-quarter revenues of $22.8 billion, surpassing Wall Street’s forecast of $22.7 billion.
What to Expect of Bank of America’s 1Q18 Earnings
Bank of America (BAC) is expected to post earnings per share or EPS of $0.59 in 1Q18, marking growth of 43.9%.
AIG Returned $2.6 Billion to Shareholders in 3Q16
AIG declared its quarterly dividend of $0.32 per share in 3Q16 totaling ~$338 million, translating into an annualized dividend yield of 2.2%.
Carlyle’s Realizations and Distributions Expected to Improve in 3Q
Carlyle Group (CG) is expected to see its distributable income rise in the current quarter on monetizations through the IPO process, private sales, and placements.
Inside Berkshire’s Investment Income and Valuations after 3Q17
As of October 2017, Berkshire Hathaway (BRK.B) stock has returned 3.2% in the past month and 31.4% over the past four quarters.
Invesco’s Assets under Management Rose in 3Q17
Invesco Limited (IVZ) reported total assets under management (or AUM) of $917.5 billion on September 30, 2017.
Morgan Stanley’s Strong Revenue Model
Morgan Stanley charges fixed fees and performance fees for asset management services, products and services, and administration of accounts.
You should pay particular attention to this valuation metric
I would pay particular attention to the Shiller P/E Ratio, which is a variation on the Cyclically Adjusted P/E or CAPE. This indicator is worth watching as it has historically correlated with long-term stock market returns.
How Stocks and Bonds Reacted to Trump’s Victory
The CBOE Volatility Index suddenly rose 6.0% on November 9, 2016, after it was clear that Trump had unexpectedly clinched the election.
What to Expect for Carlyle’s Earnings and Revenue in 4Q17
The Carlyle Group (CG) will announce its 4Q17 results on February 7, 2018. In this series, we’ll take a peek at its performance and what’s expected.
Must-know: The future of banking risks and regulations
Despite Basel III’s shortcomings, you must remember that it wasn’t the Basel norms that precipitated the subprime or global financial crisis. It was the people who didn’t implement the rules properly. Basel III is currently the best possible regulatory framework.
After a Lackluster 2Q15, Return on Equity Will Likely Improve
Wall Street analysts expect Goldman Sachs to post return on equity (or ROE) of 11.5% in 3Q15. In 3Q14, ROE for Goldman Sachs was 11.8%.
Easing Bank Rules: Negative in the Long Term?
Fitch Ratings says that easing the Dodd-Frank Act for smaller and custodial banks could be negative for some banks’ credit profiles in the long term.
How Would a Rate Hike Impact the Banking Sector?
The timing of a rate hike isn’t as important to banks as the quantum and pace of subsequent hikes. If rates are hiked more than expectations, earnings grow and forecasts are raised, leading to a rally in banking stocks.
Investors and Large-Cap Banks as Global Uncertainties Continue
Small-cap companies have lost only 0.4% YTD but have gained 5.3% as of November 6, month-over-month. But investors have stayed invested in large-cap banks.
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%.
Why 80% of Analysts Rate Bank of America a ‘Buy’
Wall Street analysts have been bullish on shares of Bank of America (BAC) on prospects of an interest rate hike and cheap valuations.
GS Cuts More Jobs than It Did during the 2008 Financial Crisis
Goldman Sachs has been cutting costs in recent quarters. In 2016, 2,600 people may have lost their jobs at GS—the highest number since the financial crisis.
What to Expect from Bank of America’s Third-Quarter Earnings
Bank of America (BAC) plans to report its third-quarter results on October 15.
Macro Events That Could Influence Markets This Week
The last three trading sessions in May are likely to be influenced by geopolitical issues rather than economic data.
Why the 26-week T-bills auction saw the lowest coverage in a year
The US Department of the Treasury held the weekly 26-week, or six-month, Treasury bills (or T-bills) auction on November 10. T-bills worth $28 billion were on offer.
Parsing the Heartland–Global Payments MAE Clause, Part 3
Let’s continue our discussion on the Heartland–Global Payments merger. The MAE clause is one of the first things that arbitrageurs look at in a merger agreement.
Visa: Most Analysts Recommend a ‘Buy’
Of 38 analysts that covered Visa in April, four recommended a “hold,” 18 recommended a “buy,” and 16 recommended a “strong buy.”
Rebounding Energy Prices Could Boost Alternative Managers’ Credit Divisions
Apollo Global Management’s Credit division reported management fees of $169.8 million in 2Q17 compared to $158.3 million in 1Q17.
Visa’s Operating Expenses and Fiscal 2018 Expectations
Visa (V) incurred total operating expenses of $6.2 billion in fiscal 2017 compared to $7.1 billion in fiscal 2016.
Balance Sheet, Slippages to Determine Bank of America’s Lending
The Fed has suggested four rate hikes in 2018, reflecting a strong stance on economic growth and inflationary pressures.
What Stretched Utility Sector Valuation Means
Utility sector valuation appears stretched. 2014 was a great year for utilities, which gained 26.62% ex-dividends and were the best-performing sector.
A Look at the Trend in American Express’s Total Revenues
American Express’s (AXP) total revenues (net of interest expense) were $8.8 billion in 4Q17 compared to $8 billion in 4Q16.
Will Bank of America’s 4Q16 Earnings Buoy Its Stock Further?
Bank of America is expected to announce its 4Q16 results before the market opens on January 13, 2017. Analysts expect it to post earnings per share of $0.38.
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.
What’s T. Rowe’s Valuation?
T. Rowe Price Group’s (TROW) one-year forward price-to-earnings ratio stood at 17.69x, which implies a premium valuation.
Macros Impact Bankers’ Asset Management
Higher valuations and the expectation of faster rate hikes led to withdrawals from equities and debt securities in recent quarters.
How Apollo’s Real Asset Division Performed in 3Q17
Fall in total revenue Apollo Global Management’s (APO) real asset division saw its total revenue fall from $23.1 million in 3Q16 to $21.7 million in 3Q17, mainly due to its carried interest income falling from $6.5 million to $1.8 million. The division’s advisory and transaction fees rose from $1 million in 3Q16 to $1.4 million in […]
PNC Financial Services: What Impacted Its 2Q16 Earnings?
PNC Financial Services (PNC) reported its 2Q16 earnings on July 15, 2016, and managed to beat analysts’ estimates.
Key ADP Highlights: 135,000 Jobs in September
The ADP National Employment Report for September 2017 showed some weaker improvement in private sector employment to 135,000 in September compared to the market’s expectation of 125,000.
Why Analysts Have a Negative Outlook for Wells Fargo in 2017
In September, Wells Fargo was slapped with the largest fine ever by the CFPB (Consumer Financial Protection Bureau), making it tough for the company to rebuild its image.
Weaker Markets Continue to Affect Carlyle’s Realizations
Carlyle Group (CG) reported distributable earnings of $129 million in fiscal 1Q16, 13% lower than in 1Q15.
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.
Factors That Will Drive Goldman Sachs’ Earnings in 2016
Goldman Sachs derives 16% of its revenues from the investing and lending business. So far, 2016 has been a rough year for the financial sector.
Goldman Sachs: Financial Sector Could See Strong Growth
Goldman Sachs (GS) believes the delay in policy reform might continue in the near future.
Did Banks’ Earnings Grow in 4Q15?
The Federal Deposit Insurance Corporation’s quarterly report on the health of the US banking industry said that 4Q15 bank earnings rose 11.9% year-over-year.
Is KKR a good pick for retirement or growth options?
Is KKR a good pick for growth options? KKR is expected to improve its realizations in 2015 and 2016 after an expected valuation increase of energy holdings.
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.
Investors Added $247 Million to the Insurance ETF KIE in 2015
The SPDR S&P Insurance ETF (KIE) has added $257 million in assets in 2015 so far. In comparison, during the previous year, the fund witnessed outflows of $139 million.
Prospect Capital’s 1Q17 Results Fall on Lower Deployments
Prospect Capital (PSEC) reported fiscal 1Q17 EPS of $0.22—lower than the analyst estimates of $0.24. PSEC saw lower earnings on lower investment income.
What Analysts Suggest for Carlyle Group after 3Q17 Results
The Carlyle Group (CG) is being tracked by 12 analysts in November 2017. Five of them have rated the stock a “hold,” and four have given it a “strong buy.”
Why Chubb’s Global Reinsurance Division Income Fell
Division’s income The Global Reinsurance division of Chubb Limited (CB) consists of reinsurance activities as follows: Chubb Tempest Re USA Chubb Tempest Re Canada Chubb Tempest Re Bermuda Chubb Tempest Re International The global reinsurance division reported income of $146 million in 9M17, compared to $338 million in 9M16—a substantial 56.8% decline. The division’s net […]
Major central banks are now diverging in their monetary policies
Major central banks are now diverging in their monetary policies, a dynamic we saw vividly on display last week with the Federal Reserve ending its quantitative easing (or QE) program, while Japan expanded its version of QE.
State Street’s Total Revenues Rose in 1H17: Here’s Why
State Street has incurred interest expenses on deposits of $57 million in 1H17 compared to $54 million in 1H16.
Fund Flows to XLF Have Been Declining
Exchange-traded fund investors added almost $552.6 million on average to the Financial Select Sector SPDR ETF (XLF) in the last quarter. During the week ending September 25, the ETF witnessed outflows of $318.3 million.
JPMorgan’s Commercial Banking segment had mild results in the 4Q
JPMorgan Chase’s (JPM) Commercial Banking segment provides conventional banking services to corporate clients. It’s JPMorgan’s third largest business segment.
Wall Street Still Loves Banking Stocks
Wall Street analysts have upgraded their ratings for bankers over the past couple of years.
FIS’s Acquisition of SunGard to Be a Key Catalyst in 2016
In 2015, Fidelity National Information Services (FIS) acquired SunGard, expanding its top line by nearly 50% and entering the capital markets and asset management businesses.
Why demand increased for the 3-month Treasury bills auction
Market demand for the three-month T-bills increased to ~24.3% of the competitive accepted bids. This was a result of higher bidding from indirect bidders.
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.
Why Citigroup Might Surprise Investors in 1Q18 and 2018
In this series, we’ll look at Citigroup’s expected performance in 2018, segment-wise performance, valuation, dividends, and repurchases.
Bank Stocks Rise Due to Expectations of a Rate Hike
2016 has been a rough year for the financial sector. Banks entered 2016 expecting four rounds of interest rate hikes. Things didn’t turn out in their favor.
Why analysts expect a further slowdown in Europe to be modest
In addition, many market watchers are concerned about slowing growth in the Eurozone. While the region is unlikely to boom anytime soon, there are some signs that any further slowdown there should be modest.
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 Citigroup Keep the Earnings Streak Alive in Q3 2018?
Citigroup (C) is scheduled to report its third-quarter earnings results on October 12.
How Charles Schwab’s Expenses Trended in 2017
Charles Schwab witnessed a marginal increase in its total expenses (excluding interest) from $3.3 billion in 9M16 (or the first nine months of 2016) to $3.6 billion in 9M17.
US Banks Are Optimistic about the New Tax Plan
Despite the $32.9-billion hit the top five banks took in their fourth-quarter earnings, US banks (XLF) are generally very positive about the new tax plan.
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.
Blackstone and KKR Raise Funds amid Volatility and Prospects
Equities and broader markets rebounded in 2H16. The global economic outlook has now become relatively more stable for 2017.
What’s Expected for Carlyle’s Total Segment Revenue
The Carlyle Group (CG) generates fee revenue from net portfolio advisory, fund management, and net transaction fees.
Why Analysts Are Bullish on Diversified Financial Services Stocks
286 analysts cover the 15 stocks in the diversified financial services subgroup of the Financial Select Sector SPDR ETF (XLF).
KKR & Co.: Investment Performance Led to Strong Numbers
KKR & Co. (KKR) posted strong numbers in 2Q17 on the back of operating fundamentals and investment performance. KKR posted earnings per share of $0.89, beating the analysts’ estimate of $0.67.
How Did Bank of America Perform in 2016?
Bank of America reported strong 4Q16 earnings, in line with its guidance. BAC’s management attributed this rise in earnings to its disciplined cost management strategy.
XLF Had Outflows of $30.9 Million
ETF investors withdrew $30.9 million from the Financial Select Sector SPDR ETF (XLF) during the week ended January 22, 2016. So far in January, the ETF has witnessed outflows of $924 million.
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 […]
Did Fiserv Manage to Beat Estimates in 1Q16?
Fiserv (FISV) reported 1Q16 adjusted EPS (earnings per share) of $1.06 on revenues of $1.3 billion.
Warren Buffett Leads with Value-Based Investing Principles
Warren Buffet has restricted himself to his circle of competencies. He has only invested in the businesses he has understood.
Unum Group Joins Potentially Undervalued Insurance Firms in Rally
Unum Group is a provider of disability insurance products in the US and the UK. The stock has rallied by 5.48% year-to-date and by 6.18% in just the past month.
Why investor sentiment can show overvaluation in US markets
While valuation is important, investors should also pay attention to sentiment. The goal is to gauge how – to steal a phrase – “irrationally exuberant” investors have become.
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.
Understanding How Fidelity National Information Services Utilizes Capital
At the end of 2015, Fidelity National Information Services (FIS) had long-term debt of $11.5 billion, nearly double what it had one year previously.
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.