Tuesday, December 10, 2013
5:33 PMGundlach reiterates bullish MBS call
- Rising interest rates have killed refinancing - eliminating prepayment risk - and home prices continue to move higher, a particularly bullish cocktail for non-agency MBS, says Gundlach (DBL, DSL), who finds those securities vastly more attractive than high-yield paper (HYG, JNK).
- Asked about Annaly (NLY) - an owner of agency MBS - Gundlach says he likes it and likes its management, but won't be buyer until after the dividend is cut to something more in line with what core earnings might be.
- "Something for Nothing" slides and webcast
- Non-agency MBS players include: MTGE, MFA, DX, TWO
- Related mREIT ETFs: REM, MORT, MORL
- High-yield ETFs: HYG, JNK, HYS, HYLD, SJNK, PHB, SJB, ANGL, XOVR, UJB, QLTC, SHYG
- Previous: "Freaking out" about interest rate risk
4:57 PMFranklin brings buyback plan up to 30M shares| Comment!
4:15 PMNorthStar Realty to spin-off asset management unit; +6% AH
- The spin-off into a separate public company will be in the form of a tax-free distribution, and is expected to be completed in 2014 H2. The new company's name will be NorthStar Asset Management.
- NorthStar Asset Management will have a 20-year contract to manage NRF along with its non-traded REIT business, and will own its own broker-dealer platform.
- Contract details: Base management fee of $90M, plus an additional base management fee of 1.5% of cumulative equity raised at NRF, along with incentive fees - 15% payable when cash available for distribution at NRF exceeds $0.78 per share; 25% payable when CAD exceeds $0.90 per share.
- CC tomorrow at 10 ET
- Shares +6.2% AH
- Press release
4:07 PMNew York Mortgage Trust maintains dividend| 4 Comments
3:35 PMMayo: Banks (especially Morgan Stanley) have already adjusted for Volcker
- "The Volcker rule is not a game-changer for Morgan Stanley (MS +1.6%)," says Mike Mayo of his top bank pick. "I'm not the least bit worried Morgan Stanley hasn't adjusted." Risk in fixed income trading is just 25% of what is used to be, says Mayo. Assets in that business are one-third less and revenues one-half less. "They've already downside and contained fixed income trading ... Perhaps getting rid of the uncertainty could be a positive catalyst."
- Bank CEOs have been "put on notice," says Mayo of the new rule. "They can't have a casino inside the bank." Conceding loopholes are sure to be found, Mayo says the rule will at a minimum enforce accountability - maybe meaning a quick exit for any CEO whose bank suffers a sizable loss.
2:55 PMSEI ups buyback authorization| Comment!
1:34 PMJPMorgan moves in on Bitcoin?
- The bank this August filed a patent application for a computerized payment system allowing people to make anonymous, electronic payments over the Internet without having to reveal names or account numbers, or pay a fee.
- Banks, credit card operators, Google, Apple and PayPal all want a piece of the fast-growing mobile/Internet payments business, but this technology looks to be borrowing at least some aspects of Bitcoin as JPMorgan's (JPM) system involves creating "virtual cash" which would sit in an online wallet.
- “While new internet payment mechanisms have been rapidly emerging, consumers and merchants have been happily conducting a growing volume of commerce using basic credit card functionality,” says the bank in its application. "None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favor of credit cards.”
1:19 PMCiti presents at Goldman conference
- "I didn't have a chance to go through the 1K pages," says Citigroup (C -0.4%) CFO John Gerspach, at the Goldman financial services conference when asked to comment about the just-passed Volcker rule. The devil - as always - is in the details.
- Webcast and presentation slides
- Giving a little guidance on Q4 results, Gerspach says trading revenue hasn't bounced and is trending lower vs. a year ago, as is investment banking business.
12:48 PMSantander to buy HSBC's Bank of Shanghai stake
- HSBC looks to move more non-core assets of the books, agreeing to sell its 8% stake in Bank of Shanghai to Banco Santander (SAN -0.2%). The price hasn't been disclosed, but the stake was last seen on HSBC's balance sheet as an available-for-sale asset with fair value around $468M.
- "Our priorities going forward will emphasize the growth of our own operations in mainland China and our own partnership with Bank of Communications," says HSBC Asia Pacific boss Peter Wong.
- The deal, subject to regulatory approvals, is expected to close in H1.
12:41 PMU.S. Bancorp settles with Freddie over mortgages| Comment!
12:19 PMReinsurance pricing set for big fall
- Following a hurricane season in which hurricanes were largely absent, property catastrophe reinsurance renewal prices are set to fall about 10% on Jan. 1, says SNL's Adam Cancryn, with prices for more U.S.-centric mid-year renewals likely to decline as much as 20%.
- This will mark year #2 of deep cuts to reinsurance pricing - with a flood of new competition adding to the lack a natural disasters. "Unless you see some sort of massive change, it's not obvious what would change this environment that we've entered," says Sanford's Josh Stirling, and some analysts predict it will take $100B in industry losses to halt Y/Y rate-reductions.
- For now, expect buybacks to continue, says Janney's Ryan Byrnes. "If you're a pure reinsurer, there's not much you can do with your capital right now, operationally."
- A few sector names: ACGL, AHL, ALTE, ENH, MRH, PRE, PTP, RE, VR
11:53 AMChilton drops opposition to Volcker rule as FIDC and Fed approve
- Not letting the poor weather affect their meetings (or perhaps they were conducted by teleconference), the FDIC and the Fed vote to approve the Volcker rule which is designed to ban prop trading by banks. The CFTC postponed its vote due to the snow.
- The CFTC's Bart Chilton - previously a critic of the rule for not being tough enough - has dropped his opposition, saying the final version closes loopholes and tries to end speculative trading dressed up as hedging (we'll call it the London Whale amendment).
- On the other hand, the final document is 882 pages and compliance has been delayed for a year until July 2015 ... loopholes meet trucks.
- Related ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, SEF, IAT, IYG, PFI, FXO, KBWB, RKH, QABA, RWW, KRU, FINU, KBWR, RYF, PSCF, FNCL, KRS, FINZ
11:12 AMMortgage REITs unfazed by Hatteras dividend cut
- The mREIT sector (REM +1.2%) is up for a 2nd consecutive day, with Hatteras Financial's (HTS +1.5%) 9% dividend cut overnight not hurting the stock and suggesting maybe a lot of bad news has been priced in. Core income in Q3 was $0.44 per share and the new payout is $0.50.
- Another adjustable-rate mortgage player, CYS Investments (CYS +2.4%) is also ahead, as is Capstead Mortgage (CMO +0.9%). Others: Annaly (NLY +1.5%), American Capital (AGNC +1.7%), Invesco (IVR +2.4%), Western Asset (WMC +1.3%).
- Related ETFs: MORT, MORL
10:46 AMLoan growth and margins catch up at Regions
- Year-over-year loan growth of about 1.2% the last two quarters was slightly ahead of Regions' (RF -0.2%) community bank peers, says CEO Grayson Hall at the Goldman Sachs conference. Previous quarters were notable for Regions' loan growth being both negative and well below that of its competitors.
- Webcast and presentation slides
- The bank also posted the best boost to net interest margins in the industry over the past year, and now sports a NIM of 3.24% vs. the peer average of 3.29%. One year ago, Regions' NIM was 39 basis points less than the industry average.
10:35 AMBlackhawk climbs, Citi upgrades to Buy on valuation, strong gift card demand| Comment!
10:20 AMMoynihan optimistic on NII going forward
- Net interest income of about $10.5B has been fairly constant for the last few quarters, says Bank of America (BAC +0.4%) CEO Brian Moynihan at the Goldman Sachs conference. However, while $10.5B could be thought of as a "maintenance" amount over the past year, one could now consider it a base going forward, he says.
- The bank has expensed $43B since the start of 2010 on litigation and rep and warranty costs, and still has $14B remaining in reserves, while expecting another $0-$4B in rep and warranty costs and $0-$5.1B in litigation.
- Webcast and presentation slides