MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Friday, May 24, 2013
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4:03 AM District Court Judge John Gleeson is reportedly considering rejecting HSBC's (HBC) $1.9B deal with authorities over money laundering charges involving terrorists and drug dealers. Should Gleeson quash the agreement, HSBC could be left open to criminal prosecution and a ban from operating in the U.S., although the DOJ is questioning whether the judge has the authority to reject the deal. We could hear more details at HSBC's annual meeting today. Shares -0.9% in London. Comment!
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Thursday, May 23, 2013
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3:34 PM "Every business is going to have cycles (of) good times and bad times," says American Capital (AGNC, MTGE) CIO Gary Kain, speaking at a conference (transcript) (presentation), and not willing to admit this is a bad time. The reality, he says, is all those Fed purchases haven't tightened up mortgage spreads all that much. "(It's confusing to me ... I mean we didn't expect them to perform the way they did." 7 Comments
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3:01 PM Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms. 12 Comments
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1:33 PM "Everyone has to have big eyes, big ears, know what's going on around them and be policemen for the organization," says Goldman Sachs (GS) CEO Blankfein to employees as part of the annual meeting. Among the reforms after a 3-year review of bank practices: Proposed transactions need to be run through "technological matrixes" to check for appropriateness. Don't me afraid to call me, says Blankfein, as the risk of reputational damage outweighs the cost of wasting his time. (Video to be posted to website later) 1 Comment
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1:13 PM The "Too Big To Fail" subsidy is a myth, according to Goldman research which shows the banking industry (XLF) is about the only one in the U.S. where the larger firms pay higher funding costs than the smaller ones. It may be so now, but the TBTFs had a large funding advantage amid the financial crisis and have paid an average of 31 basis points less than their smaller brethren over the last decade. 1 Comment
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12:54 PM Home Loan Servicing Solutions (HLSS +1.5%) President John Patrick Van Vlack adds 4.3% to his stake in the company, purchasing 4,505 shares at $23.11 each. Comment!
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11:36 AM ING. U.S. (VOYA +1.3%) is reiterated a Buy with $31 price target at BTIG following earnings. Analyst Mark Palmer holds that retirement services and asset management - not life insurance - are VOYA's dominant businesses (they command a higher multiple) and he's impressed 76% (vs. his modeled 70%) of adjusted operating earnings came from those units. ROE was up 120 bps to 9.5%, ahead of a 110 bp management goal. Comment!
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10:49 AM CIT Group (CIT +0.2%) is reiterated a Buy at BTIG, with price target raised to $55 from $45. Mark Palmer sees 3 paths to a higher price: 1) Organic growth should allow the company to reverse a $1.6B allowance against a deferred tax asset that may end up being able to be used. 2) The company transitioning from deep-turnaround story to capital-return story. 3) Its status as an attractive acquisition target. Comment!
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10:34 AM The sale of the rest of its stake in Industrial Bank doesn't mean Goldman Sachs (GS) isn't committed to growing in China, says Lloyd Blankfein, speaking from Salt Lake City - site of Goldman's annual meeting today. Roll this one around: Goldman reaped about $12B in sales proceeds and dividends from its $2.58B investment made in 2006 just ahead of the IPO. 1 Comment
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9:32 AM Ally Financial takes another step towards an IPO as it agrees to pay $2.1B towards the settlement of the ResCap bankruptcy. The move, says Ally, essentially removes the threat it would have to pay billions more in private claims related to its subprime mortgage arm. It's also a victory for MBIA (MBI), whose share of the proceeds could be $600M, according to hedge funder Manal Mehta (he's long). 5 Comments
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9:21 AM WisdomTree (WETF) tumbles 5.2% premarket following Japan's overnight crash. The stock's more than a double this year as money has poured into its Japan Hedged Equity Fund (DXJ), which is off 7.3% premarket. Another yen-hedged Japan fund - Deutsche's far smaller DBX ETF Trust (DBJP) - is off 8.3%. Comment!
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8:49 AM Just spun off from Newcastle Investment (NCT), New Residential (NRZ) gets busy, announcing a co-investment with Nationstar Mortgage (NSM) in a recent acquisition of MSRs with UPB of about $23B. New Residential is investing about $38M in exchange for one-third of the monthly cash flow, net of a fee paid to Nationstar, which will perform all servicing functions. All of the mentioned companies are in the portfolio of Fortress Investment (FIG), which has also acquired one-third of the cash flows. (PR) Comment!
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7:35 AM Following Dimon's big victory, it's back to business at JPMorgan (JPM) and a subsidiary - JPMorgan International Bank - is today fined £3.1M (not a typo) by U.K. authorities for systems and controls failings related to its provision of retail-investment advice and portfolio-investment services. Shares -1.2% premarket, inline with the broader market swoon. Comment!
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6:56 AM Prepping for the government possibly classifying it as a "systematically important financial institution," AIG is on the lookout to hire a director with regulatory experience. On the list are those who have run regulated financials as well as former regulators, according to sources. It's a new regulatory day, and an insurance company whose board is heavy with insurance people won't cut it anymore. Comment!
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