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Vishaal Behl
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I Vishaal Behl started out doing technical analysis and did really well on a small trade, I questioned the sustainability of my success with the trade and tried repeating the process with other stocks. So I searched for other ways of making money in the stock market. I began reading about... More
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  • The Triumph Of Low Expectations. 1 comment
    Jul 25, 2013 3:41 AM

    "IT COULD have been worse" was the common refrain as American banks began reporting their second-quarter earnings. Indeed, the striking characteristic of the returns was their consistency. Big and small, local and national, lenders across the country have been benefiting from some common tailwinds. Legal settlements are becoming sparser; the economy is expanding, albeit feebly, and the housing market is recovering; auditors are pushing banks to keep releasing loan-loss reserves; and actual losses are trivial.

    But avoiding disaster is not really cause for celebration. Consumers continue to shed debt; companies carry ever more cash. Banks' pre-provision revenue growth is muted (see chart 1), and there has been no recovery in loan growth of the sort seen after previous recessions (see chart 2). This is so unusual that it may be unprecedented, says Michael Mayo, an analyst at CSLA, a securities firm, and it hardly suggests a good prognosis for the banking system. He predicts that the current decade will show the worst revenue growth for banks since the 1930s. Pricing and margins will inevitably tighten as a result.

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    Author’s reply » But avoiding disaster is not really cause for celebration.
    25 Jul 2013, 03:42 AM Reply Like
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