Seeking Alpha

Big banks sport big gains ahead of stress test results

  • Buying the rumor? On a flattish day for the major averages, the Too Big To Fail banks are ignoring a continued slowdown in markets revenue this quarter, and instead partying ahead of what may be the imminent release of the Fed's stress test results (perhaps Friday). About one week later will be CCAR results at which the Fed gives the thumbs up or thumbs down on the banks' capital return plans.
  • Word is the tests are tougher this year, but bank capital levels are also improved.
  • Leading today is Bank of America (BAC +3%) - now within about one percent of a 4-year high. Others: Morgan Stanley (MS +2.8%), Goldman Sachs (GS +1.8%), Ciitgroup (C +1%), JPMorgan (JPM +1.5%), and Wells Fargo (WFC +0.6%).
  • Also subject to the stress tests are a number of regional lenders, not to mention credit card players - they're mixed in today's action.
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Comments (8)
  • sreimer77
    , contributor
    Comments (241) | Send Message
     
    BAC to $20 and beyond once they raise that dividend!
    5 Mar 2014, 04:41 PM Reply Like
  • mphill47
    , contributor
    Comments (576) | Send Message
     
    I'll make a wager that the dividend increase will not push BAC to 20 any time soon. I believe more stock buy back may be the big news.
    5 Mar 2014, 05:00 PM Reply Like
  • banjoen
    , contributor
    Comments (6) | Send Message
     
    I also think buyback is the main thing for them, and perhaps an minor raise of the dividend.
    5 Mar 2014, 05:36 PM Reply Like
  • Fluffer
    , contributor
    Comments (42) | Send Message
     
    People, they can't raise the dividend without getting penalized and further diluted under their warrants. it will be buybacks. And the Class B warrants are a screaming buy. If the stock goes to $50 in the next five years, you make 20 times your money.
    5 Mar 2014, 08:58 PM Reply Like
  • Fluffer
    , contributor
    Comments (42) | Send Message
     
    For some reason they do not make it clear in the 10-K that they can't raise the dividend above a penny without getting hit with dilution under their warrants. So it will be buybacks. BTW, the Class B warrants are a screaming buy. If the stock goes to $50 in the next five years, you make over 20X your money. :)
    5 Mar 2014, 08:59 PM Reply Like
  • spinrbait
    , contributor
    Comments (542) | Send Message
     
    fluffer, could give a symbol on that? thanks.
    6 Mar 2014, 09:18 AM Reply Like
  • ColdFriction
    , contributor
    Comments (6) | Send Message
     
    What are the warrants trading under and at what market?
    5 Mar 2014, 09:41 PM Reply Like
  • nooseah
    , contributor
    Comments (549) | Send Message
     
    No doubt the stress tests will give them all a clean bill of health on account of the fact that lying during a crisis is justified. Who genuinely knows what's going on with the big banks' balance sheets. Not the auditors, thats for sure.
    6 Mar 2014, 05:09 AM Reply Like
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