Wed, Dec. 7, 10:01 AM
- Trading revenues should be up 20% Y/Y in Q4, says Citigroup (C +0.6%) CFO John Gerspach, speaking at the Goldman Sachs financial services conference. This compares to the 15% gains mentioned by BofA and JPMorgan at their presentations yesterday.
- The credit card business is a current bright spot, he says, with the Costco partnership working "extraordinarily well."
- As opposed to Jamie Dimon - who thinks the stock price of JPMorgan is high enough to maybe postpone buybacks in favor of a special dividend - Gerspach says there's enough room between Citi's share price and book value for repurchases to continue to make good sense.
- While Gerspach doesn't want to Citi to get back into prop trading, he says the Volcker rule's record-keeping requirements are a big burden and the prop trading ban has hurt liquidity.
- Source: Bloomberg
Wed, Dec. 7, 2:27 AM
- In its first insider trading ruling in two decades, the Supreme Court has unanimously ruled in favor of prosecutors, saying that gifts of confidential information from business executives to relatives violate securities laws even if the former don't receive anything in return.
- The case, Salman v. United States, concerned trading by Bassam Salman based on information from his future brother-in-law, then a member of Citigroup's (NYSE:C) healthcare investment banking group.
Tue, Dec. 6, 3:18 PM
- After a three standard deviation move in large-cap bank stocks, it seems logical to think about heading to the sidelines, says analyst Betsy Graseck. But should the names pull back, she recommends adding to positions as the bull case still outweighs the bear case next year.
- Using base case 2018 estimates and a target P/E of 12x implies 14% upside for Morgan's eight Overweight-rated stocks. The bull case on 2018 estimates with the same target P/E means upside of 41%.
- Top picks are Citigroup (NYSE:C), Synchrony Financial (NYSE:SYF) on stronger capital returns; Bank of America (NYSE:BAC) on higher rates and lower expenses; Goldman Sachs (NYSE:GS) on rising market volatility and improving VAR productivity; JPMorgan and Wells Fargo (NYSE:WFC) on stronger loan growth and expense management; Capital One (NYSE:COF) and Discover (NYSE:DFS) on rising consumer leverage and higher capital return.
Mon, Dec. 5, 12:40 PM
- The FRBNY's William Dudley isn't concerned about the post-election jump in rates at the long end of the curve, and says the Fed is about to start following suit at the short end.
- Even the dovish Charles Evans from the Chicago Fed admits inflation is getting closer to the central bank's target, and the labor market is close to full employment.
- The 10-year Treasury yield had moved as high as 2.45%, but has pulled back to 2.40%, still up 1.5 basis points on the session.
- On the regulatory front, Fed Governor Daniel Tarullo on Friday set himself up as the chief defender of the current bank regulatory regime, but whether his voice will be heard is a different story given the incoming administration, which looks to be staffed with those favoring a far lighter regulatory hand.
- Financial sector stocks today are about doubling the S&P 500's 0.5% advance.
- TBTF banks: Bank of America (BAC +2.3%), Citigroup (C +1.8%), JPMorgan (JPM +1.3%), Wells Fargo (WFC +0.9%), Goldman Sachs (GS +1.7%), Morgan Stanley (MS +0.4%)
- Regional lenders: U.S. Bancorp (USB +0.7%), PNC Financial (PNC +0.4%), KeyCorp (KEY -0.8%), Fifth Third (FITB +0.5%)
- Insurers: MetLife (MET +0.3%), Lincoln National (LNC), AIG (AIG +0.2%)
- Brokerage: Schwab (SCHW +0.9%), E*Trade (ETFC +0.9%)
- Custodial banks: State Street (STT +0.5%), Northern Trust (NTRS +1%)
- Private equity: Blackstone (BX +0.9%), KKR (KKR +1%)
- Asset Management: BlackRock (BLK +0.1%), Franklin Resources (BEN +0.5%), Affiliated Managers (AMG +1.8%)
Mon, Dec. 5, 11:41 AM
- There are multi-year highs again across the sector as interest rates continue to rise, but, maybe more importantly, bank investors begin to envision a far less heavy regulatory burden.
- In a speech Friday described by FBR's Ed Mills as "going out swinging," Fed Governor Daniel Tarullo set himself up as the chief defender of the status quo, saying he doesn't see a "sound economic case" for rolling back the post-crisis regulatory regime.
- Whether anyone hears him much going forward is a different story, given names like former BB&T boss John Allison or former FDIC chief Thomas Hoenig being thrown around as possible Fed vice chairmen for bank supervision. Both Allison and Hoenig are fans of following simple leverage ratios, but Tarullo says just focusing on those is "inadequate and dangerous."
- Tarullo's voice will also have to rise above that of Trump's Strategic and Policy Forum led by Blackstone's Stephen Schwarzman.
- XLF +1.15%, KRE +1.1%, KBE +1.25%
- Bank of America (BAC +2.6%), Wells Fargo (WFC +1.4%), JPMorgan (JPM +1.6%), Citigroup (C +2.3%), Goldman Sachs (GS +2.1%), U.S. Bancorp (USB +1%), Regions Financial (RF +1.5%), Synovus (SNV +1.1%), SunTrust (STI +1.4%), Primerica (PRI +2.1%), Bank of New York (BNY +1.4%), State Street (STT +1.1%)
Sat, Dec. 3, 9:03 AM
- Rather than chase surging stocks at fancy valuations, the team at Barron's looked for laggards when making its picks, writes Andrew Bary.
- The names, nevertheless, aren't exactly unfamiliar ones: Alphabet (GOOG, GOOGL), Apple (NASDAQ:AAPL), Citigroup (NYSE:C), Delta Air Lines (NYSE:DAL), Deutsche Telekom (OTCQX:DTEGY), Merck (NYSE:MRK), Novartis (NYSE:NVS), Toll Brothers (NYSE:TOL), Unilever (NYSE:UL), Disney (NYSE:DIS).
- Eight of these ten are trailing the S&P 500 this year, including the three European stocks (Deutsche Telekom, Novartis, and Unilever), and all of the names except Google sell for less than 20x 2017 estimates.
- At just 10x earnings, Toll Brothers, Citi, and Delta are better ways to play an improving economy than Caterpillar at nearly 30x.
- As for the "pricey" Google, it's an example of the Buffett maxim that he'd rather buy a wonderful business at a fair price rather than a fair business at a wonderful price.
- Barron's top picks for 2016 as a group are trailing the S&P 500 by more than 600 basis points.
Fri, Dec. 2, 11:51 AM
- The financial sector is taking a breather from its staggering post-election run, with a post-jobs report dip in rates a good enough excuse for satiated bulls to cash in some chips.
- XLF -1%, KBE -0.7%, KRE -0.7%.
- Individual issues: Bank of America (BAC -1.8%), Morgan Stanley (MS -1.2%), Citigroup (C -1.9%), M&T (MTB -1.1%), Flagstar (FBC -1.7%), Fifth Third (FITB -1.6%), PNC Financial (PNC -1.4%), Prudential (PRU -1.1%), Lincoln National (LNC -1.9%), Schwab (SCHW -2.1%), State Street (STT -1.8%)
- No longer part of the financial sector as far as the GICS classification, REITs are enjoying the respite in rates. IYR +1.6%, VNQ +1.6%
- Realty Income (O +4.1%), Vereit (VER +3%), Omega Healthcare (OHI +3.2%), Welltower (HCN +3.5%), HCP (HCP +2.7%), Universal Health (UHT +4.4%), W.P. Carey (WPC +2%), Lexington Realty (LXP +2.5%), Essex Property (ESS +1.2%), Aimco (AIV +1.5%), General Growth (GGP +2.6%), Brixmor (BRX +1.6%), Federal Realty (FRT +1.8%), Kimco (KIM +1.2%), Public Storage (PSA +1.4%), Life Storage (LSI +1.4%), Boston Properties (BXP +1.2%), Stag Industrial (STAG +2.4%).
Thu, Dec. 1, 12:22 PM
- The 10-year Treasury yield is up another seven basis points to 2.46%, and bank investors continue to wrap their arms around the idea that real regulatory loosening is on the way. The XLF is higher by 1.7% vs. the S&P 500 being flat. KBE +2.15%, KRE +2%.
- Bank of America (BAC +3%), Citigroup (C +1.7%), JPMorgan (JPM +2.2%), MetLife (MET +2.2%), Voya Financial (VOYA +3.3%), Northern Trust (NTRS +3.5%).
- Oil is now ahead 4.6% to $51.72, helping the XLE to another 2.1% advance.
- Tech (QQQ -1.4%) continues to struggle. Its decline today puts it lower by 1.1% since the election vs. the S&P's 2.8% advance, a 10% gain for the XLE, and a 14.5% move for the XLF.
Thu, Dec. 1, 8:46 AM
- November monthly performance was: +5.59%
- 52-week performance vs. the S&P 500 is: 0%
- No dividends were paid in November
- Top 10 Holdings as of 9/30/2016: JPMorgan Chase & Co (JPM): 3.11216%, Citigroup Inc (C): 2.91346%, US Treasury Note 1.125%, US Treasury Note 0.5%, Bank of America Corporation (BAC): 2.04729%, Morgan Stanley (MS): 1.65388%, Apache Corp (APA): 1.61818%, Merck & Co Inc (MRK): 1.45989%, US Treasury Note 0.75%, Devon Energy Corp (DVN): 1.39074%
Wed, Nov. 30, 11:45 AM
- While the pick of ex-Goldmanite and Hollywood player Steven Mnuchin for Treasury Secretary can hardly be called "draining the swamp," Pantheon's Ian Shepherdson says it should make Wall Street happy.
- In his first public comments after being selected, Mnuchin promised to "kill" swaths of Dodd-Frank.
- Also making Wall Street (and other bankers/insurers/brokers) happy today is another big move higher in interest rates, with the 10-year Treasury yield up 10 basis points to 2.394%.
- The S&P 500 is just marginally higher, but the KBE is ahead 1.9%, and the KRE 2%. XLF +1.35%
- Bank of America (BAC +3.4%), Citigroup (C +1.9%), JPMorgan (JPM +1.5%), Wells Fargo (WFC +1.8%), Morgan Stanley (MS +2.1%), Goldman Sachs (GS +3.9%), U.S. Bancorp (USB +1%), PNC Financial (PNC +1.4%), KeyCorp (KEY +2.2%), Fifth Third (FITB +2.5%), Regions Financial (RF +2.9%), BB&T (BBT +2.4%), SunTrust (STI +2%)
- MetLife (MET +2%), AIG (AIG +0.8%), Lincoln National (LNC +1.7%), Prudential (PRU +1.1%), Hartford (HIG +1.3%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Mon, Nov. 21, 7:53 AM
- The bank has received a "non-objection" from the Fed to add $1.75B to its stock repurchase authorization. This would be in addition to the $10.4B of capital returns approved earlier this year (dividend of $0.16 per share and $8.6B buyback).
- At current prices, $1.75B would be enough to buy back another 31.5M shares against a float of 2.85B shares.
- C +0.7% premarket
Mon, Nov. 21, 5:53 AM
- U.S. lenders appear to present a bigger risk to the financial system than last year.
- Citigroup (NYSE:C), BofA (NYSE:BAC) and Wells Fargo (NYSE:WFC) all face higher capital surcharges after they rose in the Financial Stability Board's latest ranking of the most systemically important banks in the world, while HSBC, Barclays (NYSE:BCS) and Morgan Stanley (NYSE:MS) saw their buffer levels fall.
Fri, Nov. 18, 2:46 PM
- In a note titled "Universal Banks: A New World Order," Macquarie's David Konrad recommends clients shift exposure to those banks with the most leverage to capital markets, and away from those who could get hurt by slower trade and higher currency volatility, particularly in emerging markets.
- Thus his upgrade of Goldman Sachs (GS +0.4%) to Buy, and downgrade of Citigroup (C) to Neutral.
- According to TipRanks, Konrad's record puts him in the top 10% of all Wall Street analysts covering any industry.
- Previously: Goldman upgraded at Macquarie; Citi cut (Nov. 18)
Fri, Nov. 18, 7:42 AM
- There aren't any details yet available, but the upgrade is worth noting on its own as it comes following a huge rally in bank stocks, and amid a wave of sell-side downgrades this week (as price target levels are breached).
- Macquarie upgrades Goldman Sachs (NYSE:GS) to Outperform. The $245 price target suggests about 17% upside.
- Goldman is higher by 24% over the past month - with nearly all of the advance since the election. Shares are up just 10% YTD.
- Alongside, the team downgrades Citigroup (NYSE:C) to Neutral as the $56 price target is within pennies of being hit. Citi is higher by 14% over the past month and 7% YTD.
Thu, Nov. 17, 12:18 PM
- In no surprise, the list is dominated by the ripping financial sector:
- Allstate (ALL +1.4%)
- Ameriprise (AMP +0.2%)
- TD Ameritrade (AMTD +1.6%)
- BB&T (BBT +2.1%)
- Citigroup (C +2.4%)
- Citizens Financial (CFG +2%)
- Comerica (CMA +1.5%)
- CNA Financial (CNA +0.6%)
- Loews Corp. (L +0.9%)
- Marsh & McLennan (MMC +1.9%)
- PNC Financial (PNC +2.6%)
- Royal Bank of Canada (RY +0.7%)
- U.S. Bancorp (USB +1.9%)
- Aetna (AET +1.5%)
- Best Buy (BBY +10.4%)
- CBS (CBS +0.6%)
- Celanese (CE +0.1%)
- Comcast (CMCSA +1.5%)
- Dell Technologies (DVMT +1.1%)
- The Gap (GPS +0.4%)
- Humana (HUM +1.4%)
- KLA-Tencor (KLAC +2.7%)
- Liberty Media (LMCA +1.6%)
- Lam Research (LRCX +1.9%)
- Micron (MU +5.3%)
- Nvidia (NVDA +2.7%)
- Rockwell (ROK -0.5%)
- Teck Resources (TCK +0.5%)
- Texas Instruments (TXN +1.1%)
- New lows:
- Novo Nordisk (NVO +0.3%)
Thu, Nov. 17, 12:03 PM