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  • Fri, Oct. 14, 9:42 AM
    • JPMorgan and Citigroup both easily topped estimates thanks to a big rebound in previously-in-the-doldrums markets revenue. JPM is higher by 1%, and Citi by 2%. The read-through is pushing Goldman Sachs (GS +3%), Morgan Stanley (MS +2.7%) and Bank of America (BAC +2.4%) all nicely higher.
    • Less capital-markets focused, Wells Fargo also beat forecasts, but not as soundly. As usual of late, it's lagging its TBTF peers, up just 0.3%.
    • XLF +1.2%, KRE +1.4%, KBE +1.5%.
    • Other individual names: Regions Financial (RF +2.5%), Huntington Bancshares (HBAN +2.1%), KeyCorp (KEY +1.9%), Fifth Third (FITB +1.5%), SunTrust (STI +1.3%), M&T (MTB +1.7%)
    | Fri, Oct. 14, 9:42 AM | 9 Comments
  • Tue, Oct. 4, 2:19 PM
    • A Bloomberg report says the ECB is likely to gradually wind down bond purchases ahead of the scheduled March 2017 end of its QE program. The central bank is currently buying €80B per month of government and corporate paper, and may begin to slow that amount by €10B per month, according to the story.
    • Yields are higher in Europe and the U.S., with the 10-year U.S. Treasury up five basis points to 1.675% and the German 10-year Bund yield is up four bps to -0.048%. TLT -1.1%, TBT +2.2%
    • Though the Dow and S&P 500 are each lower by 0.5%, the yield-starved XLF is up 0.6%, with Bank of America (BAC +2.1%), Citigroup (C +1.9%), and JPMorgan (JPM +0.4%) leading the way. Shrouded in scandal, Wells Fargo (WFC -0.2%) continues to underperform.
    • Other names: Regions Financial (RF +1.5%), KeyCorp (KEY +2.1%), BB&T (BBT +1.4%), Schwab (SCHW +1.5%), MetLife (MET +1.1%), Prudential (PRU +1.3%).
    | Tue, Oct. 4, 2:19 PM | 17 Comments
  • Thu, Sep. 29, 1:30 PM
    • A report that a number of hedge funds are bailing out of their Deutsche Bank exposure has sent that stock sharply lower in the last few minutes, and the move is dragging the big U.S. banks, and in turn, the major averages.
    • Deutsche is now lower by more than 7%. Bank of America (BAC -1.2%), Citigroup (C -1.6%), JPMorgan (JPM -1.2%), Goldman Sachs (GS -2.1%), Morgan Stanley (MS -1.9%). The KBE and KRE are each off 1.1%.
    • The Dow (DIA -0.9%), S&P 500 (SPY -0.8%), and Nasdaq (QQQ -0.6%).
    | Thu, Sep. 29, 1:30 PM | 66 Comments
  • Wed, Sep. 28, 9:32 AM
    • "Large banks are going to be forced to take on more capital," says Dick Bove. "It will make the cost of funding more, not less, expensive. It will reduce the appeal for investors to put money at risk in the banking system."
    • Bove is commenting on a weekend announcement from Fed Governor Daniel Tarullo promising future stress tests will be geared to demanding even higher cash buffers for banks. Set to take effect next year, the new rule could raise capital requirements for the largest banks by 3 or 4 percentage points, writes Jeff Cox at CNBC.
    • Interested parties: BAC, C, WFC, JPM, GS, MS
    • There's good news though, as those lenders with less than $250B in assets won't be subject to the same standards. FBR's Edward Mills calls it a "significant positive" for regionals, which now have more certainly on the process, reduced regulatory expenses, and thus the ability to return more capital to owners.
    • Interested parties: RF, ZION, CMA, KEY, FITB, STI, NYCB, HBAN, PNC, BBT, MTB
    | Wed, Sep. 28, 9:32 AM | 24 Comments
  • Fri, Sep. 23, 3:11 PM
    • That a flatter yield curve is bad for bank profit margins isn't news, but Fitch reminds lenders need more than Fed rate hikes - for the max benefit, they need a corresponding boost to medium and long-term rates.
    • Keep an eye over the yield curve, not the Fed Funds rate, for sustained net interest margin improvement, says Fitch.
    | Fri, Sep. 23, 3:11 PM | 2 Comments
  • Fri, Sep. 16, 3:23 PM
    • SPDR Global Dow ETF (NYSEARCA:DGT) - $0.3732. 30-Day Sec yield of 2.33%.
    • SPDR S&P Bank ETF (NYSEARCA:KBE) - $0.1476. 30-Day Sec yield of 1.66%.
    • SPDR S&P Capital Markets ETF (NYSEARCA:KCE) - $0.2271. 30-Day Sec yield of 2.27%.
    • SPDR S&P Insurance ETF (NYSEARCA:KIE) - $0.2847. 30-Day Sec yield of 1.56%.
    • SPDR S&P Regional Banking ETF (NYSEARCA:KRE) - $0.1934. 30-Day Sec yield of 1.71%.
    • SPDR S&P 400 Mid Cap Value ETF (NYSEARCA:MDYV) - $0.4407. 30-Day Sec yield of 1.87%.
    • SPDR Morgan Stanley Technology ETF (NYSEARCA:MTK) - $0.1251. 30-Day Sec yield of 0.95%.
    • SPDR Russell 1000 ETF (NYSEARCA:ONEK) - $0.4978. 30-Day Sec yield of 1.95%.
    • Payable Sept. 26; for shareholders of record Sept. 20; ex-div Sept. 16. 30-Day SEC yield as of 9/15/2016.
    | Fri, Sep. 16, 3:23 PM
  • Fri, Sep. 9, 10:37 AM
    • Wells Fargo (WFC -0.7%) yesterday was fined $185M over its employees opening millions of fraudulent deposit and credit card accounts in order to meet sales targets and collect bonuses. The bank has fired 5.3K over improper practices.
    • Over at Rafferty, Dick Bove downgrades Warren Buffett's ([BRK.A]], BRK.B) favorite bank, calling it a "very big problem," that's caused "significant" damage to Wells' business model.
    • While "cross-selling" is something most lenders try to do, Wells Fargo has built its brand around this theme more than its peers. The charges, says Bove, reopens the question about whether customers can trust their banks and to whether another wave of regulation is needed.
    • Compass Point's Isaac Boltansky says the news is "bigger than WFC" and should be viewed as "clear, undeniable warnings" to the entire industry on cross-selling. The bit firmly between its teeth now, look for more enforcement actions from the CFPB.
    • Similar thoughts are hitting the tape from Sandler O'Neill, Evercore ISI, and RBC.
    • Interested parties include: BAC, JPM, C
    • ETFs: KBE, KRE
    | Fri, Sep. 9, 10:37 AM | 135 Comments
  • Thu, Sep. 1, 2:36 PM
    • The Fed stress tests are the centerpiece of post-crisis bank regulatory reform, and that the banks would even consider challenging a bureaucracy that's not in the habit of being challenged is a shocker. The WSJ, however, reports bank trade groups and industry advisers are debating just that, but say talks are still in an early stage.
    • Fans of Dodd-Frank will naturally argue the stress tests have made the banks far safer, but at what expense to investors? A main area of contention is the opacity of the tests, says the report, as well as the ability of regulators to block returns for subjective reasons (such as challenging them?).
    • Perhaps lenders are feeling their oats following MetLife's successful challenge of its SIFI designation. If the insurer can take on Uncle Sam and win, why not the banks?
    • Interested parties are too numerous to name, but include: Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), JPMorgan (NYSE:JPM).
    • ETFs: KBE, KRE
    | Thu, Sep. 1, 2:36 PM | 47 Comments
  • Wed, Jul. 27, 11:49 AM
    • Having covered bank stocks on and off since 1985, the team at Oppenheimer says portfolio managers have never been fans of the sector, but the hatred today is off the charts - even as the reasons for that hatred have gone away.
    • Banks used to be opaque, they overpaid for acquisitions, and often had frothy growth that almost invariably backfired. It's hard to say that today. While banks will always be somewhat opaque, today they're returning capital rather than blowing it on acquisitions, and their "growth initiatives are the epitome of financial probity."
    • Oppenheimer's six large bank composite has on average churned out quarterly pretax earnings of $31.4B per quarter since 2013 (including $30.5B in Q1 this year, and $33.4B in Q2). That's a lot of money, especially since most of it is being used to buy back stock at less than 10x earnings and below tangible book value.
    • While lower-for-longer interest rates will continue to hamper earnings, banks are managing appropriately for the current environment, and the math of buying back stock below book will eventually win the day.
    • Favorite picks are Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Goldman Sachs (NYSE:GS).
    • ETFs: KBE, KRE
    | Wed, Jul. 27, 11:49 AM | 20 Comments
  • Fri, Jul. 15, 2:55 PM
    • There aren't a whole lot of catalysts for bank stocks unless there's a sustained rise in the 10-year Treasury yield, says FBR's Paul Miller. "I'm going to be buying these things all day long," will be investors' attitude once yields do move higher.
    • Until then, one might have a look at those with high exposure to mortgages - Wells Fargo (NYSE:WFC), U.S. Bancorp (NYSE:USB), and PNC Financial (NYSE:PNC) - as they stand to benefit from the refinancing boom. This has risks as well as refi booms inevitably burn themselves out.
    • ETFs: XLF, KBE, KRE
    | Fri, Jul. 15, 2:55 PM | 20 Comments
  • Thu, Jul. 14, 2:43 PM
    • Moving past the overseas macro, today's modest rally is being led by the financial sector (XLF +1%), particularly the banks (KRE +1.8%), (KBE +1.8%) after JPMorgan beat estimates.
    • Also helping is another five basis points move upward in the 10-year Treasury yield to 1.53%. Among the yield-starved names applauding: Prudential (PRU +3.1%), Lincoln National (LNC +4.7%), E*Trade (ETFC +1.8%), Schwab (SCHW +1.9%), State Street (STT +2.5%), MetLife (MET +5.2%).
    • The Dow is up 0.8%, the S&P 500 0.55%, and the Nasdaq 0.6%.
    | Thu, Jul. 14, 2:43 PM | 6 Comments
  • Mon, Jul. 11, 3:40 PM
    • While nearly all major U.S. banks cruised through the stress tests last month, writes David Schawel, those exams are about determining if lenders have enough capital to get through a crisis, not whether they can earn the sort of risk-adjusted returns of the past.
    • On this front (for insurers as well as banks), there's plenty more for investors to worry about, he says, thanks to the vanishing spread between short rates (what the companies pay on their liabilities), and long rates (what they earn on their assets).
    • A new Fed study finds the adverse effect of weaker net interest margins is materially larger when rates are low. The reason: The lower bound of funding costs is zero as institutions are reticent to charge negative rates.
    • Investors interested in buying banks or insurers because of seemingly cheap valuations might want to look again. Bank multiples, says Schawel, typically move alongside ROE, and serious improvement in ROE is unlikely with rates remaining low.
    • Interested parties include: BAC, C, JPM, WFC, MET, PRU, LNC, PNC, USB, RF, KEY, KRE, KBE
    | Mon, Jul. 11, 3:40 PM | 135 Comments
  • Tue, Jul. 5, 4:17 PM
    • Interest rates continue to plummet, with U.S. government yields on the long end hitting new all-time lows. At least they remain positive (for now). Yields on French government paper are now negative all the way out to nine years, and Swiss 50-year bonds now sport yields below zero.
    • Some hawkish words today from San Francisco Fed President Williams weren't enough to lift the share prices of yield-starved financials (XLF -1.5%).
    • The SPDR KBW Bank ETF (KBE -3%), the SPDR KBW Regional Bank ETF (KRE -3%)
    • Citigroup (C -3.3%), Morgan Stanley (MS -3.5%), Regions Financial (RF -3.9%), Fifth Third (FITB -4.2%), Capital One (COF -3.3%), Legg Mason (LM -3.3%), E*Trade (ETFC -3.2%), Schwab (SCHW -3%), MetLife (MET -4.2%), Prudential (PRU -3.2%), Lincoln (LNC -4.5%)
    | Tue, Jul. 5, 4:17 PM | 6 Comments
  • Thu, Jun. 30, 10:51 AM
    • Dividend increases and boosted buybacks must already have been priced into the shares of the big banks, as share prices are showing little reaction to last night's capital plans.
    • Citigroup (C -0.6%) is notably lower despite announcing more than a tripling in the dividend. Bank of America (BAC -0.8%) was more cautious with its payout boost, but is faring about the same. JPMorgan (JPM unch) chose not to lift its dividend, but did raise the buyback. Morgan Stanley (MS +0.6%) lifted both. Wells Fargo (WFC -0.5%) didn't give details other than saying its capital plan was approved; same for Goldman Sachs (GS +0.1%).
    | Thu, Jun. 30, 10:51 AM | 23 Comments
  • Mon, Jun. 27, 6:55 AM
    | Mon, Jun. 27, 6:55 AM | 62 Comments
  • Fri, Jun. 24, 11:58 AM
    • The Too Big To Fail lenders are naturally among the day's big losers following the U.K. vote to leave the EU, but losses in the financial sector are wide and deep as - among other things - interest rates look to be a lot lower for a lot longer.
    • Among asset managers, Invesco (IVZ -10.8%) - with a sizable U.K. exposure - is faring about the worst. WisdomTree (WETF -7.8%) takes a hit as the yen is the solo currency surging against the dollar, reducing demand for its popular hedged Japan ETF.
    • It's wait till next year (or even 2018 if you believe short-term rate futures markets) for rate hikes, meaning regional lenders can't celebrate their passing of the Fed stress tests last night. Regions (RF -7.8%), KeyCorp (KEY -6.4%), PNC Financial (PNC -5.5%), U.S. Bancorp (USB -4.2%), BB&T (BBT -5.1%).
    • Even lower rates put even more pressure on the business models of the life insurers: MetLife (MET -8.8%), Prudential (PRU -7.7%), Lincoln National (LNC -9.9%), Voya (VOYA -7%). Online brokers too: E*Trade (ETFC -9.4%), Schwab (SCHW -9.5%).
    | Fri, Jun. 24, 11:58 AM | 12 Comments
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