ProShares Short S&P Regional Banking ETF (KRS) - NYSEARCA
  • Wed, Mar. 30, 3:44 PM
    • Nobody wants banks, writes Ken Brown in the WSJ, but everybody wants commercial real estate. The result: Bank yields are higher than that of CRE.
    • A report from BAML says the big banks have boosted dividends faster than any other sector, and the total cash yield to owners, including buybacks, is at its strongest level since 2003. "Both are signs of strength," writes Brown, "though investors refuse to believe them."
    • On the other hand, "Real estate is not cheap anymore," says Green Street's Peter Rothemund. One particular warning sign: Foreigners flooded the market last year, buying a net $57B of U.S. property vs. an average of just $3B annually for the previous five years.
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
    | Wed, Mar. 30, 3:44 PM | 1 Comment
  • Thu, Mar. 24, 10:43 AM
    • Oil's lower by 2.9% today and about 10% for the week, but it's the financial sector (XLF -1.3%) leading the S&P 500's 0.5% decline today. This even as Jim Bullard becomes the latest Fed speaker to more or less disavow last week's dovish FOMC meeting result, and suggest higher rates could come as soon as April's get-together.
    • Morgan Stanley (MS -2.9%), Citigroup (C -2.5%), BB&T (BBT -1.3%), U.S. Bancorp (USB -1.3%), MetLife (MET -2.8%), Prudential (PRU -3.5%)
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
    | Thu, Mar. 24, 10:43 AM | 14 Comments
  • Thu, Mar. 17, 2:44 PM
    • Increasingly negative policy rates overseas, lame global growth, high financial market volatility, and now a Fed on pace to hike substantially less than hoped ... "None of this is likely supportive of financials sector relative performance," say Wells Fargo's Gina Adams and Peter Chung, downgrading banks from Overweight to Market Weight, and capital markets to Underweight from Market Weight.
    • The only group the team likes as Overweight is insurance, which is likely to show the strongest earnings this year (hard to fathom given low rates).
    • The bank's analysts cover 70 of 90 names in the S&P 500 financials sector, with just 28 of those 70 rated Outperform.
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, KIE, IAT, IYG, IAK, SEF, FNCL, FXO, KBWB, QABA, RYF, KBWR, FINU, KCE, KRU, RWW, KBWP, KBWC, KBWI, FINZ, KRS, XLFS
    | Thu, Mar. 17, 2:44 PM | 8 Comments
  • Wed, Feb. 24, 1:13 PM
    • It's another nasty session for banks today, writes David Reilly, and the KBW Nasdaq Bank Index is now lower by almost 20% YTD, with names like Citigroup (C -2.3%) and Bank of America (BAC -2.3%) down nearly 30%.
    • The nasty feedback cycle begins with the crash in the oil price, which stings banks thanks to worries of big losses on energy-lending, and more broadly hurts lenders by dragging down the stocks in general. This in turn, leads to concern about a recession would further ding bank profits.
    • More ominous, the yield curve is flattening. Using the spread between two-year and 10-year Treasury notes isn't a bad proxy for bank profits and it's slumped to just 0.96% today. Old-timers will remember when this spread used to turn negative - a sure sign of looming recession.
    • The good news, says Reilly, is that the energy crash and low rates don't look to cause the sorts of losses seen in 2008. Take the long view - the cycle will someday turn.
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
    | Wed, Feb. 24, 1:13 PM | 35 Comments
  • Tue, Feb. 23, 2:38 PM
    • Holding its investor day today, JPMorgan said it was going to add another $500M to energy-related loan-loss reserves. This followed a $67M provision in Q4, which at the time brought total oil and gas loss reserves to $815M (vs. a portfolio with book value of $44B).
    • In addition, the bank said it could need to add another $1.5B to reserves should oil hang around $25 per barrel over the next 18 months. For perspective, prior to Q4, JPMorgan hadn't had to add to reserves for six years - in fact reserve releases were a big boost to profits across the industry.
    • "When the biggest bank increases reserves for potential oil losses it sets a tone for the industry,” says Mike Mayo.
    • Separately, the FDIC says bad loan provisions across the banking sector were $3.8B higher in Q4 than a year earlier.
    • JPMorgan (JPM -3.5%), Citigroup (C -2.9%), Bank of America (BAC -2.9%), Wells Fargo (WFC -2%), U.S. Bancorp (USB -3%), Regions Financial (RF -3.8%), Comerica (CMA -4.2%), Zions (ZION -4.1%), PNC Financial (PNC -2%).
    • ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, KRU, KRS
    | Tue, Feb. 23, 2:38 PM | 56 Comments
  • Fri, Feb. 19, 12:47 PM
    • "The  Federal Reserve is playing with fire on bank capital," write Anthony Currie and Gina Chon at Reuters, responding to the central bank's green light for Capital One (NYSE:COF) to add $300M to its buyback program.
    • While the amount is of little consequence to CapOne's capital ratio, say the authors, and it's probably not a bad idea to add to repurchases after the recent shellacking in bank shares, the whole point of the stress tests were to monitor earnings and balance sheets over a longer time frame than only a few weeks.
    • Further, the results of this year's stress tests are due in just a few weeks.
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
    • Previously: Capital One adds $300M to buyback (Feb. 17)
    | Fri, Feb. 19, 12:47 PM | 3 Comments
  • Thu, Feb. 11, 2:37 PM
    | Thu, Feb. 11, 2:37 PM | 69 Comments
  • Wed, Feb. 10, 9:15 AM
    • Most assume central bank benchmark deposit rates can't get that far below zero before lenders find it cheaper to actually hoard physical cash rather than depositing it. A Bank of England study, for instance, suggests a floor of about minus 0.5%.
    • A new report from JPMorgan, however, says England could go to negative 2.5%, the EU -4.5%, Japan -3.45%, and the U.S. -1.3%.
    • It's good news for banks, whose earnings (and balance sheet strength) are thought to be at risk as policy rates head into negative territory.
    • ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
    | Wed, Feb. 10, 9:15 AM | 16 Comments
  • Wed, Feb. 3, 10:25 AM
    • This just in: The financial sector is having a worse go it this year than energy, with the XLF lower by 13.6% YTD vs. the XLE's 9% decline.
    • Leading a big reversal from this morning higher open is the XLF's 2% decline. The S&P 500 is now off 1%, and the XLE "just" 0.85%.
    • Among the issues for the financials are two items: 1) Hopes for a sustained rate hike cycle have been dashed, with the 10-year yield tumbling all the way to 1.82% currently from about 2.30% when the Fed hiked in mid-December. Fed speakers are all-of-a-sudden sounding very dovish (Dudley is the latest), and short-term rate futures are now pricing in just a 50% chance of even one Fed rate increase this year; 2) For lenders specifically, there's worry over their exposure to the crashing energy sector. No doubt better capitalized today than 10 years ago, losses are still losses even if they don't threaten the viability of the bank.
    • JPMorgan (JPM -2.6%), Wells Fargo (WFC -3.6%), Morgan Stanley (MS -3.5%), KeyCorp (KEY -3.1%), PNC Financial (PNC -2%), Comerica (CMA -2.7%), Schwab (SCHW -3.8%), MetLife (MET -2.5%)
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, PSCF, FINZ, KRS, XLFS
    | Wed, Feb. 3, 10:25 AM | 16 Comments
  • Tue, Feb. 2, 12:52 PM
    • Alongside energy's underperformance today is the financial sector (XLF -2.4%). The long-awaited hope of a sustained rise in interest rates appears dashed once again - at least so far this year.
    • The 10-year Treasury yield is lower by seven basis points to 1.88% - a nine-month low - and short-term rate markets are now pricing is less than one 25 basis point rate hike for the remainder of the year.
    • TBTFs: Bank of America (BAC -4.4%), Citigroup (C -4%), Goldman Sahcs (GS -4.4%)
    • Regionals: U.S. Bancorp (USB -2.5%), Regions (RF -3.1%), SunTrust (STI -4%)
    • Life insurers: MetLife (MET -3%), Prudential (PRU -3.2%), Lincoln Financial (LNC -3.7%)
    • Online brokerage: Schwab (SCHW -4.2%), E*Trade (ETFC -3.8%), Ameritrade (AMTD -3.6%)
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
    | Tue, Feb. 2, 12:52 PM | 69 Comments
  • Fri, Jan. 29, 9:22 AM
    • "The market is clearly saying that Citigroup (NYSE:C) is worth far more dead than alive," says fund manager Colin McWey, an owner of the stock, but scratching his head at its valuation of just two-thirds of tangible book value.
    • JPMorgan (NYSE:JPM) and PNC Financial (NYSE:PNC) trade for right around book value.
    • Bank valuations are so cheap right now, says Morningstar's Jim Sinegal, that not a lot has to go right for an investor to make money.
    • What about energy? Is it the new subprime? First off, writes Michael Brush, exposure isn't that high. At JPMorgan, it's about 1.6% of total loans; at Citi it's 3.3%. Energy loans make up just 1.8% of total loans at the roughly 15 lenders in Baird analyst David George's coverage universe vs. 25% exposure to housing sector debt. George: Most banks could write off all energy loans and still not post a loss.
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
    | Fri, Jan. 29, 9:22 AM | 21 Comments
  • Thu, Jan. 28, 2:56 PM
    • Some sources say total exposure of U.S. banks to the oil and gas industry is 3-5% of total assets, says Pavillion Global Markets. A joint regulatory study by the Fed, FDIC, and OCC found U.S. banks' aggregate oil portfolios total $276.5B, or 7.1% of the total $3.9T syndicated loan portfolio of large U.S. banks in all industries.
    • Though a number of banks have boosted loss provisions in light of the energy bust, Pavillion doesn't see a lot more disruption coming. Bank underperformance of late has more to do with a general U.S. economic slowdown than the oil crash.
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
    | Thu, Jan. 28, 2:56 PM
  • Dec. 16, 2015, 3:04 PM
    | Dec. 16, 2015, 3:04 PM | 48 Comments
  • Nov. 6, 2015, 10:04 AM
    • The major averages are lower following the blowout jobs number, but the financial sector (XLF +1%) is charging ahead, enthused at what appears to finally be the near-certain prospect of higher interest rates.
    • Short-term interest rate futures are pricing in about a 75% chance of a rate hike next month, and the 10-year Treasury yield is up nine basis points to 2.32%. The two-year yield has soared all the way to 0.90% - its highest level in more than five years.
    • The green in this yield-starved sector is everywhere: Bank of America (BAC +3.5%), Citigroup (C +3.4%), U.S. Bancorp (USB +2.8%), Regions Financial (RF +3.7%), PNC Financial (PNC +2.4%), Capital One (COF +1.4%), Bank of New York  Mellon (BK +1.9%), E*Trade (ETFC +3.5%), Schwab (SCHW +5.1%), Interactive Brokers (IBKR +3.4%), MetLife (MET +3.2%), Prudential (PRU +3.6%).
    • Previously: Big beat on jobs number (Nov. 6)
    • Previously: December rate hike back on after big jobs number (Nov. 6)
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, KIE, IAT, SEF, IYG, IAK, FXO, FNCL, KBWB, QABA, FINU, KRU, KBWR, RWW, RYF, KBWP, KBWI, FINZ, KRS, XLFS
    | Nov. 6, 2015, 10:04 AM | 43 Comments
  • Oct. 31, 2015, 2:04 PM
    • Sizable bank mergers were supposed to be no-brainers as lenders - weighed down by a sluggish lending environment, overlapping branch networks, and high regulatory costs - sought operating synergies. Unfortunately, regulators since the financial crisis have had different ideas about what banks should be doing with their capital (namely, storing it for a rainy day).
    • The M&T/Hudson City merger finally getting approval (after a three-year delay), along with quick green lights for a couple of BB&T purchases began to give investors hope, and this week they got KeyCorp (NYSE:KEY) agreeing to buy First Niagara (NASDAQ:FNFG), and New York Community Bancorp's (NYSE:NYCB) deal for Astoria Financial (NYSE:AF).
    • The reaction: KeyCorp is lower by more than 10% since the news was announced, and First Niagara by more than 6%; NYCB is off nearly 14%, and Astoria 11%.
    • "This level of selloff is not typical," says Sterne Agee's Peter Winter. "Early reactions to bank transactions often are bumpy," says KeyCorp CEO Beth Mooney.
    • CLSA's Mike Mayo calls Key's purchase "strategically good," but isn't a fan of the bank's plan to fund a major portion of the deal with stock. NYCB is also funding much of its buy with stock, and the deal includes a cut in the dividend - maybe not the greatest move considering the income-oriented lean of the bank's investor base, says Winter.
    • Previously: More losses for NYCB as secondary prices; Astoria lower too (Oct. 30)
    • Previously: KeyCorp not expecting M&T-like deal hold-up (Oct. 30)
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
    | Oct. 31, 2015, 2:04 PM | 21 Comments
  • Oct. 20, 2015, 1:17 PM
    • The Mortgage Bankers Association expects $1.32T in mortgage originations in 2016, up from the $1.26T forecast last month. Included in that figure is $905B in purchase-money loans.
    • While a boost from a month ago, that amount remains less than the $1.45T in originations (or maybe more) on track for this year.
    • Interested parties include the regional banks and private-label mortgage shops like Redwood Trust (NYSE:RWT).
    • ETFs: KRE, KBE, IAT, KBWB, QABA, KRU, KBWR, KRS
    | Oct. 20, 2015, 1:17 PM
KRS Description
ProShares Short S&P Regional Banking seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P Regional Banks Select Industry Index.
See more details on sponsor's website
Sector: Financial
Country: United States
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