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Thu, Feb. 11, 2:37 PM
- Oil's lower by 3.3% today, but it's the financial sector (XLE -3.1%) again leading the S&P 500's 2.15% decline.
- For the year, the XLF is down by 17.9%, easily outpacing on the downside energy (down 13%) and the S&P 500 (down 11%).
- With the 10-year yield plunging all the way to 1.6% and short-term rates markets now beginning to price in Fed rate cuts this year, the banks are being hit particularly hard: Bank of America (BAC -8.1%), Citigroup (C -7.6%), JPMorgan (JPM -5.1%), Wells Fargo (WFC -2.9%), Goldman Sachs (GS -5.4%).
- Leading regionals (KRE -4.4%) lower are KeyCorp (KEY -5.9%), Huntington Bancshares (HBAN -4.9%), Fifth Third (FITB -5.4%), and PNC Financial (PNC -4.4%).
- 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: Lots of negative rate talk at Yellen hearing (Feb. 11)
- Previously: Insurers punished as rates plunge (Feb. 11)
Mon, Feb. 8, 2:24 PM
- It is the European banks and contagion concerns that are freaking out the markets today - not just the Fed, China and crude oil - according to David Rosenberg, noting that some of the European banks are trading at 2008 crisis levels after the group has tumbled 18% YTD vs. 11% for the STOXX 600 index.
- European financial firms are taking a beating amid fears of "a chronic profitability crisis that makes it impossible for banks to build up barely-adequate capital bases," WSJ reports.
- Deutsche Bank (DB -9.8%) is down another ~10%, bringing its YTD loss to nearly 40% while its valuation has fallen to ~30% of book value, and its credit default swaps spiked to their highest levels since 2012.
- News of major withdrawals out of Credit Suisse (CS -4.2%) caused its shares to sink 11% last week, hitting a 24-year low, and Santander (SAN -6.2%), BBVA (BBVA -5.4%), and UniCredit (OTCPK:UNCFF -5.5%) are down to lows seen during the last eurozone financial crisis.
- "Oil and the flatter yield curve alone do not explain the 12% plunge we have seen in S&P Financials so far this year," Rosenberg says, adding that BofA (BAC -6.1%), Citigroup (C -6.2%) and Wells Fargo (WFC -3.5%) all briefly touched 52-week lows last week - "an ominous signpost."
- ETFs: XLF, FAS, FAZ, UYG, VFH, PSP, IYF, EUFN, BTO, IPF, IAI, IYG, SEF, FNCL, FXO, PFI, IXG, PEX, RYF, FINU, KCE, RWW, KBWC
- Earlier: Markets extend two-day rout; gold gets 3% boost
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, 8:29 AM
- The bank this week reached an agreement in principle with the DOJ and regulators in which it will pay $1.2B to resolve various claims over its FHA lending from 2001-2010.
- The settlement will boost its end-of-year legal accrual by $200M, thus cutting 2015 income by $134M, or $0.03 per share to $22.9B or $4.12.
- WFC -0.7% premarket
Tue, Feb. 2, 9:00 AM| Tue, Feb. 2, 9:00 AM
- January monthly performance was: -3.31%
- 52-week performance vs. the S&P 500 is: -2%
- $0.10 in dividends were paid in January
- Top 10 Holdings as of 12/31/2015: Exxon Mobil Corporation (XOM): 3.35%, AT&T Inc (T): 3.15%, Microsoft Corp (MSFT): 3.11%, Apple Inc (AAPL): 2.84%, Verizon Communications Inc (VZ): 2.5%, General Electric Co (GE): 2.36%, Johnson & Johnson (JNJ): 2.21%, Chevron Corp (CVX): 2.2%, Wells Fargo & Co (WFC): 2.06%, Procter & Gamble Co (PG): 1.93%
Sun, Jan. 31, 8:53 AM
- Barron’s says it’s a good time to bet on the big banks after a rocky start to the year.
- The 10 biggest U.S. banks are trading for 8x-12x 2016 estimated earnings; the S&P 500 trades at 16x.
- Exposure to distressed U.S. energy companies is manageable.
- While leading Democratic presidential candidates are pushing for a breakup of the biggest banks, that possible eventuality could be a positive since many trade below their sum-of-parts.
- The following banks all have 20% upside: Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), BB&T (NYSE:BBT), PNC (NYSE:PNC), Suntrust (NYSE:STI), U.S. Bancorp (NYSE:USB).
Barron’s also mentions Citizens Financial (NYSE:CFG) and Region’s Financial (NYSE:RF) favorably.
Tue, Jan. 26, 4:44 PM| Tue, Jan. 26, 4:44 PM | 1 Comment
Tue, Jan. 26, 4:22 PM
Fri, Jan. 15, 8:29 AM
- Q4 net income of $5.71B or $1.03 per share vs. $5.71B and $1.02 a year ago.
- ROA of 1.27% down 9 basis points Y/Y; ROE of 12.23% down 61 bps. Efficiency ratio of 57.4% improves from 59%. Net interest margin of 2.92% down four basis points from last quarter, down 12 basis points from a year ago.
- Net charge-offs as a percent of average loans of 0.36% up from 0.34%. Credit losses in Q4 of $831M up from $703M in Q3 mostly thanks to $90M in higher energy portfolio losses.
- Conference call at 10 ET
- Previously: Wells Fargo beats by $0.01, misses on revenue (Jan. 15)
- WFC -2.25% premarket amid a big slump in equity index futures.
Fri, Jan. 15, 8:08 AM
Thu, Jan. 14, 5:30 PM
Tue, Jan. 12, 12:16 PM
- Wells Fargo (WFC +1.4%) is rarely cheap enough to buy, says KBW's Chris Mutascio, but a 6% slide over the past month gives investors just that chance.
- The bank has a premium valuation, but it's warranted thanks to a projected 2016 ROA of 1.32% vs. peers at just 1%. Only U.S. Bancorp is expected to perform better on this metric, and it trades a premium to even Wells Fargo.
- Mutascio also takes note of the bank's leverage to rising rates and potential upside to estimates thanks to the pending purchases of GE Capital assets.
- He upgrades to Outperform with $60 price target.
Mon, Jan. 11, 8:56 AM
- Investors may be too pessimistic on banks' ability to meet earnings expectations, says analyst Richard Ramsden, citing tailwinds like higher interest rates, a healthier U.S. consumer, manageable credit headaches, and possibly boosted capital returns.
- Wells Fargo (NYSE:WFC), he says, has the clearest path to meeting 2017 estimates. The bank will be a "liftoff winner," says Ramsden, as its retail, small balance deposit base is likely to see little pricing pressure during the first few Fed rate hikes.
- Wells also faces the least downside this year if oil prices slip, China slows, and rates stay flat. It also has potential upside from its GE Capital purchases.
- He upgrades to Buy with $60 price target. The stock's up 1.2% premarket to $50.16.
- Pulled from Goldman's Buy list is JPMorgan (NYSE:JPM) after a period of outperformance (it's about flat Y/Y after last week's steep slide). The price target is cut to $69 from $75. The stock's off 0.2% to $58.80 premarket.
Mon, Jan. 4, 9:02 AM| Mon, Jan. 4, 9:02 AM
- December monthly performance was: -0.5%
- 52-week performance vs. the S&P 500 is: -3%
- $0.25 in dividends were paid in December
- Top 10 Holdings as of 11/30/2015: Apple Inc (AAPL): 3.5%, Microsoft Corp (MSFT): 3.48%, Exxon Mobil Corporation (XOM): 3.24%, General Electric Co (GE): 3.13%, AT&T Inc (T): 2.94%, Verizon Communications Inc (VZ): 2.68%, Johnson & Johnson (JNJ): 2.24%, Wells Fargo & Co (WFC): 2.19%, Chevron Corp (CVX): 2.12%, Pfizer Inc (PFE): 2.04%
Dec. 25, 2015, 4:50 AM
- Commerzbank (OTCPK:CRZBY) is suing four banks in the U.S., claiming that they failed to properly monitor billions of dollars in toxic MBSs acquired by the German lender before the 2008 financial crisis.
- BNY Mellon (NYSE:BK) and units of Deutsche Bank (NYSE:DB), Wells Fargo (NYSE:WFC) and HSBC (NYSE:HSBC) were named in the lawsuits.
Dec. 22, 2015, 12:24 PM
- Credit Suisse (NYSE:CS) recently filed an arbitration claim with Finra alleging UBS's Americas wealth management unit unfairly raided its U.S. private-banking business over the past several months. About 70 of 300 brokers from Credit Suisse have move to UBS of late.
- Source: WSJ
- Credit Suisse, of course, is in the process of winding down its U.S. private bank, with brokers supposed to be moving their business to Wells Fargo (NYSE:WFC), which is very much interested in growing its wealth-management operation.
- Credit Suisse brokers who have joined UBS have received threatening letters about possible punitive action.
- One issue naturally comes down to pay, with UBS offering richer packages than Wells Fargo, according to some. Another is Wells Fargo's high net-worth-client operation which pales in comparison to more established players like UBS, BofA, and Morgan Stanley.
Wells Fargo & Co is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions.
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