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Financial Select Sector SPDR ETF (XLF)

- NYSEARCA
  • Sep. 16, 2014, 1:25 PM
    • Seeking its bit of the mortgage payout cheese, Virginia sues the usual suspects, seeking $1.15B in damages for allegedly misleading the Virginia Retirement System about the quality of mortgages backing MBS it purchased between 2004 and 2010.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | Comment!
  • Sep. 11, 2014, 7:27 AM
    • The capital shortfall for the world's top 102 banks to meet 2019 standards would have been just $19.5B at the end of 2013, says the BIS, versus an estimated shortfall of about $75B six months previous (it was estimated at about $500B three years ago). By 2019, the targeted common equity ratio is 7%.
    • Reducing the gap are profits, lower payout ratios, the shedding of assets, and restructuring of businesses.
    • Most of the ground to be made up is in Europe, where the top 42 banks have a shortfall of about $15B.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 1 Comment
  • Sep. 9, 2014, 12:24 PM
    • The Fed intends to impose a capital surcharge on banks tougher than the international standard, according to Fed Governor Daniel Tarullo's prepared remarks for the Senate Banking Committee. Those banks with heavier reliance on short-term funding like overnight loans - i.e. Goldman Sachs (GS -1%) and Morgan Stanley (MS -1.8%) - will likely face even more rigorous requirements.
    • Officials haven't yet decided on a number, but reportedly are considering as much as 200 basis points more than the top range of 2.5% of risk-weighted assets agreed to by international regulators.
    • What's not yet clear is who would need to raise capital to meet the new, tougher standard.
    • Citigroup (C -1%), Bank of America (BAC -0.6%), JPMorgan (JPM -1.3%), Wells Fargo (WFC -0.4%), State Street (STT -1.1%), Bank of New York Mellon (BK -0.9%)
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
    | 25 Comments
  • Sep. 2, 2014, 7:15 PM
    • The FBI has found no evidence to suggest the hacker(s) who successfully penetrated the computer system at JPMorgan Chase (NYSE:JPM) scored any similar successes against other big U.S. banks, WSJ reports, citing four people close to the investigation.
    • A source said the JPM incident was at first conflated with suspicious activity related to other banks, but as the investigation continued, the threats appeared to be separate.
    • JPM has said it is not experiencing unusual amounts of fraud, and two people briefed on the investigation say consumers likely do not face a serious risk; some cybersecurity experts believe the hack may have been perpetrated by Russians in retaliation for U.S. sanctions.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 1 Comment
  • Aug. 30, 2014, 6:48 PM
    • "Most of the reason that banks are underearning relative to their historical norms ... is economic and not regulatory," says Richard Pzena (NYSE:PZN), who remains bullish on the TBTFs. Low interest rates, weak trading, and "government persecution" are the three factors, and - should these normalize - earnings could nearly double at Bank of America (NYSE:BAC) and Citigroup (NYSE:C), though JPMorgan's (NYSE:JPM) boost would be more modest. Goldman Sachs (NYSE:GS) is another favorite.
    • Broad financial ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    • Another cheap sector is energy, says Pzena, and based on relative valuation against the broader market - whether price-to-book or price-to-earnings - the major integrated oil companies are selling near all-time lows.
    • What the market is missing, says Pzena, is the nature of oil investment. The old days saw capital spending one year, and boosted volume the next. Projects nowadays are far larger and require several years of spending before returns roll in. "We think those big new projects are going to perform and produce decent returns." HIs favorites: BP, RDS.A, RDS.B, XOM, TOT.
    • Broad energy ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, PXJ, FENY, RYE, FXN, DDG
    | 26 Comments
  • Aug. 28, 2014, 8:04 AM
    • Maybe not wanting competition for federal government debt, U.S. regulators are set to approve a final liquidity rule next week reportedly excluding municipal bonds from being among banks' high-quality, highly liquid assets. Treasurys and balances held at the Fed, of course, would be allowed.
    • Wells Fargo (NYSE:WFC) - with $47.3B - is the largest holder of municipals among the four largest U.S. banks. It hasn't said how much of that amount is included in its liquidity tally, but did say it was compliant with the international rule and awaiting the final U.S. version.
    • Both banks and local governments had naturally argued to include munis in the final rule. "[This] will almost certainly decrease liquidity in asset markets disfavored by the rule," says ABA President Frank Keating.
    • Muni ETFs: MUB, PZA, TFI, XMPT, PRB, PVI, VRD, RVNU, FMB
    • Financial sector ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 34 Comments
  • Aug. 27, 2014, 1:10 PM
    • "It's clearly not helpful to poke your primary regulator in the face with a stick," says an investment banker who works on bank acquisition deals. He's referring to 80-year old M&T Bank (MTB -0.1%) boss Robert Wilmers. After guiding his bank through the financial crisis without cutting the dividend or reporting a quarterly loss, Wilmers has been critical of regulatory overreach, arguing smaller lenders are suffering for the mistakes of the TBTF banks.
    • Today marks the 2-year anniversary of the M&T/Hudson City (HCBK -0.4%) merger announcement, a deal which continues to be held up because of Fed concerns over M&T's money-laundering compliance, but maybe regulators are just making an example of Mr. Wilmers.
    • In any case, the 2-year and counting delay has put a chill on the merger market for banks. Since the beginning of 2013, at least 10 lenders hoping to complete deals have instead been forced to move back planned closing dates. Among those, ViewPoint Financial (VPFG -0.3%) has a merger agreement expiring this weekend, and BancorpSouth (BXS -0.3%) dropped its request to buy two banks earlier this month after weaknesses were found in its money-laundering program (it plans to refile for approval after cleaning this up).
    • For its part, M&T has spent vast quantities trying to come into compliance and at latest check is still hopeful on closing the purchase before year's end.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 3 Comments
  • Aug. 15, 2014, 9:55 AM
    • "The banks are seeing this as maybe one last opportunity to fund at very attractive rates," says Standard Life's Jon Curran. Bank and other financial company debt sales hit $391B YTD yesterday, 32% higher than the same period a year ago, and a faster pace of increase than the broad U.S. corporate bond market.
    • Investors are naturally flocking to the paper, encouraged by continued improvement in banks' financial health, but also eyeing higher interest rates. While higher rates might hurt fixed-income in general, they should also boost bank profits, which would be pleasing to the holders of their debt.
    • Also driving issuance are new regulations possibly coming down the pike which would mandate a minimum level of debt at the bank-holding-company level. "The reality is that the banks would have to be issuing this debt anyway over the coming years," says a credit analyst with Invesco.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 2 Comments
  • Aug. 6, 2014, 8:48 AM
    • The Federal Reserve and the FDIC say the bankruptcy plans submitted by 11 of the largest banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. Ouch!
    • Full feedback
    • The 11 dinged: BAC, BK, C, GS, JPM, MS, STT, and the U.S. units of BCS, CS, DB, and UBS.
    • To review: Dodd-Frank requires banks annually submit a "living will" detailing their operations and exposures and how they could be dismantled without the need of a bailout in the event they near failure. Pleasing the regulators is a must as they have the power to force tougher capital rules or restrictions on growth, or even mandate a breakup of the lenders. As for the current failures, the banks have about a year to address D.C.'s concerns.
    • "Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," says the FDIC's #2 official, Thomas Hoenig.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 33 Comments
  • Jul. 15, 2014, 3:30 PM
    • Open for comment for the next 60 days are revisions in the way the FDIC calculates deposit insurance premiums. The changes - necessary to match new capital rules - would eliminate a practice allowing up to six of the nation's big banks to claim a "significant reduction in assessments," according to FDIC officials.
    • At issue are internal models banks used to measure counterparty risk; the models, according to the proposal, created an imbalance in which assessments were skewed by bank calculations rather than actual risk.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 1 Comment
  • Jul. 15, 2014, 12:49 PM
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  • Jul. 10, 2014, 11:00 AM
    • "Bank card delinquencies remain at surprisingly low levels even as credit card spending increases,” says the American Bankers Association chief economist James Chessen. "More and more consumers are using their credit cards as a payment vehicle, paying off or paying down their balances each month.”
    • Bank card delinquencies of 2.44% in Q1 fell a big 16 basis points from the previous quarter, and continue far below the 15-year average of 3.82%.
    • The composite ratio which tracks delinquencies in eight closed-end installmant loan categories edged up four basis points to 1.63% of all accounts. The 15-year average is 2.33%.
    • With the numbers so low, Chessen isn't calling for further improvement, but instead fluctuations around the current figures.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
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  • Jul. 7, 2014, 9:35 AM
    • Discussions are at an early stage, but Basel is looking at ending traditional banking industry practice of treating government paper as risk-free after the European PIIGS proved the debt is anything but. A change could potentially force lenders to raise billions in additional capital.
    • Needless to say, bankers aren't pleased, but sovereigns - used to having banks being large happy holders of their debt - are likely going to be pushing against any rule change as well. In Europe, Italian banks own more than €400B of Italian government debt, while Spanish lenders own nearly €300B of their country's sovereign paper.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
    | 2 Comments
  • Jul. 2, 2014, 12:31 PM
    • Global M&A deals in H1 totaled $1.571T, according to Mergermarket, up 56% over the same period in 2013, and up 29.8% from last year's 2nd half. in the U.S., $694.6B of deals in H1 nearly doubled that of one year prior. European deals of $453.6B gained 35.5%, and Asian deals of $286.7B rose 56.8%.
    • The M&A boom could help offset at least some of the widely expected continued trading slowdown this quarter (banks begin reporting their Q2s in about 10 days), and Goldman (GS +0.1%) tops the advisor tables with $533.8B in deals in H1, up 112% from a year ago. With $495.6M (up 180.4% Y/Y), Morgan Stanley (MS +0.5%) in in 2nd place. In third place, Bank of America (BAC +2.3%) deals grew 141.7%, and in fifth place, Citigroup (C +1.5%) saw a 177.2% boost in deals. JPMorgan (JPM -1.1%) took 4th place with $324.8B in deals, but saw just a 25.3% rise.
    • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
    | 3 Comments
  • Jun. 26, 2014, 3:11 PM
    • "Five years ago, if the risk group recommended against a strategy or product, it might just be one part of a debate," says Wells Fargo (WFC -0.4%) chief risk officer Michael Loughlin. Now, "when we say no, it's usually no."
    • The naysayers are gaining power and multiplying across the banking industry as lenders bow to pressure from regulators to simplify and make safer their operations in the hope of preventing the next financial collapse. For its part, Wells has 2.3K employees in its core risk-management department, up from 1.7K two years ago, and the unit's annual budget has doubled to $500M over that period. Earlier this year, Goldman Sachs (GS -0.2%) made its chief risk officer part of the trader/rainmaker-dominated company management committee for the first time ever.
    • The changes are expensive and come at a time of sluggish loan growth and trading revenue, but the banks have no choice as regulators wield the power given them by Dodd-Frank.
    • KeyCorp (KEY +0.1%), for instance, used to pay loan officers for meeting  profit goals. Now those bonuses can be lost if their work falls short of new risk-management standards. It's no doubt one factor behind sharply lower loan commitments for construction and real-estate development.
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAI, IAT, SEF, IYG, FXO, KBWB, FNCL, RKH, QABA, FINU, KCE, KRU, KBWR, RWW, RYF, KRS, KBWC, FINZ
    | 4 Comments
  • Jun. 25, 2014, 2:52 PM
    • The quest for yield is winning out over regulator efforts to clamp down on risky lending, as an OCC report finds signs of rising credit risk in the banks. The agency notes two areas in particular - leveraged loans and indirect auto loans.
    • Leveraged loans are essentially the banker version of high-yield bonds and indirect auto loans are banks financing car loans through an auto dealer.
    • 2013's issuance of covenant-lite leveraged loans - which strip away some protection for the lenders - hit $258B in 2013, about equal to the total amount issued between 1997 and 2012.
    • "Banks are looking for asset classes that performed better during the last crisis," says the OCC's Darrin Benhart. "The concern of course is that the previous crisis is not always the best indicator of what issues may happen next."
    • Full report
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, KBWB, FNCL, RKH, FINU, QABA, KRU, KBWR, RWW, RYF, KRS, FINZ
    | 3 Comments
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XLF Description
The Financial Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Financial Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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Sector: Financial
Country: United States
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