Frank Rong1

Credit Card Breakdown: AmEx Disappoints, as Predicted

I still think Ian cooper is an idiot. Some consumers are cash strapped, most of American are doing just fine. Amex's problem is really Amex's problem. The numbers of people who defaulted on loans at Amex felt to 5 years low, (Amex Master Trust), but the loan balance per default account doubled from three years ago. One possible reason? It juiced up spending volume by giving people too high of credit limits. I don't like Amex for now.

MasterCard and Visa are equally toxic. What's stopping a large card issuers from switching its card to Visa from MasterCard, or vice versa? Prices. Visa, MasterCard and Discover will be in a pricing war to get cardissuers to issue their card.

I like Discover, its earning is still strong. Although charge-offs are picking up recently, that's not a big deal, these losses can be offset by hiking overall rates on customers, or hiking fees on Merchants, and lower funding costs due the lower interest rate cut by the FED

Visa and MasterCard's loyalty lies with large banks. Top 10 banks control almost 70% of the transaction volumes, losing one large client will see the stock price fall off a cliff. That will happen after banks sell their stocks in MasterCard and Visa.

Visa and MasterCard are like emperors without clothes, they don't have any direct relationship with consumers. Their futures are in the hands of large banks.

I wouldn't touch V and MA with a 10 foot pole, these two stocks are the trainwreck waiting to happen, after about 1-2 years from now. People who buy these two stocks don't understand Microeconomics