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_pennystock版 - Three Banks To Avoid Right Now -- zt (转载)
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相关话题的讨论汇总
话题: banks话题: three话题: bac话题: jpm话题: rally
1 (共1页)
c****o
发帖数: 384
1
【 以下文字转载自 Stockcafeteria 俱乐部 】
发信人: chhguo (Survivor), 信区: Stockcafeteria
标 题: Three Banks To Avoid Right Now -- zt
发信站: BBS 未名空间站 (Fri Oct 1 10:13:34 2010, 美东)
AS THE SEPTEMBER RALLY TRIES TO BREAK KEY RESISTANCE LEVELS AND TACK ON MORE
TO THE IMPRESSIVE 9% GAIN THIS MONTH, IT'S LEAVING THE BANKS BEHIND IN THE
DUST.
Indeed this rally has been compelling, but is it more sizzle than substance?

The recent economic data has been less than stellar -- hardly positive
enough to justify a rally of this magnitude. The action is being led by a
pump priming induced stimulus, and fueled by a commodities rally and a
plunging dollar.
What’s concerning about the validity of the sustained bullish move in the
stock market is that the financial sector is not only not participating in
the gains, but, in most cases, seeing declines. This is serious cause for
concern if you’re looking for bullish confirmation.
Once the sizzle fades, the market will certainly look at the substance, and
if the financials are not participating, this rally will most certainly fade
. The key is where and when the burners extinguish. Perhaps it’s an
escalation in the European sovereign debt crisis or the Fed disappointing
the markets with not firing the printing presses on high speed.
Below is a 1 month daily chart that shows the relative strength of the S&P
500 rally against three major banks: JP Morgan (Sym: JPM), Wells Fargo (Sym:
WFC), and Bank of America (SYM: BAC).
From the chart, you can see the SPX is up a little over 9%, while these
three major banks are up less than 3%, and flat in the case of BAC. The
banks began to diverge from the SPX in the third week of September. This is
a warning sign, and it underpins what is truly behind this equity rally and
confirms that you should proceed with caution if the market does indeed
trade higher.
WHAT’S WRONG WITH THE BANKS?
Third quarter earnings season is about to kick off, and the banks tend to
report on the early side. JPM reports on Oct 13, which will set the tone.
BAC reports on Oct 19 and WFC reports the next day, Oct 20.
The last time they reported, in the 2nd quarter, all three beat earnings ...
which you would think was positive. However, the numbers were not beat
through strong top line revenue, but rather through the usual accounting
shenanigans that frustrate investors.
All three, almost in an eerily collusive way, reduced loan reserves against
non performing assets, which from a GAAP standpoint directly boosts the
bottom line. Without the loan reserve reductions, the earnings would have
missed.
These accounting manipulations are not taken lightly by investors. The
markets are adjusting for the fuzzy math and are discounting their own view
on how non-performing assets should be accounted for.
The KBW Bank Index, in which all three of these stocks have a significant
weighting, currently trades at 95% of book value, a level never seen before
the credit crisis in 2008. This is very telling that the market is
discounting the banks below what they are hypothetically worth if they were
liquidated today.
This is a clear indication that the markets are fully aware of the
accounting manipulations. Also, all three of these banks have heavy
exposure in residential real estate loans on their books and the portfolios
continue to struggle at uncomfortable levels.
Just last month, when the August numbers were released, lenders took back
more homes than any other month since the US mortgage crisis surfaced 3
years ago. CNBC reported that "one in 381 homes in the US received some
sort of foreclosure-related warning in August.” That amounts to over 300,
000 households receiving the grim news in the mailbox.
The guidance from these big banks last time they reported indicates that the
worst is behind us, and I hope they're right. However, when you look at
this problem on a smaller scale with a fine microscope, it may seem
otherwise. I am referring to the smaller savings and loan regional banks.
Just last Friday, the FDIC shut down two more banks, bringing the total to
127 US Bank failures year-to-date from a continued wave of loan defaults and
economic stress. These smaller banks are simply microcosms of their major
counterparts. The only real difference is the big ones are much more
capitalized. Nevertheless, the lending and banking models are similar.
The number of bank failures is expected to peak this year and surpass the
140 that fell in 2009. The number of “problem” banks on the FDIC’s list
jumped to 829 in the second quarter from 775 in the prior three months.
When these companies report, it will be very telling how they address loan
reserves in this quarter.
Another strain on earnings will come from a profit squeeze from the
flattening yield curve. The 10 year treasury yields have been below 3% for
the majority of the 3rd quarter. Today, it sits at 2.50%. Mortgage rates
have come down to record levels with a 30 year fixed below 4.50%. New loans
originated or refinancing out of higher interest rate loans reduces the
spread these banks collect. The Fed is focused on keeping mortgage rates
very low, which is a double edged sword that must be dealt with.
The major banks also derive a significant portion of their revenue from
investment banking and trading. The third quarter has seen a significant
reduction in trading volume across the board, and this will affect top line
revenue. Global stock underwriting proceeds have slipped 9 percent so far
in 2010, which will particularly affect JPM and BAC. Hiring in the
investment banking and trading divisions have been frozen, and some have
seen reductions. This is a confirmation that the slowdown in activity will
affect earnings for the remainder of the year.
If the market does reverse and fall back into the trading range, the
financials will perform poorly, as they are one of the weakest sectors. JPM
, WFC, and BAC could easily test or break their August lows. If the market
does break this resistance level and makes a run to the April highs, follow
the sizzle. Commodities will most likely continue to lead the market higher
, far outpacing the struggling financial sector.
a****g
发帖数: 8131
2
mark to be read later

MORE
THE
substance?

【在 c****o 的大作中提到】
: 【 以下文字转载自 Stockcafeteria 俱乐部 】
: 发信人: chhguo (Survivor), 信区: Stockcafeteria
: 标 题: Three Banks To Avoid Right Now -- zt
: 发信站: BBS 未名空间站 (Fri Oct 1 10:13:34 2010, 美东)
: AS THE SEPTEMBER RALLY TRIES TO BREAK KEY RESISTANCE LEVELS AND TACK ON MORE
: TO THE IMPRESSIVE 9% GAIN THIS MONTH, IT'S LEAVING THE BANKS BEHIND IN THE
: DUST.
: Indeed this rally has been compelling, but is it more sizzle than substance?
:
: The recent economic data has been less than stellar -- hardly positive

M*******a
发帖数: 870
3
这种马后炮满天飞的时候通常是bottom的时候了。。。

MORE
THE
substance?

【在 c****o 的大作中提到】
: 【 以下文字转载自 Stockcafeteria 俱乐部 】
: 发信人: chhguo (Survivor), 信区: Stockcafeteria
: 标 题: Three Banks To Avoid Right Now -- zt
: 发信站: BBS 未名空间站 (Fri Oct 1 10:13:34 2010, 美东)
: AS THE SEPTEMBER RALLY TRIES TO BREAK KEY RESISTANCE LEVELS AND TACK ON MORE
: TO THE IMPRESSIVE 9% GAIN THIS MONTH, IT'S LEAVING THE BANKS BEHIND IN THE
: DUST.
: Indeed this rally has been compelling, but is it more sizzle than substance?
:
: The recent economic data has been less than stellar -- hardly positive

M*****g
发帖数: 3145
4
嗯。。杀入的时侯到了?要不要呼唤老牛。。。

【在 M*******a 的大作中提到】
: 这种马后炮满天飞的时候通常是bottom的时候了。。。
:
: MORE
: THE
: substance?

K********g
发帖数: 9389
5
快来救我

【在 M*****g 的大作中提到】
: 嗯。。杀入的时侯到了?要不要呼唤老牛。。。
M**i
发帖数: 331
6
他S定了

【在 M*****g 的大作中提到】
: 嗯。。杀入的时侯到了?要不要呼唤老牛。。。
1 (共1页)
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相关话题的讨论汇总
话题: banks话题: three话题: bac话题: jpm话题: rally