Q3
2013 Earnings\Financials: The Party is Over
It’s
once again earnings season and a great deal of attention will be
focused on financials. Over the past three months, the equity market
values of most of the largest universal banks have
traded off as investors have started to appreciate that the
party is ending in terms of new mortgage originations driven by
refinance transactions. As I noted in the last post, the
guidance from all of the big banks is decidedly negative for Q3
because of the prospective decline in revenue and transaction volumes
in mortgages.
While refinance transactions are falling
rapidly, mortgage loan purchases volumes are not growing nearly
enough to make up for the drop in overall volumes. The chart
below shows the total loan originations, refinance and purchase
volumes for all lenders from the Mortgage Bankers Association through
Q1 2013:
…
So when we actually start the Q3 earnings cycle
for financials, watch for the word “surprise” in a lot of news
reports and analyst opinions. Nobody seems to want to take
notice of the very public guidance coming from some of the largest
names in the banking complex because of what it implies for housing.
But just to show you that God has a sense of humor; Bank of
America and Citi have actually outperformed their asset peers in the
TBTFgroup over the last three months. Hey, that’s what we
need, an index comprised of TBTF banks. Be a useful surrogate
for the credit quality of the United States.
See
you at Americatyst
2013 in Austin TX next week.
Barclays
Is Shutting Down Its Wealth Management Businesses In 130 Countries
(Reuters)
– Barclays Plc will stop offering wealth management
services in about 130 countries by 2016 and cut jobs in the unit as
part of an effort to rein in costs and boost profit.
Read more: http://www.businessinsider.com/barclays-wealth-management-services-closures-2013-9#ixzz2g04MmUbA
Read more: http://www.businessinsider.com/barclays-wealth-management-services-closures-2013-9#ixzz2g04MmUbA
Piling
On The JCPain: Citi Lowers JCP Target To $7, Questions “Adequate
Cash For 2014/15″, Sees $1/Share Floor
…
it is the turn of Citi’s Deborah Weinswig which after reviewing its
JCPenney cash burn analysis, goes for the jugular with phrases such
as “We think adequate cash for 2014/2015 is in question”, “The
turnaround is taking longer than we anticipated, and we are
concerned about a softening macro environment combined with
deteriorating vendor relationships”, and
of course “We
maintain our EPS ests. but are lowering our target price to $7, down
from $11 prev.,
based on an EV/Sales valuation methodology using our 2015 sales
estimate.” And it gets worse: “Where’s The Floor? — As
a supplement to our EV/Sales valuation methodology, we have conducted
a basic liquidation valuation, yielding $324M total value, or
$1/share.”
Well, as long as there is a “floor”…
Forget
Recovery: This Is What Total European Monetary Collapse Looks Like
Presented
without commentary (if confused – wink wink Mario Draghi - Ray
Dalio will explain).
Source:
Goldman, ECB
http://www.zerohedge.com/news/2013-09-26/forget-recovery-what-total-european-monetary-collapse-looks
This is how ICAP manipulated Libor rates.
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