19 Burst results for "Big Money Center"
"big money center" Discussed on MAD MONEY W/ JIM CRAMER
"Would buy a big slug of Morgan Stanley Issue James Gorman has systematically dearest the company while buying each which we thought was terrific that just close and the Justice Eaton Vance, and another great idea. It's an attic gathering machine and that's Consistent. Secular growth sticking business as for the big money center banks let's start with P. Morgan. This best the Bungee Puerto Larger Marzi better than expected quarter on Tuesday morning company gave strong top and bottom line beat fueled in part by much more than two stated provision for credit losses. Now, while I were worried about paying loans because so many small businesses are going under a million lost their jobs we know that Wall Street. JP. Morgan to take a two point five, four, billion dollar hit on loan loss provisions Tuesday. They merely took six hundred eleven million people pretty excited. and. This round response to the IRVY's release. But you know what? You're never safe I. Tell you never saved the scores is over when it comes to these talks. especially with J. P. Morgan turns out there seeing lower than expected credit losses because they'd given many borrowers extensions to get their finances in order or get bailed out by in other words. It's not that JP Morgan seem recklessly few bad loans. It's more that they've postponed the reckoning on bad loans until next year. Beyond that, the analysts hector management about the one bad line item lower than expected net interest income about what you expect when Beitcher. This low come on guys get off get over it. I think they should have been more focused on the strength in commercial corporate and investment banking not to mention CEO Jamie diamonds excellent expense management. It was a very fine quarter. If you have to wait for the inflection, the Oh curve, you might miss what could happen here. How about the other solid money centreback cover Morocco on Tuesday these guys reporting based good quarter smaller speak up with a modest revenue missed wasn't a great quarter unlike JP Morgan. Bank of America took a pretty sizable provision for credit losses though I think that's why the stock got hit even though probably just means the Bank of America is showing trouble borrowers unless forbears, which if you're a shareholder, you might like with big almost provision Bank of America took its. Medicine and that sets them up for better earnings going forward. They're not pushing these problematic loans off until the middle of next year more importantly the Excellency O'Brien Moynihan told a pretty compelling story on the conference call, but a strong start to October spending by the consumers remain solid up ten percent, your rear deposits, still elevated loan demand stabilizing. When instance, we might have seen that twelve and September this was a much better result than it seemed, which explains what? Bank of America Stock Rally two percent today as far circle back to because they looked at and they realized it wasn't we quarter it was great quarter I. think they did a terrific job and words. So out of favor I could have seen this one really run by the way the digitisation to spank is like any other they have really figured I use L.. I love it that leaves the weakest of the money centers and those are Citigroup and Wells Fargo. Of the two cities much better shape. But the stories complicated and not in a good way see when city and Puerto Tuesday morning the actual numbers they look terrific. The big bank posted a solid revenue beetle inside a monster. Be It made a dollar forty per share wall? Street is only over ninety four cents and that's despite of a twenty six, billion dollar allowance for credit losses on loans. Seizures have got a great capital position typical buffet what the billy be worth it. They closed up shop liquidated, which is not going to. Do is now we're seventy one dollars ninety, five per share I it's it's it's an amazing discount from that number I just gave you but that's not what anyone cared about. Remember the big news going into the quarter was that co Mike Corbett announced his retirement about the same time. We learned that city had a huge fine coming over some serious delinquencies and it's risk management attornal controls they needed to change the narrative of the conference call but instead they got people worried that it could cost another couple of into peace regulars plus. They got billions more technology just to catch up with the other guys. So that's a negative. Now, I want to contrast that with Wells Fargo which had been complications on top of already headquarter failing to meet Wall Street's already lowered expectations yesterday morning wells. Fargo posted a modest revenue beat, but the earnings weaker-than-expected school was less than stellar like JP Morgan Citi Wells, Fargo, much more than expected lowest division it. Some of these still miss the Ernie systems in response. The stock correctly dropped six percent yesterday. But you know what? The quarter wasn't even the worst news we got about Wells Fargo. Close, last night, which is one of the more outrageous things. Bloomberg. Reported that wells had dismissed over one hundred employees for improperly receiving corona virus relief money. It looks like some of their Stanford's may have default defrauding the small business. Administration. Wells. Fargo's relatively new CEO Charlie Sheriff has spent his whole tenure desperately trying to repair the bank's tarnish image. If he can't stop his employees from effectively stealing cova bail out money was I tell you this bank still has very serious problems. Look don't over think this charlie sharp's man. He has been trying to orchestrate a turnaround here, but that's still very much a work in progress and it may be too early to think about buying wells. Fargo who knows at the scandals or even done this? We're throwing for speculation. I don't know if we're there yet after that conference call and then the subsequent news bottom line. If you want financial exposure here, I recommend going Goldman Sachs or Morgan Stanley they are in fabulous shape and they really have nothing to do with traditional banking anymore. But insist on owning one of the money centers it's J. P. Morgan or you might like Bank of America. Then there's messy but incredibly cheap Citigroup home from book value, and then there's the pitiful helpless wells Fargo which I still can't come up with a good thing to say about other than the fact that Charlie sharp come on the show I give them all the time in the world we needed to tell us why we should buy the stock. Let's go to Rob in New Jersey Rob. Hey. Thank you my worse, Ron. This talking pay pal of Brazil and the doctor don't go at the any I'm making decent game in the stuff and I've reported of this paying the price target by saga around.
"big money center" Discussed on Bloomberg Radio New York
"It's hard to keep the bad people out. Um, the U. S government uses access to banking services on D U. S dollar has a way of punishing Uh, bad actors and states And so banks have a very complex matrix. They have to wade through to do business with foreigners, any foreigners? And a lot of them have just decided not to do it. Many US institutions will not do business with non U S resident so I think it's not surprising. It's been a problem for a long time. And many of those banks that are listed there are you know, providing services they think are OK, but in order to do diligence on these people and keep up with the list of, you know, Band persons, for example. Uh, requires a lot of focus and a lot of effort by banks and they don't They don't do a very good job, do they? You know it's not surprising, is it? We've been reading about this for years. You want more headwind for some of the big banks to deal with these days? I'm wondering given wearing interest rates are how low they are and how the Fed Chairman Powell suggests that they will stay lower for much longer than maybe people initially anticipated. Is there a bull case? For buying these big money center banks. But we're still awaiting visibility. Paul on credit. You know, the banks have certainly put a lot of money aside for future losses, and I expect that's going to continue all year. I think at the end of the day will probably put aside more. Reserves this year than we did in 8 4009. And the fourth quarter could be quite a mess in terms of taking assets to the curb and cleaning house. So but to your question, is it time to buy them now that they're down? Well, They're not really down very much. J. P is still one of the quarter tonnes book. I just published a note on Cities Studio well blow book, and that's just a reflection of the returns to generate the the higher risk shops like City Capital one Goldman. Habitually trade below book because of lack of visibility on forward events, right, especially idiosyncratic events from investment banking engagements, right which no one has visibility into So for me, there's some banks out there that are great value. I've been buying mostly the preferreds when they've been selling off because you know, buying an eight or 9% coupon. It par, which we've had an opportunity to do several times in the past year. Eyes kind of nice. Low beta, you know, makes me happy. I got out of most of the common. I had some U s bank, But I just traded out of it because I think I combined again later on once we have little more visibility on where the banks were going. Well, Speaking of city, Chris, you've been negative on city for sometime, obviously had a very troubled past. And in that note that you just referenced you talk about the new Leader Jane Fraser, who's going to be replacing like a core bod in February of next year. And you say Corba doesn't leave behind a legacy of stability and rising equity values. But little change in terms of focus or a new business direction for the bank. Will Jane Frazer be able to find one? I don't know. I think short term No. And the recent Bonnie it's that they traded away from their asset management business selling that the Morgan Stanley and probably made sense at the time. But you don't buy Corbat had to make up for a shambles that had gone on really from when John Reed left the bank in 98 through the period of Sandy while and Bob Rubin and Vikram Pandit And the bank was really in bad shape. So it's right now a two legged stool capital markets and you have essentially a sub prime consumer business in the US, and then you have these little bits and pieces around the world. You don't have a firm foundation for this bank in terms of core deposits or just the ability to make money in the same way, J P. Morgan, us, right. They have a huge advantage because they're offshore, so their facilities cost is much less than other U. S banks, but they still make less per dollar of assets. And to me, it's a business model issue. Bonnie I'm actually working on my next book biography of a very prominent mortgage executive. Ah, great story, and it's a non bank story. Who's the mortgage executive? Do tell? I'm not going to say I'm going to teach you a little bit hasn't been announced yet, but it's it's almost finished. And the neat thing about it is it's a non bank perspective of the eighties and nineties in 2000 and who was there? City City got the nonbank EPO Stone on bank culture. Of lending on unsecured No doc mortgages. All of that came from the nineties. In the eighties. People forget this. So that's saying cultures in city cities, part finance company, part Global bank. Um, but if you look at their funding costs, it's significantly higher than the other big banks. So there is a disadvantage. I kind of put them in the same bucket is Goldman. They have some business model issues just Make investors easy where they'll take a U. S bank or BankAmerica J. P. Morgan because they think they have a better handle on it right in terms of the surprise risk factor. Crystal rabbit hole. So thanks, Chris. Yeah, Psych so much for joining us here. I have a guess as to who this person is. And maybe Vonnie Mel do not.
"big money center" Discussed on Bloomberg Radio New York
"Trends weakened Mohr and hear the name some names is Herman Chance, senior industry analyst at Bloomberg Intelligence. Herman. Thanks so much for joining us here we've all heard from the big money center banks that Jamie Diamonds of the world talking about. Billions in dollars of loan loss reserves. I'm afraid that might even be a little bit more challenging for some of the small and midsize banks. Some of the regional banks what your research showing you That's right. Palm Regional banks have also put on billions of dollars of reserves ahead looming credit losses which have really hit the banks of yet, and that's due to two things. Ah lot of stimulus measures from the government. Enhanced unemployment benefits that have since Roland you and stimulus checks and also, the Federal Reserve would come in and really calm credit markets, which Richard help things as well. Um, with that in mind, Credit losses had been really benign so far in the first half of the year, but we expect some looting glasses ahead, given the fact that there's been a lot of the firm of payments for moans, and those pearls have sort of run off. Thus far, and we should expect the quote to take to show losses ahead in the back every year and early next year as well. So having tacos or tell us what they criticized commercial loan is and why you look at it Sure criticize our started early indicators for credit losses from banks. They are the problem loans that each bank has flagged internally as showing some deficiency, so that could be They expect from this payments coming on that these loans have been deferred, so they are sort of the early warning signs firm for losses for for banks, and we see Ah, pretty solid up take across the board for for for these criticize loans and most second quarter And we dig deep into the tank used to really find these numbers and banks like MNT. True as science regions are gangs that would highlight as being strong uptick in increased last longer in the recording. All right. So even though certain economic indicators are suggesting that you know we're coming out of this recession, there's some bright lights. Bergson Green shoots. Ah, looking forward. The argument could be made that there's still more bad news or maybe worse news for the regional banks into coming Couple of quarters. I think that's right in the first of the year, as I mentioned before, there are a lot of measures from Accounting rules offered the furrows. There was, um, artificial stimulus, so a lot of it is really just kicking the can down the road. There's going to be a lot of losses for the industry, including losses, that reason of banks and we'd highlight areas such as commercial real estate. Areas like commercial lending to leisure and hotels. These are the areas that are hard hit from the top down and the gun down there, Jet and inevitably, we should expect lost lives. Not going forward Herman are Rachel Banks, typically as well reserved as some of the big money center banks. Actually, we did a pretty good analysis on this on when you explain the paycheck protection loans, which, uh, fully guaranteed by the U. S government, regional banks, reserves are actually very in mind with the largest banks like Bank of America and keep working on those Fargo. So everybody is pretty much in the same category for for reserves, but across certain mon types, like Ah, Like credit card, the region Ben's orbit under reserves, so we should expect some more provisions for credit losses in the back half of the year specifically in areas like credit card and perhaps construction as well. You know what we heard from some small midsize businesses is that during this pandemic they their access to capital isn't nearly as good as some of the large corporations that have been able to tap. You know, the investment grade bond market, which has just been exploding when new issuance and that when they go to their banks to actually get maybe You know, alone are revolving credit line. They're finding that the credit standards all of a sudden, I've got much, much difficult making the life of that entity or making that survivability of that company even more difficult. So what are the Regional banks doing in terms of making loans in this environment. Yes, that's right. Uh, that spot on the regional banks that are leading to do primarily is German by the paycheck Protection programme. As I mentioned before that really drove down desire for the industry that being said credit stands have time. Then you would expect that for banks because, uh, the environmental and knows the weaker and thanks needs to reflect that in their underwriting. So it will be tougher for small and businesses and you in this In this current environment with pandemic, we have seen the small This is hurting more because they have less access to capital. Um, paycheck protection program was one avenue. But other than that, it stops flooding for that. Industry. Also one of the themes we heard about the banking sector in the United States, in general, heading into this is that they were generally in much better financial shape, much better capitalized, much better prepared. To handle a recession. Then they were in 2008. Is that true for the regional banks? I would say unequivocally that that's true. Thanks for the regional banks. They have much higher capital ratios, much better liquidity, better deposit funding and you see this with the most recent stress test the region with large regards undertook earlier in the year. Where are they passed on. Capitol was dented but not to extend of others and again over the past couple quarters in the first half of the year, banks I have added to their their reserves pretty thing for for future loan losses. So we don't expect this scenario like we had in the Greek financial crisis where a lot of these banks had to look for partners because there were some credit issues involved in commercial real estate, residential real estate construction, you're going to see some pain, but it's mostly going to be a learning tissue rather than a capital issue. An RV All right, Herman. Thanks so much for joining us. We appreciate you sharing your thoughts. Herman Chan, hey covers regional banks for Bloomberg intelligence. We appreciate his time coming up on the program. The mess Hurricane Lara left behind could help some struggling waste Cos clean up their own bottom lines. Listen to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2000 companies and 130 industries. You can access Bloomberg intelligence via B, I go on the terminal. Paul Sweeney. It's 25 minutes past the hour, and this is Why do you have.
"big money center" Discussed on Bloomberg Radio New York
"This is Bloomberg Radio. Thiss is Bloomberg surveillance economics. A lot of us are still in a bit of a guessing game, trying to determine how severe the downturn will be. The only thing that can bring him into the crisis is containing the disease clinic, one country where people depend unemployment for health insurance in the middle of a health crisis investment. Real yield is a scarce as that these days unknowable, of course, where things were going. Bloomberg surveillance with Tom Keen and Poles on Bloomberg. Radio Good Monday morning from New York City and points beyond to our worldwide audience. Covert 19 cases continue to surge in certain key states across the nation, Investors are weighing the economic cost versus the health care risk. Estates, re openings stop and start, of course second quarter earnings kick kick off this week, led by the big Money Center. Banks will have it all for you throughout the week, looking at future's right here. Equity futures pointing higher Treasury rates are steady with a 10 year at that 0.65 level the dollars modestly weaker while W E could hold steady in that $40 per barrel level. City deeper on his premarket equity trading trends return to Bloomberg stocks Editor Dave Wilson. Dave, What you looking at this morning. So much to look at, and we're not even really internee season yet, which is talent is something but what jumps out is the juggernaut that is Tasgola. The shares are up 6.5% in early trading. Electric carmaker higher after surging in the past two weeks by 61%. Tesla's rally enable CEO Elon Musk to surpass Berkshire Hathaway's Warren Buffett in the Bloomberg Billionaires Index. So And Maura the same for Taza or so it would seem five years, up about 3%. The drug maker and Germany's bioattack were granted an accelerator review of two covert 19 vaccine candidates by U. S regulators. The so called fast track designation was based on preliminary study.
The Fed has capped bank dividends and suspended buybacks after stress tests
"For the first time in the ten years of stress, testing banks are required to resubmit their capital plans later this year to reflect the current environment by chair Randall. Quarrels notes in a statement that there is quote material uncertainty about the trajectory for the economic recovery in its impact on banking organizations, and not all governors agreed to let the banks continue payouts even if If, they're limited fed governor Lael brainard said in a separate statement that she does not support giving the green light for large banks to deplete capital which raises the risk they will need to tighten credit or rebuilt capital during the recovery coverage, informing this decision by the Fed was a covert sensitivity overlay for their traditional stress tests where the test of the bank's viability under three hypothetical recessions in subsequent recoveries, v-shaped, u-shaped and w shaped. The Fed notes that there are scenarios are not predictions of the likely path of the economy in aggregate, though the Fed said loan losses for the thirty four banks tested amounted to five hundred and sixty billion to seven hundred billion dollars aggregate capital. Ratios declined from twelve. Twelve percent in the fourth quarter of two thousand nineteen to between nine point five to seven point seven percent in the hypothetical downside, they did not break out the results of the cove analysis on individual banks, but in the after hours investors have been drawing their own conclusions with mixed results depending on the bank mixed performance depending on the Bank Melissa all right Leslie, thank you Leslie picture with the results of the stress has a lot to think about. There are a lot to think about in terms of how it affects the bank trade, but there's also this to think about. Take a listen to what David Ellison of the Hennessy funds said on the closing bell just a few moments ago. There really inserting themselves, and and basically acting like they want to act in a sense that these companies are effectively nationalized. and. We're seeing the effect of that today. in what they're saying, so they're worried about the the appear to be more worried about the economy than the market is. Again heard Powell last week. Say that he was worried now. It seems like we're hearing that again. And this is going to be an ongoing thing. The banks are going to be battling this for the next couple years. So they are effectively nationalized according to this bank investor, guide me. What does this all mean for the bank trade? Yeah. It's interesting. I mean I. Don't know if I'd go that far that the bank should be but I I respected the the opinion on that. Know what it means for the bank trade I don't think the value proposition of the reason you were getting wanted to belong J. P. Morgan was because of the dividend or their stock. Buy Back. I mean I. Don't think that's why you're long the stock, but I understand the headline. This is somewhat shocking, although probably not all that. Surprising quite frankly, I think a lot of people probably saw this coming I think the bigger headline was the reason I thought. The market rally in the first place was a relaxation of the Volcker rule to a certain extent. I think that's why banks had the big run. Now you have to wonder if the timing was somewhat coincidental. I still would submit the following. Pretty steadfast on this you're looking for opportunities to by name like J. P. Morgan for that now second potential run up to one fifteen, and we've done the math for you. I mean one fifteen for J. P. Morgan is putting a one point eight multiple on sixty two dollars tangible book, and it makes a lot of sense. Go back and look where we traded up to a couple of weeks ago and that to me is where the market wants to go I. Don't think it's I. Don't think this is the reason to be bearish the broader market although you know I am. But I do think the headline is probably going to some people carrying. You've been a longtime investor in the bank specifically, certainly not for the dividends, certainly not for the share buybacks. Knew that they were gonNA suspend by back at least for this quarter. So how do you factor this into your investment thesis? So. I mean I guess it makes sense I that they say. Let's see how the year unfolds before we decide whether or not you're going to be allowed to to pay your dividend, or at what level you'll be allowed to pay your dividend, so that sort of makes sense to me i. think what is going to be more important I think is how bad are the provision for loan losses going to be in this quarter? And how bad are they going to be given that we are having difficulty reopening? How sustainable those losses to be going through the throughout the year, so I had thought that the first quarter and the second I'm sorry, the quarter ending in. June, and this next one I'm sorry. March marching, June would be the worst quarters of the year. Maybe there's another bad quarter here. It is interesting to me though that the Volcker rule did come out on the same day that I mean that's sort of like back to go go times. To? The stress tests. But I think the story hasn't really dramatically changed today we'll be. It'll be interesting when we see on Monday. Who is going to change their dividend? Would seem like Wells Fargo is maybe a likely candidate. For BANKAMERICA's city and JP Morgan. The big money centers I don't think they're moving much I. saw city up a little JP Morgan down a little and Bankamerica down. Little I don't think a whole lot has changed to me. It still comes down to how bad will the loss be? Yeah, Goldman after hours one of the biggest loser, if down two and a half percent, a wells Fargo's down one and. And a half percent.
"big money center" Discussed on Bloomberg Radio New York
"Everything autos you name it the rent whatever so everybody thinks they got a free pass but it's not built with small businesses there was a window there where you could go to your bank typically the bank you use for the business and payroll and you could get a loan from them and if you agreed to keep your pick all he would eventually get forgiven there's also so much money at all so most of the small business people I know who have tried to access these credits are found out to the bank supported run through the money and I think what's you know important realizes that for a lot of small businesses it's better to just put your people on unemployment and keep their health care active because many uses specially you know the lower level employees of the race so big they can stay home with their families you keep their health insurance impact and you just basically wait and I think that's what a lot of small businesses have decided to do so we've heard about a lot of smaller community banks that were very effective at processing these PPP applications but less so for the big money center banks is that's simply a function of employee to client ratio I mean if your Wells Fargo or bank America you have the Gillian clients but if you're a smaller community banks somewhere in the Midwest I gotta think it's pretty easy for them to process those applications quickly that's correct the larger institutions have trouble with processing anything out of the ordinary innocence or nor colonies of scale in banking right so the little community bank you can the regionals are typically more flexible they can handle increase at the branch level and they can make decisions on because they have a flatter organization the big banks are pyramids and nude they do this intentionally to keep them from causing trouble so with the central the largest banks are very inefficient by design and that's why when you called them they have this very narrow bottleneck of capacity for example to take calls because you have to actually talk to someone if you want to get one of these loans and they had some online presence to remember they have to put all this up in a matter of days and thanks to that quickly signaling bank companies because they're flat we moved very quickly and smaller banks tend to be much more nimble than larger institutions so so for these things how does participating in the PPP plan benefit them I it certainly doesn't hurt if your clients can survive but for the banks to do over something over here they make a couple points up front down on sale of loans no no credit risk that works there in credit it's like a small business administration loans thanks have a nice little bump in the front because they typically will so long as well we're keeping portfolio if they want but they have a number of incentives to to do the business believe me what kind of bank was best positioned for this cove in nineteen crisis wasn't the big money center banks was at the investment banks was at the regional banks with a smaller community banks who do you believe is going to come out of this as having not only survived but thrived I think first and foremost to look at JP Morgan simply because of size you know trillion plus in core deposits on one side of the business and really robust capital markets business and also group but it's on the other side it's about half and half wells bank of America like what's the big islands of liquidity more than a trillion dollars a quarter posits the ones with more consumer exposure like Capital One Citi they've been getting beaten up just for that reason you know credit is the concern and in the investment banks interestingly Morgan Stanley during the selloff because of the out liar in the whole group credit default swaps were trading in a more than two hundred basis points over the current proposal pot coming up we continue our conversation with Chris Whalen chairman.
Latest from the Stock Market
"I'm Melissa Leo Best Carter Worth Tim Seymour's Karen fighter men and guide dominated Tommy. The countdown is on its apple's big event tomorrow. Will it be enough to convince enthusiasts the world over to trade up in the middle of trade war also ahead activists investor. Elliott management taking a three billion dollar stake in at and T. A. Saying ix nay on the bank they see a sixty percents upside potential traitors take a second look and Boeing pausing using stress tests on its new triple. Seven after issue is discovered. We've got the details ahead. We begin with the Big Bang breakout on the day. The S. and P. Five hundred ended in the red checkout. He's he's moves from City Bank. America Wells Fargo David Morgan all firmly in the green for wait a minute. It was just a few days ago. The racer plunging yield curves inverting cats and dogs living together together and now look so the banks turned a big corner guy this desk by the way cats and dogs living together guy who's not sorry sorry who had a cat or a dog. I guess well how good question to answer on TV well. Let's go to the marketplace Sultana think they've turned the corner at all but what happened is everything got a little ahead of itself and it's not like we haven't talked about this. We're not saying this in a vacuum. Go back Tuesday. I think before Memorial Day we actually power-pitch some of the banks specifically it was city saying that you know what boring markets slow week into a holiday markets probably GONNA rally the toto's probably gotten and ahead of itself when city trades that discount to tangible book historically over the last couple of years. It's been a buy and that's pretty much what's happening. I mean I don't think again. The landscape has gotten better for the banks. Necessarily just the trading landscape in the short term has so the city have more room yeah probably overshoot seventy two like it undershot to sixty one but I think the the headwinds that they faced still exists today are some rays of sunshine based on what the CFO told the Barclay Financial Services Conference today that they expect growth in the back. AH The year that there are other parts of the business that can offset some of the losses or the softness in sort of the rate sensitive businesses so can you sort of extrapolate that some of the other brings thinking. Maybe things aren't as bad as people thought yeah I think I think that what the price they were trading at before. Two days ago really reflected a lot of things so I don't think I more that a lot of bed extra too much penalties there. I think if you think about where Citibank was trading you know well under ten times earnings a three percent yield. JP Morgan tend to change times earning a three and a half percent yield Bank of America under ten times earnings. I mean that's a lot about news priced in and their business models aren't all interest income right. There's a lot of other income in there as well so I think you know the market just saying Oh the whole book of Big Money Center banks is a giant two year tenure spread it must be going to zero didn't make sense. I'm not selling them here. I think they're still attracted. I'll actually question because we've had one kind of from a market position. Technicals Protective Talk and fundamentals. I'll talk to you the context of the overall market this this could you could make a comparison to the first quarter twenty sixteen when we're worried about global growth and banks essentially got through this period where once we got the sense that recession was off the table banks want on argue a very historic run for them relative to at least the cycle. Citibank's up thirteen percent eight days. It's up close to sixteen percent in sixteen days if you look at the X. L. F. It's basically kept pace with the SNP. Despite all of the things things that have happened to bank so the most important thing that happened today and I hate hyperbole may but I will tell you I think this is one of the most extraordinary trading days of the year that no one's talking about impressive was flat and yet you had banks three percent. You had expertise three and a half percent. You would transfer this is a major day for the march is not about the banks banks right. It's a behavioral thing. Is You look at the one hundred. What was the best performing stock the more beaten down. You were the better your slumber J. Lead. You Got Simon Property. You've got things like I mean in hindsight which is literally down eighty percent. Ge in the top ten so it's it's not a bank story although it is that's part of the story because they matter the most. It's simply dead. Cat bounces and dead cats do bounds but do they really come to life. No they're still dead heartbeat. It was more about deflation isn't as bad as you thought. I'm not going to tell you that deflation because I believe it's there's some stuff as leftover from the crisis but but deflation as it was exemplified and illustrated through bond yields around the world through gold going through the roof through everything else that was related to acid replacing going through the floor. The rally today are asset based their reflationary based and that's very exciting sites the retail these are retails that won't exist at some point in three five seven whether it's an urban outfitters. Tayo Ay and it's again it's it's it wasn't specific the banks the fact that it was craft. Ge tells you it was just an unwinding. If there's two sides here on this side of the desk extraordinary training day or just dead cats that's bouncing to make extraordinary trading day in terms of the move in yield terms everything he pointed out was extraordinary the context of what we've seen but I tend to sort of I I well. It should come as no surprise ten more with Carter Worth. I do think these are bounces within the framework of things that have just been oversold. I mean you mentioned Simon Properties. These go back and look where it bottomed out in April. Two Thousand Eighteen look where recently bought them at so you can understand the bounce slumber. J. has been left for dead. I mean we've talked about it. Seemingly for a year and a half trying at least I have tried to ascertain when the bottom would be unsuccessfully. We've seen moves like this before. This will be so again. I guess the fact that the SNP when he was unchanged today bowls could say what that someone constructive bears could say it should have been up twenty five handles on a day like today the other flipside of what happened today was growth oath at any price which had been where everyone wanted to go no matter what terrible complete reversal names like crowd strike or zoom right just absolutely getting annihilated highlighted today so you're just a rotation is just everything that didn't work now pile into that everything that did work time to bail but the question is exactly. I can't can't be in a crowd strikers in there too expensive. They're expensive. Yes two days ago even down ten percent too expensive for me. I think would momentum goes out. Those kind of names have were down to maybe more it's not. It's not terribly surprising that a crowd strike in company and their ilk are going down. Maybe on a daily today or just not rallying as much what's been interesting. Is that Koogle Amazon anything. That's been defensive relative momentum but actually you know they. They tend to be low momentum. Stocks in in difficult times in the market are under performing to Carter cares rights talk about. I don't know anything changed slumber J. in the last week in fact I think lenders as got some tough times ahead of them but when I look at some of the other parts of the market including the transports that are very real companies that are not going out of business that I don't think they're dead. Cat bounces. I'm not saying the world has gotten better in two days. I'm I'm telling you that it's always about positioning. It's always about where I think. The market momentum is we've got an ECB meeting coming up in a few days it's also going to I think help tell the tale of work. Global yields yields go because I think that the European Union is the one that was dragging global yields down and we know that the machines momentum is on both sides momentum down or some momentum up in if I go and when it flips. It's the you get these levers going on both sides but it doesn't usually last that long. At what point do you think I mean. Would you would take a lot of time and a lot more of this kind of thing. Because we saw the bouncing we saw in the certainly bouncing today. You just need in a lot more than I I agree cars. I don't think anything can you can't say suddenly it's it's all good for all these things that have underperformed for long time but for the last three weeks we've seen the DAX ax outperforming the machine emerging markets outperformed so This isn't a one day phenomenon today. It was a bit of an exclamation point on things that really suffer from deflation all right her neck. Scott says you may WanNa pump the brakes on the banks especially ahead of next week's. Fed Meeting joining us now. Steve chaperone equity strategists portfolio manager at Federated Investors Steve Great Great to see you again. so is it just the banks or is it all of these sectors that were dead cats bouncing Carter. I don't know if I'd do as far as the dead cat I. I'm somewhere in between I think Carter and Tim here and what I mean by that is it's very enticing when you look at the move in the banks today and you put it in the overall context then that context has rate rates bottom two weeks you go and have moved higher. The city surprise index bounced into positive territory week ago and value in general has moved up so there's an inclination to want US okay this is. This is the move in the value cyclicals that we've been waiting for. I think you need a little bit of confirmation on that. I think you need see what the Fed does in a week. I think they need to deliver against market expectations I think. ECB similarly has to at least provide some some delivering. I think this meeting is not as important as the one that comes in November when Christine lagarde takes over but move the ball forward and then I think you need the data that continue to come in strongly. If what we're talking about is a global reflation trade because the stimulus that's been put in the system helps the economy to move in the in the back half of the year. That's incredibly bullish and so I'm enticed by it but I'm not willing to kind of jump all in on it just yet so how are you. How are you positioned in the market right now. It sounds like like your you want to see how the data plays out. It sounds like you think I mean the federal probably cut twenty-five deliver on something that's sort of in the expected realm the the data is a little bit of a question mark at this point. So what do you do you think about the market right now is really a battle between the P and the right the P. should be higher. We've taken the discount outrage for stocks and we've cut it in half the only reason why the market isn't higher is because the market's concerned about recession and so they're worried about that e part so I think what it really comes comes down to is how our earnings gonNA come through and that's why trade matters. That's why Hong Kong brexit matters our view. Is that our base case. Scenarios earnings are going to be okay. They're going to be flat right to slightly up. You're going to get a revaluation higher because of those lower yields and that's where you play out over the next six to twelve months however over the course of the next month or so. I WANNA WANNA see how that goes. I want to see how the Fed goes. I WANNA see how earning season so when we were here earlier in the year we were eight percent overweight.
"big money center" Discussed on P&L With Pimm Fox and Lisa Abramowicz
"Big banks we had Morgan Stanley report earnings this morning kind of a mixed bag I would say from some of the big money center banks and global investment banks kind of help us parse through what we are seeing. We welcome Ken Leon. Ken Is Global Director of Industry and Equity Research at C._F.. Are can thanks so much for joining us. Let's start with Morgan Stanley since they just printed this morning. What was your takeaway there so it wasn't earnings.
"big money center" Discussed on Bloomberg Radio New York
"Four seventy eight foot seas down four tenths of a percent of action Germans down six tenths of a percent that compares is down one tenth of one percent that's a Bloomberg business flash Bloomberg markets continues I'm Gregg Jarrett you're listening to Bloomberg markets with Lisa Abramowitz in full swing on Bloomberg radio we're just about through the earnings results for the big banks we had Morgan Stanley report earnings this morning kind of a mixed bag I would say from some of the big money center banks in global investment banks to kind of help us parse through what we are seeing the welcome Ken Leon can is a global director of industry in equity research at C. F. R. A. can thanks so much for joining us let's start with Morgan Stanley since they just printed this morning what would you take away their so it was a learning speak eight cents and they did this really on the more stable businesses and wealth management entertainment and cost control the areas that are really a burden right now are tied to the capital markets the equity underwriting was flat tax that come down twenty two percent and in a is really formal for Morgan Stanley another fax down eighteen percent and of course trading as well has been weak with professors on the sidelines of the relates to global worries about trade terrible things like that so can wired shares basically flat this morning flat in our table the large banks have a terrific for week performance you know for starting with the June twenty seventh the federal reserve approving the capital plans on working families up about ten percent since June looking at the stock today we reiterate our buy recommendation we have a forty nine dollar target price and feel that you know the overhang just on the capital markets you know for Morgan Stanley ticketed out of the park or fire on all cylinders need to see improvement related to investment banking so can let's talk to the capital markets side of the business for these big banks here it's been since you know I'm just thinking back you know three four five quarters it's been very difficult for these companies to put us in good numbers and I'm just wondering is this kind of a a cyclical issue just market conditions or this something more secular about just kind of the profitability that these capital markets desks and businesses can generate for these big investment banks it's a great question and related to capital markets particularly banking at the local you know Morgan Stanley Goldman JP Morgan usually typically in the top three ranking of anything you choose or not the writing and then when it relates to their business Morgan Stanley's then really moving away from kind of cyclical businesses to be guilty to have more stable recurring revenue and they're getting that from a large wealth management franchise and the ability to expand that the difference really a performance for the stock persons other others in the financial sector is predictability so yes capital markets is important but I think directionally whether you look at a Morgan Stanley or Goldman Sachs diversifying into retail we're looking for more predictable businesses that give investors more confidence about their outlook so can you know that we have the major U. S. banks all reporting I'm wondering at what what do you see your big takeaways take away is focuses on the inverted yield curve or the forward curve which suggests a narrowing of net interest margin and then lowered net interest income and and calibrating what that does for the earnings outlook so that's a factor but at the same time there's other inputs into that interesting come looking for the other large banks of the can be you know fifty percent of their total net revenue Bob it's gross an investor accounts were in retail banking on to consumers very strong yet each of these banks have sensitivity to net interest income so they have to pull growth from non interest income which is their businesses and then also from cost controls optimistic twice because we've we've moved the story away from the capital plants these are very significant for all these acts the building to have significant return of capital would buy back and dividend increases including Morgan Stanley today ten point seven billion by back seven percent dividend increase rates the specs are beginning to look at attractive total returns yield stocks and you could not say that over the last seven years so I guess can one thing I'm struggling with I mean I get the the server by back dividend story it's just an income story about going back to what you're talking about the net interest margin this has been offset in the past years of financial repression in the wake of feds as zero rate policies it's been offset by much higher capital markets activity what does it say to you that we are not seeing that acceleration in capital markets activity now and you know the prospects going forward even without lower rates ahead the prospects of perhaps capital markets are kind of done as far as what they need to be doing areas here first related to interest rates this is a reversal to where we were at the end of last year so analysts were factoring and rising rates perhaps two to three increases and that one away so then of course that reversed managers checkup the other part of your question is really interesting and it really ties to what's going to spur the capital markets we have chairman Powell two weeks ago testify actually it's the worry is about in the US at least investment capital investment in plant and equipment and there's been a delay in doing that there's also uncertainties that really try to see your confidence debilitated to invest here or overseas or even mergers and acquisitions the full these taxes down twenty thirty percent there is a a good high point related to anime but it's been very challenging right now because the disability is very difficult tell me on thank you so much for being with us and for all of your insights Kenley on global director of industry in equity research at C. F. R. A. research Morgan Stanley shares had been they've the kind of fluctuating up and down.
"big money center" Discussed on Recode Decode
"Do you lose by waiting? So I think some big money center type banks are actually leaning into these technologies because they see this is the future, and they want to make sure that they are on board. And if they can go to cities, customers and say, hey, I can enable these global transactions free and reduced the cost significantly. So what then is the role of a Bank from your perspective? I don't think you know, they're getting some in the crypto community would argue at this point. But I don't I don't think banks goes, I don't think governments go away. If governments go, don't go away, banks aren't gonna go way, banks are applying a very important regulatory framework, that I actually think is important for society. You know, I think I personally believe the banks will continue to serve that role. They're good at it. Sure. Maybe they could be better at it, and we can point to lots of ways that they have, you know, maybe could have been better. But, you know, there's lots of ways I think banks will continue to be part of the solution in this. I think this is a new set of technologies that they can benefit from to grow their business. All right. So when we get back here and talk more about where this is going to when you think of yourself before he finished as the crypto group, you're all not together. Your, it's not people do tend to lump everyone in your make really important point. I it's important to me that people understand this is not one big group. Even in Washington, there's various kind of lobbying organization has come together. And a lot of them, we won't join because they have as their members some people who espouse the criticality of anonymous transactions. That is not gonna fly right? Yeah. Regulators with regular. Well, it's there's that regulators globally United States. Yeah. That is not gonna fly. And so I, I wanted to have the Cayman Islands don't Swiss banks anymore, but Swiss banks in the last twenty years, that's changed dramatically. And so I just say, here's the hell, we want to change the system by working with the system, and I think trying to hold onto ideas that are counter to fundamental tenets of the current system. Our slow adoption down, just these are profound technology can really benefit society in lots of ways, we can reduce the friction of global commerce. We can allow people globally more access to the economies around the world to compete. I think that's actually a really good thing. All right. We're here with Brad Garlan house and apologised for banks. Now I'm getting the C referal we're gonna take a quick break. Now. We'll be back after this Verizon is obsessed with speed an obsession that pushes them to the limits and beyond will now the rise.
"big money center" Discussed on Bloomberg Radio New York
"Bank earning season, which Morgan and Wells Fargo reporting today we've seen some rough results out of the banks for their fourth quarter. Joining us now to kind of bring us up to date on what's going on with the big money center. Banks and investment banks is Charles pity, president Portela partners longtime analyst on the street covering the banks. So Charles, thanks for being with us. What have you seen so far we've had city J P Morgan Welles report? What have you seen in the results? Thanks, paul. You know, what intrigues me the most is the insistence by these companies that they're meeting their expense targets, and they certainly are in absolute dollar terms. But none of these guys are hitting their efficiency ratio targets, which as you know, includes a numerator related to revenues. I mean denominate related to revenues until they're falling on the revenues. And that's the big disappointment. And I think that's what is caused this whole multiple revaluation of the stocks during the course of two thousand eighteen was the expectation of revenues would slow or disappoint. So so far g think that the disappoint disappointing revenues has already been baked into the share prices here. Yes, I do think it has inside sort of indicated that I thought the first leg of the bear market has concluded and that relief rally is in in place right now. But the second leg of the bear market is out there. You know, ready to start at some point maybe spring summer. I don't know. And it's going to be characterized by deteriorating credit, and you and you are starting to see some early signs of that likely to happen. So Charles you've been I think pretty spot on on on these banks. You got cautious an October you downgraded some of the names in December. Head of the earnings twenty one thousand nine hundred cities seem to have had the CFO seem to have some moderately positive outlook for twenty nine thousand nine hundred you share that optimism. I don't in terms of of where they're headed. I mean, you know, they had promised a two hundred basis point improvement in operating efficiency in two thousand nineteen they walked that back yesterday on the call and started to take a page out of Wells Fargo's approach and say, well, we think we can keep expenses flat around forty two billion. But we're not going to promise more than you know, a ninety two some plus ninety basic point proven inefficiency. So they're already walking back, you know, some of the expectations in nineteen and it really is related to the uncertain revenue environment. I think short term, you know, on a trading basis. No revenue disappointments are been discounted. But I don't think the credit disappointments that are coming have been discounted yet. All right talking about credit. Now, we get to talk about debt, and I'm very excited, of course. Because that's that's feel most comfortable that gay galas actually of Janney. Montgomery Scott came. Out today. And so that to Bank, CitiGroup and J P Morgan have reported increases in loan loss provisions in credit costs, and he takes this indication that they're preparing for the credit downturn. Even if that's not what they're saying outright. Do you agree? I do. In fact, JP Morgan got caught here in the fourth quarter being a little bit too aggressive in the capital markets arena. They did see a big jump in loans held for sale. Non cool status. And I'm guessing then guessing that it's related to some of their leverage lending or hung loans for the indications of buyouts. But there are indications there too good, Bloomberg functions. If you have a Bloomberg terminal that are worth looking at and we do your speaking go, and if your listeners can put that up on their terminal, it shows, the concentration, we're bankruptcy filings are occurring and then also shows most recent bankruptcy filings. And the second one is similar D N K R, I N D X index go and it shows the pace of bankruptcy filings. And use your bottom line is you're seeing a pickup in fourth quarter. Bankruptcy filings in the corporate world, and I think that's a a forerunner of more things to come. So Charles on the cost side of the equation. Do you think these big money center, banks and investment banks? Are they right sized for kind of the new revenue environment that is likely to occur? Over the next several years. You're going to have to answer that business by business. You're you're going to see more downsizing, for example, in the mortgage banking business, you probably going to see more downsizing in the wealth management business. So it is a business by business. You know situation. I I would say what we are facing, you know, in the course of nineteen twenty earnings recession for these banks as opposed to balance sheet impairment, I do think these banks will come through the next downturn with their capital intact. And and so they'll become out of that recession day one ready to invest in their businesses and build as opposed to repairing their balance sheets for two or three years after the recession ends. So the good news. They might have to get bailed out by the US government, the bad news and not gonna make that much money. In fact, they're gonna see their earnings declined. Thank you so much. Thank you for your insights. They always are welcome. And usually spot on president of partners talking about the Bank earnings really interesting Paul to me about this idea that they are preparing for a downturn. They're starting to build credit reserves to me that does seem like an indication of something it does it does. And you'd like to think that they have some Ford you given some, you know, their their relationships go across the globe, they talked to everybody. They see a lot of businesses from their customers. And maybe they're seeing something out there. Indeed coming to take a look at China with George Magnus associate at the China center at.
"big money center" Discussed on Bloomberg Radio New York
"Markets are rebounding a bit today after a terrible week and after up markets where broadly poised to be in their worst month since the financial crisis. So what is the road ahead here to tell us what he thinks is Greg hun. He's president and chief investment officer at Winthrop capital management based in Indianapolis, Greg. Thank you so much for being with us before we get into the nitty gritty. I'm just wondering are you out there buying do you think that the market that the the US equity indices went too far too fast down, actually? Yeah, we're at we're adding to the equity basis we started adding last week. How are you? Adding right now, we just want to add to the basis, but the two areas that we we think are cheap right now, we actually liked the tax base, and we like the financial space when you talk about financials every talking about big money center. Banks like J P Morgan Chase and Bank of America. Yep. I yeah. We're talking about the big banks. So does it concern you at all that investors are at least a American depositors are starting to demand more interest from those banks or you think that that sort of red just basically red herring? And that these banks are much more solid condition that then stock investors are giving them credit for it does bother us. But the the Bank after the financial crisis the whole banking infrastructure is so much stronger in banks have more levers to pull to drive revenue and drive profitability. So there's there's still these are huge huge cash flow machines right now are these kinds of investments a substitute for short duration bonds. Absolutely not. That's a great question. No, I don't I don't buy into the idea that we use stocks as a supplement or replacement for income vehicles. I'm old school. I think bonds bonds play that role in short duration bonds play it, really, well, especially I think you can get short duration at yielding higher than than some of these these these older stock Greg, do you think the NASDAQ and the s&p in the dour gonna see new highs this year or you just basically buying a dip for short term gains or just to hold on for a long term. What's your sort of longer term outlook here? The we we we've taken an approach to to look at old economy versus new economy stocks, and this is not a perfect science. But some of this the new economy stocks like where we're seeing with Amazon, and Microsoft is a new economy stocks makes difference it makes a big difference compared to some of the older the older companies. That's that's how we look at it. And that's where we're adding. Where do you believe? Technology is going to improve efficiency in the banking industry. If that is part of the reason to apply both of these things to one investment. Yeah. It's it's the whole client experience everything from the coming into the teller coming into we've already seen that that's been going on for forty years with the ATM, but we'll see it all the way through mortgage loan. Applications will see it through trading. The discount brokerage operations, it'll all get replaced it. It's to the extent that the client will put up with it doesn't need to talk with the person. We'll see more of that. Greg. I want to shift focus a little bit too credit markets, which have actually hung in there. Much more than stocks have over the latest route not just wondering looking forward with you. See this being the same case in particular with leverage loans, just noticing that became the biggest leveraged loan each sites. Biggest one day withdrawal on Friday, so sort of giving giving rise to this. Sort of question about whether the strength can lasting credit. Yeah. So we we actually see we're we're expecting a shift in the credit cycle. The next twelve to twenty four months. We are. We're just living. This this Cinderella story. Where capital markets are just priced to perfection. We haven't seen significant credit deterioration and following the financial crisis. Now, we've seen this this wave of upgrades. We think that's going to change. And we think the leverage loan market is the canary in the coal mine because so much of that now has shifted off the Bank balance sheets into the capital markets. So the banks are going to weather this storm really well that's coming, but it's gonna hit the capital markets in if you're in Cielo or levered loan product, be careful 'cause we're dealing with weaker covenants and weaker underwriting, and there's so much demand. Because there's demand for income. I wanna follow up on this. Because you think that there's going to be a wave of defaults in the next twelve to twenty four months, or do you think that you're just going to start seeing prices decline much more significantly? On the loans products. It goes and steps we see restructurings before we see defaults, but the false. I mean, Sears is a great example where we're already starting to see default. I'm not saying I'm not predicting that we're gonna have this huge run on defaults. But we we believe in credit cycles, the credit cycles real, and we're seeing one of the signs in deterioration credit cycle is weaker covenants. We've seen twelve months now of underwriting where it's been heavy underwriting with a lower loan covenants. And that's usually a telltale sign of the market. Top wanna thank you very much for spending time with us. Greg Hahn is the president and the chief investment officer of Winthrop capital management. They are based in Indianapolis, and he's focused on technology stocks and on financial such as banks J P Morgan Chase Bank of America and leverage loans. He thinks possibly are sending a signal that we are passed the peak in the credit cycle short duration. I think was his watchword. Duration bonds and don't use stocks as a complement to or a replacement for income producing fixed income all right now, let's go to our ninety nine.
"big money center" Discussed on WCBM 680 AM
"Are you, sir? Fine, sir. Great to be with you. Now, we have a guest tonight, very timely guest because these are interesting times in stock markets and bond markets, and our guests has a lot of experience and knowledge in that area. So surely does I'll tell you a little bit about them minute mini. Are we taking calls tonight? No, okay. Well, we're just doing an interview with Mark want to glean as much information. From a pro of veteran pro in the industry as we can during these tumultuous times is, you know, come and go they come and go did we plenty of plenty of content to fill up up our time here. So let me do that. We have Mark Landis with us. He's the founding partner of wavelength capital management. LLC has over thirty years of experience in the in the investment industry and executive experience. And he's here to talk about the bond market. And the things have been going on over the last ten years when impact where they going to have here perspectively so without. Further. Do Mark welcome to the show. Mark. We're waiting for Mark to come on the air with us. Now, we doing there. Chris. Mark. Are you there? Oh, there you are. How are you my friend? I'm very well. Thank you. Thank you for having. Yeah. It's great. You know, you've been around for how many years in the markets. All right one to thirty five thirty five. So that brings you back to nineteen Eighty-three just is thinking very just as the US bond market and stock market. The stock market was starting to mega bull market and the bond market went on a thirty some actually almost through your entire career was in a bull market the bond market. That is correct. And when I first started we were actually looking at coupons somewhere in the fourteen twelve to fifteen and it's gone down. Every you, and I would have never I started in one thousand nine hundred seventy nine mean little older than you. I would have never predicted that the United States would have seen one and a quarter percent interest rates on the ten year treasury Nora. No, I don't. Especially since my first option was the fourteen of ten. Fourteen of two thousand and ten. Really? And they were paying fourteen percent. Fourteen percent. Wow. Went to then to the fifteen and three quarters of two thousand ten. Wow. That's amazing. Little hiccup in ninety four bonds. But overall. Market had a numerous hiccups along the way. On which market you're into that was another interesting thing. So you went through the junk bond craze of the nineteen eighties. Mark, right. He's doing through the SNL crises of the nineteen nineties. Sure you went through the emerging market crises of nineteen ninety seven. And then you went through the financial crisis of two thousand and eight and the only thing that you forgot was long term capital. Yeah. Long term capital management. That was interesting one in ninety eight also, Mary weather and company, right? Correct. With the most the most liquid bonds in the entire world, the US treasuries became the most illiquid bonds the entire world. So so with that kind of experience just wrap up for our listeners just a quick intro into the concept of what's going on. Now. What should their main thought be right now just as simple concept that they need to grab a hold of? So they don't get panicked. When these types of things happen right now. Markets are cyclical so remember whether you're in the equity market or the bond market market, so cyclical nothing goes up forever. Nothing goes down forever. And specifically within any sort of term. At the end of the day. The markets are going to to to to rebound or or or move in the way at the economy is is is pushing it at that particular point everything everything that we do as an economic back, right? And so unless you unless you feel that the world's coming to an end the United States is going to be Venezuela next week or something like that. You know, it's not worth panicking and trying to figure out how far these markets are going to go down. And when you're going to re bind on the way back up is it now. No. And and less, even if it's Venezuela or. Guess what these things get revamped? And you had back back in the nineties. You had the Brady Brady bonds which actually helped out everyone, even when they went defunct in one way, shape or form. That's a that's a whole story in itself. And most of our listeners probably have no idea what we're talking about. But I hadn't thought about the Brady bonds in a long time. But in one thousand nine hundred eighty four when you were starting Eighty-three, basically, our money center banks are Chase Manhattan Bank of America or JP Morgan they were literally bankrupt because they had lent so much money to Mexico and other emerging market nations. They were literally bankrupt. But we weren't we weren't willing to let them show they were bankrupt. And so they came up with this strategy. So just tell us quickly that story 'cause that's a good one. Just think about. So you you hit the nail on the head in an economic policies. Lease the big money center, banks or bankrupt. And you know, you go ahead to two thousand eight and and in essence, you know, depend on market Mark to market, and where where what the government had to bail out these banks, and basically what they did was that the banks had had lent money to these various emerging markets and most of them in the southern cone. So whether it be Ecuador west. The mexico. Whether it be. Argentina Venezuela, Brazil, they had lent money to these to these these these countries the countries themselves actually could not pay back the loan. So the government then went and. And the US government went to back, those loans themselves and essence, they they put the US government guarantee on the package that right and nNcholas Brady was the mastermind of that. That's why they call them Brady bonds. That's correct. Treasury Secretary under George H h George Hw. Right. Absolutely. So, you know, the reason that we wanted to talk about that Mark is that understanding history helps us to better understand where we are today, and what might happen tomorrow. And that's the reason we're talking about that. But when we come back, Mark, we're gonna talk more in depth about what wavelength is doing and some of the interesting strategies, and so forth, you're putting in place based on your understanding your experience, and what you're seeing happening now, and what you expect to happen in the future. So hold on with us right now, we're going to traffic. We'll be right back money reaching wealth..
"big money center" Discussed on MAD MONEY W/ JIM CRAMER
"Fixed income currencies and commodities business actually up four percent versus the previous quarter, a terrific book which could now I wince when I saw that revenue worrying that bears would seize on that one one number. Okay, because that's what was highlighted when we saw the headlines on TV and wires, but citiz- quarter was stronger than if I appeared the revenue line. Didn't tell you enough. The main highlight was actually the company spending display, which is what allowed them to deliver earnings beat. That was nice. Plus they back in the standing seventy five million shares the quarter which is part of that total six point, four billion. That the company returned to shareholders which is significant in for a hundred seventy. Two billion coming city do great businesses. Okay, the exects executions. Terrific. And that's good enough for stock trades at only nine times next year's earnings and just one point. One times, tangible book value what you get if you cut down the company and we dated everything tomorrow. The buyback is one of the biggest on the new York Stock Exchange, and the balance sheet is rock solid. Even if repurchasing twenty percent of the share-out over the past six years. Hence why the stock value of buck forty, six, staying strong all day. It's still well off. It's eighty are high and it's six dollars. I am telling you represents tremendous. Okay. How about the greatest Bank on earth is what some people would say, Dave pee more you at first glance, this one looked pretty good, nice top and bottom line beat with a slightly better than expected editor smart. However, there were some things to nitpick investment banking a little bit rough, and this fixed income currency and commodity revenue was down eighteen percent versus the previous quarter. And create, especially in consider the city's Fiqh AS Roma's up nicely. Commercial banking declined by two percent last quarter and consumer community banking was up six percent. There were nevertheless appre station declined mortgage activity, but it was a great quarter. They made a ton of money. I, I'm nitpicking. Like I said, it's usually profitable, but there was a buzzkill the thing that caused the stock closed down. One point, one percent after very strong opening Jamie diamonds commentary in the medial Jamie talked about and I quote Brexit Italy trait reversals of QE, Turkey, Argentina, Saudi Arabia. It's an extensive list the stuff, and I'm on went on to say those things don't derail strong economy, but they are out there. And eventually it may have an affect, no one should be surprised if it happens down the road and quote, while diamond still thinks Connie's going strong and Nicotiana money for shareholders. It's strong in spite of these issues, which is why warned that the market may not take it. Well, the fed keeps raising rates. You gotta understand. James normally a pretty optimistic. So even though his comments weren't negative in the quarter was fabulous. He's down more cautious than it used. Now, this guy thought a major change versus the blue and Jamie diamond. We interviewed in Philadelphia just a few weeks ago and that that discourage me little. That's j.p. Morgan is still best to breed, and I bet a week from now it makes up the losses endured stock today and clears one hundred ten dollars from its current. Your one? Oh, seven perch down a bucket team for the day after be up at one ten earlier in the morning. As for Wells Fargo, you know what? The numbers pretty typical. What we've come to expect company delivered a top line beat bottom line, miss this point income net interest margin slightly, but average total deposits shrank by three percent. Your rear average loan balance fell. One percent, although good enough spent starting to make a comeback. I like to stock very much down here. Fifty two bucks up sixty seven cents today do cheap to, nor thing you need to remember is that investors just wanted Wells Fargo to get its house in order if years of being held back by that big cross selling scandal. And then they doing just that Mr. sloan's clinically Johnny. When you put them all together the results than big money center banks, let's say on remarkable. So from Jamie diamonds, more damn become a about the world..
"big money center" Discussed on CNBC's Fast Money
"Not necessarily for the March. A win win for the markets. And that's why the markets are not. I'm not. I mean. Setting is you don't want the market does not wanna fat. That is that is their hands are tied remarkable once said, saying right now is if the fed continues on it rate rising pace, it's because the economy's doing well and there's no real aftershocks from a trade war. If there's an aftershock from the trade war, the fed can back up a little. So I think he's painted into a corner Powell on land that he likes to fat is more boxed in into raising rates in December because of that President Trump tweet. Now I hopefully. Whatever we want. I tell you what I think right now are fed, fortunately is an independent fed, and I think there's the jury of proof will be that actually they're responding to pressure from the White House, but there's been enough pressure on the fed by other people to say, hey, you know what? Look at the flattening, you're moving too fast. And even though we do have inflationary pressure and I think we do, I think you could make an argument that even you had fed Powell twice last week in front of humphrey-hawkins speech. You had a chance for him to try to again, stay in his lane, but he got all the time about trade tariffs. He got asked about these executives factors and the fed response to fiscal policy. They don't lead it, and I think that's what you're going to know about this fete. The bigger concern is not so much the bond market. It's the currency markets. It's the currency war that started last week, and this could be a reaction to it. I mean, we saw the dollar dropping reverse today. If you get another strong dollar 'bout here, that's the biggest concern. The market can handle higher rates. As long as there's growth, the market can't handle a higher dollar for too long. Higher the dollar goes, it's like the new Vicks. The higher goes, the more risk in the global system. Where were you? And I last week around lunchtime member, we did a TV show the hotel delivering power. John's John's charitable. charcoal year, go ahead. Some people were there. What did I always just in the gutter out of the gutter and back into finance. Guard said that from Oregon asset, the said thing that concerns them here is the speed with which currencies are moving out that BK's on you. That's that's the biggest risk to the global market. Now occurrence your is not a good thing for coming, but I tell you what I just quickly say, if you look around the world fundamentals, which courtesy would you say his trading off of its Mark? I to me if any of them, it's probably the well certain rates. The Bank soaring today, which our next guests called less than two weeks ago on this very show. We know that the financials out of the game with the big earnings reports were down hard. And yet it's their reversal that actually caused the reversal in the market, especially as tech started to falter. So my haunt shoes that they're telling us that we've actually had all the selling, at least for now that we're going to have regional banks very bad, but the big money center banks quite good. It was a great call and chart MasterCard or worth a quarter. So macro is back at the Mazda. So part where banks going now, what does it mean for the markets? Right. Well, I mean, the key is that it is the big money center banks versus regionals. They're out performance is a function of their proceeding under performance. But first, let's look at tenure yields. Here's a chart, no judgments or annotations by me. I think one way to draw the lines as follows. And what we know is you've come out of the apex of this very well defined triangle meaning a series of lower highs, higher lows, a moment of indecision, and then it comes to life and that sort of breakout move. Let's put that in the context of the BK x. index, which is the KB w. big banks. It hasn't quite broken out yet, but the presumption is that it will right. So back to the yield chart. Again, this has broken out. The bet is that the banks will in terms of yields and where we sit in relation to the long-term bottom..
"big money center" Discussed on CNBC's Fast Money
"It does a lot quicker people to to your point yes so banks will do right now is they'll make a whole bunch of really junkie loans that's going to be the next six to twelve months because they don't have that those names necessarily to do anymore so they're going to try to do more loans and get volume rather than quality and that happens every cycle this is not unusual so you mentioned the banks a hit today after disappointing earnings or next guests was the man who said to fade the banks exactly one week ago what we knows of course financials have been the dream with industrials and they've been a real misfortune for anyone who's been longer overweight and i don't think that's going to end it call but the chart mastercard or worth of cornerstone macara's back at the plasma with a new call hi carter i mean you can't flip and flip too much obviously but i'm surprised frankly how well they recovered intraday meaning we know that the financials out of the game with the bigger earnings reports were down hard and yet it's their reversal that actually caused the reversal in the market especially as tech started to falter so my hunch is that they're telling us that we've actually had all the selling at least for now that we're going to have regional banks very bad but the big money center banks quite good this is the xl f overall and obviously we have this downtrend but if you have a well defined head and shoulders top head and second shoulder the neckline right here you should break and instead of breaking we held and then we held again and then we held again now he added the bottom line one could say right but isn't ultimately going to break that's the risk but keep in mind where this level is this twenty thousand six level and look at actually the long term chart of xl f what we know is that xcel aleph is actually sold off to a level where it is a sensually bounced repeatedly and it came to life off that line again my haunt she is that they're telling us even the intraday recovered while they closed lower that they've had their beating just as industrial to some except the market really is going to be depend on how these tech names perform in car to come on over to the desk we've got questions for carter so it's just let's get bigger long thanks michelle does the chart of the kra the regional banks look similar to xl off gary is worse which care or so right to leading for the better part of two years and yet of late and specifically the last two weeks the regional banks the ones that are under the most pressure whereas the money center banks call they used to call methadone anymore the big heavy ones were so bad that they're actually stabilizing the face of what some say we're good results and others say we're bad results dealing with the posits and some of the loans so how far does that have to break that trend line that you just drew they are how far does it have to break is it a percentage that you're looking forward to break below to change your stance on meeting so the reason for caution for longtime and this is because basically the way forward is industrials and financials but to have the news that hit and then to hold the way it did albeit down and i would suggest that that's not the risky part of the market now i think they will bounce off that trend line it would be at least a two percent violation of that because it's all about techno carter how does play into this if we see i mean today was decent volume in the financials that we've seen some big increasing volumes does that mean is that make you think that maybe we're going to get that break out right well volume is most important at tops and bottoms and we're not really at a topper about them that's when you have a major transition we're just a sell off twelve percent to a trend line and as a now it is holding i'm going to go back to the original thing that we're talking about on the show twenty eight hundred on the five hundred and i'm going to incorporate a game that we play begrudgingly traded or faded yeah what would you what would you had a breakout twenty yeah so you think we're going to.
"big money center" Discussed on Talk 1300 AM
"In the you know it's it's not a frothy market in my opinion jp morgan chase black rock in wells fargo all reported better than expected quarterly results yesterday s and p500 profits in this earnings season now expected to have risen 112 in the 4th quarter of last year in all eleven of the s and p500 sectors are expected by many to post increases in both earnings and revenue so folks this would be the first time since 2011 that all sectors in the s and p500 posted sales and profit growth for the same quarter we're very early into the earnings reporting season it just basically started yesterday yesterday in it's going to ramp up as we as we go over the next couple of weeks but as many have reported in its many the most important dynamic in my opinion to focus on in this market is growth yep there will be some risks to this rally more importantly going forward looking ahead there is really broad economic growth both here in overseas in recent data have suggested to me any way that the use economy is picking up steam the labor department said that its consumer price index excluding the volatile food and energy sectors gain to three tenths of one percent last month biggest advance in the core sepia cpr which is that it is in twelve months so a pretty good labor department report the s and p500 the nasdaq both registered their age record closings out of the last nine trading days in 2018 the dow hit it six closing record high of the year already in herod here is the 13th of january the fact that all the big money center banks beat on the bottom line yesterday it's a pretty good omen that for the rest of the earnings season in fact the economy is going okay inflation is kind of a non existent right now wage growth is not an issue so we continue to move higher in the stock market and you enjoy the ride to the the.
"big money center" Discussed on Bloomberg Radio New York
"And technologies learn more at nj it dottie e d you and to learn more about what's going on in the markets of course we bring in dave wilson bloomberg stocks columnist stand editor and also blogger at mlive go on the bloomberg also where this is scott dorf he is a bloomberg prophet and managing director of amherst pierpont securities all right dave wilson lists begin with you hours looking an airline stocks earlier today plus also were taken a look at some financial says specifically bank of new york state street as well as people's united so that the big money center banks but smaller more regional play there's very see more of an effect of what's happening in the bond market on their business and again we can look at interest rates sort of playing out in the stock market only two of the eleven main groups in the s p 500's higher at the moment one of them energy greg jarrett talking about how oil prices are up so that much is clear the other is the financial we're talking about those banks say they do stand to benefit ultimately fro rising bond yields and you know the other side of the coin worst performer among the eleven main groups real estate talk about an area that gets hit by a rate increase got the majorities right well didn't you got to lend nor numbers to the homebuilding adds true then again this headline was it was a whiff as i love that said line our shares are actually higher by half a percent at the moment they talked about how their results for the latest quarter came up short of estimates because of a single strategic transaction let's suppose to happen this quarter oh and by the way it's going to get taxed at a lower rate because federal tax laws change so you you do have that sort of back and forth at least a start let's bring you on him in here at scott dorfmann gothic managing director at amherst pierpont securities we are seeing that sell off accelerate and the 10year yield after china are after a story said that china was considering whether to pare back its purchases of treasuries do you think that this is the start of something bigger and that at this time is different well i could get continuation of what's going on really since early september i'm while most uh most people focus on the long end of.
"big money center" Discussed on P&L With Pimm Fox and Lisa Abramowicz
"Or the financial uh the bank are very cheap at my mind uh energy when you hold on when you say banks are you talking about big money center banks like jp morgan bank of america as well as maintaining morgan stanley citigroup hit a group apt fully all of the above and then they regional banks were also pretty attractive they're not quite as she bears the money center bank maybe because people were burned more the money hunters than they were in the regional uh but i consider the regional attractive as well um it it that on the finance in the financial sector and then in energy i consider the pipeline very very cheap uh got burned because of the drop in oil prices but you know we're pretty were were almost back to the record high production level for crude oil in the united states the pipelines are carrying more uh the expectation is we're going to increase production going forward cracking it's becoming progressively more efficient lower cost uh we're going to consume more this product somebody's got to carry it and yet the stocks are tape well so here's what i'm struggling with a lot of people have said that the lease credit conditions has enabled the stock market rise and if you start to see a 10year treasuries at thirty year at their thirty three percent i yields any and above that's could increase the borrowing costs of a lot of companies want that hit the stock market.