Displaying items by tag: banks

(New York)

If you are keeping an eye on financial stocks, this morning held a very bad omen. Citigroup was the first big Wall Street bank to report earnings, and the numbers weren’t pretty. In particular, the ever important area of fixed income trading revenue was disappointing, with total revenue dropping 21% to the lowest in seven years. The company missed its full-year profitability target by a wide margin.

FINSUM: The reason this is so worrying is that the fourth quarter was a very volatile period for markets. Such environments usually send trading revenue surging for banks.

(New York)

Markets are having a very rough day. Both the S&P500 and the Dow are down almost 3%. Financials have been leading losses. The selloff appears to be centered on fears over the fragility of the US-China trade “truce”. Treasury bonds have been rallying, leading to selloffs in tech and banks. The Treasury curve started to invert yesterday, which also seems to have spooked investors.

FINSUM: What a difference a day makes! Just yesterday it seemed like stocks might be lined up for a nice end of year run. A day later, the trade trace has created more tension than before and the yield curve is starting to invert.

(New York)

The biggest and most famous investor of them all just took a big position in US financials. In particular, Warren Buffett just made a large investment in JP Morgan to the tune of $4 bn. Buffett already holds a $23 bn position in Wells Fargo. Berkshire Hathaway has a history of making successful investments in banks, including in Bank of America. Buffett also boosted its holdings in BAC, Goldman Sachs, and US Bancorp.

FINSUM: Rising rates are good for banks. Recessions are not. The risk and reward is clear.

(New York)

One of the big questions investors and analysts are still trying to sort out is who are the biggest market winners and losers as a result of the midterms. Here are some insights. The sector which seems likely to gain most is healthcare, as the risk of more regulation looks diminished, and the chances of increased government healthcare spending (as a result of the election of Democrats in key states) seems higher. The sectors which seem likely to lose out are banks and telecoms, both which seem likely to face much greater scrutiny by the now Democrat-led House.

FINSUM: We would also lump big tech into the losers category as increased scrutiny and regulation of the sector is one of the few areas of bipartisan agreement right now.

(Washington)

With the midterms finally over, investors need to think critically about how the market will respond. In particular, specific sectors will have different reactions. With that in mind here are six sectors to watch. Drugmakers seem likely to be seen favorably as the split between the parties means new regulation governing prices seems less likely. Banks could go either way, but most expect Trump’s deregulatory agenda to continue. Technology is looking less favorable as regulation and scrutiny of the sector is one of the few areas of bipartisan agreement. Industrials are looking less favorable as well, as the odds of a big infrastructure package have decreased. Energy seems neutral, as no big changes appear likely. Finally, marijuana stocks are likely to jump.

FINSUM: There is going to be quite a range of reactions over the next few months as each sector digests how the newly split Congress will affect them.