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WFC | JCP Helps U S Benchmark Breach Key Level | Stocks added to smallish gains early with all three of the major market gauges finishing higher Thursday after better than expected earnings from a new batch of retailers including JC Penney helped alleviate worries over fading consumer strength A smaller than expected drop in durable good orders was supportive for equities while an unexpected rise in new jobless claims last week was largely attributed to a holiday shortened reporting period The modest gain was enough to push the S P 500 through tough closing resistance at 1850 its close above that line at 1854 is a new record high
Who Knew Retail stocks rose supported by better than expected quarterly results by J C Penney JCP and Best Buy BBY JCP encouraged investors by saying it s now in the final year of a lengthy turnaround The struggling department store retailer also drew support after posting an adjusted Q4 net loss of 0 68 per share beating analyst expectations by 0 19 while revenue narrowly missed expectations after a 2 6 slide from year ago levels Same store sales rose 2 In remarks to the Senate Banking Committee Fed Chairwoman Janet Yellen acknowledged the recent weakness in U S economic data was likely due to harsh winter weather but she also said the central bank was unlikely to change its policy of a gradual tapering of its stimulus efforts unless conditions seriously worsened Nine of the 10 industry sectors in the S P 500 rose paced by gains for shares of technology and materials companies Utilities were the lone decliners Thursday
CommoditiesCrude oil for March delivery settled 19 cents lower at 102 15 per barrel while March natural gas shed 3 cents on the day to 4 51 per 1 million BTU April gold rose 3 80 to 1 331 80 per ounce while March silver added 6 cents to finish at 21 35 per ounce May copper fell 2 cents to 3 20 per pound Here s Where The U S Markets Stood At Day s End
Dow Jones Industrials Average up 74 30 0 46 to 16 272 71
S P 500 up 9 14 0 50 to 1 854 30
Nasdaq Composite up 26 87 0 63 to 4 318 93
GLOBAL SENTIMENT
Hang Seng Index up 1 74
Shanghai China Composite Index up 0 30
FTSE 100 Index up 0 16
UPSIDE MOVERS
COA Agrees to 385 mln buyout by Essilor International EL PA and the Canadian direct to consumer retailer receiving 11 17 C 12 45 a share from the French vision care products company a 19 premium over COA s closing price Wednesday OCN Said it was working with the New York Department of Financial Services to resolve the hold on a 2 7 bln purchase of mortgage servicing rights from Wells Fargo WFC Also Q4 EPS beats by 0 05 Revenue in line after 135 rise to 556 mln IQNT Shares climb to a 30 month high after the networking equipment company reported Q4 net income of 0 27 per share topping estimates by 0 08 while revenue also narrowly eclipsed analyst expectations
DOWNSIDE MOVERS
INO Prices offering of 18 96 mln shares of its common stock at 2 90 each
CTRX Q4 earnings miss views same store sales drop
CHS Swung to a fiscal Q4 loss posted earnings expectations as same store sales fell and increased promotional activity hurt margins
After Hours Stock News From Copyright 2014 MT Newswires a Division of MidnightTrader Inc |
WFC | Wells Fargo A Lesson In Dealing With Fear | What would you do if we told you that a financial crisis was coming Specifically let s drill down to a single bank stock and say that we knew for certain that Wells Fargo s WFC share price would drop by more than 70 Moreover this price decline wasn t necessarily going to be capricious in nature as Wells Fargo s earnings would also drop by roughly 75 for the year We didn t know when this time would come but rest assured it was coming
What would your course of action be Would you avoid shares of Wells Fargo like the plague or last year s trend We believe that most people would or updated for the present most people would have avoided Wells Fargo had they known what was coming Yet we would like to express caution on this front What seems like a disaster could simply be a folly of short term judgment Consequently in thinking about the future it s important to recognize that fears are often fleeting while long term business partnership decisions are regularly lasting Said differently even if you come up with a classic bad news investing story in this case Wells Fargo in 2009 it s possible that one s memory could simply be
Let s begin with some history Below we have included an for Wells Fargo dating back to the end of 1995 which incidentally is about a century and a half after the company started doing business Here you can observe that the financial crisis did indeed have a dramatic one year effect on the company s profitability and consequently the share price reacted violently
Yet let s take a look at the performance results for a long term partner in this business Since the end of 1995 an investor would have received total returns of 11 3 against the S P 500 s return of 7 3 during the same time period Expressed in another way a hypothetical 10 000 investment would now be worth about 70 000 if invested in Wells Fargo while it would only be worth 35 000 in the index In observing the yearly dividends it s clear that a dramatic cut took place Yet the patient investor still would have seen their dividend grow by over 8 per annum in total
Now some might point to this as a cherry picked example whereby the return results happened to oust the index returns In reality it s actually much more difficult to find a period where shares of Wells Fargo underperformed the index rather than outperformed If you bought shares at the end of any year ranging from 1996 until today not only would you have a positive return but also Wells Fargo would have beat or tied the performance of the index in 94 17 out of 18 of the occurrences
An astute reader might imagine that the one period of underperformance for Wells Fargo was directly prior to the company s 70 price decline Yet even this seemingly worst case scenario isn t quite the bad news story it s cracked up to be in the intermediate term Below we have included the performance result table starting from 12 31 2008 Here we see that Wells Fargo had total returns of only 10 4 against the S P 500 s result of 16 per annum Granted this represents a decently sized gap but keep in mind it s the only example in the past 18 rolling periods
So this missing out on 10 annualized returns is the benefit of being right about the temporary share price collapse of Wells Fargo True Wells Fargo s share price and earnings dropped by more than 70 in a year Moreover the dividend was handily slashed and has yet to return to its pre crisis level But it stands that if you bought shares at one of the worst possible times and simply watched all of this happen you would still be sitting here today just over half a decade later with a 10 yearly total return To us that speaks to the importance of viewing your partnerships as long term decisions
With the above being said let s move on to the potential future prospects of the business Below we have included the Estimated Earnings and Return Calculator to illustrate how analysts are presently viewing this company Specifically the calculator uses the consensus median estimates from analysts reporting to S P Capital IQ for the next four fiscal years along with a long term growth rate In reviewing these estimated earnings numbers appear more than reasonable If Wells Fargo were to keep its current dividend payout ratio the estimated earnings materialize as forecast and Wells Fargo trades at 15 times earnings this would equate to a 12 4 yearly return for the next 5 years
Now it is paramount to underscore the idea that this is simply a calculator Specifically it relies on analysts consensus estimates and a default P E ratio If for instance the same earnings estimates materialize but Wells Fargo shares are trading at the same P E as today this would only indicate an annual expected return of roughly 8 However it does provide a solid baseline for how analysts are presently viewing the company In addition a F A S T Graphs subscriber has the ability to change these forecasts to fit their own expectations or scenario analysis
Now don t misunderstand us today there are reasons to not like Wells Fargo We didn t dive too deep into the underlying business model but the company lists no less than in its annual report perhaps you could even imagine a couple more You might believe that another financial crisis is round the bend or perchance the share price could drop 30 40 or even 70 next week next year or next decade at the very least in your lifetime There are always going to be reasons and times when it was better or worse to own a security
Yet the important part the takeaway is that even if one of these times comes an investor could still do quite well in the long term As long as you don t panic and sell you might take solace in the fact that Wells Fargo made it through the worst financial crisis we have seen and is now pumping out stronger profits We think there s a lesson in there Instead of trading on fear if you simply partnered with the company there wasn t a bad time to own the stock There were bad times to sell But despite the major and seemingly catastrophic events that occurred shares held today have provided returns that have not only been positive but are also respectable Whether you like the company or not we believe Wells Fargo provides a solid case study on how to deal with short term fears
Disclosure Long WFC at the time of writing
Disclaimer The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted The information in this document is believed to be accurate but under no circumstances should a person act upon the information contained within We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation |
CMCSA | Fox TV scores highest NFL rating this season for Cowboys Steelers game | Reuters Two big National Football League games scored a noticeable television ratings uptick on Sunday in the first weekend since the U S presidential election according to Fox and NBC amid a slump of 14 percent for NFL games this season Fox a unit of 21st Century Fox Inc said it drew a 17 8 overnight rating the highest for any NFL game this season for its broadcast of Dallas Cowboys Pittsburgh Steelers game NBC a unit of Comcast Corp NASDAQ CMCSA said it drew a 14 3 overnight rating the highest for any primetime NFL game since the opening weekend of the season for Sunday night s game between the Seattle Seahawks and New England Patriots 2015 Super Bowl rivals Coming into Sunday NBC s viewership has declined 18 percent from last season while Fox was down 4 percent Though the U S election has been cited as a key factor in the ratings slump this season NFL Commissioner Roger Goodell said the amount of commercials during the game could be another factor
Should we look at ways to maybe take some commercialization out of it Either in less ads or maybe have the ads come in different ways than the traditional pods Goodell said at the New York Times DealBook conference last Thursday |
CMCSA | With election behind Sunday football sees ratings silver lining | With a seemingly interminable U S election finally over is America ready for some football In a season marked by across the board ratings declines Fox s FOX 1 2 FOXA 1 4 broadcast of the Dallas Cowboys Pittsburgh Steelers game drew the highest rating of any NFL game this season a 17 8 overnight rating Meanwhile NBC CMCSA 1 2 got a 14 3 rating for its night game matching the Seattle Seahawks and New England Patriots the highest for any prime time game since opening weekend While discussion abounds about what s affecting ratings the ratings draw of these two matchups can t be ignored Overall ratings are down about 14 Before Sunday s games NBC s ratings have been down 18 and Fox s about 4 |
CMCSA | Comcast rolling out two family focused Hispanic networks | Comcast NASDAQ CMCSA is launching two new Hispanic networks in January after evaluating dozens of proposals The company has chosen Primo TV and Kids Central for the launch two networks promising family programming targeted to bicultural Hispanic youth Kids Central owned and operated by Condista Networks is English language and aiming at viewers ages 3 7 with an expanded audience in prime time targeted at whole families It will also have Spanish language video as part of its on demand content Primo TV meanwhile is also English language and targeted viewers ages 6 16 It s owned by V Me Media Comcast carries more than 160 independent networks In 2011 as part of the terms of its NBCUniversal purchase it promised to launch 10 new independently owned and operated networks eight of them minority owned by 2019 the two new networks will be the sixth and seventh in that count |
CMCSA | NBC takes over Thursday football with reportedly higher ad rates | As NBC CMCSA 1 5 takes over its half of the season of Thursday Night Football broadcasts from CBS NYSE CBS tonight it looks like it might get its wish for higher ad rates than its rival In the summer NBC had argued that its Thursday night games might command higher rates coming closer to the U S holidays and it s gotten as much as 600 000 for a 30 second spot Reuters reports It had been asking 560 000 in line with what CBS got for five Thursdays earlier in the season to which it drew an average of 14 7M viewers down 16 Y Y NBC s back loaded games might also benefit if last week s football ratings uptick is linked to the conclusion of U S election season Comcast today hit an all time high of 68 72 |
CMCSA | AT T Time Warner deal may hinge on FCC licensing | Speculation about the chances for approval of AT T s T 0 7 85B deal for Time Warner TWX 2 has turned on some key sub issues like whether the FCC would get a chance to weigh in as opposed to merely antitrust reviews Time Warner could sell its license for TV station WPCH in Atlanta sure it s Time Warner s FCC licenses for satellite distribution getting its programs into space and then to people s homes that could bring in the FCC and thus the biggest threat to the deal Time Warner has dozens of licenses for its dishes that would trigger a review if transferred to AT T and if the company sold its dishes to a third party that party would still need to get the FCC s OK AT T thinks it can offload licenses that would trigger a review says RBC Capital Markets Jonathan Atkin Meanwhile the FCC has broad public interest authority to end deals that it has a handle on even by pushing deals to a lengthy hearing as it did in squelching AT T s bid for T Mobile and Comcast NASDAQ CMCSA s deal for Time Warner Cable But the merger might not face an FCC review under a Trump administration the dawn of a new regulatory day says analyst Craig Moffett who now gives the deal a 65 chance of approval MoffettNathanson upgraded Time Warner to Buy with a price target of 100 more than 10 upside from today s close |
WFC | Wells Fargo CEO says bank changing handling of whistleblower complaints | By Dan Freed Reuters Wells Fargo Co N WFC Chief Executive Officer Tim Sloan told workers on Thursday the bank was changing the handling of whistleblower complaints after allegations it retaliated against employees who called an ethics hotline to report sales abuses Sloan announced the change to a gathering of about 2 000 employees in Des Moines Iowa as part of a conversations tour he and other executives are making to try to restore employee morale following the bank s recent sales practices scandal Sloan who took over as CEO of San Francisco based Wells Fargo last month did not detail how whistleblower complaints will now be handled but said the bank was also reviewing allegations of retaliation against staff Wells Fargo agreed in September to pay 185 million in penalties and 5 million to customers after revelations its staff opened up to 2 million deposit and credit card accounts in customers names without their permission to meet internal sales goals Some former employees have said they were fired after they called an internal company ethics line to report the misconduct We ve found that the majority of cases were handled appropriately However there are some instances where we have questions so we are doing further investigation of those matters Sloan said He also spoke of an effort to repair relationships with customers after the scandal which has damaged Wells Fargo s reputation and put Wall Street under renewed scrutiny The effort includes contacting thousands of retail and small business customers responding to hundreds of inquiries from elected officials and apologizing to hundreds of non profit organizations that have partnered with Wells according to prepared remarks from Sloan s presentation |
WFC | Wells Fargo whistles to a new tune | Wells Fargo NYSE WFC is changing the way it handles whistleblower complaints following allegations it retaliated against employees who called an ethics hotline to report sales abuses CEO Tim Sloan announced the change at a gathering of about 2 000 employees in Des Moines Iowa as part of a conversations tour he and other executives are making to try to restore employee morale after the bank s recent scandal |
WFC | Buffett hasn t sold any Wells Fargo | Calling Wells Fargo WFC an incredible institution Warren Buffett tells CNN the bank made a terrible mistake and now former CEO John Stumpf is a very decent man who didn t correct things fast enough As for the new CEO Buffett calls Tim Sloan the right man for the job and disagrees with those who say Wells should have hired an outsider to fill the position |
WFC | Buffett breaks silence on Wells Fargo bogus account scandal | Reuters Wells Fargo NYSE WFC Co made a terrible mistake by keeping in place sales goals that corrupted people billionaire investor Warren Buffett told CNN in an interview in his first public comment on the bogus account scandal at the bank It was a dumb incentive system which when they found out it was dumb they didn t do anything about it Buffett told CNN s Poppy Harlow Berkshire Hathaway NYSE BRKa Inc the conglomerate run by Buffett is Wells Fargo s largest shareholder The scandal at Wells Fargo emerged in September when the bank agreed to pay 185 million to settle regulatory charges that some of its employees opened as many as 2 million accounts without customers knowledge in order to meet sales targets It also led to the departure of veteran Chief Executive John Stumpf last month Buffett described Stumpf as a very decent man who made a hell of a mistake and didn t correct it When asked by Harlow if he had advised Stumpf to step down Buffett said he had not I don t know the exact words but I said I don t think you understand the gravity of this he said The legendary investor backed Tim Sloan who succeeded Stumpf as CEO of the third largest U S bank by assets Buffett has over the years repeatedly praised Wells Fargo whose stock Berkshire has owned since 1989 and this year asked the U S Federal Reserve for permission to buy more |
WFC | Will Student Loan Crisis Torpedo Stock Market | All is well with the U S economy right
I mean the war torn housing market is finally ready to check out of the rehabilitation center Prices are up for 21 consecutive months and counting
The slumbering manufacturing sector is springing back to life too The latest Philly Fed Manufacturing report jumped three points higher well ahead of economists projections
Even more encouraging overeating at the debt buffet is no longer trendy Instead consumers appear dead set on getting their financial houses in order
Case in point Economists from Wells Fargo Securities note that delinquencies have trended lower across nearly every type of consumer credit category
I hope you caught that
They specifically said nearly every type of consumer credit category
Now don t kill the messenger but the lone exception here could end up torpedoing the tenuous recovery
I warned that it was a concern over a year ago But now we could be on the cusp of a full blown crisis And there s one sector you definitely don t want to own if disaster strikes
Student Loans A 1 Trillion Clear and Present Danger
A single chart reveals the clear and present danger that the U S economy is facing right now student loans
While delinquency rates on every imaginable type of consumer credit home credit card auto etc keep trending lower student loan rates are headed in the opposite direction
At the end of the third quarter of 2013 student loan delinquency rates rose to 11 8 according to the Federal Reserve Bank of New York
If that s not alarming enough chew on this
The delinquency rate is most likely understated As Rohit Chopra of the Consumer Financial Protection Bureau told Bloomberg recently Compared to other financial products performance data on student loans is much more opaque
Making matters worse the Department of Education which makes calculations on an annual basis reveals that 14 7 of students flat out defaulted on their federal loans in the first three years That s up from 13 4 the year earlier
No Quick Fix
What s going on
Well according to the top minds at Wells Fargo WFC The continued upward trend is reflective of the unique characteristics of the student loan market such as lack of credit history for most borrowers and the government sector being the dominant provider as well as the weak recovery in jobs and wages
In other words it s d j vu all over again
Institutions including the government recklessly lent money without taking into account creditworthiness or anyone s ability to repay their obligations Just like they did during the run up to the housing bubble
And now we re shocked there s a problem
Come on people Anyone with a basic understanding of math could have predicted this
For over a decade now the average cost of a college education has been climbing Meanwhile the average earnings for a college grad have been declining
Specifically the average tuition and fees at a public four year college are up 87 5 since 2000 Whereas the average earnings for a full time worker age 25 to 34 with a bachelor s degree are down 13 7 over the same period
Taking on more debt to secure a job that pays less and less doesn t make fiscal sense Not in the real world at least
More Than Meets the Eye
Now at face value the 1 03 trillion in outstanding student loans might not seem like a big deal
Not when you consider that outstanding real estate loans check in at more than 13 trillion
But don t be fooled into complacency just because we ve weathered bigger debt crises before
The potential economic damage here extends far beyond the loan amounts
The crushing weight of student debt has many recent grads still shacking up with mom and pop For obvious reasons that s not good for marriage or birth rates which have direct implications for economic growth
Plus people with onerous student loan debt burdens or worse defaults aren t in a position to buy cars homes or any other big ticket items
It ll be Rent A Center Inc RCII or bust
I m not kidding either Jobs remain scarce Even for more educated Americans
In fact college grads have been leaving the workforce every month at an equal if not faster rate than workers without a high school education since the end of the recession
And without a job there s no way they can make payments on their student loans So default rates are bound to spike even higher
How high
One of ITT Educational Services ESI private loan pools the Peaks Private Student Loan Program carries an eye popping default rate of 59
If that s a harbinger of things to come we could be in store for a mega default before long which would put a meaningful dent in economic growth
Profit educators like ITT Apollo Education Group Inc APOL Corinthian Colleges Inc COCO and DeVry Education Group Inc DV could be the hardest hit as access to lending freezes up and or the value of a college education at current prices comes increasingly into question
Bottom line As Forbes Brett Nelson plainly states Like it or not the student loan crisis is everyone s crisis now Indeed
It could prove formidable enough to put an end to the budding recovery So no all is not well with the U S economy The student loan crisis is a trend we need to be monitoring very closely |
WFC | 3 High Yielding ETFs That Hit 52 Week Highs | There are scores of writers commentators and analysts who have declared the death of bonds It should be noted that many of these people prematurely made the same declaration 10 years earlier in 2003 2004 Nevertheless the overwhelming sentiment today is that an attempt to squeeze cash flow from a stone produces more risk than reward
For the last few months I have been challenging the latest predictions that interest rates must rise and that bond prices must fall It is not that I believe rates will necessarily turn back the clock to revisit all time lows rather the surge in the 10 year from 1 4 to 3 0 in 2013 may have represented two steps in one direction while the stabilization or slight decline in rates may represent a probable step back here in 2014
One thing is for certain ETF enthusiasts are not throwing in the towel when it comes to the pursuit of higher yielding income whether it comes from junk bonds MLPs or multi asset funds Here are three high yielders that just hit 52 week highs
1 Guggenheim International Multi Asset Income HGI This exchange traded tracker invests at least 90 in securities that constitute the Zacks International Multi Asset Income Index There are roughly 155 investments selected from a universe of global real estate trusts REITs American Depository Receipts ADRs master limited partnerships MLPs closed end funds CEFs preferreds and royalty trusts The 12 month yield of 4 is a highlight for those who have chosen to participate However the fund s 30 million in assets under management and low trading volume could make it difficult for stop limit order advocates to exit the position at a desired price point
Guggenheim contends that HGI is geared to outperform the MSCI EAFE Index Over the last 5 years HGI has annualized at 13 15 whereas iShares MSCI EAFE EFA has compounded at 11 7 per year Although that may sound like a venerable advantage since HGI s inception on 7 11 2007 both funds are even at 0 Regardless those that might prefer HGI should make up their own mind on the appropriateness of the comparison as well as the attractiveness of the annual cash flow
2 Yorkville High Income MLP YMLP It only took a few weeks last May for YMLP to fall 6 in value From some people s perspective it may be difficult to get excited about an investment where most of the annualized cash flow could be wiped out in a few weeks of rapidly rising rates Then again with 250 million in assets under management and a distribution yield of 8 9 there are plenty of dollars chasing the pipeline possibility
Perhaps surprisingly YMLP recently hit a 52 week high If rates manage to finish 2014 where I expect them to finish with the 10 year at 2 75 YMLP could see a modicum of capital appreciation to add to junk bond like cash flow Keep in mind I am not recommending that investors hold n hope for a particular outcome with this price sensitive investment rather I am pointing out that yield chasing has not evaporated in the wake of expert predictions that rates have to go higher
3 E Tracs Wells Fargo Business Development Company Index ETN BDCS Technically this exchange traded note is not a fund You pay 0 85 for the privilege of getting diversified exposure to the exact performance of the above mentioned index Business Development Companies or BDCs are publicly traded corporations that engage in lending at high yield rates to smaller fish The larger entities often take equity ownership in the smaller venture offering business acumen in addition to capital They are similar to private equity firms though the Securities and Exchange Commission SEC requires BDCs to invest 70 of assets in U S companies as well as to distribute at least 90 of taxable income in the form of dividends And that s how BDC shareholders often get juicy 7 9 yields
At the moment BDCS offers about 7 annualized Of course investors seem to be benefiting from impressive capital appreciation as well with the ETN hitting an all time high
Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
WFC | Laundromat Banks Too Big To Fail | As a general rule the most successful man in life is the man who has the best information
Money laundering is the process by which illegally obtained cash is made to appear as if it has been obtained by legal means
The following snippet is from Robert Mazur s How to Halt the Terrorist Money Train article that appeared in The New York Times
The House Subcommittee on Oversight Investigations and Management issued a shocking documenting the collaboration between Mexican and Colombian drug cartels and Hezbollah in narcotics and human trafficking smuggling and financial crimes in the United States and Latin America a partnership that in just the border region between Brazil Paraguay and Argentina produces an estimated 12 billion in cash each year
Yet data from the Department of Justice Asset Forfeiture Fund and the United Nations Office on Drugs and Crime Research Report show that United States law enforcement tracks down and seizes no more than 1 percent of the drug fortunes generated each year by global cartels
The rest isn t hiding in mattresses It s being washed stripped clean of information that would identify its source then transferred from one account to another and often moved surreptitiously through various business enterprises until it can settle safely in a criminal s private offshore bank account None of this happens without help from lawyers and businessmen
According to the U S Department of Justice the Sinaloa drug cartel together with Columbian drug traffickers the Norte del Valle Cartel moved 881 million through HSBC between 2006 and 2010
The investigation further revealed that drug traffickers were depositing hundreds of thousands of dollars in bulk U S currency each day into HSBC Mexico accounts In order to efficiently move this volume of cash through the teller windows at HSBC Mexico branches drug traffickers designed specially shaped boxes that fit the precise dimensions of the teller windows The drug traffickers would send numerous boxes filled with cash through the teller windows for deposit into HSBC Mexico accounts After the cash was deposited in the accounts peso brokers then wire transferred the U S dollars to various exporters located in New York City and other locations throughout the United States to purchase goods for Colombian businesses The U S exporters then sent the goods directly to the businesses in Colombia U S Department of Justice
In violation of the Trading With the Enemy Act HSBC also used various schemes to move hundreds of millions of dollars to nations subject to trade sanctions The list of nations included Iran Cuba and the Sudan
On at least one occasion HSBC instructed a bank in Iran on how to format payment messages so that the transactions would not be blocked or rejected by the United States Assistant Attorney General Lanny A Breuer
HBUS the American affiliate of HSBC repeatedly broke American Anti Money Laundering AML laws HBUS supplied the Saudi bank Al Rajhi with nearly US 1 billion Al Rajhi used at the money to finance terrorist groups including Al Qaeda
They violated every goddamn law in the book They took every imaginable form of illegal and illicit business Jack Blum an attorney and former Senate investigator regarding HSBC
Since 2006 more than a dozen banks have reached settlements with the Justice Department regarding violations related to money laundering including the following entities
ING Bank
American Express Bank International
Union Bank of California
Lloyds
Credit Suisse
ABN Amro Holding now owned by Royal Bank of Scotland
Barclays
Standard Chartered
All these banks admitted guilt and all were handed traffic tickets please pay your fine on the way out the door
You know if you re caught with an ounce of cocaine the chances are good you re going to go to jail If it happens repeatedly you may go to jail for the rest of your life But evidently if you launder nearly a billion dollars for drug cartels and violate our international sanctions your company pays a fine and you go home and sleep in your own bed at night U S Senator Elizabeth Warren
At one time Pablo Escobar s drug cartel controlled 80 percent of the world s cocaine trade His recipe for success was You bribe someone here you bribe someone there and you pay to help you bring the money back
Story Time
On 10 April 2006 a DC 9 jet landed in the port city of Ciudad del Carmen Inside the jet were 128 cases packed with 5 7 tons of cocaine valued at 100m
During an almost two year investigation by the DEA and the IRS it emerged that the smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States Wachovia now part of Wells Fargo
The authorities uncovered billions of dollars in wire transfers traveler s checks and cash shipments through Mexican exchanges into Wachovia accounts
Criminal proceedings were brought against Wachovia but even though it was the biggest action ever brought under the US bank secrecy act the case never made it to court In March 2010 Wachovia settled through the US district court in Miami and the bank is now in the clear
A Lebanese bank accused of laundering drug money through U S banks and routing it to Hezbollah will pay 102 million to settle a 2011 lawsuit brought by the U S government
The U S accused the Lebanese Canadian Bank LCB of using the U S banking system to launder proceeds from drug trafficking through West Africa and back to Lebanese financial institutions with ties to Hezbollah
These cases are only the tip of the iceberg demonstrating the role the legal banking sector plays in laundering hundreds of billions of drug and terrorist dollars around their global tax payer bailed out operations
Oh the irony
On 4 March 2013 HSBC announced profits of 20 6 billion in 2012 while it paid out a 3 million bonus to its CEO
Late last year several HSBC customers told BBC Radio 4 s MoneyBox program that when they attempted to withdraw certain sums between 5 000 and 10 000 they were asked to provide proof why they needed the money
How would you feel if a bank teller told you that you couldn t withdraw the amount of money you wanted from your account What would your reaction be if he or she said You can have 2 000 00 but you can t have 5 000 00
What would your reaction be if the bank asked you why you needed your money you were enough of a sheep to tell them they said Prove it then you ll get your money
We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account Since last November in some instances we may have also asked these customers to show us evidence of what the cash is required for
The reason being we have an obligation to protect our customers and to minimize the opportunity for financial crime HSBC
If you re a big bank moving money for a drug cartel or terrorist organization and get caught you pay a fine HSBC paid 1 9b in fines and forfeitures 10 percent of the pretax profits it earned in 2010 and then you up your fees
Of course the perfect irony is the small guy taxpayers are then the ones asked to provide proof as to why they need a couple of thousand dollars
Conclusion
Had the U S authorities decided to press criminal charges HSBC would almost certainly have lost its banking license in the U S the future of the institution would have been under threat and the entire banking system would have been destabilized Lanny Bauer Assistant Attorney General
In many instances the money from drugs was the only liquid investment capital In the second half of 2008 liquidity was the banking system s main problem and hence liquid capital became an important factor Inter bank loans were funded by money that originated from the drugs trade and other illegal activities There were signs that some banks were rescued that way Antonio Maria Costa head of the UN Office on Drugs and Crime
Too big to fail means dealing drugs and funding terrorist groups is acceptable to our dear political leaders and their shadow puppet masters the banksters
Legal Notice Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment
Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified
Richard Mills makes no guarantee representation or warranty and accepts no responsibility or liability as to its accuracy or completeness Expressions of opinion are those of Richard Mills only and are subject to change without notice Richard Mills assumes no warranty liability or guarantee for the current relevance correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission
Furthermore I Richard Mills assume no liability for any direct or indirect loss or damage or in particular for lost profit which you may incur as a result of the use and existence of the information provided within this Report |
WFC | Will YUM Continue To Grow In China Despite Avian Flu Outbreak | YUM Brands Inc YUM is set to report FQ4 2014 earnings after the market closes on Monday February 3rd Yum Brands is a US based restaurant company which operates through Taco Bell KFC Pizza Hut and others YUM is the largest fast food company in the world by number of units operating over 39 000 restaurants Recently YUM stock took a large hit after being downgraded by Wells Fargo who cited an avian flu outbreak in China as a concern China accounts for over 50 of YUM s revenue and analysts expect sales growth in the world s most populous country to continue Here is what investors expect YUM Brands to report Tuesday
The current Wall Street consensus expectation is for YUM to report 80c EPS and 4 235B revenue while the current Estimize com consensus from 21 Buy Side and Independent contributing analysts is 80c EPS and 4 239B revenue This quarter the buy side as represented by the Estimize com community is expecting YUM to report in line with Wall Street on profit but exceed slightly on revenue
Over the previous 6 quarters the Estimize com consensus has been more accurate than Wall Street in predicting YUM s EPS and revenue 4 times each By tapping into a wider range of contributors including hedge fund analysts asset managers independent research shops students and non professional investors Estimize has created a data set that is up to 69 5 more accurate than Wall Street but more importantly it does a better job of representing the market s actual expectations It has been confirmed by an independent from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market In this case we are seeing a small differential compared to recent quarters
The distribution of estimates published by analysts on the Estimize com platform range from 77c to 83c EPS and 4 157B to 4 312B in revenues This quarter we re seeing a small distribution of estimates compared to previous quarters
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already A narrower distribution of estimates signaling more agreement in the market which could mean less volatility post earnings
Throughout the quarter the EPS estimate from Wall Street fell from 82c to 80c while the Estimize consensus dropped from 81c to 80c Both groups have lowered their revenue expectations with Wall Street s consensus declining from 4 341B to 4 235B Timeliness is correlated with accuracy and shrinking revenue expectations going into a report are often a bearish indicator
The analyst with the highest estimate confidence rating this quarter is j holliman who projects 80c EPS and 4 220B in revenue In the Winter 2014 season j holliman rated as the 22nd best analyst and is ranked 7th overall among over 3 700 contributing analysts Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy In this case j holliman agrees with the Estimize community that YUM will report in line with Wall Street on EPS but j holliman takes the opposite view on revenue expecting YUM Brands to come up short
While the stock has been getting hammered recently analyst expectations for this quarter are not that bad The Estimize com community consensus is that YUM will meet Wall Street expectations on profit and produce slightly more revenue than expected by Wall Street |
CMCSA | Florida man pleads guilty to hacking spamming scheme | By Nate Raymond Reuters A Florida man pleaded guilty on Thursday to charges stemming from his role in wide ranging hacking scheme that generated 1 3 million through the hijacking of customer email accounts to send unsolicited spam messages prosecutors said Timothy Livingston 31 entered his plea in federal court in Newark New Jersey to three counts including conspiracy to commit fraud and related activity in connection with computers and access devices prosecutors said His plea came ahead of a trial scheduled for Nov 14 and followed guilty pleas in June by two other men in the case Tomasz Chmielarz of Rutherford New Jersey and Devin McArthur of Ellicott City Maryland As part of a plea agreement Livingston agreed to forfeit nearly 1 35 million as well as property he obtained using proceeds from the scheme including a Ferrari NYSE RACE and Cadillac prosecutors said He is scheduled to be sentenced Jan 27 A lawyer for Livingston did not immediately respond to a request for comment Prosecutors said Livingston who owned a spam company called A Whole Lot of Nothing LLC solicited Chmielarz to write computer programs that send spam in a manner that conceals their origin and bypasses spam filters In pleading guilty Livingston admitted that he also hacked into individual email accounts and used corporate mail servers to further his spam campaigns prosecutors said He also admitted he and Chmielarz created custom software that appropriated a corporate website belonging to a New York based technology company in order to use its servers to send spam that appeared to be from the company prosecutors said Prosecutors had previously said the scheme that targeted personal information of 60 million people including customers of Comcast Corp NASDAQ CMCSA where McArthur worked during the period in question The case is U S v Livingston et al U S District Court District of New Jersey No 15 cr 00626 |
CMCSA | Hulu signs deals with Disney Fox for new streaming TV service | By Malathi Nayak NEW YORK Reuters Video website Hulu on Tuesday announced deals to add programing from Twenty first Century Fox and Walt Disney Co to a streaming TV service that it plans to offer in early 2017 Disney and Fox as well as Comcast Corp NASDAQ CMCSA and Time Warner Inc NYSE TWX own stakes in Hulu Hulu s live and on demand streaming video service will include Fox s entertainment news sports and non fiction content along with video from Disney s channels including ABC and ESPN it said in a statement Time Warner said in August that it would pay 583 million to buy a 10 percent stake in Hulu and that its Turner networks including TBS Cartoon Network and Turner Classic Movies would be available on the new service With these two new deals in place and additional partners to come Hulu will soon give TV fans of all ages live and on demand access to their favorite programs in a whole new more flexible highly personalized way Hulu Chief Executive Officer Mike Hopkins said in the company s statement
Hulu s customers currently watch shows on demand for 8 per month with commercials or 12 without them The company has beefed up its customer service staff and has been hiring executives from outside and within to slow subscriber defections ahead of the introduction of its live TV service |
CMCSA | NBCUniversal discussing minority stake in Euronews | NBCUniversal CMCSA 2 6 is in discussions to take a stake in European broadcaster Euronews and Euronews chief Michael Peters has been tasked with getting an agreement by year s end Reuters says That stake would likely be 15 30 sources said Control of Euronews originally conceived by state owned continental channels as a European CNN would still rest with Egyptian billionare Naguib Sawiris who holds 53 The move could give NBC News a foothold in Europe even as it works to strengthen Euronews offerings |
WFC | Wells Fargo How To Trade Earnings | Wells Fargo WFC stock price declined to 45 on market s open yesterday after the bank announced its Q4 earnings The uptrend that followed is a great example of how to trade stocks during earnings season Once again I am going to talk about support and resistance levels Only this time I m going one timeframe at a time Wait don t we care of the actual earnings report I don t other than the fact that I check which companies are announcing earnings before I add a stock in my watch list for the particular day If you are though you can have a look at Motley s Fool on Wells Fargo earnings Wells Fargo Charts Daily To 5 MinuteHere is the daily Wells Fargo stock chart Note that I have omitted Tuesday s candlestick as I will describe my trading mentality before the market s open By looking at this chart I immediately notice that Wells Fargo stock is trending upwards The stock price pulls back about 50 before it prints a new higher top during the past 4 months I don t normally draw such an obvious trendline but I m including it for illustration purposes here The stock is trading higher than the significant resistance level at 44 75 which used to be the 6 month high till December The breakout that occurred on December 18 sent Wells Fargo stock price to 45 during a day when bulls controlled the market throughout the session That explains the long green body of that specific day s candlestick WFC stock pulled back to 45 That level will probably provide support to future retracements Now let s move down to the 15 min chart of Wells Fargo stock In this chart though I m including the price action that took place after the earnings report The green support line is the one I drew in the previous chart The stock price pulled back to that level during the first half an hour of trading Remember it s a pullback given the confirmed uptrend that Wells Fargo stock is following That is worth mentioning because by looking at that shorter timeframe one could assume that the stock is moving sideways As I noted my trading strategy would be to buy near 45 One likely scenario would have been to submit a limit buy order at 45 round number when the market opened Thus my order would be executed in the first 30 minutes of trading Moreover wherever I would place my stop loss it would never have been hit Yet another strategy would be to wait for confirmation in even shorter timeframes Let s go down to the 5 min chart This is how Wells Fargo stock price moved along during the day that the bank s earnings were announced It opened at 45 60 declined down to 45 and went back up to day s high at 45 83 Did the confirmation I required happen You bet it happened That candlestick pattern that I have circled on the chart may very well be considered a bullish pattern And when such a pattern is printed at a key support level I am willing to initiate a trade That s great but where do I sell now Setting Profit TargetsI need to go up one timeframe and take another look at the 15 min chart If you do that you ll notice a support level that failed on December 13 Do that now I ll wait Yes I m referring to the support level at 45 60 that failed during the pullback That support level will most probably convert into a resistance one So that s a good point to set my first profit target locking in my first profits Was that price target hit Yes it did Should I have gone long on Wells Fargo stock on its earnings day I would have made 0 50 per share in 3 hours Simultaneously I would have moved my stop loss to my entry point 45 10 I would no longer risk any money on this trade That s what I call day trading But that s not the end of the story As I would have closed 70 of my positions right there I need to set my second profit target where I would sell 20 of my Wells Fargo shares I could afford letting the remaining 10 run riding the multi year uptrend of the banking stock I would then use a trailing stop Can you guess where I would set my second profit target Exactly I would now go one more timeframe up and check the daily chart just as I started this analysis Second target profit set at the new 6 month high that s at 46 20 And if that is hit that would be 1 10 per share in my pockets When a company announces earnings I am expecting increased volatility That volatility may create an opportunity to trade such as in Wells Fargo s case Did I trade this stock No I do not have any Wells Fargo shares But if I did that is how I would trade How would you Let me know in the comments below |
CMCSA | AT T Time Warner shares dip with worries about deal clearance | By Jessica Toonkel and Supantha Mukherjee Reuters Wall Street signaled skepticism on Monday that AT T Inc NYSE T would secure the government approvals needed to carry out its planned 85 4 billion acquisition of Time Warner Inc NYSE TWX with shares of both companies falling as analysts scrutinized the deal Time Warner shares were trading some 20 percent below the implied value of AT T s 107 50 per share cash and stock offer indicating investors doubt that the companies would be able to complete the transaction The deal announced on Saturday would give AT T control of cable TV channels HBO and CNN film studio Warner Bros and other coveted assets and reshape the media landscape Dallas based AT T said on Saturday it would need approval of the U S Department of Justice and the companies were determining which Time Warner U S Federal Communications Commission licenses if any would need to transfer to AT T Any such transfers would require FCC approval AT T Chief Executive Randall Stephenson said on Monday he expects government clearances for the deal because it is a so called vertical integration that will not eliminate a competitor a situation that is viewed more favorably by antitrust enforcers While regulators will often times have concerns with vertical integrations those are always remedied by conditions imposed on the merger so that s how we envision this one to play out Stephenson told CNBC Despite its big media footprint Time Warner has only one FCC regulated broadcast station WPCH TV in Atlanta Time Warner could sell the license to try to avoid a formal FCC review several analysts said Any decision to review the deal would be made by regulatory officials at the Department of Justice and the Federal Trade Commission White House spokesman Josh Earnest told reporters on Monday The president would hope and expect that regulators would carefully consider the potential impact of this deal on consumers Earnest added Shares of AT T closed down 1 7 percent at 36 86 and shares of Time Warner fell 3 percent to 86 78 FOCUS ON APPROVALS Investors Wall Street analysts and traders on Monday expressed concerns about the implications of the antitrust and regulatory challenges I don t know how favorably regulators will look upon this said media investor Sanjay Sen chief investment officer of BloombergSen Investment Partners of Toronto The total value of broken deals is nearly 700 billion so far this year a fact that has sidelined some investors The regulatory environment has been unbelievable this year and I think everyone is on edge said an arbitrage investor considering buying exposure to the deal who did not want to be identified because they were not authorized to speak to the press The biggest deals to fall apart in 2016 include Office Depot Staples Baker Hughes Halliburton Allergan Pfizer and Norfolk Southern Canadian Pacific Railways Many of the deals drew objections from the Department of Justice and U S Treasury We are unprepared at this point to assign anything higher than a 50 50 probability of deal approval wrote MoffettNathanson Research in a report downgrading Time Warner to neutral but raising its target price by 8 to 100 The deal s arbitrage spread of more than 20 percent is wider than five other recent deals that regulators subsequently shot down or were withdrawn including Comcast NASDAQ CMCSA Corp s planned takeover of Time Warner Cable That deal had a spread of only 5 percent The deal announced just over two weeks before the Nov 8 U S election was also generating skepticism among both Republicans and Democrats OTHER QUESTIONS Others were unnerved by the rationale for the deal and the massive 170 billion debt balance the combined company may hold after the deal closes The CEOs couldn t easily explain the synergies and I can t clearly understand them said Sen who also expressed concern about AT T embarking on a new deal so shortly after buying DirecTV last year for 48 5 billion How successfully will it integrate these three large and different businesses he asked Analysts at Cowen Co said it was a struggle to understand why the acquisition made sense If it is simply differentiated content AT T is interested in we don t understand why this couldn t have been solved by some form of partnership the firm wrote in a note to downgrade the company s investment rating to market perform from outperform Analysts at Moody s which put AT T on review for a downgrade after the acquisition was announced said regulators could include conditions that limit the wireless provider s ability to use Time Warner content as a competitive advantage ultimately undermining its objective to differentiate its mobile and pay TV platforms with exclusive content John Traynor chief investment officer of People s United Wealth Management which owns shares of both AT T and Time Warner said his firm would vote for the deal as it looked like a good marriage of content and distribution In the 1980s and 1990s it was all about hardware For the last 10 years it s been all about connectivity and content Traynor said He expects the deal to face lengthy scrutiny by regulators but eventually to be completed We ll be talking about this a year from now but Comcast NBC got through he said referring to the 30 billion purchase of NBCUniversal by cable company Comcast
We think AT T can handle the debt load he added |
CMCSA | T Mobile seen as top target following AT T Time Warner deal | By Malathi Nayak NEW YORK Reuters T Mobile US Inc is the likeliest acquisition target as media companies seek a wireless partner following AT T NYSE T Inc s proposed 85 4 billion takeover of Time Warner Inc NYSE TWX analysts said AT T announced the deal late on Saturday stoking urgency in the telecoms and media sectors where carriers facing a saturated wireless market are looking for content to attract mobile users and producers of shows and movies are seeking digital distribution T Mobile took most of the wireless industry s subscriber and revenue growth in the third quarter Its strong balance sheet and fast growing wireless business makes it an attractive target for a pay TV or media company analysts said T Mobile shares jumped 9 5 percent on Monday after it announced third quarter financial results At least nine analysts raised their target price on the No 3 wireless company which said it added 851 000 postpaid subscribers in the quarter T Mobile has taken market share from bigger rivals Verizon and AT T and that momentum is expected to continue analysts said The takeout target over the next twelve months has got to be T Mobile New Street Research analyst Spencer Kurn said Potential buyers include Comcast Corp NASDAQ CMCSA satellite TV provider Dish Network Corp and Mexican telecom company America Movil analysts said Comcast and Dish declined to comment America Movil could not be immediately reached for comment Content of all kind is rapidly landing on the internet and the internet itself is rapidly transforming toward mobile T mobile Chief Operating Officer Mike Sievert told Reuters T Mobile is very interested in exploring strategic opportunities he said Sprint Corp which is aggressively working towards reviving its wireless business is another takeout candidate analysts said Sprint received more calls than usual from bankers over the weekend after the AT T Time Warner deal was announced Chief Executive Marcelo Claure said on an earnings call on Tuesday Our strategic value to many has significantly grown he added Dish is struggling to grow its subscriber base amid intense competition but sits on a treasure trove of wireless spectrum that it has amassed in recent years Dish has been long considered an acquisition target for AT T or Verizon to boost their wireless networks Dish s spectrum could be worth nearly 45 billion analysts said Dish CEO Charlie Ergen has been pretty realistic about the challenges in the pay TV business so it is more likely they would look to sell BTIG analyst Walt Piecyk said
The AT T Time Warner deal means Dish has lost a potential buyer in AT T Piecyk added |
CMCSA | FCC adopts tougher rules on broadband customer privacy | The FCC split on party lines again today in adopting tough new privacy regulations on broadband Internet providers rules that require an opt in before sharing most customer data That could present a problem growing advertising for big providers including Comcast NASDAQ CMCSA and Verizon NYSE VZ The vote passed 3 2 with strong dissents from the panel s two Republican commissioners More public information names addresses will be treated leniently but providers will need to ask permission before sharing more sensitive data like phone tracked location or sites visited and apps used The new rules while scaled back have drawn heavy criticism from cable telecom and advertising sectors with companies that fret that the move will restructure the Internet s free content approach Other players OTCPK ATCEY FTR CTL WIN S TMUS CCOI |
WFC | Strong U S job growth rising wages boost December rate hike prospects | By Lucia Mutikani
WASHINGTON Reuters U S employers maintained a strong pace of hiring in October and boosted wages for workers which could effectively seal the case for a December interest rate increase from the Federal Reserve
Nonfarm payrolls increased by 161 000 jobs last month amid gains in construction healthcare and professional and business services the Labor Department said on Friday
Adding to the report s strong tone August and September data was revised to show 44 000 more jobs created than previously reported Average hourly earnings increased 10 cents in October As a result the year on year gain in wages last month was the largest in nearly 7 1 2 years
All in all the data fits perfectly with a Fed hike in December said Alan Ruskin global co head of FX research at Deutsche Bank DE DBKGn in New York
The unemployment rate fell one tenth of a percentage point to 4 9 percent in part as people dropped out of the labor force
The closely watched employment report was published four days before the Nov 8 presidential election It came on the heels of data last week showing an acceleration in economic growth in the third quarter But economists see little impact from the report on an increasingly bitter and divisive campaign
There is so much noise out there right now everyone is screaming from the rooftops I just don t know that any particular data point is going to have a great bearing on the election in and of itself said Sam Bullard senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina
Though the U S central bank is expected to increase borrowing costs next month that decision will likely depend on the outcome of Tuesday s election The tight race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets
The dollar raced to session highs against the yen and the euro after the report U S Treasuries fell while U S stock index futures trimmed losses
Economists polled by Reuters had forecast payrolls increasing by 175 000 jobs last month and the unemployment rate falling to 4 9 percent from 5 0 percent
A broad measure of unemployment that includes people who want to work but have given up searching and those working part time because they cannot find full time employment fell two tenths of a percentage point to 9 5 percent last month That was the lowest level since April 2008
The Fed on Wednesday left interest rates unchanged but said its monetary policy setting committee judges that the case for an increase in the federal funds rate has continued to strengthen It lifted its benchmark overnight interest rate last December for the first time in nearly a decade
The election could still derail the Fed s plans particularly if a very close result led to one or both candidates contesting it via the courts said Paul Ashworth chief economist at Capital Economics in Toronto
TREND HAS SLOWED
The trend in employment growth has slowed as the labor market nears full employment and the economy s recovery from the 2007 09 recession shows signs of aging
Employment growth so far this year has averaged 181 000 jobs per month down from an average gain of 229 000 per month in 2015 Still the monthly job gains are more than enough to absorb new entrants into the labor market
Fed Chair Janet Yellen has said the economy needs to create just under 100 000 jobs a month to keep up with growth in the work age population
The prospects of an interest rate hike next month were also bolstered by a solid rise in wages
Average hourly earnings increased 0 4 percent in October after advancing 0 3 percent in September That pushed the year on year increase to 2 8 percent the biggest gain since June 2009 from 2 7 percent in September
The Fed on Wednesday struck a fairly upbeat note on inflation saying price pressures had increased somewhat since earlier this year
Despite the labor market nearing full employment wage growth has been moderate Economists blame this on a low labor force participation rate
The participation rate or the share of working age Americans who are employed or at least looking for a job fell 0 1 percentage point to 62 8 percent last month not too far from multi decade lows in part reflecting demographic changes
The solid payrolls gain accompanied by the surge in wages could support consumer spending heading into the holiday season and in turn keep the economy on a relatively higher growth path
While the household survey showed a large increase in the number of people saying they could not get to work because of bad weather the department said it was difficult to assess the impact of Hurricane Matthew on job growth last month
The storm lashed the east coast of the country last month causing extensive flooding The average workweek held steady at 34 4 hours
Construction payrolls increased 11 000 rising for a second straight month But manufacturing employment fell 9 000 last month falling for a third straight month
Retail sector employment surprising fell 1 100 jobs despite anecdotal evidence retailers had embarked on early hiring for the holiday season
Professional and business services payrolls rose 43 000
Healthcare and social assistance employment increased 39 100 last month Temporary help jobs a harbinger for future hiring increased 6 400 Government employment rose by 19 000 jobs |
WFC | U S senators raise questions over fired Wells Fargo workers | By Elizabeth Dilts and Dan Freed Reuters Wells Fargo Co N WFC has fired hundreds of employees with Wall Street licenses for improper sales practices three U S senators said on Thursday In a letter to Wells Fargo Chief Executive Tim Sloan Senators Elizabeth Warren Ron Wyden and Robert Menendez questioned the bank s disclosures about those employees dismissals in required regulatory filings The letter is the first indication that customers of the brokerage business known as Wells Fargo Advisors may also have been affected by the earlier problems involving Wells Fargo staff opening customer accounts without permission The employees who were fired worked for Wells Fargo s retail bank but were licensed by the Financial Industry Regulatory Authority FINRA a Wall Street regulator that oversees brokers Wells Fargo said on Friday Some bankers obtained securities licenses so they could refer branch customers to the brokerage arm Wells Fargo said in September it would pay 185 million in penalties and 5 million to customers for opening up to two million deposit and credit card accounts in customers names without their permission The San Francisco based bank said it fired 5 300 workers for improper sales practices over a period of five years Reuters reported in October that thousands of small business customers have also been affected It would appear that Wells Fargo concealed key information from regulators that may have revealed the bank s misdeeds long before the September 2016 settlement the senators wrote requesting more information FINRA which regulates brokerages and securities dealers told congressional staff that it had received dismissal documents known as Form U5s for more than 600 of those fired Wells Fargo employees However only 207 of them contained details indicating they were fired for practices that led to bogus accounts The incomplete U5 filings may have deprived regulators of information that could have allowed them to uncover and stop the illegal activity sooner the senators said FINRA takes seriously the integrity and accuracy of all filings made by firms spokeswoman Nancy Condon said in an emailed response She noted that FINRA last week launched a review of sales programs for all firms it oversees Wells Fargo spokeswoman Jennifer Greeson Dunn said multiple investigations were underway including an internal review The bank has been working for years to stop wrongful sales practices and is taking steps to repair the damage she said We acknowledge we could have acted sooner and more aggressively Greeson Dunn said At a conference on Thursday Sloan said he had no knowledge of issues outside the retail bank
This version of the story corrects the headline and first paragraph to show employees who were fired had securities licenses but were not employed by the brokerage division |
WFC | U S judge certifies class action against NovaStar banks | NEW YORK Reuters A federal judge on Friday said investors seeking to hold banks liable for helping underwrite more than 7 7 billion of mortgage backed securities from the now bankrupt subprime lender NovaStar Mortgage Inc may pursue their claims as a group
In a 33 page decision U S District Judge Deborah Batts in Manhattan granted class certification to investors led by the New Jersey Carpenters Health Fund against units of Royal Bank of Scotland Group Plc L RBS Deutsche Bank AG DE DBKGn and Wells Fargo Co N WFC
Several former NovaStar executives are also defendants
NovaStar specialized in lower quality residential mortgages including many packaged into securities issued in 2006 and 2007
Investors accused the banks of misleading them through their offering materials into believing that the underlying loans were underwritten as advertised and that the securities they bought were safer than they proved to be
The lawsuit was filed in June 2008 Hundreds of similar lawsuits have been filed nationwide against banks over mortgage securities sold prior to the 2008 financial crisis
NovaStar filed for bankruptcy protection in July
The case is New Jersey Carpenters Health Fund v Royal Bank of Scotland Group Plc et al U S District Court Southern District of New York No 08 05310 |
WFC | U S stock futures surge after Clinton cleared by FBI | By David Henry and Rodrigo Campos NEW YORK Reuters U S equity index futures rallied at the open on Sunday as bullish sentiment returned to Wall Street following the largest streak of losses on the S P 500 since 1980 The 1 3 percent move in S P 500 e mini futures ESc1 cut in nearly half the losses in futures over the past nine sessions and came a few hours after the FBI said that newly discovered emails had not changed the agency s conclusion that no charges were warranted in the case of Democratic presidential candidate Hillary Clinton s use of a private server The move in equity futures came in a surge of volume as electronic trading kicked off for the week at 6 p m EST 2300 GMT If the upturn in S P 500 futures carries through the day on Monday it would put an end to the longest daily losing streak in the benchmark stock index SPX in more than 35 years The run of losses had come as Clinton appeared to have lost momentum over Republican rival Donald Trump in some public opinion polls after FBI director James Comey said on Oct 28 that additional emails had been found and would be reviewed Clinton and Trump face off on Tuesday in a vote to elect Barack Obama s successor as U S president Until recently financial markets had priced in a victory from Clinton The news from the FBI and recent reports of Clinton starting to regain strength in public opinion polls likely explain the move higher in stock futures and in the Mexican currency said Michael Yoshikami chief executive of investment management firm Destination Wealth Management of Walnut Creek California Until Sunday night the downward trend in equities and the peso has been in direct relationship to the news that Donald Trump was advancing in the polls Yoshikami said The Mexican peso which has been a market proxy for sentiment about the election and has performed in inverse correlation with Trump s perceived chances of winning the White House shot more than 2 percent higher against the U S dollar in late Sunday trading It is still down more than 7 percent this year against the greenback S P 500 futures fell 3 percent over the past nine sessions during which the benchmark index S P 500 declined daily to set the longest falling streak since December 1980 To get back to where we were before the election angst began would require a 3 2 percent rally said Brian Jacobsen chief portfolio strategist at Wells Fargo NYSE WFC Funds Management in Menomonee Falls Wisconsin There have been some impressive rallies in the couple days in the run up to an election he said With a dearth of economic data releases little else will be moving the markets between now and Tuesday night
He noted however that some traders will likely sell this rally to avoid any surprise in the election outcome which could trigger a spike in volatility |
WFC | A Comprehensive Guide To Housing ETFs | The housing momentum seen in 2012 and in the first half of 2013 has slowed down in the past 3 4 months due to the recent spike in mortgage rates rising home prices tight credit availability and the political uncertainty in Washington Though interest rates are rising these are still below historical levels and housing is still affordable In addition accelerating job growth and increasing consumer confidence are also boosting demand for new homes Supply however is constrained by low home inventories both of new single family and multi family homes A shortage of land and labor is restricting the construction of homes both single and multifamily Home prices have thus started to move up with market demand gaining momentum and supply remaining limited Rising home prices and the spike in interest mortgage rates since May this year slowed down the pace of orders and traffic Buyers were taken unawares by the sudden increase in rates and a few put off their purchase decision thereby increasing cancellation rates and lowering orders for most homebuilders in the last reported quarter However most homebuilders believe that this is only a temporary factor and are confident of demand picking up in future quarters These builders expect buyers to adjust to rising prices and interest rates and return to the market Also Federal Reserve s promise to keep interest rates low for some time despite tapering its 85 billion stimulus plan by 10 billion from Jan 2014 removes a major overhang for the homebuilders A slew of housing data released lately clearly shows that housing recovery is still on Data released by the U S Department of Housing and Urban Development and the U S Census Bureau showed that sales of newly built single family homes rose 25 4 in October Another data release by the department showed that November housing starts surged to their highest in nearly six years The National Association of Home Builders NAHB Wells Fargo Housing Market Index HMI known as the homebuilder sentiment index jumped 4 points to 58 in December from 54 in July This was the seventh consecutive monthly increase in the index showing that the recent interest rate hikes have not dampened the housing recovery completely The Consumer Confidence Index also rebounded in December after declining in November ETFs to Tap the Sector With this in mind it could be time to give this segment a closer look For investors looking to play the homebuilding sector in a less risky way an ETF approach can be a good idea This technique can help to spread out assets among a wide variety of companies and reduce company specific risk for a very low cost Below we highlight three ETFs that are worth a look in this sector SPDR S P Homebuilders XHB is one of the more popular homebuilding ETFs in the market today with assets under management of around 2 0 billion and a trading volume of roughly 5 3 million shares a day The fund has an expense ratio of 35 basis points The fund holds 35 stocks in its basket with 44 of the assets going to mid cap and 15 comprising large cap stocks Despite the smaller holding pattern the fund does not appear to be concentrated in the top ten holdings The fund has just 32 5 in the top ten holdings with Lumber Liquidators D R Horton Inc and Lennar Corporation occupying the top three positions with asset allocation of 3 39 3 31 and 3 27 respectively The fund s assets include 29 homebuilders 15 household appliances securities 27 specialty retail stocks and the balance 28 of building materials companies The fund carries a Zacks Rank 3 Hold with a moderate level of risk iShares Dow Jones US Home Construction ITB Another popular choice in the homebuilding sector is ITB which tracks the Dow Jones U S Select Home Construction Index It has 1 72 billion in assets with a trading volume of roughly 5 800 000 shares a day while its expense ratio is just 45 basis points The fund holds 34 stocks in its basket out of which only 12 are large cap securities The fund has a concentrated approach in the top ten holdings with 62 3 of the asset base invested in them Among individual holdings top stocks in the ETF include Pulte Lennar and D R Horton Inc with asset allocation of 10 32 9 81 and 9 51 respectively Homebuilders account for around 67 0 of this fund The fund carries a Zacks Rank 2 Buy with a moderate level of risk PowerShares Dynamic Building Construct PKB This ETF comprises around 30 housing companies and has its assets invested across all classes of the market spectrum Engineering and construction stocks comprise 23 of the fund followed by specialty retail companies that account for 15 A look at the style pattern reveals that the fund has a preference for growth stocks The fund manages an asset base of 100 6 million and has an expense ratio of 63 basis points The fund has only 25 in large cap securities and around 46 0 in top ten holdings The fund carries a Zacks Rank 3 Hold with a moderate level of risk To Sum Up Though the sudden jump in interest rates has temporarily disrupted housing recovery we expect sales to continue to rise in 2014 as pent up demand is released and buyers return to the market Most homebuilders also expect the housing momentum to continue into 2014 with the gradual strengthening of the economy |
WFC | A Quiet Beginning To The Week | After a week of important data last week earnings should dominate the news this week but so far Monday is beginning much like Friday ended quiet Dow futures are implying a slightly lower 17 point open with the S P lower by about three points Friday the Dow was essentially flat closing seven points lower at 16 437 05 The S P ended a volatile trading day nearly where it started at 1 842 37 and the NASDAQ gained 0 4 percent to close at 4 174 66 Top StoriesA Southwest LUV aircraft reportedly landed at the wrong airport The Branson Missouri bound aircraft landed at the M Graham Clark Taney County Airport a much smaller airport about seven miles from its original destination GM GM CFO Dan Ammann said that the company is closer to issuing a dividend Suntory Holdings Limited and Beam Inc BEAM today jointly announced that they have entered into a definitive agreement under which Suntory will acquire all outstanding shares of Beam for US 83 50 per share in cash or total consideration of approximately US 16 billion including the assumption of Beam s outstanding net debt Asian Markets Asian markets ended the day mostly flat as investors reacted to the dismal U S jobs data released Friday The Nikkei was up nearly 0 2 percent to end the day at 15 912 06 The Shanghai composite was down 0 4 percent to close at 2009 56 and the Hang Seng up about 0 2 percent to close at 22888 76 European Markets Europe is following Asia s lead and printing mostly flat numbers The FTSE is up about 0 1 percent at 6746 87 and the CAC is up about 0 2 percent 4259 55 The DAX is up about 0 2 percent at 9498 73 Commodities Commodities are mostly lower this morning WTI is down 0 6 percent at 92 15 while Brent is about 0 5 percent lower at 106 70 Natural gas is down nearly two percent to 4 13 Gold is flat at 1245 70 and silver is trading down about 0 7 percent at 20 07 per ounce Copper is down 0 5 percent at 3 32 Currencies Major currency pairs are mixed The euro is flat against the dollar at 1 366 the USD is 0 7 percent lower against the yen at 103 34 and the Aussie dollar is flat against the U S dollar at 0 902 Pre Market MoversRed Hat RHT is up 2 45 percent and Best Buy BBY is up 0 77 percent EarningsXyratex XRTX will report fourth quarter earnings after the bell today Analyst consensus is for a loss of 0 24 per share with revenue of 208 73 million Tomorrow earnings reports from Wells Fargo and JPMorgan begin a week of earnings reports from banks and financial institutions Economics There are no major reports scheduled for today A three and six month bill auction take place at 11 30 am ET By Tim Parker |
WFC | Will Charges Hit JPMorgan Earnings Again | JPMorgan Chase Co JPM is scheduled to release its fourth quarter and full year 2013 results tomorrow Jan 14 before the opening bell In the third quarter massive legal expenses dampened the banking behemoth s results making it report a loss of 17 cents per share This represented a pause in its strong earnings run for six straight quarters However leaving out the primary non recurring items it delivered an 11 8 positive earnings surprise thanks to solid performance by its client franchises Will JPMorgan be able to return to its earnings story after covering the legal costs this time Let s see how things have shaped up for this announcement Factors to Influence Q4 Results Regulatory and litigation issues spilled over into this quarter and JPMorgan continued to hit headlines for its wrong doings and related settlements The latest in this regard is the upcoming 2 6 billion settlement of criminal and civil allegations related to the fraud at Bernard Madoff s Ponzi scheme This outflow which could erode its earnings brings the total cost of its legal settlements to nearly 30 billion over the past two years The final impact that the settlement will have on JPMorgan s fourth quarter earnings depends on the strength of its legal reserves Also as legalities seem to have become part of the company it will have to set aside significant funds as reserves for future settlement costs However continued cost containment through workforce reduction is expected to support the bottom line It is on track to reach its target of axing as many as 17 000 jobs including 13 000 15 000 positions in mortgage banking by the end of 2014 In Nov 2013 Gordon Smith JPMorgan s chief executive officer of consumer and community banking said that the bank was all set to reduce 11 000 of the targeted mortgage banking positions by the end of 2013 Though we don t expect any significant improvement in interest income due to sluggish loan growth and a persistent low interest rate environment broad based strength across product lines should make up for the shortfall Moreover higher trading revenues and an improvement in investment banking on the back of enhanced equity market dynamics should continue to support top line growth But lesser mortgage activity in the quarter may work as a dampener Similar to the third quarter this banking giant failed to impress analysts with its level of activities The concern over the outflow related to Madoff and other settlements forced many analysts to significantly lower their fourth quarter earnings estimates The Zacks Consensus Estimate has moved down by 3 8 to 1 25 per share over the last 7 days as the tendency for a downward estimate revision was more obvious Earnings Whispers Our proven model does not conclusively show that JPMorgan is likely to beat the Zacks Consensus Estimate in the fourth quarter That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank 1 Strong Buy or at least 2 or 3 for this to happen Unfortunately this is not the case here as elaborated below Negative Zacks ESP The Earnings ESP for JPMorgan is 4 80 This is because the Most Accurate estimate stands at 1 19 while the Zacks Consensus Estimate is higher at 1 25 Zacks Rank JPMorgan s Zacks Rank 3 Hold increases the predictive power of ESP However we also need to have a positive ESP to be confident of an earnings surprise call Stocks to Consider Here are a few major bank stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter Fifth Third Bancorp FITB has an earnings ESP of 2 38 and carries a Zacks Rank 2 It is scheduled to report fourth quarter results on Jan 23 The earnings ESP for M T Bank Corp MTB is 3 85 and it carries a Zacks Rank 3 The company is expected to release fourth quarter results on Jan 15 SunTrust Banks Inc STI has an earnings ESP of 1 43 and carries a Zacks Rank 3 It is scheduled to report fourth quarter results on Jan 17 In the banking sector JPMorgan which has exposure in almost all banking businesses will be kicking off the fourth quarter earnings season with Wells Fargo Co WFC Therefore the release will be a significant indicator of fundamental performance by the key banking sector Original post |
CMCSA | U S vice presidential debate watched by 37 million on TV | NEW YORK Reuters An estimated 37 million Americans watched the U S vice presidential debate between Republican Mike Pence and Democrat Tim Kaine on television according to Nielsen data on Wednesday less than half the number who tuned in to Donald Trump s first matchup with Hillary Clinton last week The figure represented the average audience across nine channels during Tuesday s 90 minute encounter Broadcaster NBC pulled in the biggest audience with 7 million viewers Fox News Channel led cable networks with 6 1 million Last week s first debate between the presidential candidates for the Nov 8 election Republican Trump and Democrat Clinton was watched by a record 84 million TV viewers Vice presidential debates have traditionally attracted smaller TV audiences with the exception of the 2008 encounter between Democrat Joe Biden and Republican Sarah Palin which set a record for a VP debate of 69 9 million viewers The 2012 vice presidential encounter between Biden and Republican Paul Ryan was watched by 51 4 million Americans None of the figures for the debates include those who watched online through social media or in bars and restaurants Tuesday s 90 minute face off between Pence governor of Indiana and Kaine a U S senator from Virginia was the only debate between the vice presidential contenders before the election next month
NBC is a unit of Comcast Corp NASDAQ CMCSA Fox News Channel is owned by 21st Century Fox |
CMCSA | Comcast will pay 2 3 million to settle U S billing probe | WASHINGTON Reuters Comcast Corp O CMCSA the largest U S cable company will pay a 2 3 million fine to resolve a federal investigation into whether the company wrongfully charged cable TV customers for services and equipment they never authorized The U S Federal Communications Commission FCC said Tuesday it had received numerous complaints from consumers alleging Comcast added charges to their bills for unordered services including premium channels set top boxes and digital video recorders
Comcast is paying the largest civil penalty assessed from a cable operator by the FCC and will implement a five year compliance plan the FCC said Comcast did not immediately comment |
WFC | Big Fidelity investor in Wells Fargo trimmed position in September | BOSTON Reuters Fidelity Contrafund one of the largest investors in Wells Fargo Co N WFC reduced its stake in the scandal hit bank by 5 percent in September according to the fund s latest holdings report Run by star portfolio manager Will Danoff Contrafund had a 2 2 billion stake in Wells Fargo or about 50 1 million shares at the end of September according to a report released on Sunday The fund owned about 52 65 million shares at the end of August Wells Fargo is the only bank in a Contrafund top 10 holdings list dominated by tech companies The bank s shares dragged on Contrafund s third quarter performance falling nearly 6 percent amid disclosure Wells Fargo branch staff opened as many as 2 million accounts without customers knowledge
Contrafund is the third largest mutual fund investor in Wells Fargo behind two Vanguard Group index funds according to Thomson Reuters data |
WFC | Wells Fargo agrees to 50 mln settlement over homeowner fees | By Dena Aubin NEW YORK Reuters Wells Fargo Co N WFC has agreed to pay 50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans The proposed settlement which requires court approval was disclosed in a filing on Friday in an Oakland California federal court If approved it will resolve nationwide claims that Wells Fargo charged much more than it paid for third party appraisals exploiting borrowers who could least afford it and driving them further into default Wells Fargo s settlement of the lawsuit comes as the bank is still recoiling from a scandal over sales targets that drove employees to create unauthorized accounts for customers Multiple lawsuits over those practices are pending Spokesman Tom Goyda said Wells Fargo believes its appraisal practices were proper and disagreed with the lawsuit s claims but settled to avoid further litigation Plaintiffs lawyer Roland Tellis said We re very pleased to have negotiated a settlement that achieves our litigation goals About 250 000 homeowners are covered by the proposed deal he said Mortgage agreements allow banks to charge homeowners for the appraisals if they default on their mortgage loans but Wells Fargo added large mark ups to the amounts its third party vendors charged the 2012 lawsuit said Wells Fargo typically charged 95 to 125 for the type of expedited appraisal at issue when the actual cost was 50 or less the complaint said The charges added hundreds or thousands of dollars to borrower s mortgage loans over time the lawsuit said Customers did not know they had been victimized because the charges were described on statements with cryptic labels such as other charges the lawsuit said
The plaintiffs had sought triple damages under the U S Racketeer Influenced and Corrupt Organizations Act The lawsuit said sending invoices and statements with the fraudulently concealed fees constituted mail and wire fraud sufficient to allege racketeering In court filings lawyers for Wells had called those claims far fetched The U S Office of the Comptroller of the Currency and courts have recognized that fees similar to Wells Fargo s can include a profit margin the lawyers said The case is Bias et al v Wells Fargo Co U S District Court California Northern District no 12 cv 664 |
WFC | SEC probes Wells Fargo over sales practice disclosures WSJ | Reuters The Securities and Exchange Commission SEC is probing whether Wells Fargo Co N WFC violated rules around investor disclosures and other matters relating to its recent sales tactics scandal the Wall Street Journal reported on Wednesday The SEC sent requests to Wells Fargo for documents in recent weeks following senators calls in late September for the SEC to investigate whether the San Francisco based lender misled investors while allegedly engaged in illegal sales practices the newspaper said citing a source Wells Fargo veteran chairman and chief executive officer John Stumpf abruptly departed last month bowing to pressure over the bank s sales tactics that have damaged its reputation and put Wall Street under renewed scrutiny The misconduct carried out by low level branch staff to meet internal sales targets shattered the bank s folksy image and a raft of federal and state investigations followed The company in September agreed to pay 190 million in penalties and customer payouts to settle the case involving the creation of credit savings and other accounts without customers knowledge About 5 million will directly go to customers many of whom might have paid a small fee on the unwanted accounts
A spokesman for the SEC declined to comment Wells Fargo also declined to comment |
WFC | Credit Suisse says to sell client relationships to Bank CIC | ZURICH Reuters Credit Suisse SIX CSGN has agreed to sell an unspecified number of client relationships to Credit Mutuel owned BFCM UL Bank CIC Switzerland a spokeswoman for Credit Suisse told Reuters on Thursday The sale is part of a scaling back by Credit Suisse of its client book amid rising regulatory requirements and increasing costs of banking cross border clients Credit Suisse has been aligning its service offering to focus on the markets and client segments where we can offer a competitive advantage and see most growth potential the spokeswoman said in an emailed statement The Zurich based bank gave no further details It is the latest private banking divestiture by Switzerland s second biggest lender which sold its businesses in Monaco and Gibraltar to J Safra Sarasin and also awarded Wells Fargo NYSE WFC Co the exclusive right to recruit Credit Suisse brokers in the United States
Earlier on Thursday Credit Suisse reported an unexpected net profit for a second quarter in a row though the surprise was largely down to real estate sales and Chief Executive Tidjane Thiam cautioned the outlook remained challenging |
WFC | Wells Fargo CEO sees relatively quick review of sales practices | By Dan Freed Reuters Wells Fargo Co s N WFC CEO Tim Sloan said on Thursday a comprehensive review of the bank s sales practices would be done relatively quickly and unveiled a series of immediate changes at the bank s retail unit under new division boss Mary Mack Management is reaching out to employees who were wrongly fired while continuing to review sales practices across the bank and changing compensation plans to avoid incentivizing bad behavior It is also ramping up marketing efforts after having slowed them in the wake of the problems Mack told an industry conference in Boston her first with analysts since taking over the retail business The bank which earlier said in a regulatory filing that legal costs could exceed reserves by 1 7 billion has also hired an outside consultant to guide changes to the retail business The retail unit s new risk chief now reports into the broader company s risk chief rather than to Mack The bank also said it created a new Change Leader position in the unit to focus on what great customer experience looks like according to Mack and Sloan s presentation We re going to leave no stone unturned said Sloan I don t want there to be a question about how we interact with customers at Wells Fargo he added We re going to put that to rest That s going to be done in a very comprehensive way and it s going to be done relatively quickly but it s going to be done right An independent consultant is now reviewing sales practices across the whole bank Sloan said without identifying the company Because most of Wells Fargo s senior leadership has been at the bank for a long time they may have inadvertently contributed to some of its problems he said Wells Fargo s period of atonement follows a 185 million settlement on Sept 8 with federal regulators and a Los Angeles prosecutor regarding its opening as many as 2 million accounts in retail customers names without their permission At the time the bank said it fired 5 300 employees for improper sales practices over a period of five years but since then reports have surfaced of employees also being fired for raising red flags or not meeting aggressive sales quotas imposed by their managers Wells Fargo welcomes back employees fired inappropriately if they would like to return Sloan said He took the reins on Oct 12 from former CEO John Stumpf who abruptly left the bank under harsh scrutiny for its practices Mack became head of the retail unit in July before the scandal came to light She replaced Carrie Tolstedt who forfeited 19 million in stock in September following a public uproar over the sales issues Stumpf gave up 41 million Even with the settlement the management shakeup and the steps is taking to improve Wells Fargo s problems are not over The bank faces probes from several other regulators and authorities including the U S Department of Justice and congressional committees The Securities and Exchange Commission is also examining the bank Wells said in its filing on Thursday
Wells 1 7 billion estimate of its potential legal expense shortfall is up from a 1 billion estimate in August |
WFC | Pennsylvania Treasury suspends Wells Fargo from trading | Reuters Pennsylvania Treasurer Timothy Reese said on Thursday that he suspended Wells Fargo Co N WFC from any treasury investment or trading activities in the state for a year because of its fraudulent accounts scandal The Pennsylvania Treasury said it will continue to monitor the situation and may re evaluate the bank s status if it showed progress in reforming its operations and culture
Wells Fargo has faced intense regulatory scrutiny since September over the opening of as many as 2 million unauthorized accounts a scandal that led to the departure of John Stumpf former chief executive last month |
WFC | Steel Stocks Head Fake Or Legitimate Breakout | The world s newest Nobel Prize winning economist Robert Shiller didn t mince words this weekend He told Germany s Der Spiegel magazine I am most worried about the boom in the U S stock market Why Because our economy is still weak and vulnerable says Shiller While I don t share his concerns about U S stocks yet I ll concede that the economic recovery has been less than robust Nowhere has this been more evident than in the steel industry Titans in the sector like Nucor NUE are still struggling to recover In the first nine months of 2013 sales and net income both decreased by roughly 14 Compared to peak activity in 2008 Nucor s sales and net income over the last 12 months remain 21 and 75 below their annual highs respectively And yet share prices for Nucor and its peers like U S Steel X AK Steel AKS and Steel Dynamics STLD have been perking up lately Take a look Over the last three months they re all up by double digit levels Heck the recent rallies by U S Steel and AK Steel make the S P 500 Index s gains for the entire year seem miniscule Is this the beginning of a legitimate recovery or merely a head fake that should be ignored It s time to find out and invest accordingly High Risk High Reward Steel producers play a crucial role in the global economy since the metal is used in everything from automobiles to bridge building As such steel companies can serve as an excellent harbinger of better economic times ahead which brings us back to Shiller s observation Even as the global economic recovery extends into its fifth year steel demand remains lackluster at best Case in point ArcelorMittal MT the world s largest steel producer recently reported a narrower loss for the third quarter But the company said it was only cautiously optimistic about prospects for 2014 Now it s hard to put much stock in that assessment Earlier this year the company assured investors that demand would be strong in 2013 and that has hardly come to fruition At the same time the World Steel Association is only forecasting a modest 3 3 uptick in steel demand for 2014 compared to a 3 1 increase for this year Nevertheless the analysts over at Goldman Sachs GS recently upgraded a trio of steel stocks from Sell to Buy based on the outlook for stronger domestic demand I wouldn t follow their lead though We re heading into the traditionally weakest quarter for steel companies Not to mention the industry is still suffering from overcapacity What s more cheap foreign steel promises to keep a lid on any meaningful price increases which in turn will dampen profitability Or as the analysts at Wells Fargo WFC put it We expect pricing to weaken meaningfully in H1 2014 due to increasing levels of import competition And we believe there is now greater risk to 2014 estimates Greater risk That doesn t sound like the makings of a legitimate recovery to me And these aren t the conditions necessary to support a prolonged rally in share prices Bottom line I m convinced that the latest price swings for steel stocks are merely a head fake So a short term correction promises to be close at hand If I m wrong so be it Steel stocks have a long way to run before they get back to their 2008 peaks Unlike the S P 500 that recouped all its losses and keeps hitting new all time highs the average steel stock is still off about 60 from its peak So there will be plenty of time to go long steel stocks and still profit handsomely |
WFC | 5 Growth Oriented Mutual Funds | A single minded focus toward capital appreciation is what best characterizes growth funds This purity of style is further established by the fact that investors can expect few or no dividend pay outs from such mutual funds But investing in this class of funds requires a relatively higher appetite for risk than those following a value or blend style toward investing However in depth research and professional management are what make mutual funds a much safer proposition as compared to directly investing in growth stocks Below we will share with you 5 top rated growth mutual funds Each has earned a Zacks 1 Rank Strong Buy as we expect these mutual funds to outperform their peers in the future To view the Zacks Rank and past performance of all growth funds investors can Thornburg Core Growth A THCGX invests a large share of its assets in equity shares of companies which possess the ability to grow at an incremental pace The fund may also purchase foreign equity securities as well as debt instruments The growth mutual fund has a one year annualized return of 38 81 The growth mutual fund has a minimum initial investment of 5 000 and an expense ratio of 1 45 compared to a category average of 1 23 Wells Fargo Advantage Capital Growth SLGIX seeks capital growth over the long term The fund invests the majority of its assets in large cap companies These companies must have capitalizations identical to those included in the Russell 1000 Index Not more than 25 of its assets are utilized to purchase foreign equity securities The growth mutual fund has a one year annualized return of 33 36 Michael T Smith is the fund manager and he has managed this growth mutual fund since 2012 T Rowe Price Growth Stock PRGFX invests a large share of its assets in common stocks of a wide range of growth oriented companies The fund focuses on those companies which have higher dividend paying capacity The growth mutual fund has a one year annualized return of 34 89 The growth mutual fund has a minimum initial investment of 2 500 and an expense ratio of 0 70 compared to a category average of 1 23 Mairs Power Growth MPGFX seeks appreciably high long term growth The fund invests the majority of its assets in a wide range of common stocks The fund may also purchase foreign securities and convertible debt rated lower than investment grade The growth mutual fund has a one year annualized return of 32 76 As of October 2013 this growth mutual fund held 49 issues with 4 08 of its total assets invested in Valspar Corporation Franklin Flex Cap Growth A FKCGX seeks capital growth by primarily investing in common stocks of companies having a significant growth potential It may invest in companies regardless of their market capitalization The growth mutual fund has a one year annualized return of 33 51 Conrad B Herrmann is the fund manager and he has managed this growth mutual fund since 1993 |
WFC | Tech Stocks The Week Ahead | Last week Yahoo YHOO continued on its buying spree this time with a focus on video while Intel INTC shares responded to data that the disrupting tablet market could be letting off Yahoo s Video Investments Continue Last week Yahoo made three acquisitions two of which could help video delivery at the company Yahoo s recent product introductions and revamps have included an element of coolness and any future video platform from the company is likely to fit the same description The first of the two acquisitions was a team of developers at DreamWorks Animation that created the app called Ptch The app allows the compiling of event photos and videos by multiple users on their smartphones to create a more complete picture of the event Ptch is being shut down with the technology moving to Yahoo The other acquisition was of a startup called EvntLive which has developed a platform for streaming of live concerts on demand streaming of previously recorded live shows and an interactive platform for sharing opinions and comments Mayer said earlier that the focus of acquisitions was likely to move from mobile to advertising technology and video These acquisitions indicate that we are probably looking at a new or revamped video platform from Yahoo that will take video consumption to the next level Moderating Tablet Demand Breathes Life into IntelInvestment firm J P Morgan Securities published a report on Dec 4 that provided data pointing to softening tablet demand this year followed by strengthening PC demand next year The firm noted some positive signs in the PC supply chain for the first time in two years Shares of Intel which is still largely dependent on the PC market jumped in response Earlier in the week a Wells Fargo analyst reiterated his Outperform rating on Intel shares The analyst said that there were chances of margin improvement due to stable chip prices and lower processing costs But Intel has already decided to push its advanced technology into the mobile segment until more suitable mobile ready products are available Therefore although its processing costs continue to decline the company s attempt to capture market share even at the lowest end Chromebooks will remain a pressure on margins Intel is still largely viewed as a PC component supplier While its latest mobile products hold promise Intel has missed the 2013 holiday season which means that the large scale adoption of its latest mobile chips has been pushed back a few quarters That said Intel s 2014 guidance doesn t look aggressive so any improvement in PC demand should be good news for the company The Secret Behind Facebook s Mobile GrowthFacebook s FB mobile business appears to have grown in leaps and bounds and last week a product manager at the company explained how The secret appears to be a phenomenon called mobile app install ads which are nothing more than ads for apps that get streamed in the Facebook news feed In itself this doesn t appear to be too exciting since most ads on Facebook appear in the newsfeed But the reason this has proved so successful is that a person clicking on the ad is taken right away to the app download page which increases the chances of the app getting installed Facebook also provided some rather astonishing numbers of the apps downloaded this way It says that there were 175 million downloads since January Since it had stated earlier that there were 25 million downloads in the first quarter this means 150 million downloads in the few months since then which looks to be a very high growth rate Social ad shop AdParlor estimates that Facebook charges 2 50 per install which means that nearly a fifth of its mobile ad revenue comes from these apps Facebook s huge success with mobile app install ads could be the reason that other social networking companies such as Twitter TWTR are also testing the format |
WFC | Housing Starts Surge To The Highest Level Since 2008 | So much for wondering about the resiliency of the housing recovery Yesterday s update on housing starts puts to rest the idea that the sector s growth is fading New residential construction in November surged nearly 23 vs the previous month Newly issued building permits for private housing retreated a bit but remained near a five year high suggesting that new construction will continue to grow in the near term The numbers for the year over year comparisons look encouraging as well and so yesterday s housing report tells us that this crucial sector will continue to provide support for the economy in the months ahead The sharp rise in new construction last month lifts the level of starts to the highest number since February 2008 Another way to consider the data starts are now running at about twice as high as compared with the number posted during the depths of the Great Recession The pace of new construction is still roughly 50 under the high points of the housing boom although some of that was simply excess building that had little if any economic rationale In any case it s clear that housing has recovered quite a lot of lost ground since this market imploded a few years back The strong profile that emerges from yesterday s data minimizes the worrisome signs that had been casting shadows recently The year over year figures for both starts and permits had been trending lower through most of 2013 It wasn t clear if this was a maturing of the housing recovery or something darker The future s still uncertain of course but yesterday s numbers on starts suggests that new construction is in no danger of slipping off the cyclical cliff any time soon Although the annual rate of starts turned sharply higher in November the growth of permits relative to the year earlier number is closing in on the lowest pace since 2010 For the moment this isn t terribly troubling because the current year over year pace of around 8 still suggests a healthy round of growth for home building In fact that s the message in this week s December update of the National Association of Home Builders Wells Fargo Housing Market Index which jumped to an eight year high This is definitely an encouraging sign as we move into 2014 said NAHB Chairman Rick Judson earlier this week Yesterday s news on housing starts only strengthens Judson s outlook What s the risk for housing Higher interest rates maybe When the Federal Reserve starts winding down its stimulus program rates will move northward In fact rates have already moved moderately higher in recent months in anticipation that extraordinary run of monetary stimulus is nearing an end The 30 Year conventional mortgage rate is currently around 4 4 based on the national average or up from roughly 100 basis points since the Spring For the moment it s not obvious that higher rates will damage the housing recovery But much depends on how fast rates rise and why they rise If the Fed is tightening policy because economic growth is picking up that s a healthy change For the moment that s still a reasonable bet |
WFC | Homebuilders Stock Outlook December 2013 | The housing momentum seen in 2012 and in the first half of 2013 has slowed down a bit in the past 3 4 months due to the recent spike in mortgage rates rising home prices tight credit availability and the political uncertainty in Washington While interest rates are rising they are still below historical levels and housing is still affordable In addition accelerating job growth and increasing consumer confidence are also boosting demand for new homes Supply however is constrained by low home inventories both of new single family and multi family homes A shortage of land and labor is restricting the construction of homes both single and multifamily Home prices have thus started to move up with market demand gaining momentum and supply remaining limited Rising home prices and the spike in interest mortgage rates since May this year slowed down the pace of orders and traffic Buyers were taken unawares by the sudden increase in rates and a few put off their purchase decision thereby increasing cancellation rates and lowering orders for most homebuilders in the last reported quarter Orders declined around 17 at PulteGroup Inc PHM 2 at D R Horton Inc DHI and around 9 at Hovnanian Enterprises Inc HOV Though order trends improved year over year for others like Lennar Corporation LEN and Toll Brothers Inc TOL they slowed down from the past quarter However most homebuilders believe that this is only a temporary factor and are confident of demand picking up in the forthcoming quarters These builders expect buyers to adjust to rising prices and interest rates and return to the market Also Federal Reserve s promise to keep interest rates low for some time despite tapering its 85 billion stimulus plan by 10 billion from Jan 2014 removes a major overhang for the homebuilders A slew of housing data released lately clearly shows that the housing recovery is still very much intact Data released by the U S Department of Housing and Urban Development and the U S Census Bureau showed that sales of newly built single family homes rose 25 4 in October Another data release by the department showed that November housing starts surged to their highest in nearly six years The National Association of Home Builders NAHB Wells Fargo Housing Market Index HMI known as the homebuilder sentiment index jumped 4 points to 58 in December from 54 in July This was the seventh consecutive monthly increase in the index showing that the recent interest rate hikes have not dampened the housing recovery completely OPPORTUNITIESLand as Native Strength Homebuilders like Lennar and Toll Brothers who boast of a solid land position have been able to better capitalize the rising demand for homes during the upturn This gives these companies a competitive edge over peers like Pulte which are facing land availability constraints During the downturn Lennar strategically focused on acquiring new home sites in well positioned markets The company thus has enough land now to satisfy deliveries through 2014 and is now pursuing land opportunities for 2015 and beyond However others like Pulte have intentionally slowed down the sales pace across some of their communities thus lowering the community count due to a lack of land development and scarcity of finished lots Housing inventory both existing and new homes remains tight in most markets Instead Pulte is focusing more on driving price and margin in most communities This strategy has hurt net order growth significantly year to date with orders declining 12 in the second and almost 17 in the third California based homebuilder KB Home KBH is also emphasizing more on price and margin improvement to optimize returns from its land assets and slowing down its sales pace leading to lower order growth Though the price optimization initiatives of Pulte and KB Home have boosted profits so far the companies need to increase their volumes to boost long term top line growth Some homebuilders are speeding up their land investments Ryland Group Inc RYL has spent 498 million on land acquisition and 184 million on site development in the first nine months of 2013 Texas based D R invested 2 6 billion in land lots and development in 2013 and seems well positioned to meet demand for fiscal 2014 and 2015 High End Homes Driving Prices Most homebuilders like Lennar KB Home and Toll Brothers have shifted their focus on high end communities primarily of California Arizona Colorado and Florida which allow them to sell larger higher priced homes driving the ASPs up Homebuilders like KB Home also target the higher income move up buyers who are more likely to qualify for home loans Pulte is shifting its focus towards its high priced Pulte branded move up homes which improve the overall ASP Another small homebuilder Meritage Homes Corporation MTHTM is also seeing improving selling prices from a mix shift towards move up homes in higher priced communities and states Luxury home builder Toll Brothers is focused on improving the quality and the luxury quotient of its homes thus giving it a competitive advantage Strategic Restructuring Cost Saving Initiatives Improving homebuilding revenues combined with tight cost control and better overhead leverage as volumes improve continue to boost margins for most homebuilders Most housing companies are striving to improve their operating and financial performance through strategic restructuring initiatives The initiatives taken include workforce reductions improving overhead leverage managing inventory tightly and implementing new pricing strategies The homebuilders expect these cost reduction and operating efficiency improvement plans combined with positive housing demand to further boost profitability in 2014 Ancillary Companies also Gain from Housing Recovery Construction material companies Vulcan Materials Company VMCTM and Eagle Materials Inc EXP and building product makers Masco Corp MAS and Louisiana Pacific Corp LPX are fast gaining momentum from improving new home demand These companies are also seeing a concomitant rise in demand and volume for their products Fed to Keep Interest Rates Low In mid December the Federal Reserve announced plans to scale back its currency 85 billion a month bond buying program by 10 billion to 75 billion The Fed has been buying 85 billion in government bonds and mortgage backed securities a month known as quantitative easing to keep interest rates low and boost economic growth Ideally tapering of the bond buying plan would have led to adoption of a tighter monetary policy which would have increased interest rates further However the Fed said that the interest rates will be kept low for even longer than previously promised irrespective of the reduction in the bond buying program thus removing a major overhang for homebuilders WEAKNESSESRising Interest Rates Since mid 2012 homebuilders have largely benefited from historically low interest rates eventually leading to the sharp increase in home buying activity With the recent improvement in economic conditions and the housing market in general mortgage interest rates are edging upwards to more normalized levels since May 2013 According to the Freddie Mac mortgage survey the 30 year fixed mortgage rate has risen from 3 59 on May 23 to 4 42 as of Dec 12 High interest rates dilute demand for new homes as mortgage loans become expensive This lowers a buyer s purchasing power This can hurt volumes revenues and profits at the homebuilders Homebuilders at large admitted that higher interest rates have eaten into volumes in the last reported quarter But the homebuilders are also convinced that sluggish demand in the past quarter is only a fleeting phenomenon and buyers would soon return to the market overcoming their inhibitions of rising rates and climbing home prices In fact while interest rates are an important part of the home buying business sustainable increases in housing and housing demand for the long term will require the overall economy to strengthen This means further job growth improving household incomes rising consumer confidence and easing of credit availability The economy while still improving slowly is far from experiencing a full fledged recovery Until there is more robust economic activity new home sales will continue to lag historical levels Interestingly with the rise in mortgage rates lenders are beginning to ease credit standards to more normalized levels which could in fact have a modest positive impact on demand Rising Input Costs Rising input costs are a concern due to increasing costs of building material and labor As housing starts accelerate both labor and construction material costs would continue to experience upward pricing pressure impeding margins in the future Supply Constraints A shortage of approved home sites labor constraints in some markets and a lack of available capital for smaller builders are lowering the supply of homes both new and existing The supply of homes is still not meeting current demand let alone the pent up demand If the supply picture does not improve home prices could shoot up further causing many homebuyers to hold back on their purchase decisions Performance of Key Players in the Last Reported Quarter Despite the rising interest rates key housing companies like Lennar and Toll Brothers delivered stronger than expected results in the last reported quarter driven by volume growth and aggressive pricing Pulte beat the Zacks Consensus Estimate for both earnings and revenues driven by margin growth and pricing power which made up for the order shortfall However housing giant D R Horton missed the Zacks expectations for both revenues and earnings due to slowing order trends Others like Hovnanian Enterprises beat earnings expectations on the back of price increases and cost savings while missing out on the revenue consensus due to weak order trends A look at the Earnings ESP in the table below shows that KB Home could beat the Zacks Consensus Estimate in the next quarter first quarter of fiscal 2014 due to pricing and margin improvement Note For Pulte the last reported quarter was Q313 while for others it was Q413Zacks Industry Rank Within the Zacks Industry classification we rank all the 260 plus industries in the 16 Zacks sectors based on the earnings outlook and fundamental strength of the constituent companies in each industry As a guideline the outlook for industries in the top 1 3rd of all Industry Ranks or a Zacks Industry Rank of 88 and lower is Positive the middle 1 3rd or industries with Zacks Industry Rank between 89 and 176 is Neutral and the bottom 1 3rd or Zacks Industry Rank of 177 and higher is Negative The Zacks Industry Rank for the construction industry is currently 69 This is in the upper 1 3rd of all industries ranked highlighting the group s near term positive outlook as the housing recovery continues despite rising interest rates and increasing home prices Earnings Trends The Construction sector depicts stable earnings trends The September quarter results for the sector have been average in terms of both beat ratios percentage of companies coming out with positive surprises and growth The earnings beat ratio was a strong 81 8 while the revenue beat ratio was 63 6 Total earnings for this sector increased 32 1 reflecting a sharp moderation from 53 6 growth registered in the second quarter We note that comparisons have become difficult considering that the housing industry started to improve steadily from the second quarter of 2012 Total revenues grew 9 2 in the quarter versus a 10 1 jump in the previous quarter The consensus earnings expectations for the December quarter look encouraging with earnings projected to grow 1 5 thereby pegging the full year 2013 growth outlook at 95 2 For revenue growth will likely be 6 9 in the December quarter Full year revenue will likely increase 9 8 Bottom Line Though the sudden jump in interest rates has brought a short time halt to housing recovery we expect sales to continue to rise in 2014 as pent up demand is released and buyers return to the market Most homebuilders also expect the housing momentum to continue into 2014 with the gradual strengthening of the economy Our proprietary Zacks Ranks indicate the movement of the stocks over the short term 1 to 3 months At present 16 stocks post a positive outlook while 84 has a neutral outlook None of the stocks show a negative outlook Stocks which will likely outperform the broader market and currently hold a favorable Zacks Rank 2 Buy include MRV Engenharia e Participa MRVNY M I Homes Inc MHO and Meritage Homes We are currently not too enthusiastic on Zacks Ranked 3 Hold NVR Inc NVR due to weak net order trends |
WFC | Homebuilding Stocks and ETFs Surging Outpacing The Broad Market | Most of the homebuilding stocks and related ETFs are surging easily outpacing the broad market in the process First the Federal Reserve committed to keep the interest rate at lower levels for some time despite its plan to curtail the ongoing stimulus program by 10 billion beginning next month Low interest rates will continue to encourage buyers to purchase more homes and keep the mortgage rates at attractive levels driving the space higher read Second the streak of upbeat data is fueling additional growth to the sector New construction jumped 22 7 to an annualized rate of 1 09 million units in November buoyed by higher single family homes and apartments This represents the highest jump in nearly six years and is well ahead of market expectations While building permits fell 3 1 in November to an annual rate of 1 01 million it is above the market expectation of 990 000 and breached the one million mark for the second month in a row Homebuilder confidence bounced back strongly in December suggesting that the growing demand will overcome the rising mortgage rates seen in the past few months A gauge of homebuilder confidence as indicated by the National Association of Home Builders Wells Fargo housing market index matched the eight year high climbing to 58 in December from 54 in November According to the latest data from the value of homes in the U S is up 8 year over year at 25 7 trillion this year representing another annual gain Finally robust earnings for the fourth quarter of fiscal 2013 from homebuilders like Lennar Corporation LEN and Toll Brothers Inc TOL ahead of Christmas are an added advantage for the sector Both the companies outpaced the Zacks Consensus Estimate on top and bottom lines driven by strong volume and prices The housing market will continue to show strong growth in 2014 as improving job markets continue to lift demand for houses Further rising home prices and surging production would fuel strong growth approaching 2014 Thus Santa Claus has brought good fortune to this sector and investors could ride this recent surge with any of the following ETFs read SPDR S P Homebuilders ETF The most popular choice in the homebuilding space XHB follows the S P Homebuilders Select Industry Index The fund manages about 1 88 billion in asset base and trades in heavy volume of more than 5 7 million shares a day
The ETF charges 35 bps in fees per year from investors In total the fund holds about 37 securities in its basket with none holding more than 3 60 of total assets The product focuses more on small cap securities with nearly 44 share followed by 40 in mid caps The ETF provides a nice mix of sectors with homebuilding building products home furnishing retail and home furnishing making up for double digit exposure XHB gained 4 35 in the past five trading sessions and has a decent Zacks ETF Rank of 3 or Hold with Medium risk outlook iShares U S Home Construction ETF ITB This fund provides pure play to the home construction sector by tracking the Dow Jones US Select Home Builders Index It holds a small basket of 33 stocks and is heavily concentrated on the top 10 holdings with 63 of total assets read Taper Concerns Put Focus on Homebuilder ETFs The fund is skewed toward mid cap securities 57 and charges 45 bps in fees and expenses The product is rich with AUM of over 1 5 billion and average daily volume nearly 6 1 million shares The ETF added over 5 over the past five days and has a Zacks ETF Rank of 2 or Buy rating with Medium risk outlook PowerShares Dynamic Building Construction Fund PKB This product follows the Dynamic Building Construction Intellidex Index holding 30 stocks in its basket The fund has managed assets worth 97 2 million while sees light volume Expense ratio came in at 0 63 The product is a little bit concentrated on the top 10 firms at under 46 of total assets read In terms of market cap the ETF has a nice mixture of mid caps 42 small caps 34 and large caps 25 The top three sectors include engineering and construction 23 specialty retail 15 and construction materials 13 PKB surged over 4 in the past five days and has a decent Zacks ETF Rank of 3 or Hold with Medium risk outlook Bottom Line The good tidings in the homebuilding sector ahead of Christmas are likely to continue in the New Year as well The solid housing market recovery is sure to spread cheer not just in the sector but also among investors heading into 2014 |
CMCSA | NBC signs deal to create original content for Snapchat | Reuters Comcast NASDAQ CMCSA Corp s NBC Universal said on Monday it has signed a multi year content and advertising deal with Snapchat to produce original shows for the messaging app The first of these shows to premiere will be The Voice on Snapchat based on the reality singing show The Voice will debut on Aug 22 NBC said in an emailed statement E Entertainment s E News will debut a weekly series starting Sept 8 that will also have original content for Snapchat NBC said Other NBC shows such as The Tonight Show Starring Jimmy Fallon and Saturday Night Live will be available on Snapchat later NBC said As part of the deal NBC Universal will develop and sell advertising packages including Snapchat s into its sponsorship mobile and video offerings the broadcaster said This is not the first deal between the parties It builds on NBC Universal s Olympics Snapchat partnership with BuzzFeed to show highlights from the 2016 Olympics These deals show the broadcaster s effort to woo younger audiences who are increasingly shifting to online media for their entertainment fix ditching traditional cable services a trend called cord cutting
Snapchat which has more 100 million users is known for automatically making posts disappear after 24 hours |
CMCSA | Windowless bunker brings NBC s marathon Rio Games operation to life | By Liana B Baker RIO DE JANEIRO Reuters The epicenter for one of the biggest media operations at the Rio Olympics is a 75 000 sq feet 6 970 sq meters maze of windowless rooms lit by thousands of monitors that serves as the backbone of NBC s exhaustive Olympics coverage Just one product of it is Michael Phelps death stare that dominated social media the first week of the Games NBC a unit of Comcast Corp NASDAQ CMCSA was able to beam online athletes preparing in ready rooms at some of the Games biggest events with newly installed cameras Rio is the ninth consecutive Games for NBC which has the U S Olympic rights for the next 16 years Viewers habits keep changing with more searching for Olympics news online or through social media fragmenting the traditional prime time audience that advertisers still pay a premium for The company has honed its own game plan with thousands of workers returning every Olympics Its challenge is to meet new needs without unraveling a trusted system that has worked for so long The sheer quantity of clips on mobile and tablets and the live streams add a lot of complexity said David Mazza NBC Sports and Olympics chief technical officer pointing to a rack of equipment making it possible for editors in NBC s broadcast center in Stamford Connecticut to cut clips to be shared online He called the Rio operation 25 percent more complex than the broadcast from London in 2012 A wall diagram near him shows 132 feeds being sent back to the States including all of the streaming video signals for Telemundo routing back to Miami and a Golf Channel feed headed for Orlando Most of the raw feed comes from the Olympic Broadcast Services although NBC supplements the events most popular with U S audiences like swimming gymnastics and athletics with its own cameras The U S television network ships its gear from one Games to the next When the Games are over in Rio it will pack 30 shipping containers full of TV monitors furniture catering supplies and the like and send it immediately to South Korea for the 2018 Winter Games It took 60 days of build will have 25 days of usage and in 20 days it ll be dead empty Mazza said NEAR DISASTER NBC said there were a lot of close calls this year Two thirds of the power went out in Olympic park two weeks before the games Then a week before the opening ceremony one of its four circuits transmitting the TV signal back to the United States failed The next day two more went down which Mazza said was terrifying After the Games started one of its generators died on Copacabana during the beach volleyball and NBC had to run with no backup power that night since it took several hours and a crane to get a new one We generally have four plans Sometimes you never do plan A or B often times you ll start with plan C and hopefully not plan D Mazza said VIEWERSHIP Overall viewership on the main NBC broadcast network is down from the Games four years ago in London Jim Bell NBC s Olympics executive producer said it s not accurate to compare the primetime broadcast numbers because viewers are watching the Games online or on different cable channels at the same time We all sit there and quibble what are the metrics what is the engagement To pick this metric or that metric is an incomplete snapshot of what s gone on here We re streaming it We re monetizing it We re winning cable We re winning broadcast We re dominating social Bell said NBC expects its revenue sharing deals with young media companies such as Snapchat for the Olympics to pay off and for the Olympics to boost its own long term digital efforts
The NBC Sports app saw a 60 percent boost in NHL streaming after the Sochi Winter Games in 2014 according to Rick Cordella NBC Sports Group s general manager of Digital Media |
CMCSA | China launches anti trust probe into Comcast DreamWorks deal | BEIJING Reuters China s commerce ministry will launch an anti monopoly probe into Comcast Corp s O CMCSA planned purchase of DreamWorks Animation after receiving unspecified complaints that the U S media deal could hurt competition in the Chinese market The investigation comes as China s anti trust watchdog has hardened its stance on companies striking deals without seeking its clearance with the body naming shaming and fining almost a dozen firms over the past year for gun jumping Comcast owner of NBCUniversal said in April it would pay 3 8 billion to buy DreamWorks the producer of the Kung Fu Panda and Shrek franchises which was also one of the first Hollywood names to open a production studio in China Recently MOFCOM received complaints regarding Comcast s decision to buy out DreamWorks claiming that the deal would hurt competition in the Chinese market Shen Danyang spokesman for the Ministry of Commerce MOFCOM said on Friday Shen didn t say exactly what the complaints were nor who made them China s film market the world s second largest is a magnet for film producers looking to tap the country s 1 4 billion people even though there are signs that stellar box office growth may be starting to slow Reuters was unable to reach Comcast or DreamWorks for immediate comment out of regular U S business hours
Separately China s commerce ministry said on Friday it would investigate the planned merger of ride hailing firm Didi Chuxing and the Chinese unit of U S rival Uber over anti monopoly concerns |
CMCSA | Organizers name TV journalists to moderate U S presidential debates | WASHINGTON Reuters Journalists from NBC ABC CNN and Fox News will moderate the three scheduled debates between U S presidential candidates Hillary Clinton and Donald Trump ahead of the Nov 8 election the nonpartisan group organizing the events said on Friday NBC anchor Lester Holt will ask questions at the first debate on Sept 26 in New York while ABC global affairs correspondent Martha Raddatz and CNN anchor Anderson Cooper will co moderate the Oct 9 town meeting style debate in St Louis the Commission on Presidential Debates said Fox News anchor Chris Wallace will moderate on Oct 19 in Las Vegas it said in a statement CBS journalist Elaine Quijano will moderate the single vice presidential debate on Oct 4 between Republican Indiana Governor Mike Pence and his Democratic rival U S Senator Tim Kaine of Virginia the commission said C SPAN s Steve Scully will be a back up moderator for all four of the debates it added Trump the Republican candidate has said he will take part in the three debates but wants to see the conditions Representatives for the Trump campaign did not immediately respond to a request for comment on Friday s announcement The New York businessman who has never held elected office has had repeated run ins with the media since launching his campaign last year charging networks like CNN with phony reporting sparring with MSNBC hosts and insulting Fox News journalist Megyn Kelly His campaign has also black listed several reporters and news outlets Clinton the Democratic candidate has said she will participate in all three debates as scheduled Separately NBC has said Trump and Clinton will participate in a commander in chief forum focused on military issues on Sept 7 in New York appearing separately On Friday Trump s son Eric raised questions about ties between the anchor for that event Matt Lauer and the Clinton Foundation and said NBC and its cable offshoot MSNBC have been against his father Obviously there s a lot of speculation because of his involvement with the foundation Eric Trump told Fox News in an interview I hope he ll be fair Representatives for NBC said Lauer was not a member of the foundation and that he had interviewed former President Bill Clinton for the network s Today show not on behalf of the foundation Trump s reality television show The Apprentice debuted on NBC in 2004 NBC later cut other ties with the businessman dropping his Miss USA and Miss Universe pageants and Trump sued
NBC is a unit of Comcast Corp NASDAQ CMCSA Fox News is part of the Twenty First Century Fox Inc ABC News is owned by Walt Disney Co while Time Warner Inc NYSE TWX owns CNN CBS Corp NYSE CBS is also publicly traded |
CMCSA | China s government flexes muscles with Uber DreamWorks probes | By Adam Jourdan and Michelle Price SHANGHAI HONG KONG Reuters The Chinese government said on Friday it was investigating two high profile takeover proposals involving U S companies the latest sign of its growing influence on whether deals are approved even those appearing to have little impact in China The Commerce Ministry said at a briefing on Friday it was probing ride hailing giant Didi Chuxing s planned acquisition of U S rival Uber Technologies Inc s China unit and Comcast Corp s O CMCSA purchase of movie studio DreamWorks Animation The scrutiny announced the day before world leaders descend on China s eastern city of Hangzhou for a meeting of the Group of 20 underscores the ministry s increasingly tough stance on companies that strike deals without seeking its approval The Chinese are increasingly using their regulatory might to gain influence in the global economy according to one expert in international relations DreamWorks and Comcast barely touch China but it s a way to assert their new position in the world They want to remind us We re big and you have to pay attention to us said Jim Lewis of Washington s Center for Strategic and International Studies think tank A representative of the U S Department of State declined comment and referred queries to China s Commerce Ministry There had not been a filing for the Didi Uber deal the ministry said last month Comcast already said it had completed the deal for DreamWorks which may indicate it did not think it needed to wait for Chinese approval The ministry requires companies to notify it of transactions before they close if those merging have combined global turnover in the previous year exceeding 10 billion yuan 1 5 billion or their combined China income exceeds 2 billion yuan 300 million Didi said its deal did not trigger these thresholds while lawyers said they were surprised that the DreamWorks deal was being probed given its small China footprint With the DreamWorks Comcast deal I was kind of surprised said Wendy Yan Shanghai based partner at Faegre Baker Daniels The ministry said it had launched the investigation into the takeover following unspecified complaints that the combination of Comcast one of the largest U S cable and broadcasting groups with the movie studio could hurt competition in the Chinese market I d be interested to know who made such complaints and how exactly the Comcast DreamWorks merger would affect the China market because they are not in a dominant position added Yan A representative for Comcast declined to comment on the Chinese probe Comcast owner of NBCUniversal said in April it would buy DreamWorks the producer of the Kung Fu Panda and Shrek franchises for 3 8 billion DreamWorks was one of the first Hollywood names to open a production studio in China and NBCUniversal in 2014 announced plans to open a 3 3 billion Universal theme park in Beijing China s film market the world s second largest is a magnet for movie producers looking to tap the country s 1 4 billion people even though there are signs that stellar box office growth may be starting to slow Comcast announced the completion of the DreamWorks deal last week The ministry has the power to fine companies it believes should have sought clearance and can also force them to sell assets to get approval or even to unwind transactions If Comcast didn t file and they should have filed this will be resolved with a fine and a press release said Bruce McDonald a veteran of the U S Department of Justice now at law firm Jones Day Is this China just being tough on a U S company I don t think so it might be them being sticklers for following Chinese filing rules CONSUMER ANGER Lawyers said that the Didi deal to buy Uber s China unit had caused a stir among local consumers and rivals The two ride hailing firms were already the number one and two top players together controlling around 90 percent of the market The ministry had signaled its discontent with the two companies last month because they had not filed a merger application to the regulator A representative for Uber referred questions to Didi A Didi spokeswoman said We are in communication with the authorities Consumer groups and rivals have warned that fares could rise steeply if the two companies join forces Both Uber and Didi had spent billions of dollars subsidizing fares in a price war to lure riders and drivers Marc Waha head of the antitrust practice at Norton Rose Fulbright in Hong Kong said a key concern for the ministry would be the elimination of Uber as a competitor to Didi If the market is considered to only comprise those two car hailing services the transaction could be seen as a merger from two to one which is likely to be problematic however small the target is Very often a small target acts as a maverick on the market leading to low prices he added The ministry has developed a reputation globally as a tough regulator but it has only blocked two transactions since China s antimonopoly law came into force in 2008 compared with 1 447 unconditional clearances Norton Rose data shows Faegre Baker Daniels s Yan added however Chinese regulators could end up with a deluge of new deals to work through if the latest probes were a sign of things to come
If the China government reaches out its hands too far they may need to deal with things they are not able to do and they need to have the manpower to review all these global mergers which may not have China implications she said |
CMCSA | Market rally has U S fund managers eyeing smaller companies | By David Randall NEW YORK Reuters With the U S stock market near record highs some mutual fund managers say they are opting to go small picking up the shares of companies with tiny market values that may have more room to grow Companies with smaller market capitalizations are typically seen as riskier because they may not trade as often or have the same financial cushion as larger companies Yet fund managers say that these companies look attractive at a time when larger companies struggle to post earnings growth increasing the likelihood that small companies will become acquisition targets Earnings of the companies in the large cap S P 500 are on pace to decline 2 percent in the second quarter and 1 percent in the third quarter according to Thomson Reuters data At the same time the broad rally that has pushed the small cap Russell 2000 index up approximately 11 5 percent over the last six months means that there are fewer small companies trading at attractive prices leaving fund managers more willing to dip lower instead We re finding more interesting stories the further we go down in market cap because it s more likely you will find something that s been overlooked said Mike Balkin a co manager of the William Blair Small Cap Growth fund Balkin has been adding shares of companies that may be acquisition targets such as remote control marker Universal Electronics Inc a 1 billion market cap company that extended its agreement with Comcast Corp NASDAQ CMCSA in March to provide voice activated remotes for the company s Xfinity cable system Shares of Universal Electronics are up 40 2 percent so far this year Overall so called microcaps have outperformed both small caps and large caps over the last six months with the Russell Microcap index gaining 12 6 percent a 1 percentage point jump over the Russell 2000 and more than double the 5 5 percent gain in the S P 500 over the same period Sandy Villere a co portfolio manager of the Villere Balanced fund said that he is buying smaller companies as more investor money flows into dividend stocks such as telecoms and utilities He has been adding shares of Taser International Inc which makes non lethal weapons and body cameras used by police departments Shares of the 1 3 billion market cap company are up 46 percent for the year to date
Money keeps pouring into the big safe companies and that s leaving these small growth names there for the picking he said |
CMCSA | AT T s T Stream Saver To Cut Data Costs For Customers | AT T Inc NYSE T has announced that it help wireless customers save data costs by offering them a choice to stream videos at a lower DVD quality 480p The feature dubbed as Stream Saver is similar to the ones offered by T Mobile US Inc NYSE T in its Binge On services Notably the service has received criticism with regard to its possible violation of the net neutrality rules laid down by the Federal Communications Commission FCC AT T will be launching its online video streaming service DirectTV Now which will allow wireless subscribers to watch TV shows and videos without incurring any data charge Notably AT T is the largest pay TV operator in the U S Meanwhile the company looks to gain wireless customers through its online streaming services which will now offer data saving options Data Caps An In depth AnalysisZero rated plans unlimited video streaming offers by wireless carriers and net neutrality principles lead us to one common question are data caps necessary Let us find out Data caps allow telecom service providers the scope to earn higher revenues in the event of a customer crossing his her data limit However in order to remain competitive telecom providers are increasingly adopting zero rated plans to lure customers with the attractive option of unlimited streaming of popular services Apart from T Mobile and AT T cable companies like Comcast Corporation NASDAQ CMCSA have launched similar plans But these schemes have been heavily criticized for rendering small scale and startup video service providers uncompetitive Moreover once net neutrality rules are adopted in full it is unlikely that these plans will continue to remain in service Recent EventsOwning to a matured market telecom players are looking at alternate sources of revenue Mobile streaming offers a feasible revenue driving option for the future AT T is no exception The company is keeping no stones unturned to build a media portfolio and has recently reached an agreement to acquire Time Warner Inc NYSE TWX for the purpose However high level of post merger debt and regulatory issues threaten the proposed merger
AT T currently carries a Zacks Rank 3 Hold You can see AT T INC Price
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WFC | U S mall investors set to lose billions as retail gloom deepens | By Herbert Lash and Joy Wiltermuth NEW YORK Reuters IFR The dramatic shift to online shopping that has crushed U S department stores in recent years now threatens the investors who a decade ago funded the vast expanse of brick and mortar emporiums that many Americans no longer visit Weak September core retail sales which strip out auto and gasoline sales provide a window into the pain the holders of mall debt face in coming months as retailers with a physical presence keep discounting to stave off lagging sales Some 128 billion of commercial real estate loans more than one quarter of which went to finance malls a decade ago are due to refinance between now and the end of 2017 according to Morningstar Credit Ratings Wells Fargo estimates that about 38 billion of these loans were taken out by retailers bundled into commercial mortgage backed securities CMBS and sold to institutional investors Morgan Stanley Deutsche Bank DE DBKGn and other underwriters now reckon about half of all CMBS maturing in 2017 could struggle to get financing on current terms Commercial mortgage debt often only pays off the interest and the principal must be refinanced The blame lies with online shopping and widespread discounting which have shrunk profit margins and increased store closures such as Aeropostale s bankruptcy filing in May making it harder for mall operators to meet their debt obligations Between the end of 2009 and this July e commerce doubled its share of the retail pie and while overall sales have risen a cumulative 31 percent department store sales have plunged 17 percent according to Commerce Department data According to Howard Davidowitz chairman of Davidowitz Associates Inc which has provided consulting and investment banking services for the retail industry since 1981 half the 1 100 U S regional malls will close over the next decade TOO MUCH A surplus of stores are fighting for survival as the ubiquitous discount signs attest he said When there is too much and we have too much then the only differentiator is price That s why they re all going into bankruptcy and closing all these stores Davidowitz said The crunch in the CMBS market means holders of non performing debt such as pensions or hedge funds stand to lose money The mall owners mostly real estate investment trusts REITs have avoided major losses because they can often shed their debt through an easy foreclosure process You have a lot of volume that won t be able to refi said Ann Hambly founder and chief executive of 1st Service Solutions which works with borrowers when CMBS loans need to be restructured Cumulative losses from mostly 10 year CMBS loans issued in 2005 through 2007 already reach 32 6 billion a big jump from the average 1 23 billion incurred annually in the prior decade according to Wells Fargo NYSE WFC The CMBS industry is bracing for losses to spike as loan servicers struggle to extract any value from problematic malls particularly those based in less affluent areas In January for example investors recouped just 4 percent of a 136 million CMBS loan from 2006 on the Citadel Mall in Colorado Springs Colorado Investor worries about exposure to struggling malls and retailers intensified in August when Macy s said it would close 100 stores prompting increased hedging and widening spreads on the junk rated bonds made up of riskier commercial mortgages Adding to the stress new rules set to be introduced on Dec 24 will make it constlier for banks to sell CMBS debt The rules require banks to hold at least 5 percent of each new deal they create or find a qualified investor to assume the risk This has already roughly halved new CMBS issuance in 2016 and loan brokers say the packaged debt financing is now only available to the nation s best malls Investors too are demanding greater prudence in CMBS underwriting Mall owners who failed to meet debt payments in the past would just hand over the keys because the borrowers contributed little if any of their own money The terms often shielded other assets from being seized as collateral to repay the debt Dodging the overall trend retail rents for premier shopping centers located in affluent areas continue to rise Vacant retail space at malls is at its lowest rate since 2010 according to research by Cushman Wakefield The low vacancy rate reflects the ability of some malls to fill the void left by store closings by offering space to dollar stores and discounters That is however little consolation for investors
With the retail consolidation that we have ahead of us malls have a fair amount of pain left to come Edward Dittmer a CMBS analyst at Morningstar said |
WFC | Major banks mark first ever international trade using blockchain tech | By Byron Kaye SYDNEY Reuters The first cross border transaction between banks using multiple blockchain applications has taken place Commonwealth Bank of Australia and Wells Fargo NYSE WFC Co said on Monday resulting in a shipment of cotton to China from the United States Australian cotton trader Brighann Cotton Marketing bought the shipment bound for the port city Qingdao from U S division Brighann Cotton in Texas the companies and their banks said in a joint statement The blockchain trade for 88 bales totaled 35 000 Commonwealth Bank told Reuters Blockchain is a web based transaction processing and settlement system whose efficiency banks say could slash costs It creates a golden record of any given set of data that is automatically replicated for all parties in a secure network eliminating any need for third party verification Existing trade finance processes are ripe for disruption and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies Michael Eidel Commonwealth Bank s executive general manager for cashflow and transaction services said in the statement The transaction is not the first involving the decentralized database used since 2009 for the digital currency bitcoin But it is a milestone for the traditional banking industry which at first shied away from the technology partly because it makes money flows harder for law enforcement agencies to track Led by a consortium of over 70 of the world s biggest financial institutions called R3 the banking industry has been researching ways to harness the speed accuracy and efficiency afforded by blockchain One of its benefits is removing people from transaction processing That has been seen as especially appealing for cross border trades which are typically held up by duplication of payment processing and time zone differences R3 has been researching ways to expand the use of blockchain to include smart contracts or payments triggered when certain conditions are met The cotton transaction for instance involved automatically making payments when the shipment reached certain geographic locations the statement showed The shipment is currently between Singapore and Hong Kong and is due to arrive in early November Commonwealth Bank said The bank also said that R3 of which it and Wells Fargo are members did not play a part in the trade Brighann Cotton was not available for comment when contacted by Reuters
Wells Fargo s head of international trade services Chris Lewis said in the statement that his bank was committed to new technology He also said significant regulatory legal and other concerns remain to be addressed |
WFC | Wells Fargo says head of capital finance to retire | Reuters Wells Fargo NYSE WFC Co said on Monday that Henry Jordan chairman and chief executive officer of Wells Fargo Capital Finance would retire on Dec 31 Capital Finance will be joined with newly formed Wells Fargo Commercial Capital following Jordan s retirement Guy Fuchs will head Capital Finance unit and will report to executive vice president of specialized lending and investment Ed Blakey
The Commercial Capital unit combines Wells Fargo s asset based lending businesses including the recently acquired GE Capital s commercial distribution finance and vendor finance businesses and direct lending portfolio |
WFC | Credit card issuer Synchrony Financial joins blockchain group | Reuters Synchrony Financial said on Monday its has joined R3 a group of companies working on blockchain technology making it the first credit card issuer to join the consortium Blockchain is a web based transaction processing and settlement system whose efficiency banks say could slash costs It creates a golden record of any given set of data that is automatically replicated for all parties in a secure network eliminating any need for third party verification Led by a consortium of over 70 of the world s biggest financial institutions called R3 the banking industry has been researching ways to harness the speed accuracy and efficiency afforded by blockchain The first cross border transaction between banks using multiple blockchain applications took place on Monday Commonwealth Bank of Australia and Wells Fargo NYSE WFC Co said resulting in a shipment of cotton to China from the United States |
WFC | Wall Street leaders too insulated says watchdog for U S rescue fund | By Patrick Rucker WASHINGTON Reuters Wall Street executives are too shielded from prosecution and should answer for misdeeds committed by underlings the watchdog for a multibillion dollar bailout said on Wednesday Senior banking officials should attest each year that their companies are free of criminal fraud and civil abuse said Christy Goldsmith Romero special inspector general of the Troubled Asset Relief Program Every executive should be able to conduct due diligence she told Reuters in an interview If they are too big to do that then they are too big period In 2008 Congress created TARP to buttress a financial system crippled by crashes in the housing and stock markets U S taxpayers have invested more than 400 billion since the crisis mostly in large Wall Street banks Goldsmith Romero leads a staff of roughly 140 who investigate possible abuse of the TARP program Since it was conceived the inspector general s office has helped recover more than 10 billion in misappropriated money Every three months Goldsmith Romero s office reports to Congress on her agency s work The 550 page report filed on Wednesday details tens of thousands of cash injections selloffs and other investments of taxpayer money Goldsmith Romero said the report also described cases where executives are complicit in fraud but the highest ranking officials are walled off The knowledge stops she said It resides at lower levels and stops there And in many cases I think that s by intentional design In her regular report to Congress Goldsmith Romero commonly singles out leading banks that she says have not taken enough care to help consumers For example taxpayers paid Wells Fargo Co N WFC 268 million to assist troubled homeowners but the lender has often failed to notify struggling customers of their rights to a cheaper loan according to the report A Wells Fargo official said the report was unfair and that the bank respond s quickly to correct any errors we identify or that are brought to our attention Goldsmith Romero has never before suggested a reform of the financial system She said that she felt compelled to speak up this time after facing so many cases where senior executives seemed out of reach from prosecutions
This is one way to argue for change she said |
WFC | Oft divided SEC speaks with one voice when suing corporations records | By Sarah N Lynch WASHINGTON Reuters The U S Securities and Exchange Commission has released a collection of internal voting records long held secret that reveal it to be less divided than is commonly thought The new data reveal that the agency s commissioners vote unanimously almost every time they take companies and executives to federal court in contrast to the public and sometimes bitter disagreements they exhibit when debating regulatory matters Details of the votes are significant because they give agency watchers a window into how commissioners handle cases they take to court The cases that were brought unanimously 94 percent of the total since April 2013 when Mary Jo White became the agency s chair included high profile defendants such as the City of Miami Wells Fargo N WFC and pharmaceutical executive Martin Shkreli The fact that so many are decided unanimously belies the public belief that the SEC is fractious said James Cox a law professor at Duke University who closely tracks the agency In recent years commissioners have dissented over many policy issues such as whether to grant regulatory waivers to big banks and how to interpret rule making requirements of the 2010 Dodd Frank Wall Street reform law An SEC spokeswoman did not respond to a request for comment Legal experts expressed differing views on the significance of the uniformity of the votes Donald Langevoort a professor at the Georgetown University Law Center said there is less disagreement on whether to sue companies because those decisions tend to turn on individual facts and circumstances instead of policy views Defense attorney Stephen Crimmins of Murphy McGonigle said commissioners might be agreeing quickly because their heavy caseload does not allow enough time for deep study of each case The SEC decision to publish its voting records on these cases came four years after Reuters filed a Freedom of Information Act request for the data The SEC which historically has made public its voting on cases it handles administratively had resisted release of internal voting records it deemed privileged The release of this data is a huge breakthrough for the public said Bradley J Bondi an attorney with Cahill Gordon Reindel LLP who said it would provide insight into whether some alleged misconduct could be considered a clear violation or a close call in the eyes of the SEC It covers slightly more than 1 400 defendants in 414 cases filed in federal courts from April 11 2013 through August 26 2016 Only four of those cases actually received a vote against bringing the case all of which were from Michael Piwowar a Republican In one high profile case Piwowar voted against charging the Royal Bank of Scotland L RBS with misleading investors in subprime mortgage securities The case still won a majority of support from the two other commissioners who participated in the vote and the bank settled the charges Some 21 other cases received partial dissents meaning the commissioners agreed to proceed with the case but disagreed on matters like whether to require shareholders to bear the costs of paying a corporate penalty or whether the evidence justified specific charges
This version of the story corrects the 11th paragraph to say that there were only four cases in which there was a complete dissent about bringing a case not five |
WFC | Market Views Tepid Growth As Taper Later Signal | Fundamental Coals Have Not Caught Fire Those of you who have experience with old school charcoal grills know lighter fluid is used to prime the proverbial pump until the coals can take over Quantitative easing QE is the Fed s lighter fluid for the economy The hope is that money printing will help spark economic growth Once economic growth picks up the Fed can put its lighter fluid away The problem is if the Fed stops pumping lighter fluid onto the economic coals the present day fire may go out recently asked American economist Robert Shiller what keeps him up at night is it asset bubbles His response speaks to the Fed s reluctance to put the cap back on the lighter fluid
The world economy is softening a bit he tells us in the accompanying interview There s always a chance of another recession It s been six years since the last recession started they tend to come along with some regularity Congress is now unable to get things done and so we won t have a good response if there s another recession
How Important Are The Recent Cracks This week s video below covers evidence of defensive posturing that has been slowly creeping into the battle between economic confidence and economic fear The video puts recent gains in Treasuries TLT weakness in credits spreads and lagging performance from economically sensitive stocks in perspective
Rough Draft of Wednesday s Fed Statement With the recent less than stellar reports on the economic and earnings fronts it is difficult to see the Fed adding a we are about to taper clause to this Wednesday s statement From
Investors are going to be overly focused on this Fed meeting Scott Wren senior equity strategist at St Louis Missouri based Wells Fargo Advisors LLC which oversees about 1 3 trillion said by phone I suspect that when the statement is released there s going to be very little change to it
Therefore we can use the last statement as a preview of this week s Fed event Below is a key portion of the released on September 18
Consistent with its statutory mandate the Committee seeks to foster maximum employment and price stability The Committee expects that with appropriate policy accommodation economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished on net since last fall but the tightening of financial conditions observed in recent months if sustained could slow the pace of improvement in the economy and labor market The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance but it anticipates that inflation will move back toward its objective over the medium term
Economy Good and Not So Good Monday brought some conflicting data on the economy Industrial production numbers looked good from a headline perspective but has some concerning internal elements From
U S industrial production recorded its largest increase in seven months in September as utilities output surged after several months of declines but manufacturing showed signs of cooling Industrial output rose 0 6 percent last month after increasing 0 4 percent in August the Federal Reserve said on Monday Economists polled by Reuters had expected industrial output would rise 0 4 percent
Worst In Three Years In terms of looking at the broad U S economy the housing market may be the most susceptible to any tapering schedule devised by the Federal Reserve In the process known as quantitative easing the Fed buys bonds to drive down interest rates When the Fed s demand for bonds is tapered then interest rates tend to go up Rising interest rates mean higher monthly mortgage payments for homebuyers which dampens demand for housing From
Contracts to purchase previously owned U S homes fell by the most in more than three years in September a sign that a softer economy and a rise in mortgage rates are hurting the country s housing market Mortgage rates have risen sharply since May on bets that the U S Federal Reserve would soon begin winding down a stimulus program although rates have eased slightly in recent weeks Many investors believe the Fed will keep its bond buying stimulus at full throttle given recent signs the U S economy lost a step in September
Investment Implications Stocks Tentatively Higher The S P 500 advanced 15 points last week The stock market bears had taken the S P 500 down to near break even with return to risk off Wednesday The bears were not able to produce any follow through on Thursday or Friday which is indicative of a market where the desire to sell is relatively weak The chart below shows economic confidence is clearly in control relative to economic fear Points A and B highlight the 50 day and 100 day moving averages notice their slopes are beginning to rise again Thus far the S P 500 has not stalled below resistance near point C Points A B and C are all positive developments for the economic and stock market bulls Would the stock market be going up if the Fed were not in the picture The answer is most likely no but the Fed is an important part of the investing equation From
It s premature to assume that yields are bound to increase after reports last week signaled the U S economy still needs the Fed s support to ensure its recovery said Jack McIntyre a Philadelphia based money manager at Brandywine Global Investment Management LLC which oversees 44 5 billion
The expectation of taper later is unquestionably impacting the market s pricing mechanism As we noted last Friday the present day market is in much better shape than it was during the 2007 2008 peaking process allowing us to maintain exposure to economically sensitive investments such as U S stocks SPY technology QQQ financials XLF and emerging markets EEM However the aforementioned cracks in the market s profile must be respected allowing us to remain flexible |
WFC | Alternative ETFs Can You Increase Your Risk Adjusted Performance | Is anyone bothered by the bizarre relationship between a sub par economy and ever rising stock prices In brief dismal hiring coupled with negligible wage growth encourage the Federal Reserve to continue suppressing interest rates with its emergency bond buying program Corporations use the ultra low rates to refinance debt repurchase stock shares cut costs and enhance profit margins while rarely using the easy money to hire Meanwhile investors increase their margin exposure to buy riskier assets and or simply opt for riskier assets over the non yielding bond market In fact companies may not be selling products or services particularly well but their balance sheets look spectacular Indeed the relationship between asset prices and economic well being has turned into an incongruous circle of silliness The Fed s rate manipulation goals were supposed to get businesses to hire and consumers to spend Neither is occurring at the level that the central bank had anticipated Unfortunately the cessation of bond acquisition activity at this point would likely hinder price appreciation in housing as well as stocks In turn this leaves Bernanke Yellen with an unenviable choice The Fed can accept a probable recession by winding down quantitative easing QE or keep hoping that the ever increasing net worth of companies as well as wealthy individuals will someday translate into new jobs and vibrant consumption If the discussion is a bit too much to swallow then let me simplify Buy buy buy As long as the Fed continues acquiring low yielding bonds with money that it does not actually have savers and investors will find themselves needing to do things with their capital that they normally would not do Take more risk When a caller recently asked financial personality Ric Edelman what to do about the inability to live off the interest of CDs and savings he explained that the only viable alternative was to diversify a portfolio across 18 19 asset classes If you don t want to erode your principal you have no other choice he insisted For the most part he has a valid point The risk of outliving one s money may be greater for many folks than the risk of participating in a diversified mix of stocks bonds REITs partnerships currencies commodities and alternative assets In this commentary I am choosing to look at some alternative asset exchange traded funds They are often misunderstood rarely discussed in detail and they may go the furthest toward reducing overall portfolio risk If the fit hits the shan the way it did in the financial collapse of 2008 then most asset classes e g most stock types most bond types most REITs most currencies most commodities etc could depreciate significantly Alternative assets may or may not do much better but when it comes to a world where the Fed is likely to remain exceptionally accommodative alt assets are worthy of discussion Here are 3 exchange traded investments for tapping into a world of alternative possibilities 1 ETRACS Wells Fargo Business Development Company Index Note BDCS Business Development Companies BDCs are similar to venture capitalists and private equity firms In particular there are roughly 30 or more publicly traded corporations that engage in lending at high yield rates to smaller up n comers BDCs often garner equity stakes as well The Securities and Exchange Commission SEC requires these BDCs to invest 70 of assets in U S companies while distributing a minimum of 90 of taxable income in the form of dividends Those distributions often lead to annual yields in the 7 9 range for shareholders Not surprisingly there are exchange traded vehicles for BDCs The unleveraged ETN from UBS E TRACS ticker symbol BDCS is a means for accessing the alternative asset class Capital appreciation may be a little light in 2013 though the 7 annualized yield is a nice offset rising interest rates in the May June period did not hurt BDCS more than the market at large Moreover the 50 day moving average has remained above the 200 day moving average since early in 2012 2 ProShares Large Cap Core Plus CSM Before fees and expenses CSM pursues the results of Credit Suisse s 130 30 Large Cap Index The 130 30 paradigm has become increasingly popular in the alternative arena where an index has total long exposure of 130 and total short exposure of 30 In this vehicle the 500 largest stocks comprise the universe where a rules based ranking system determines which companies will make up the long and which will make up the short However there is very little discernible performance difference or price direction when compared to the S P 500 SPDR Trust SPY Both have three year total returns of roughly 58 both move in the same direction 99 times out of 100 The advocates of 130 30 strategies swear by the approach s ability to deliver excess returns for less risk but the evidence is pretty slim at least in the passive world of ETF indexing 3 Credit Suisse Merger Arbitrage Index ETN CSMA In merger arbitrage one is pursuing the spread between the stock price of a target company after the public announcement of its proposed acquisition and the price offered by the acquirer to pay for the targeted company s shares If a deal goes through as anticipated gains are probable If a deal fails to materialize losses may occur Compared to the previous alt assets CSMA provides the least annualized volatility and the lowest correlation with the S P 500 with a coefficient of 0 39 In the same vein however the investment may not provide much of anything of value Over the previous three years the profits are frighteningly slim For the most part alternative ETFs may not be alternative enough And when they are they may not provide enough value to warrant their inclusion That means the majority of ETF enthusiasts should stick with mainstream offerings tied to stocks bonds REITs and commodities Moreover since few of the primary asset classes will hold up in a systemic shock you ll need to actively manage the downside risk with an approach to lowering your overall exposure Disclosure Gary Gordon MS CFP is the president of Pacific Park Financial Inc a Registered Investment Adviser with the SEC Gary Gordon Pacific Park Financial Inc and or its clients may hold positions in the ETFs mutual funds and or any investment asset mentioned above The commentary does not constitute individualized investment advice The opinions offered herein are not personalized recommendations to buy sell or hold securities At times issuers of exchange traded products compensate Pacific Park Financial Inc or its subsidiaries for advertising at the ETF Expert web site ETF Expert content is created independently of any advertising relationships |
WFC | New Trend AThird Of Americans Need to Work Until 80 | According to the just released annual Wells Fargo Company Middle Class Retirement Study about 60 of middle class Americans say that getting monthly bills paid is their top concern This number stood at 52 in the 2012 study Source Wells Fargo Company October 23 2013 But there are more depressing results of the survey 34 of middle class Americans say that they will work until they are 80 years old because they will not have enough money saved up for retirement In 2012 the number of respondents with a similar opinion stood at 30 and in 2011 this number was at 25 While the U S economy is supposed to be in recovery mode the trend shows more Americans will need to work after retirement Based on the results of the study the Wells Fargo Institutional Retirement and Trust issued a statement saying We do this survey every year and for the past three years the struggle to pay bills is a growing concern and the prospect of saving for retirement looks dim particularly for those in their prime saving years Source Ibid No kidding While the stock market has more than doubled since 2009 while real estate prices are rising again while Washington and the mainstream are telling us the U S economy is improving Americans are becoming more doom and gloomish According to the results of the CNN ORC International poll released late last week only 29 of Americans say that economic conditions are good right now the lowest level of the year Source CNN Breaking News Text October 22 2013 The chart below of the University of Michigan Consumer Sentiment Index is very important This is a key indicator of consumer confidence in the U S economy Since July of this year consumer confidence has been plunging having now fallen to the same level it was at in early 2012 Weak consumer confidence has always been a signal that consumer spending in the U S economy will pull back But looking at the retail stocks it s like they don t care how consumers are feeling in the U S economy The Dow Jones U S General Retailers Index just hit a record high What does that tell me It tells me the same thing I have been telling you dear reader for months now This stock market is rising on easy monetary policy not fundamentals and that s dangerous Michael s Personal Notes Even amateur economists will agree with me on this when supply declines and demand remains the same prices increase Well it wasn t too long ago when I said that if gold bullion prices remain suppressed for long we will see the supply decline This phenomenon has started to happen According to the U S Geological Survey USGS in June of 2013 the total production of gold bullion from mines in the U S was 19 400 kilograms kg about four percent lower than the same period a year ago Source U S Geological Survey Mineral Industry Survey September 2012 and October 2013 The table below compares U S mine production in the first six months of 2012 to the first six months of 2013 But as the supply of gold bullion falls we see consumer demand for gold bullion increase In India the biggest consumer of the precious metal demand continues to rise in spite of the efforts of the Indian government and the Indian central bank to curb demand for the yellow metal The director of the All India Gem and Jewellery Trade Federation Bachraj Bamalwa recently noted Demand is picking up and supplies have dried up Source Gold premiums near record levels on lack of supply Reuters October 22 2013 In China the second biggest gold bullion consumer we are seeing something very similar According to the Hong Kong Census and Statistics Department in August 110 5 metric tons Mt of gold bullion was imported from Hong Kong into China It marked the fourth straight month that imports of the precious metal exceeded 100 Mt Source Reuters October 8 2013 Why is this so important to even mention China keeps the country s gold bullion production for internal use importing from Hong Kong shows how much more is needed to fulfill the demand Other than the consumer demand for the precious metal we are still seeing buying for gold bullion from central banks especially in Russia and Turkey After hitting a bottom in June gold bullion prices haven t declined to that level again In fact they have been trending higher since This trend can continue but you have to keep in mind that we are in a market where irrationality prevails Time will draw a better picture but as it stands I see many opportunities in the mining sector Disclaimer There is no magic formula to getting rich Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis The opinions in this e newsletter are just that opinions of the authors Information contained herein while believed to be correct is not guaranteed as accurate Warning Investing often involves high risks and you can lose a lot of money Please do not invest with money you cannot afford to lose |
WFC | Indian Rupee Gained Against The US Dollar | USD INR The Indian rupee gained against the US dollar on Monday as per our expectations supported by a rally in domestic equities Strength in rupee was mainly driven after the US Federal Reserve s chairperson nominee Janet Yellen on Friday said that she would continue the current monetary stimulus program Sensex rose 459 73 points or 2 25 to 20 859 15 while the National Stock Exchange s broader 50 share Nifty index jumped or 132 85 points or 2 19 to 6 189 Meanwhile state governments have taken a rigid position on protecting their autonomy and revenues with regards to implementation of GST goods and services tax The states have decided to oppose the inclusion of petrol and liquor under GST and want a formal mechanism for compensation for revenue losses because of GST to be a part of the constitution amendment Bill The position of the states also comes as a blow to industry which was looking forward to moving to a unified tax regime The Confederation of Indian Industry has said that around 2 percentage points of GDP will be saved if GST is implemented
The US dollar recovered some ground against major currencies except the yen after Federal Reserve Bank of New York President William C Dudley said he was growing more and more hopeful that the U S economy is improving and added fiscal uncertainties may no longer be dragging down recovery as in recent months The positive comments coming from a renowned dove like Dudley meant that Fed policy makers are slowly tilting in favor of the QE Taper USD recovered against the EUR and the pound following Dudley s comments However gains in the USD were restricted due to soft housing data National Association of Home Builders Wells Fargo Housing Market Index came in unchanged in November at 54 missing analysts calls for an uptick to 55 this month The USD INR is likely to open flat today Much of the rebound in rupee was mainly driven by RBI governor s comments on dollar demand from oil importers and Jenet Yellen s dovish statements The USD INR is likely to test 62 70 levels today EUR INR The EUR fell against the INR however losses were capped after EURUSD pair rose to near two week high levels during the European session The euro zone s trade surplus widened more than expected in September official data showed on Monday The current account surplus narrowed to a surplus of 13 7 billion Euros 18 5 billion in September following an upwardly revised EUR17 9 billion surplus in August Widening of the EU trade surplus in 2013 can be attributed to record high unemployment and resulting fall inflation We believe the EUR rose mainly due to prevailing risk on sentiment after dovish comments Yellen The single currency shrugged off rate cut worries and even outperformed the Pound German Zew survey Economic sentiment for the month of November is likely to rise to 54 0 from the previous month s reading of 52 8 Rise in Zew Survey indicators will be supportive for the EUR EU construction output is likely to have negligible impact on the EUR USD pair Overall the outlook for the EUR INR stays bearish The pair is likely to test 83 50 levels this week GBP INR The pound remained near three week highs against the U S dollar on Monday as speculation the Federal Reserve will decide to maintain the level of its monthly asset purchases for the time being continued to weigh on the greenback Separately market sentiment improved after China outlined a series of broad economic reforms late Friday including the easing of the one child policy and opening the way for more private investment in state controlled industries No major data is due out of UK or US today We expect GBP to trade strong against the INR and USD The GBP INR is trading near support level of 100 25 The pair is likely to rise to 100 68 levels today JPY INR THe yen gained against the USD on Monday despite positive comments on US economy from the renowned US Fed policy maker Bank of New York President William C Dudley The dollar was also weighed down by soft US housing sector data National Association of Home Builders Wells Fargo Housing Market Index came in unchanged in November at 54 missing analysts calls for an uptick to 55 this month The USD JPY pair is trading below the 100 level at the time of writing US and European stock indices hit record high levels yesterday Any correction in equities would be somewhat supportive for the yen Given that the USD INR is likely to open flat we expect the JPY INR to strengthen tracking gains in the yen against the USD Losses in the JPY INR are likely to be capped around 62 00 levels |
CMCSA | Comcast to offer prepaid TV and internet service | By Malathi Nayak NEW YORK Reuters Comcast Corp NASDAQ CMCSA the No 1 U S cable company said on Thursday it will introduce prepaid TV and internet services to attract customers whose credit ratings do not quality them for postpaid services The service will roll out later this year in Illinois Michigan Georgia Florida and Indiana and will extend to the entire country by the end of 2017 Philadelphia based Comcast said in a statement Cable and satellite providers are looking for new ways to add customers in the face of intense competition from streaming video services The new offering which does away with credit checks and annual contracts lets customers refill their service at any time for a period of seven or 30 days for 15 and 45 respectively the company said The price of a TV starter kit starts at 80 and an internet starter kit costs 80 Comcast said it hopes to target customers without bank accounts with its new Xfinity Prepaid Services According to the Federal Deposit Insurance Corp nearly 10 million U S households are unbanked and another 25 million are underbanked meaning they have poor access to banking services Comcast also said it has signed a deal with pre paid wireless service Boost Mobile to sell Xfinity Prepaid at a few Boost Mobile locations later this year and 4 400 Boost Mobile locations within Comcast s service area by the end of 2017 The company s new prepaid offer is in line with the wireless industry s prepaid cellular service offerings that give customers with low credit scores or low income the chance to skip credit checks and annual service contracts We want to create an easy pay as you go option for people who want more flexibility and predictability when buying our services said Marcien Jenckes executive vice president consumer services Comcast Cable said in a statement
Comcast which will announce earnings on July 27 said it will not include pre paid customers when it reports subscriber numbers in its quarterly reports |
CMCSA | NBC has sold 1 2 billion in Olympics advertising | By Liana B Baker RIO DE JANEIRO Reuters NBC a unit of Comcast Corp NASDAQ CMCSA has sold 1 2 billion in advertising for the Summer Olympics in Rio de Janeiro the network said on the eve of a rare Games where some of the most high profile contests will air live in prime time for U S audiences The official U S broadcaster of the Games is selling ads at a quicker pace than the London Olympics in 2012 NBC Sports Group s executive vice president of advertising sales Seth Winter said on Thursday The problems surrounding the Rio Olympics have helped boost interest in the Games Winter added Instead of basking in the glory of hosting the first Olympics in South America organizers were struggling to get the event ready Brazil has been grappling with a volatile political situation concerns over crime levels in Rio water pollution late infrastructure and an outbreak of the Zika virus which has clouded the start to the Games It sounds a little bit distorted or perverse whatever the appropriate word is but it just raises awareness that there are Olympic Games going on in South America and you d have to be hibernating under a rock not to understand that Winter said speaking from Rio on a conference call with reporters By nature of a short time difference between Brazil and the United States the U S broadcast will feature more live events such as track and field and swimming than in London over 17 consecutive nights from Aug 5 21 The live events give NBC confidence in committing to our advertisers the types of numbers that we think we can reach Winter said The broadcaster is still planning to air the opening ceremony on Friday on a tape delay however which has generated criticism on social media NBC signed on two years ago to pay 7 65 billion for the right to air six Olympic Games from 2022 to 2032 before any other U S media company could bid Winter alluded to the Rio games being profitable to the network Networks have been stocking up on live sports which are popular with advertisers since audiences cannot skip commercials More than 75 percent of the ad sales are driven by the main broadcast network Winter said although they also include cable and digital ad sales NBC had previously said it hit the 1 billion ad sales mark for Rio four months ahead of the previous Summer Games |
CMCSA | American TV viewers slam NBC for delaying Rio broadcast | RIO DE JANEIRO Reuters American TV viewers used social media on Friday to vent their anger at U S broadcaster NBC for delaying the screening of the opening ceremony of the Rio Games by an hour and then going to repeated commercial breaks during the show NBC a unit of Comcast Corp NASDAQ CMCSA has the U S media rights for South America s first Olympic Games and said it decided not to show the ceremony live because its producers and commentators wanted time to put it into context for Americans It s not a sports competition a NBC Sports spokesperson said in a statement emailed to Reuters during the ceremony It s a cultural ceremony that requires deep levels of understanding with numerous camera angles and our commentary laid over it We think it s important to give it the proper context And prime time is still when the most people are available to watch But many viewers were upset at waiting to see a global event while audiences and news media in the rest of the world were already sharing pictures of it on the Web The rest of the world has been watching it LIVE for a half hour now said one tweet before the NBC telecast started Another chimed in Great idea NBC Don t air what should be a global cultural event live Why would everyone want to watch and enjoy together Some journalists also showed their frustration including Wall Street Journal editor in chief Gerard Baker Just staggeringly irritating that 20 years after the birth of the web NBC still shows the Olympics with a time delay Baker tweeted Others were annoyed at repeated ad breaks including one who tweeted Can NBC slip in a bit of the Olympic opening ceremony between the commercials
On commercial breaks the NBC spokesperson said the delay enabled it to insert ads into the broadcast without depriving viewers of much of the ceremony |
WFC | Massachusetts latest to bar Wells Fargo as underwriter | By Hilary Russ Reuters The state of Massachusetts will stop using Wells Fargo Co N WFC as a bond underwriter for a year joining a growing list of state and local governments to suspend business with the bank after revelations it opened millions of unauthorized accounts Massachusetts Treasurer Deborah Goldberg instructed her staff late on Monday to immediately remove Wells Fargo from the state s approved list of underwriters for a term of one year her spokeswoman said on Tuesday Compared with other states Massachusetts exposure to the bank is extremely limited but Goldberg isn t convinced that Wells Fargo has grasped the level of seriousness of their actions nor have they addressed systemic failures within their organization spokeswoman Chandra Allard said in an email We value the Commonwealth of Massachusetts business and will work to earn it back the bank said in a statement Last month Wells Fargo agreed to pay a 190 million settlement over its staff opening as many as 2 million accounts without customers knowledge The misconduct triggered a raft of federal and state investigations and led to the resignation last week of its chief executive and chairman John Stumpf Earlier this month following the scandal Massachusetts as well as Oregon and the city of New York said they were reviewing their business relationships with the firm The backlash has since widened On Friday Ohio said it would ban state business with Wells Fargo for a year following the city of Chicago and the states of Illinois and California In Massachusetts the bank said it employs 1 300 people and contributed 1 3 million to nonprofits and schools statewide in 2015
Its business with the state is conducted through Wells Fargo Securities which is a separate business line from its retail banking operations |
WFC | Ecuador bank s suit against Wells Fargo over cyber heist can go forward ruling | By Nathan Layne Reuters A lawsuit by an Ecuadorean bank alleging that Wells Fargo Co N WFC is liable for authorizing the transfer of 12 million stolen in a 2015 cyber heist can go forward a U S judge ruled on Tuesday The decision by U S District Judge Lewis Kaplan in Manhattan was in response to Wells Fargo s motion to dismiss the lawsuit by Banco del Austro which sought to hold the U S bank responsible for failing to halt the transfers made via the SWIFT network The 2016 lawsuit took on new importance in the wake of this year s heist at the Bangladesh central bank in which cyber thieves used the SWIFT global messaging system to swipe 81 million from an account at the Federal Reserve Bank of New York In addition to highlighting potential security risks inherent to such interbank transfers Banco del Austro s lawsuit was also seen by legal experts as a key test of whether a so called correspondent bank in this case Wells Fargo could be held liable for authorizing authenticated SWIFT transfer messages In Tuesday s ruling Kaplan threw out breach of contract and negligence claims against Wells Fargo but denied the U S bank s bid to dismiss alleged violations of the New York Uniform Commercial Code which governs whether fund transfer security procedures are commercially reasonable Kaplan said the court could not rule as a matter of law that use of the SWIFT system with nothing more constituted a commercially reasonable security procedure in the context of this particular customer bank relationship Wells Fargo which has previously maintained that it properly processed the wire instructions via authenticated SWIFT messages could not be immediately reached for comment on Tuesday s ruling Banco del Austro could also not be reached for comment The 12 million was stolen in January 2015 when unidentified hackers secured a Banco del Austro employee s SWIFT logon credentials Wells Fargo said in a February court filing Court filings and judicial rulings show that the cyber thieves routed most of the stolen funds through 23 companies registered in Hong Kong some of them with no apparent business activity Reuters reported in May
Banco del Austro submitted criminal reports to police in both Hong Kong and Ecuador about the transfers according to Hong Kong court filings It is not clear if any progress has been made by the authorities in finding the stolen funds |
WFC | California launches criminal probe into Wells Fargo account scandal | By Sarah N Lynch WASHINGTON Reuters The California Attorney General s Office has launched a criminal investigation into Wells Fargo N WFC over allegations it opened millions of unauthorized customer accounts and credit cards according to a seizure warrant seen by Reuters Attorney General Kamala Harris authorized a seizure warrant against the bank that seeks customer records and other documents saying there is probable cause to believe the bank committed felonies The probe marks the latest setback for the bank in a growing scandal that led to the abrupt retirement of its chief executive officer monetary penalties compensation clawbacks lost business and damage to its reputation Wells Fargo spokesman Mark Folk did not immediately provide a comment in response to requests from Reuters but was quoted in the Los Angeles Times as saying the bank is cooperating in providing the requested information A spokeswoman for the California Department of Justice said she could not comment on the probe The bank s downward spiral kicked into high gear last month The U S Consumer Financial Protection Bureau and other regulators ordered the United States third largest bank by assets to pay 190 million in fines and restitution to settle civil charges that its branch staff created as many as 2 million accounts without customers knowledge in order to meet internal sales targets The CFPB said that high pressure sales tactics and financial incentives fueled the fraud which was largely carried out by low level branch employees About 5 300 of those employees were fired Shortly after the civil settlement was made public CEO John Stumpf was called to testify before Congress Observers have widely criticized his performance with many saying he appeared ill prepared to deal with tough questioning by lawmakers including Massachusetts Democratic Senator Elizabeth Warren who called for his resignation and accused him of him gutless leadership Last week Stumpf resigned and was replaced by Chief Operating Officer Tim Sloan This is at least the second criminal probe to be opened into Wells Fargo since last month In September a source told Reuters that federal prosecutors are also looking into the matter An affidavit filed by Special Agent Supervisor James Hirt with the California Department of Justice reveals that interviews with possible victims of the fraud have already started One victim identified only as Ms B told the investigator that she had declined a request by a Wells Fargo teller in late 2011 or 2012 to open new accounts But sometime in late 2013 or early 2014 she started to receive notices that she and her husband allegedly owned on three life insurance policies held by the bank the affidavit says She also told the investigator that Wells Fargo often claimed that her accounts had to be closed and reopened because of problems that it could never fully explain The constant changes she added sometimes caused her to incur fees because her checks would bounce Another alleged victim identified as Ms C told the investigator she noticed the bank was transferring money from her checking account to her savings account in amounts that grew over time from 50 to 150 The bank claimed the transfers were done as overdraft protection but it refused to provide her bank statements when she asked to see them The seizure warrants by the state are seeking a variety of documents from Wells Fargo including a list of all unauthorized California customer accounts created between May 2011 and July 2015
It also seeks information about fees charges and other costs that were incurred and the identity of all Wells Fargo employees that may have opened the accounts |
WFC | Bank rewards must promote good conduct Fed s Dudley | NEW YORK Reuters Banks need to continue to monitor the way they reward employees to ensure they promote good conduct one of the top U S financial regulators said on Thursday To put it very simply incentives drive behavior and behavior establishes the social norms that drive culture said William Dudley president of the Federal Reserve Bank of New York who was speaking at a conference hosted by his Fed bank titled Reforming Culture and Behavior in the Financial Services Industry If the incentives are wrong and accountability is weak we will get bad behavior and cultures The comment came amid a scandal at Wells Fargo Co N WFC in which the bank agreed to pay a 185 million settlement over its staff opening as many as 2 million accounts without customers knowledge
Wells Fargo employees have described a pressure cooker atmosphere in which they risked losing their jobs if they did not hit unrealistic sales targets They have said this pressure created a culture at Wells Fargo which led to widespread fraud in the opening of fake accounts |
WFC | Possible US Compromise Sets Mood In The Markets | On Friday key stock indexes of Europe showed positive dynamics the second day in a row based on the information that the Congress of the USA can agree on raising the level of the national debt of the country having reduced thereby the threat of a possible default It should be noted that negotiations of politicians will proceed thus republicans already put forward offers on a temporary increase in the ceiling of the national debt of the USA In the light of the latest events the government of the USA hasn t worked since October 1 and meanwhile October 17 is approaching when it will be necessary to make the decision on the increase of the ceiling of the national debt of the country As a result the Dow Jones finished the trading week at 15237 11 increasing by 0 73 Nasdaq increased by 0 84 S P 500 added 0 62 traded on a level of 1703 29 points From the macroeconomic statistics published on Friday the consumer price index of Germany for September did not change as expected Meanwhile in the USA the new reporting season started which brought optimistic vibes on the market The reporting of the American banks JP Morgan and Wells Fargo surpassed market expectations JP Morgan showed a loss following the results of the last quarter but it is mainly connected with legal costs Except for this article the profit on a share made 1 42 whereas an increase to 1 29 was expected This week many important corporate publications are expected tomorrow will we see reports from Coca Cola Johnson Johnson Intel and Yahoo Commodity and currency markets are stable upward movement of Gold and Silver can be seen which again left below levels of 1300 00 and 22 00 accordingly This morning Gold is traded on a price of 1275 87 per troy ounce adding 0 60 and Silver is up by 0 73 at 21 41 per troy ounce Monday is quite poor regarding macroeconomic statistics Consumer price index has been published in China which recorded unexpectedly high growth of the indicator in September by 3 1 when 2 9 had been forecasted In the European region data on industrial production of 17 countries of the Eurozone will be published |
WFC | Goldman Earnings Show Mixed Bag | The Goldman Sachs Group Inc s GS third quarter 2013 earnings per share came in at 2 88 significantly surpassing the Zacks Consensus Estimate of 2 48 Moreover the reported earnings outpaced the year ago figure of 2 85 per share Amid challenging global markets better than expected results were driven by Goldman s prudent expense management Moreover the company s strong capital position was a positive However a fall in the top line was a major concern Net income applicable to common shareholders in the quarter was 1 43 billion declining slightly from 1 46 billion recorded in the prior year quarter Performance In Detail Goldman s net revenue declined 20 year over year to 6 7 billion in the quarter under review Revenues were mainly negatively impacted by lower institutional client services revenue and reduced investing and lending revenues Revenues also lagged the Zacks Consensus Estimate of 7 6 billion Quarterly revenues as per business segments are as follows Investment Banking division generated revenues of 1 17 billion almost in line with the prior year quarter Results reflected lower than expected financial advisory revenues However revenues from the underwriting business up 13 year over year were on the upswing driven by elevated revenues in equity underwriting Institutional Client Services division recorded revenues of 2 86 billion down 32 year over year Results were impacted by lower revenues in Fixed Income Currency and Commodities Client Execution FICC marked by decreased net revenues in currencies credit products along with mortgages and interest rate products A fall in equity trading revenues down 18 year over year was recorded due to lower net revenues in equities client execution and securities services Though global equity prices rose during the reported quarter equities operated in an environment where lower levels of activity and volatility was recorded Investing and Lending division booked revenues of 1 48 billion in the quarter down 18 from 1 80 billion in the prior year quarter Results included net gains of 938 million from investments in equities net interest income and net gains of 300 million from debt securities and loans coupled with other net revenues of 237 million However Investment Management division generated revenues of 1 22 billion up 2 year over year Results reflected increased management and other fees partially offset by reduced transaction revenues Operating expenses descended 25 to 4 6 billion compared with the prior year quarter Expenses decreased largely due to reduced compensation and employee benefits expense Non compensation expenses were 2 2 billion in the quarter down 9 year over year Additionally results included net provisions of 142 million for litigation and regulatory proceedings Evaluation Of Capital Goldman exhibited a strong capital position in the reported quarter As of Sep 30 2013 Goldman s Tier 1 capital ratio and Tier 1 common ratio under Basel I was 16 3 and 14 2 compared with 15 6 and 13 5 respectively in the prior quarter reflecting revised market risk regulatory capital requirements which became effective on Jan 1 2013 Return on average common shareholders equity on an annualized basis was 8 1 in the reported quarter as compared with 10 5 in the prior quarter Goldman s book value per share and tangible book value per share surged to 153 58 and 143 86 from 151 21 and 141 62 respectively at the end of the prior quarter Assets under supervision increased to 991 billion in the quarter compared with 951 billion in the prior year quarter and recorded net market appreciation of 19 billion and net inflows of 17 billion Capital Deployment Update During third quarter 2013 Goldman repurchased 10 2 million shares of its common stock at an average price per share of 161 59 and a total cost of 1 65 billion Remaining share authorization under Goldman s existing repurchase program stands at 65 7 million shares Notably on Oct 1 2013 Warren Buffett s Berkshire Hathaway Inc BRK A BRK B exercised its revised warrant agreement with Goldman for a net share settlement Specifically Berkshire Hathaway received 13 1 million shares worth 2 15 billion and became the sixth largest external investor in Goldman with 2 91 stake Concurrent with the earnings release Goldman declared its increased quarterly dividend of 55 cents per share The revised dividend reflects a 10 hike from the prior dividend of 50 cents The new dividend will be paid on Dec 30 2013 to common shareholders of record as of Dec 2 2013 In Conclusion We expect Goldman to benefit from its well managed global franchise strong capital base and recent investments in the near future However regulatory issues including lawsuits and the market volatility remain concerns The positive developments of the sector and gradually improving macroeconomic elements helped the banking behemoth maintain its illustrious track record Though there are concerns related to the impact of legal issues and its global exposure equity centric activities in the U S are expected to support Goldman s results in the upcoming quarters with continued recovery in the capital markets An investor with an appetite to absorb risks related to the market volatility should not be disappointed with an investment in Goldman over the long haul Goldman s fundamentals remain highly promising with a diverse business model and strong balance sheet Moreover Goldman is justly considered to be a value investment due to its steady dividend yielding nature Goldman currently carries a Zacks Rank 3 Hold Among other Wall Street big shots Wells Fargo Company WFC achieved the 15th consecutive quarter of growth in earnings per share by reporting earnings of 99 cents per share in third quarter 2013 Results improved from 98 cents earned in the prior quarter and 88 cents in the year ago quarter Also results beat the Zacks Consensus Estimate by 2 cents Total loans and deposits grew amid economic challenges and disciplined expense management Moreover a strong capital position and returns on assets and equity acted as the positives Wells Fargo also reported 900 million in reserve release pre tax attributable to an improved credit performance However the company experienced a fall in top line due to reduced non interest income Further we look forward to the results of Morgan Stanley MS which will report on Oct 18 |
WFC | Reports For This Quarter See Bank Shares Slip | The current financial quarter ends today which for many firms listed on stock markets means one thing releasing data for the past three months As this quarter draws to a close anticipation of what banking firms have to tell the markets about recent performance has caused more than a little anxiety with shares in some of the biggest in the sector in the US and UK dropping significantly On Friday the at the close of trading having dropped a little further during the day Despite that J P Morgan s price had actually risen by 0 67 while a marginal loss of 0 05 for Wells Fargo suggest that their rivals have a little more to worry about when their reports are released next month Don t bank on it Barclays were among the most notable fallers in both the US and UK markets Stateside their share price fell by close to 1 while a 1 26 drop on the day was experienced for their London stocks RBS were also adversely affected by the day s trading Today both banks are already in negative territory with several hours trading still to come On altogether safer ground hasn t seen its share price change even marginally for a number of weeks This may suggest that for those with stocks and shares ISAs investing in them is a safer bet than it would be to put money into ordinary high street and or investment banks with a possible mortgage fuelled rise potentially on the way Safe as houses YBS were recently revealed to be the At a time when the government s Help to Buy scheme is expected to help improve the availability of 90 and 95 mortgages offering the lowest rates on the market may see plenty of new customers flock towards them Mortgages could prove vital in determining the future direction of banks and building society Offering in conjunction with Help to Buy may turn a loss or marginal profit into something far more favourable which may see declining share prices reversed but a lot also depends on coming financial results |
CMCSA | Instagram attracting more advertising than Twitter survey | By Yasmeen Abutaleb SAN FRANCISCO Reuters Advertising agencies are for the first time turning to Instagram more frequently than Twitter for social media ad campaigns a survey released Thursday showed a further indication of weakness in an ad sales operation that has been one of the few bright spots for Twitter The survey from a unit of Comcast NASDAQ CMCSA called Strata came the same week Twitter Inc said its head of product who took over the team in September was leaving The research firm eMarketer said earlier this month that Snapchat was on pace to surpass Twitter in U S active users highlighting the threat Twitter faces from faster growing competitors Amid Twitter s ongoing struggles with stagnant user growth management turmoil and a tumbling stock price the advertising operations under chief operating office Adam Bain had been a relative oasis of stability Bain who joined the company in 2010 helped build Twitter from scratch to more than 1 billion revenue in just over three years But cracks in the ad business began to emerge in the company s first quarter earnings report in which it missed its numbers due to weaker than expected spending by big advertisers and provided a weak revenue forecast The stock has fallen 15 percent since the April earnings announcement and closed Wednesday at 14 60 far below its 26 IPO price in November of 2013 The Strata survey asked 83 advertising agencies which social platform their clients preferred for social media campaigns Sixty three percent of advertisers said they were most likely to use photo sharing app Instagram compared with 56 percent who said they would use social network Twitter Facebook NASDAQ FB dominated with 96 percent of advertisers saying they were likely to use it Twitter rejected the survey results pointing to a 2015 study by Advertiser Perceptions that showed 37 percent of advertisers intended to buy ads on Twitter compared with 28 percent on Instagram which is owned by Facebook The same study showed that 46 percent were considering buying ads on Twitter compared with 41 percent on Instagram The data presented in this survey couldn t be farther from the truth a Twitter spokesperson said We have close relationships with our agency clients and continue to hear that Twitter offers the most powerful creative canvas Still the survey shows the growing power of Instagram which has the benefit of using Facebook s advertising technology and has been rolling out features that make it more useful for sharing news and activity updates that are the bread and butter of Twitter Instagram has more than 200 000 advertisers compared with Twitter s 130 000 We re seeing almost all of our clients shifting if not all of their budgets then most of their budgets from Twitter to Instagram said Chris Gilbert senior social strategist at digital agency Kettle which works mostly with fashion brands Marketers typically want to be where the audience is Some ad agencies said their clients are shifting more of their budgets to Instagram because it has more users more than 400 million compared with 310 million on Twitter and because Facebook s ad technology allows them to target highly specific audiences We ve had more emphasis on Instagram for the last year said Jason Peterson chief creative officer at ad agency Havas Worldwide North America
Instagram declined to comment on the Strata survey |
WFC | Ohio latest to bar Wells Fargo from state business | NEW YORK Reuters The state of Ohio on Friday joined a growing list of municipalities to suspend business relationships with Wells Fargo NYSE WFC Co over a scandal involving as many as two million bogus accounts Governor John Kasich announced that for one year he is barring Wells Fargo participating in future state debt offerings and financial services contracts initiated by state agencies under his authority and will seek to exclude the California based bank from participating in debt offerings initiated by the Ohio Public Facilities Commission While Wells Fargo only does limited retail banking in Ohio it does regularly seek state bond business so I have instructed my Administration to seek services from other banks instead and I ll cast my votes against Wells Fargo on the Public Facilities Commission Kasich said in a statement This company has lost the right to do business with the State of Ohio because its actions have cost it the public s confidence he added Last month the bank agreed to pay a 190 million settlement over its staff opening as many as 2 million accounts without customers knowledge The misconduct carried out by low level branch staff to meet internal sales targets shattered the bank s folksy image and triggered a raft of federal and state investigations The scandal cost former chief executive and chairman John Stumpf his job when he was forced to resign on Wednesday after 34 years with the bank Ohio joins other states and local municipalities including California Illinois and Chicago in banning Wells Fargo from participating in bidding for bond underwriting and other types of business In addition to outright sanctions the states of Massachusetts and Oregon as well as the city of New York have said they would press for reforms at the bank await results of investigations while also reviewing their business relationship with the company
Kasich did say he could possibly revisit the decision in the coming year if Wells Fargo were to make progress in restoring a culture of integrity |
WFC | Wells Fargo CFO says has not considered giving back recent bonuses | By Dan Freed Reuters Wells Fargo Co N WFC CFO John Shrewsberry said on Friday he has not considered giving back bonuses he has earned following a scandal over unauthorized accounts Wells Fargo which reported third quarter earnings on Friday has been reeling over revelations that branch staff opened as many as 2 million accounts over several years without customers knowledge to meet internal sales targets Asked during a CNBC interview whether his compensation may have been tied to hitting targets that were artificially boosted by fake accounts Shrewsberry said the accounts did not impact revenues It wasn t generating revenue and it wasn t improving our bottom line so it didn t work for anybody Shrewsberry said The CFO added that compensation for senior executives is delayed over the course of years and is at risk based on the performance of the company overall Shrewsberry s 2015 compensation was more than 9 million according to Wells Fargo s latest proxy statement filed in March That total included a bonus of 850 000
Senior executives who have forfeited compensation over the scandal include John Stumpf who resigned as CEO Wednesday and gave up 41 million in stock Carrie Tolstedt the former head of the retail unit where the problems occurred forfeited some 19 million in stock |
WFC | Is Washington Moving Toward Resolution | Some tell tale signs of thaw in DC are raising hopes that the two sides may have finally started moving towards a resolution Hard to tell if it will result in ending the shutdown and the debt ceiling issue but the markets find these developments reassuring enough to start today s session on a positive note This morning s Jobless Claims data likely wouldn t have much sway as it s hard to see how the claims numbers would look without the extraneous influences Let s hopes that subsequent headlines out of DC don t wash away the emerging air of optimism Positive movement on the DC issue will help the market start paying attention to the 2013 Q3 earnings season which has gotten underway already Micron Technology MU and Safeway SWY will report results after the close today but we have seen Q3 results from 27 S P 500 members already Total earnings for these 27 companies are up 8 3 with 51 9 of the companies beating earnings expectations Total revenues for these companies are up 4 6 with 44 4 beating top line expectations This is very early in the reporting cycle but the earnings and growth rates for these companies are tracking better than what we saw from these same companies in Q2 and the four quarter average while the beat ratios are a bit lower We will have a much better sense of the Q3 earnings season by the end of next week as by then we will have seen results more than 1 5th of the S P total membership J P Morgan JPM will kick start the Finance sector s results with its Q3 report tomorrow Wells Fargo WFC will also be reporting Friday morning The consensus expectation is that JPM s Q3 total earnings will be 15 lower from the same period last year The operating environment for the banking sector was less than helpful in Q3 with the wind down of the mortgage refinancing boom as a result of higher interest rates and continued weak demand for loans from households and businesses not getting offset by enough strength in capital markets activity As a result total earnings growth for the Finance sector is expected to be up only 3 9 with flat growth at the major banks and positive momentum at the brokers offset by tough comparisons for insurers and the regional banks A key question about the Q3 earnings season is how companies guide towards Q4 as expectations for that quarter still reflect a strong growth ramp up The predominant tone of guidance thus far from the 27 companies that have reported results already remains on the weak side but we will know much more next week as a big cross section of the corporate world will be coming out with results My sense is that guidance wouldn t be any better than what we have been seeing over the last few quarters prompting estimates for Q4 to come down sharply |
WFC | JPM WFC In Play Today | This morning the S P 500 Index e mini futures ES Z3 are trading lower by 1 00 point to 1684 00 per contract Generally after a big rally in the stock market such as the one yesterday the major stock indexes will pause or pullback slightly So traders should look for a flat trading session by the close Earlier today JPMorgan Chase Co JPM and Wells Fargo Company WFC both reported earnings These stocks should be volatile throughout the first couple of hours of the trading day |
WFC | Friday s Swing Trade Hit List | The all short list on Friday s is a theme that I like to do since I focus more heavily on the long watch lists thoughout the week So Friday s is my chance to get Shorts their complmete moment in the spot light Here are the swing trade setups SHORT Wells Fargo WFC SHORT Trinity Industries TRN SHORT PNC Financial PNC SHORT Cabelas CAB SHORT American Axle and Manufacturing AXL |
WFC | U S Markets Snap 2 Week Losing Streak | Stocks rose for a second day Friday lifting the major averages to weekly gains as the White House and Congressional leaders continued work on legislation to raise the national debt limit and reopen the federal government All 10 industry sectors in the S P 500 ended with gains as investors largely shrugged off new data showing consumer sentiment falling to its lowest levels since January instead extending a broad based rally that began Thursday snapping a two week losing streak for equities U S Consumer SentimentConsumer sentiment as measured by the Thomson Reuters University of Michigan index fell to a preliminary score of 75 2 down from last month s 77 5 reading Also Friday U S retail sales last month missed analysts estimates with the private Retail Metrics gauge of same store sales rising 4 0 in September boosted by strong performance of drug stores last month The market consensus was expecting a 4 1 rise Commodities were mixed Crude oil for November delivery settled 99 cents lower at 102 02 per barrel while November natural gas was up 5 cents to 3 77 per 1 million BTU December gold finished 28 60 lower at 1 268 40 per ounce while December silver slid 64 cents to 21 25 per ounce December copper added 2 cents to 3 27 per pound Here s Where The U S Markets Stood At Day s EndDow Jones Industrial Average up 111 04 0 73 to 15 237 11S P 500 up 10 64 0 63 to 1 703 20Nasdaq Composite Index up 31 12 0 83 to 3 791 87GLOBAL SENTIMENTHang Seng Index up 1 16 Shanghai China Composite Index up 1 70 FTSE 100 Index up 0 88 UPSIDE MOVERS SCTY Expects to deploy between 475 megawatts and 525 megawatts of solar panels in 2014 SSW Terminates previously announced public offerings of common stock and convertible notes saying it would not be in the best interests of its shareholders INFY Reported Q2 earnings of 0 73 per American depository share ex one time items beating the Capital IQ consensus by 0 02 per share DOWNSIDE MOVERS SGI Preliminary Q1 earnings trail prior forecasts by at least 0 04 and lag Wall Street expectations by 0 05 per share or more GPS Apparel retailer reports September net sales were essentially flat compared with year ago levels Same store sales fall 3 0 last month MU Chip maker reduced to Underperform from Market Perform at Wells Fargo After Hours Stock News From Copyright 2013 MT Newswires a Division of MidnightTrader Inc |
WFC | What A Week Yellen The Shutdown And Malone | Wow What an interesting week it has been on Wall Street and in the world at large The most obvious event is the ongoing drama in Washington D C regarding the debt ceiling negotiations government shutdown and budget issues as well as Obamacare I would just call attention to the fact that the Japanese and Chinese started to voice concerns about a potential default and low and behold both Democrats and Republicans decide well maybe yeah let s negotiate with the other guys When you don t have your own financial house in order you have to listen to your biggest creditors in this case the largest owners of U S debt to the tune of multiple trillions of dollars If the U S were to default on it s debt the value of those trillions of dollars gets obliterated so you can see why the Chinese and Japanese are more than a little concerned about our political dysfunction You follow the incentive you get answers about why people do things according to Charlie Munger In this case as in many before this one Munger is right on the money Jamie s FirstOn Friday JP Morgan JPM and Wells Fargo WFC reported their financial results for the previous three quarters Wells posted strong results while Chase had its first quarterly loss under Jamie Dimon Elswhere on Wall Street Jos A Banks JOSB made a hostile bid for Men s Wherehouse which was promptly rejected The reason I bring this small transaction up is it speaks to the merger and acquisition environment Money is still very cheap and as such companies are going to look to take advantage of it and do deals or by borrowing to finance corporate transactions of some sort President Obama named Janet Yellen to be the next Federal Reserve Chairman which is what Wall Street pretty much expected Yellen has an impressive academic background with a doctorate from Yale and she taught five years at Harvard as well as the London School of Economics and UC Berkley She also has been part of the Federal Reserve Board of Governors for quite a few years However one thing she should be prepared for and you can count on this in a big way Wall Street and the investment world is going to test her from the first second she takes the job The boys on Wall Street give nobody a free pass so she will have to prove herself very quickly Keep Out The ShutdownAt the Grand Canyon and Yellowstone National Park rangers have apparently been told to make life miserable for the general public At a Veterans Memorial in Washington D C the government tried to erect two foot barriers to prevent World War Two veterans from visiting their family members or friends Family members of soldiers killed in Afghanistan have been denied immediate death benefits to greet the bodies and luckily a private organization is paying the tab until the government opens again Even more delicious is Congress has decided that it s members get benefits which are not under the jurisdiction of the Affordable Care Act The public has given Congress a 5 approval rating which might be a bit overstated Malone s LibertyOn the opposite side of the spectrum the genius of John Malone shown through at Liberty Day Thursday One of the great things about being a shareholder of the Liberty family is that you know he is trying to help shareholders and he does not sit still unless of course he probably should Over the last few weeks the various companies have engaged in a number of very interesting transactions by issuing convertible bonds engaging in swaps or tax free exchanges for their own stock borrowing money at 1 and 3 4 for 10 years and announcing new tracking stocks Malone also invested in a solar energy product with a very high return which is tax efficient due to the tax advantages tax credits government guarantees of alternative energy investments From a finance perspective the guy is great and you only get a few chances a year to listen to him each year so it s always worthwhile to do so They say that the wheels of justice grind every slowly but eventually justice is served In the case of Malone and the Sirius Satellite board versus suing shareholders the judge ruled completely in favor of Malone British Petroleum was awarded a victory when the court of appeals ruled that the fund administrators for the 2010 oil spill has partially erred in the way they are awarding those with claims There will be more on the matter in the future as well as the determination of how oil was spilled and whether BP was grossly negligent or negligent in the way it handled the explosion Obviously a very sensitive subject for many people and it will probably be a long time before a final conclusion to the matter is rendered |
CMCSA | Golf Channel unveils Olympics plans NBC says no shows to have regrets | By Liana B Baker Reuters NBC s Golf Channel on Tuesday said it plans to air 300 hours of Olympic golf coverage from Rio de Janeiro in August 130 of them live but several top player no shows could dampen interest As an event returning to the Olympics after more than 100 years some industry experts are concerned that the withdrawal of key names could turn off casual fans who might watch golf for the first time during the Olympics In the U S the event will mainly be shown on NBC s Golf Channel In the past few weeks Australia s Adam Scott withdrew as well as South African golfers Louis Oosthuizen and Charl Schwartzel drawing criticism from nine time major winner and South Africa golf team captain Gary Player who said many people have fought tooth and nail to return golf to the Olympics Former world No 1 Fiji s Vijay Singh also said he plans to skip the Games Most golfers have cited scheduling conflicts or family time as reasons for withdrawing but the threat of the Zika virus in Brazil has also loomed over the Games for months The players who do not show up may end up regretting it said Jim Bell executive producer of NBC Olympics I agree with some of the legends of golf and the Olympics who have the benefit of a lifetime of experience that some of these players may look back at this decision with some level of regret Bell said Golf Channel is touting other players who say they are excited to compete for a spot in Rio such as U S golfers Jordan Spieth Bubba Watson and Ireland s Rory McIlroy But some viewers may be turned off if more notable golfers are not in the lineup said Michael Neuman managing partner at the in house sports marketing division of Horizon Media There is an audience for Olympic golf but Golf Channel s ability to deliver a sizable audience would be curtailed by the volume of high profile golfers not competing Neuman said Golf was chosen by the International Olympic Committee eager to tap new markets and win fans The channel will begin coverage Aug 8 The men s tournament runs from Aug 11 14 and the women s from Aug 17 20 No high profile women golfers have said they were withdrawing
The network said it will also stream the competition through NBCOlympics com and the NBC Sports Group App While the live events will appear primarily on the cable channel broadcast network NBC a unit of Comcast Corp NASDAQ CMCSA may air live look ins on the course at key moments |
CMCSA | YouTube plans online TV service Bloomberg | Reuters Alphabet Inc s YouTube is working on a paid subscription service called Unplugged that would offer customers a bundle of cable TV channels streamed over the Internet Bloomberg reported The project is slated to debut as soon as 2017 Bloomberg reported on Wednesday citing people familiar with the plan YouTube has discussed these plans with most media companies including Comcast NASDAQ CMCSA Corp s NBCUniversal Viacom Inc Twenty First Century Fox Inc and CBS Corp NYSE CBS but has yet to secure any rights according to Bloomberg Comcast Twenty First Century Fox and Viacom could not immediately be reached for comment Alphabet and CBS declined to comment on the story
YouTube already offers a 9 99 a month subscription service called YouTube Red in the United States that allows viewers to watch videos without interruption from advertisements |
CMCSA | NBC to stream over 6 000 hours of Olympics 2016 content | NEW YORK Reuters Comcast NASDAQ CMCSA Corp s NBC unit will stream live over 6 000 hours of competition from the Summer Olympics in Rio de Janeiro Chief Executive Officer Brian Roberts said on Monday The cable and media giant will have added improved search and personalization features on its X1 platform for viewers when it broadcasts the events which start on Aug 5 Roberts said at the INTX conference a telecommunications and cable industry trade show in Boston |
CMCSA | Two men plead guilty in U S to hacking spamming scheme | By Nate Raymond Reuters Two men pleaded guilty in New Jersey on Thursday to playing roles in a wide ranging hacking and spamming scheme that targeted personal information of 60 million people including Comcast Corp NASDAQ CMCSA customers prosecutors said Tomasz Chmielarz 33 pleaded guilty in federal court in Newark New Jersey to charges of conspiracy to commit fraud and related activity related to computers and e mail while Devin McArthur 27 pleaded guilty to conspiracy to commit wire fraud Along with a Florida man Timothy Livingston 30 they were arrested in December in connection with several alleged computer hacking and illegal spamming schemes that targeted multiple companies and generated illegal profits exceeding 2 million Prosecutors said Livingston who owned a spam company called A Whole Lot of Nothing LLC hired Chmielarz of Rutherford New Jersey to write computer programs that send spam in a manner that conceals their origin and bypasses spam filters Prosecutors said Chmielarz admitted that he and Livingston hacked into email accounts and seized control of corporate mail servers to further their spam campaigns and created software that exploited vulnerabilities in a several corporate websites Livingston Chmielarz and McArthur a resident of Ellicott City Maryland also worked together to steal databases containing the personal information of millions of Americans for use in spam campaigns prosecutors said Prosecutors said McArthur admitted that he also gave Livingston unauthorized access to a remote administration tool on a computer connected to the network of a Pennsylvania based telecommunications company where he worked That enabled Livingston and Chmielarz to steal the personal information of customers of the company for use in spam campaigns prosecutors said The company was not named in court papers but Comcast confirmed its identity Jenni Moyer a Comcast spokeswoman said the company appreciates the efforts of U S authorities in bringing this scamming scheme to a just resolution Other companies targeted included a New York telecommunications company a New York technology and consulting company and a Texas credit monitoring firm the indictment said Michael Koribanics Chmielarz s lawyer said his client had accepted responsibility for his actions as evidenced by his guilty plea A lawyer for McArthur did not respond to a request for comment Livingston has pleaded not guilty and is scheduled to face trial on Oct 13 The case is U S v Livingston et al U S District Court District of New Jersey No 15 cr 00626 |
CMCSA | AT T T Downgraded To Sell Intense Competition A Reason | On Oct 3 wireless carrier AT T Inc NYSE T was downgraded to a Zacks Rank 4 Sell You can see AT T has been facing intense competition from peers compelling it to lower the price of its services This will dent AT T s margins going ahead Additionally the entry of cable MSOs like Comcast Corporation NASDAQ CMCSA and Charter Communications Inc NYSE T in the wireless industry will intensify competition In a saturated wireless market spectrum crunch has become a major issue in the U S telecom industry Most of the carriers are finding it increasingly difficult to manage mobile data traffic which is growing by leaps and bounds AT T is no exception The situation has become even more acute with the growing popularity of iPhone and Android smartphones as well as rising online mobile video streaming cloud computing and video conferencing services However AT T is actively participating in the ongoing 600 Mhz spectrum auction conducted by the Federal Communications Commission The new spectrum may solve problems relating to spectrum crunch AT T hasn t been proactive on the Internet advertising front as well Moreover AT T s failed bid to acquire Yahoo Inc NASDAQ YHOO means it has to look for alternate ways to integrate its DIRECTV service with this mobile advertising platform Being a dormant player in the mobile advertisement space AT T is overlooking a major revenue generation opportunity by not venturing into the high growth mobile advertising space Also the company s wireline division is grappling with persistent losses in access lines as a result of competitive pressure from voice over Internet protocol VoIP service providers and aggressive triple play voice data video offerings by cable companies These are weighing on the company s revenues and margins AT T INC Price
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WFC | Wells Fargo complaints show flaws in federal whistleblower program | By Sarah N Lynch WASHINGTON Reuters Former Wells Fargo Co N WFC general manager Claudia Ponce de Leon filed a whistleblower complaint in December 2011 with federal labor regulators alleging she was fired for telling superiors about employees opening unauthorized accounts Nearly five years later she has not been interviewed by investigators at the Labor Department s Occupational Safety and Health Administration OSHA said her attorney Yosef Peretz Her complaint claiming retaliation by Wells Fargo for reporting potential misconduct is one of several dozens filed against the bank over the last 14 years Reuters has found Their existence shows U S government regulators are still not meeting targets set by law a problem that was also flagged in a critical internal report issued in September 2015 As of Oct 6 the agency had yet to close out 34 of the 91 complaints it has received since fiscal year 2002 from Wells Fargo employees alleging they faced retaliation after reporting potential wrongdoing according to department data obtained through a Reuters public records request The department did not disclose details of the claims or the dates they were filed and it remained unclear how many were related to the ongoing scandal involving Wells staffers opening as many as 2 million accounts without customer permission It is also unclear how those 91 complaints against Wells Fargo compares with other corporations The bank last month agreed to pay 190 million in fines and customer restitution in a settlement with the Consumer Finance Protection Bureau and other regulators In late September Reuters identified Ponce de Leon and at least four other former Wells Fargo employees who reported to OSHA between 2009 and 2014 that they were fired for raising concerns about the opening of unauthorized accounts and credit cards Of the five OSHA complaints seen by Reuters Ponce de Leon s case has been pending since December 2011 and another 2014 case was initially dismissed by an OSHA investigator on grounds that were later reversed on appeal by a Labor Department administrative law judge The bank ultimately reached a settlement with the employee in 2015 The three other complaints one in 2009 and two in 2010 were transferred to state and federal courts respectively One employee of the Labor Department involved with the cases has since filed his own whistleblower claim against the agency alleging his office has a history of mishandling cases His complaint does not reference the Wells Fargo complaints specifically It s absolutely outrageous that whistleblowers contacted OSHA as early as 2009 about potential fraud at Wells Fargo and yet these government bureaucrats failed to do their job said Sen David Vitter a Louisiana Republican who has been looking into how Wells Fargo s sales practices have impacted small business owners Labor Department Secretary Thomas Perez said last month that the department has launched a top to bottom review of prior Wells Fargo whistleblower complaints Agency spokesman Jesse Lawder said it is the department s policy not to comment on specific whistleblower cases but said the review aims to ensure whistleblowers receive the protections and remedies afforded them Richele Messick a Wells Fargo spokeswoman could not comment on individual cases but said the bank does not tolerate retaliation against team members who report their concerns and will take measures to protect team members from retaliation From fiscal year 2005 through 2015 less than two percent of all whistleblower complaints filed with OSHA were won on the merits federal statistics show The rest were either settled dismissed or transferred to federal courts Lawyers who represent whistleblowers say OSHA investigators face challenges One problem is the crushing case load which can lead to significant delays said attorney Jason Zuckerman OSHA which received 3 288 whistleblower cases in fiscal year 2015 currently has 88 full time investigators across the country in 10 regional offices INTERNAL CRITICISM OSHA refers whistleblower complaints to the relevant federal regulators to investigate But the office does not always refer them promptly or sometimes at all the Labor Department s inspector general found last year An earlier audit in September 2010 found that 80 percent of complaints it reviewed were not properly investigated meaning OSHA staff did not take steps such as interviewing the employee obtaining a witness list or allowing the employee to refute the employer s defense The subsequent audit in September 2015 noted improvements finding that 18 percent of complaints reviewed failed to meet certain investigative criteria Still it also found that 72 percent of all of OSHA s investigations were not performed within the 30 60 or 90 day time frames specified by various whistleblower protection laws OSHA disputed some of those findings at the time saying the audit relied on inaccurate data to determine how well it referred cases to other regulators Labor Department spokeswoman Amanda McClure said OSHA s practice is to send copies of complaints when it receives them and its findings at the conclusion of the investigation to either the Securities and Exchange Commission or the CFPB depending on which federal whistleblower law applies It is not clear whether OSHA which received complaints of the unauthorized account openings at Wells Fargo dating at least as far as 2009 referred the matters to federal banking regulators such as the CFPB and the Office of the Comptroller of the Currency The CFPB a new agency launched in July 2011 has said it did not start investigating the issue until it received tips from whistleblowers in mid 2013 The OCC has said it first learned about the issues after it received a small number of complaints from consumers and bank employees in March 2012 Those complaints and media reports in December 2013 led the regulator to step up its supervision of Wells Fargo An SEC spokeswoman declined to comment on whether OSHA had referred the complaints about Wells Fargo s sales practices A CFPB spokesman declined to comment on whether the office had received any OSHA referrals involving Wells sales abuses SITTING IN A STACK OF FILES Darrell Whitman a former OSHA investigator in the San Francisco office from 2010 2015 was assigned to three of the five cases examined by Reuters from former Wells Fargo employees alleging retaliation for reporting improper sales tactics Whitman said he only briefly dealt with Ponce de Leon s 2011 case before it was transferred to another investigator and he was instructed to close the two 2010 cases because they were slated to be transferred to a federal court Another investigator assigned at one point to Ponce de Leon s case Susan Kamlet told Reuters the case sat in a stack of other files and that her manager controlled which cases had priority Now the former OSHA investigators are making their own claims of retaliation Whitman alleges he was fired for raising concerns about the agency s mishandling of whistleblower complaints and Kamlet says she was fired for supporting his accounts and for raising concerns about a particular case she was investigating Whitman has since filed a whistleblower complaint of his own with the Office of Special Counsel an office that investigates retaliation against federal employees His complaint is still pending
The Labor Department spokeswoman and the Office of Special Counsel declined to comment |
WFC | Wells Fargo shares move higher after Q3 profit beats consensus | Investing com Shares is Wells Fargo NYSE WFC moved slightly higher in pre market trade on Friday after reporting mixed third quarter earnings
Wells Fargo said earnings per share came in at 1 03 in the three months ended September 30 down from 1 05 a share a year earlier but above expectations for earnings of 1 01 a share
The bank s revenue totaled 22 3 billion in the third quarter a 1 9 increase from the 22 9 billion reported in the same period in 2015 but slightly below estimates for revenue of 22 43 billion
Traders will now turn their attention to the bank s conference call due to start at 10 00AM ET 16 00GMT
Following the release of the report shares in Wells Fargo were up more than 1 in pre market trade However at 8 17AM ET 12 17GMT shares were gaining only 0 13 or 0 29 to 44 85 from Thursday s closing price of 44 74
Meanwhile U S equity markets pointed to a higher open The blue chip Dow futures advanced 69 points or 0 38 8 18AM ET 12 18GMT the S P 500 futures rose 7 points or 0 32 while the tech heavy Nasdaq 100 futures gained 16 points or 0 33 |
WFC | Wells Fargo Q3 EPS 1 03 vs estimate of 1 01 | Investing com Wells Fargo s third quarter earnings beat estimates The bank Friday reported Q3 EPS of 1 03 vs estimate of 1 01 year earlier 1 05Revenues rose 2 yoy to 22 3 bn vs estimate of 22 43 bn Wells Fargo NYSE WFC shares up 0 25 at 44 85 in pre market trade Account fraud by bank employees expected to be focus of conference call at 10 00 ET |
WFC | Homebuilder Stocks Fall 20 Since May What Does It Mean | The U S housing market is hot home prices are going up and up At least that s what the mainstream s saying The S P Case Shiller 20 City Composite Home Price Index considered a key indicator of the U S housing market increased to 159 18 in July In June it stood at 158 20 Since the beginning of the year the index of home prices in 20 major cities in the U S economy has increased by roughly 7 5 Source Federal Reserve Bank of St Louis web site last accessed September 24 2013 Why isn t this bullish news pushing up homebuilder stocks Or more importantly what are those leading indicator stocks trying to tell us by collapsing 20 since their May high As I continue to write in these pages I am skeptical of the rise in home prices in the U S housing market I believe the rebound in the housing market activity is a direct result of the Federal Reserve s easy money and nothing else To have real growth in the housing market you need buyers who are going to actually live in the homes they purchase This analogy can also be used for other commodities For example to assess the condition in the copper market if you see increased buying by companies that make copper products this suggests there s demand On the contrary if you see speculators then you can assume they will bail as soon as they make some money on their trade The U S housing market has accumulated too many speculators It is well documented in these pages how institutional investors are buying homes fixing them up and then renting them out For the housing market one key indicator I follow is the activity of first time home buyers and they re just not there in this recovery Take existing homes sales for August for example First time home buyers only accounted for 28 of all the sales in the housing market for that month In July they accounted for 29 A year ago they made up 31 of the sales Source National Association of Realtors September 19 2013 The number of first time home buyers entering the housing market continues to fall a bad omen for the recovery On average first time home buyers should account for 40 of all existing home sales And mortgage rates have been rising As rates increase it makes homes less affordable for many buyers In September the National Association of Home Builders Wells Fargo Housing Market Index HMI which tracks the sentiment of homebuilders was unchanged after hitting an almost eight year high The chief economist at the National Association of Home Builders NAHB David Crowe said Following a solid run up in builder confidence over the past year we are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit shrinking supplies of lots for development and increasing labor costs continue Source Builder Confidence Unchanged in September National Association of Homebuilders September 17 2013 Homebuilder stocks as the chart above illustrates are down a little more than 20 since their May peak I would not be surprised to see them decline further As an investor you know the stock market is a forward looking animal Homebuilder stocks declining so rapidly show investors don t want to own them And in the past the action in homebuilder stocks has always led the direction of the housing market in the U S So next time you hear housing is making a comeback remember what you just read here All is not as rosy as it seems for the housing market Michael s Personal Notes Boy they just don t like gold bullion The gold bears are getting excited over every negative movement in gold prices As soon as the precious metal s prices decline a little we start to hear chants like Gold bullion is useless Sadly most of the market is too focused on the short term the daily weekly or even monthly fluctuations which is wrong I keep my eye on the long term picture Before going into any details please look at the chart below of gold bullion prices since 1970 Looking at this chart an observation one can make is that gold prices are known to have price swings meaning they go up significantly and then come back down From 1970 to 1974 gold bullion prices increased by more than 440 then in November of 1974 they started their decline The precious metal s prices found a bottom in 1976 and in that period prices dropped more than 45 Source Past Data StockCharts com last accessed September 24 2013 Moving forward in August of 1976 we saw the beginning of another bull run in gold prices This rise continued on until the beginning of 1980 In this period the precious metal s prices increased by more than 705 From there until June of 1982 gold bullion prices declined more than 63 From then on the price of gold moved sideways for a while but there were heavy fluctuations in between Then came 2001 when the precious metal found a bottom and started to go higher increasing 291 until March of 2008 After this time we saw a decline of almost 30 in a very short period Following this another bull run was born From then on gold bullion prices increased about 170 until 2011 when the price hit 1 900 an ounce Since then we have seen scrutiny Gold prices made a low at around 1 200 an ounce or a decline of about 35 not too long ago Dear reader the moral of the story is that the fluctuation we have seen in gold bullion prices is nothing new My opinion When the bears say gold bullion prices are in a bubble they shouldn t be trusted We have seen all this in the past The gold bears were wrong then they are going to have the same fate again I continue to be bullish on gold bullion for the following reasons Central banks are still printing paper money as their economies are still in trouble They are fixated on printing to bring down the value of their currencies But gold bullion is a global currency To give you some idea about their sentiment the president of Switzerland s central bank Thomas Jordan said At the moment there s no reason to discuss an exit of the cap the minimum exchange rate is still very very important Source SNB Says Franc Ceiling Essential to Protect Economy Bloomberg September 19 2013 In other words the central bank plans to keep printing its own currency Eventually all this paper money printing with nothing backing the paper will catch up with world central banks in a bad way Meanwhile demand for gold bullion worldwide is increasing The longer gold bullion prices remain stressed the bigger the eventual impact on the supply side What He Said If I had to pick one stock exchange that would rank as the best performer of 2007 it would be the TSX Canada s equivalent of the NYSE Interest rates in Canada remain very low and they are not expected to rise any time soon Americans looking to diversify their portfolios both as a hedge against the U S dollar and a play on gold bullion s price rise should consider the TSX Most brokers in the U S can buy stock on this exchange Michael Lombardi in Profit Confidential February 8 2007 The TSX was one of the top performing stock markets in 2007 up nearly 20 for the year Disclaimer There is no magic formula to getting rich Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis The opinions in this e newsletter are just that opinions of the authors Information contained herein while believed to be correct is not guaranteed as accurate Warning Investing often involves high risks and you can lose a lot of money Please do not invest with money you cannot afford to lose |
WFC | Debt Limit The Fed and Interest Rates | Today s shutdown is the culmination of over two years of political turmoil in the wake of the Budget Control Act of 2011 which capped federal spending sequestration and brought to the forefront the need to reign in federal spending October 1 2013 John Silvia chief economist of Wells Fargo Securities and my regular fishing partner at Leen s Lodge John was chief economist to the US Senate Banking Committee in an earlier time in his career As we watch the Washington theatre surrounding the debt limit the budget and sequester squabble play out we do not hear a single word uttered about the impact the Federal Reserve s activity has on the budget Hmm The Fed s QE assuredly has implications for the nation s bottom line and the tapering of QE when it happens will change the picture yet again Current Fed policy impacts the budget in two ways First the Fed s very low interest rate policy means that the portion of the federal budget required to pay interest on the national debt is currently lower than it would otherwise be We could go through a detailed exercise to guess what the normalized interest rate may become after the Fed has stopped tapering and has neutralized or sterilized its expanded balance sheet This would be a wild guess since we do not know the rate of change in the size of the Fed s balance sheet over the next few years and we do not know what the interest rates will be once the Fed reaches a neutral stance Still we do know what the mechanisms are and it behooves us to understand how they will work and what the scale of the impact in broad terms might be We do assume that the federal budget is likely to be running some lower level of deficit once QE has been tapered and we estimate that marketable federal debt in the hands of the US public and the rest of the world is likely to be around 75 80 of our GDP So we can guess that we will have about 15 18 trillion in outstanding non federally held debt before the end of the decade We guess that GDP will exceed 20 trillion by then The Fed will eventually be resetting interest rates and we can therefore guess that every 1 change in rates equates to about 150 180 billion in additional annual interest expenditures in the federal budget If the interest rate now is say 2 points lower than it would otherwise be without Fed intervention we can conclude that we would otherwise be incurring about 300 360 billion of interest expense that is not showing in the federal budget plan today but is likely to appear in the future as and when the Fed neutralizes its policy Of course we do not know the maturity distribution of that debt at this time so we are just guessing that the average interest rate on all the federal debt will be 2 higher around the end of the decade The second dimension of the Fed s impact on the budget consists of the remittances that the Fed sends to the Treasury each year The amount is approaching 100 billion and comprises the net income collected by the Fed because of its large holdings of federal securities Remember the Fed currently is creating 85 billion a month and using it to buy intermediate and longer term US Treasury debt and federally backed mortgages The Fed s balance sheet size is about 4 trillion and rising This number is up from under 1 trillion prior to the Lehman AIG collapse The Fed s current cost of funds on the liability side of its balance sheet is zero for currency in circulation around the world and 0 25 in interest that it pays to banks for their excess reserve deposits at the Fed Once the Fed starts tapering and when it reaches neutrality remittances to the Treasury will peak As the Fed normalizes interest rates and allows its assets to roll off the remittances to the Treasury will decline Right now they are part of the federal revenue and work to reduce the deficit When they decline revenue drops So we can say something like this About 100 billion comes to the US Treasury from the Fed s unusual operations under the QE regime which the Fed says it wants to wind down Another projected 300 billion is evidenced in a smaller than otherwise deficit because the Fed s policy is focused on maintaining interest rates at lower levels than they would otherwise be We know the Fed is targeting a 2 inflation rate and we have a lot of history to suggest that such an inflation rate would lead over time to an average interest rate on Treasury debt of about 4 We conclude that the change in Fed policy and the normalization of interest rates will be huge in federal fiscal finance And its impact is not mentioned much in the current political fight Yet a great part of the present debate is about this future interest cost Lastly we want to offer a worst case example of what the interplay between a central bank and a government can lead to The case study is Argentina The quote below comes to us from another fishing friend who has in depth knowledge of Argentina We will keep him anonymous since the Argentine government is known for certain vindictive practices He wrote One comment on central banks profit Believe it or not in Argentina the central bank books as profit in local currency the increase in the net worth of the central bank due to the depreciation of the currency and the resulting increase of the value in pesos of the international reserves It then transfers those profits to the government to finance public spending Of course the government books this as genuine income i e above the line so it doesn t impact its fiscal balance figures As you can imagine this only translates into additional inflation now running at 25 per year in pesos We thank both our friend for the comments and hope some of our dysfunctional politicians in both political parties read it Of course that assumes they can read Hmmmmmmmmmm BY David R Kotok |
WFC | Shutdown And The Q3 Earnings Season | We didn t get the September jobs report thanks to the government shutdown and the impasse promises to steal the limelight from the 2013 Q3 earnings season With the October 17th debt ceiling deadline fast approaching we can only hope that we move past these hurdles without further damage The Q3 reports have been trickling in with results from 21 S P 500 companies out already All of the reports thus far are from companies with fiscal quarters ending in August which we count as part of the Q3 reporting cycle Most of the companies reporting going forward including Alcoa AA that reports October 8th after the close are on the calendar quarter In total we have 33 companies reporting results this week including 10 S P 500 members J P Morgan JPM Wells Fargo WFC Costco COST and Yum Brands YUM are some of the notable companies reporting results this week We have had a few strong earnings reports already particularly from Nike NKE FedEx FDX and AutoZone AZO but the overall trend at this admittedly very early stage is mixed The earnings and revenue growth rates for the 21 companies are tracking better than what these same companies in Q2 and the 4 quarter average though the beat ratios percentage of companies coming ahead of expectations are a bit weaker This week s results will provide better color on underlying trends with results from companies like Costco COST Yum Brands YUM Family Dollar FDO and Safeway SWY giving us a sense of the consumer economy Results from the big banks aren t arriving till Friday but they will set the stage for the rest of the group the following week Finance was instrumental in keeping last quarter s aggregate earnings growth in the positive column and is playing a similar though less pronounced role this quarter as well J P Morgan has been in the news lately for all the wrong reasons though the company has an impressive track record of positive earnings surprises having beat expectations in the last 6 quarters This report could have noisy parts related to the company s recent litigation and regulatory troubles but core earnings should still remain best in class The mortgage business will likely be less of a contributor this time around both for JPM as well Wells Fargo Low Expectations for Q3 As has been the case at the start of recent quarterly earnings cycles expectations for the Q3 earnings season have fallen sharply over the last three months Total earnings for companies in the S P 500 are now expected to be up only 1 1 from the same period last year down from 5 1 at the start of the quarter in early July as the chart below shows This negative revisions behavior is hardly unusual as we have been repeatedly seeing this pattern play out in recent quarters Companies have been overwhelmingly guiding lower prompting analysts to cut estimates for the following quarter The revisions behavior ahead of the Q2 earnings season was no different as the chart below shows Most of the same sectors have experienced negative revisions this time around as was the case in Q2 The regulars on the negative estimate revisions front include Technology Basic Materials and Industrials But in addition to those sectors Retail and Consumer Staples have played some roles in bringing down expectations for Q3 as well The chart below compares the Q3 total earnings growth expected for these five sectors at the start of the quarter and where those expectations stand at present Estimates for other sectors have come down as well with even the Finance sector earnings expected to be up 5 9 today vs 6 2 last week and 8 1 in early July Energy Utilities Conglomerates and even Construction have suffered negative revisions in varying degrees High Expectations for Q4While estimates for Q3 have come down the same for Q4 and the following quarters have held up fairly well as the chart below shows Part of the strong Q4 growth is a function of easier comparisons as 2012 Q4 represents the lowest quarterly earnings total for the S P 500 in the last six quarters with the comps particularly easy for the Finance sector But it s not all due to easy comparisons as the expected earnings totals for Q4 represent a new all time quarterly record Total earnings for the S P 500 reached a new record at 258 6 billion in Q2 surpassing Q1 s 253 6 billion record But they are expected to reach 265 7 billion in 2013 Q4 with total earnings growth outside of Finance expected at 5 3 The evolving outlook for Q4 is perhaps the most important aspect of the Q3 earnings season more so than Q3 earnings revenue growth rates and beat ratios While the overall level of aggregate earnings is in record territory there isn t much growth The longstanding hope in the market has been for earnings growth to eventually ramp up But the starting point of this expected growth ramp up keeps getting delayed quarter after quarter The hope currently is that Q4 will be the starting point of such growth Guidance has overwhelmingly been negative over the last few quarters But if current Q4 expectations have to hold then we will need to see a change on the guidance front we need to see more companies either guide higher or reaffirm current consensus expectations Anything short of that will result in a replay of the by now familiar negative estimate revisions trend that we have been seeing in recent quarters The market didn t care much as estimates came down in the last few quarters hoping for better times ahead Will it do the same this time as well pushing its hopes of earnings ramp up into 2014 We will find out the answer to that question over the next two months Monday 10 7
With nothing else on the economic or earnings calendar headlines from Washington will be in the spotlight
Tuesday 10 8
The August Trade Deficit is the only economic report on the docket though it may fall victim to the shutdown
Alcoa AA and Yum Brands YUM are the key earnings report today both after the close while Global Payments GPN will report after the close
Zacks Earnings ESP our proprietary leading indicator of earnings surprises is showing Alcoa to come out with a positive earnings surprise Our research shows that companies with Zacks Rank of 3 Hold or better meaning Zacks Rank 1 Strong Buy or Zacks Rank 2 Buy combined with a positive Earnings ESP are highly likely to come out with positive earnings surprises Alcoa currently has Zacks Rank 3 Hold and has Earnings ESP of 16 7
Wednesday 10 9
We will get minutes of the Fed s last meeting in the afternoon These minutes will be interesting as this FOMC meeting surprised the markets with its no Taper decision that everyone was expecting
Costco COST Analyst Report Family Dollar FDO Analyst Report and Fastenal FAST Analyst Report are the key reports in the morning while Ruby Tuesday RT Snapshot Report will report after the close
Thursday 10 10
The Jobless Claims data coming out in the morning will likely be noisy as it will reflect furloughed federal government employees
Micron Technology MU Snapshot Report and Safeway SWY Analyst Report are the only major earnings reports today both reporting after the close
Zacks Earnings ESP is showing both Micron and Safeway reporting earnings surprises Micron has Zacks Rank 1 Strong Buy and Earnings ESP of 4 4 while Zacks 2 Ranked Safeway has Earnings ESP of 26 7 Please note that the magnitude of the ESP 26 7 for SWY and 4 4 for MU does not mean that the expected positive surprise will be this much
Friday 10 11
The September Retail Sales and PPI reports scheduled for release before the market s open may also fall victim to the government shutdown But we will get the preliminary University of Michigan consumer sentiment survey after the market opens The expectation is for the sentiment index to drop to 75 from the prior month s 77 5 reading
J P Morgan JPM and Wells Fargo WFC are the only notable reports today both in the morning |
WFC | 3 Financial Charts You Can Bank On | Wells Fargo WFC and JP Morgan JPM release earnings Friday They will cause the trade to focus on the financial sector A scan of Zacks Rank 1 Strong Buy financial stocks drummed up some interesting looking chart formation Despite a solid performance this year a number of financial shares either remain in an uptrend or show signs of longer term base patterns With financial earnings on the horizon the sector may have a catalyst to follow through on some friendly looking technical formations Let s take a look at three names in alphabetical order BOFI Holdings BOFI Zacks Rank 1 Strong Buy is a holding company for Bank of Internet USA It is consumer focused national savings bank and focused on originating and purchasing multi family and single family loans for investment It has a market cap shy of 850 mln The stock has been on a roll lately and has posted a positive earnings surprise six straight quarters BOFI is expected to report profits on November 14 Technically the stock looks oversold based on the MACD Moving Average Convergence Divergence reading Notice that the MACD is on the lower end of the one year range More importantly the uptrend is strong and the stock is consolidating in a triangle formation The formation is a pause and usually a set up for a continuation of the rally Movement over the 66 level would confirm a breakout of the triangle pattern and point to a new leg higher with a target into the 75 region A break below the 60 area would negate the pattern and smell of a top Credit Suisse CS Zacks Rank 1 Strong Buy is a large bank and investment company which is showing both upward earnings estimate revisions and a favorable technical set up The Zacks 2013 and 2014 Consensus Earnings per Share Estimates for CS have crept higher over the past 7 days The 2013 and 2014 forecasts have each lifted 02 to 2 93 and 3 61 respectively The rise into earnings season looks like a positive development Analysts seem to be warming toward the stock What do they know CS is expected to report profits on October 24 The chart displays a potential breakout above the trend line off the 2009 high and above the recent high just above 31 63 from October 2011 This suggests a potential bullish trend reversal Furthermore there is a V bottom set up which looks to be a base for a move into the 60 area and a retracement of the uptrend There is layer of resistance around the 37 50 region off a set of 2010 lows which may provide a hurdle Favorable earnings could excite technical and fundamental traders Deutsch Bank DB Zacks Rank 1 Strong Buy is a large bank and investment company which is also showing upward momentum to earnings estimate revisions The healing of economic conditions in Europe appears to be a positive dynamic and the market has shrugged off talk of weak trading revenues Jitters about the health of Southern European banks and their bad debt levels and their need for LTRO funding has also found limited spill over into DB Over the last 7 days EPS estimates have risen 0 11 to 5 99 for 2013 and 0 21 to 6 91 for 2014 DB is projected to report profits on October 29 Technically DB has formed a large downward sloping bullish wedge formation extending from the 2010 highs The formation argues for a retest of the 2010 high in the 80 area The breakout has not been powerful but has occurred along with a retest There is a wall off resistance off the 2010 lows and 2012 high in the 53 00 area Prices may need to work over this level to find more dynamic strength In addition to the wedge prices have consolidated in recent weeks in a small triangle pattern which suggests consolidation for a push higher on a rally over 50 In contrast a break below 42 50 would be a sign of weakness The triangle pattern presents a pattern in a pattern In conclusion keep an eye on BOFI CS and DB in the coming weeks Their charts suggest upside may be in the bank |
CMCSA | Comcast earnings beat estimates | Investing com Comcast NASDAQ CMCSA posted better than expected results on Wednesday topping analysts estimates
The largest U S cable operator said total revenue rose 5 3 to 18 8 billion
Analysts on average had expected earnings of 18 64 billion
Net income grew 3 6 from the year ago period to 2 13 billion or 87 cents per share
Earnings were boosted by the biggest first quarter gain in pay TV customers in nine years |
WFC | SEC questioned Wells Fargo about cross selling in 2014 | By Patrick Rucker and Sarah N Lynch WASHINGTON Reuters The U S Securities and Exchange Commission raised questions about Wells Fargo Co s N WFC aggressive cross selling in late 2014 according to regulatory paperwork almost two years before officials settled with the bank for opening phony accounts In December 2014 the SEC asked Wells Fargo to detail how it tallied the many accounts that one customer might open Your cross sell program is a key element that management believes will help Wells Fargo meet its strategic goals reads the letter from Christian Windsor an SEC attorney in the Division of Corporation Finance Please provide us with an explanation of the methodology you use to calculate the products per household The same letter asks Wells Fargo to explain how it measured cross selling success in the past Wells Fargo s Controller Richard Levy responded to the regulator on Jan 12 2015 saying that its methods to measure cross selling remained consistent over the past five years The bank wanted savings accounts individual retirement accounts or other products that have the potential for revenue generation and long term viability the bank wrote Last month federal banking regulators ordered Wells Fargo to pay 190 million to settle civil charges that it had opened personal accounts without customer say so to satisfy managers demand for new business The SEC letter makes no mention of how unauthorized accounts might affect cross selling metrics By early 2015 Wells Fargo had fired several thousand employees for the opening of unauthorized accounts Federal prosecutors and other U S agencies are now probing the bank sources have said It is unclear exactly what prompted the SEC s Corporation Finance Division which reviews company filings to ask questions about cross selling and whether the SEC was satisfied with the response An SEC spokesman declined to comment Last month several U S Senate Democrats called on the SEC to investigate whether Wells Fargo misled investors by failing to disclose what they called widespread fraud In a separate letter in October 2007 the SEC asked Wells Fargo about its formula for compensating executives The bank said cross selling success could mean higher pay Wells Fargo has designed its management reporting system and goal setting process to facilitate and reward these behaviors the bank wrote the SEC in October 2007
John Stumpf Wells Fargo s chief executive officer was copied on both letters On Wednesday Stumpf stepped down from the bank |
WFC | Wells Fargo CEO John Stumpf quits replaced by Tim Sloan | By Dan Freed and Elizabeth Dilts NEW YORK Reuters Wells Fargo NYSE WFC Co s veteran chairman and chief executive officer John Stumpf abruptly departed on Wednesday bowing to pressure over its sales tactics that has damaged the bank s reputation and put Wall Street under renewed scrutiny San Francisco based Wells Fargo said Stumpf 63 was retiring and would be replaced as chief executive by President and Chief Operating Officer Tim Sloan 56 The bank is splitting the role of chairman and CEO with Stephen Sanger its lead director becoming chairman Stumpf s exit leaves Sloan with a steep challenge in rebuilding its reputation and overhauling its hard charging sales culture without gutting profits The new CEO will also contend with ongoing regulatory investigations and private litigation The departure is a stunning reversal of fortune for Stumpf who successfully navigated Wells through the financial crisis and built it into the world s most valuable bank with a focus on Main Street style lending that was the envy of Wall Street I have decided it is best for the company that I step aside he said in a statement The bank s shares which have slumped in the wake of the scandal rose 2 percent in after hours trading after the bank announced Stumpf s exit Sloan said his immediate priority was to restore trust in the bank Long considered Stumpf s successor Sloan has spent most of his career at Wells working with corporations and institutional investors not the retail division where the fraudulent accounts were opened But as the former CFO and president and COO of the company since November he has been responsible for the entire company including the retail bank at the heart of the scandal Carrie Tolstedt the woman who ran the retail division when the misconduct occurred reported to Sloan from November of last year She left the bank last month They had three goals in replacing Stumpf speed integrity and competence If you want to move very fast and find someone intimately familiar with the business you ve got to hire an insider said Peter Conti Brown a business ethics and law professor at University of Pennsylvania s Wharton School of Business If you want to hire someone with unimpeachable integrity that s going to take time to find Conti Brown said Sloan will preside over the bank s third quarter earnings on Friday FALL FROM GRACE Stumpf s fall from grace started with a 185 million regulatory settlement between the bank regulatory authorities and a Los Angeles prosecutor over its staff opening as many as 2 million accounts without customers knowledge The misconduct carried out by low level branch staff to meet internal sales targets shattered the bank s folksy image and a raft of federal and state investigations followed Stumpf was summoned before the U S Senate and faced calls for his resignation after repeatedly deferring responsibility to low level workers and decision making authority to his board of directors Massachusetts Senator Elizabeth Warren called him a gutless leader who should be criminally investigated A week after that hearing he agreed to forgo 41 million in unvested stock awards However that was not enough and at a second hearing some lawmakers called for the bank to be broken up California State Treasurer John Chiang who announced a year long ban on state business with Wells Fargo released a statement praising Stumpf s resignation Based on his duck dodge and deny performance in the wake of admissions that his bank had fleeced legions of its own customers he was not and would never be the change agent leader Wells Fargo so desperately needs Chiang said in the statement John Thielen who grew up with Stumpf in Piers Minnesota where he was a year behind the future CEO in school said he felt sorry for Stumpf
He s in hot water but I think he put himself there Thielen told Reuters in a recent interview that preceded Stumpf s resignation |
WFC | Wells Fargo Q3 EPS estimated at 1 01 on revenues of 22 06 bn | Investing com Wells Fargo NYSE WFC Q3 EPS estimated at 1 01 on revenues of 22 06 bn EPS has been steady at just over 1 for past three years revenues seen up 1 in Q3 San Francisco based lender will report earnings before the market opens on Friday Focus on account fraud committed by thousands of bank employees over past five years CEO John Stumpf quit Wednesday after the scandal replaced by COO Tim Sloan Wells Fargo makes up about 10 of Warren Buffet s Berkshire Hathaway NYSE BRKa portfolio |
WFC | Top 5 things to watch today | Investing com Gloomy China trade data spooks investors Fed rate hike bets boost U S dollar to 7 month highs Global stocks drop amid Fed rate hike chatter weak China data U S weekly oil stockpile data ahead Wells Fargo NYSE WFC CEO Stumpf retires effective immediately |
WFC | U S stock index futures lower on Fed rate hike noise | Investing com U S stock index futures lower Thursday on Fed rate hike talk The Dow futures was down 0 51 at 06 45 ET while the S P 500 futures fell 0 53 The tech heavy Nasdaq futures gave up 0 58 September FOMC meeting minutes strengthen odds for December hike Investors look to official EIA stockpile data as industry figures show increase Wells Fargo NYSE WFC up 1 in pre market trade as CEO Stumpf quits after fraud scandal |
WFC | Wall St lower on U S rate talk weak China data | Investing com U S stocks lower early Thursday on U S rate hike bets weak China trade data The DJI was down 0 86 at 09 45 ET while the S P 500 shed 0 86 The tech heavy Nasdaq composite gave up 1 18 Weekly jobless claims at 43 year low 246 000 against forecast of 254 000 Wells Fargo NYSE WFC down 0 95 at 44 89 as CEO Stumpf retired after account fraud scandal Delta was down 2 7 at 38 21 after Q3 EPS beat estimates at 1 70 misses revenue forecast |
WFC | Old problems overshadow new era at Wells Fargo | By Dan Freed NEW YORK Reuters The Tim Sloan era has begun at Wells Fargo N WFC but the old problems remain The newly installed chief executive faces a plethora of challenges following a sales practices scandal that felled his predecessor John Stumpf He needs to restore the bank s reputation after revelations that staff opened as many as two million accounts without customers knowledge to meet internal sales goals and he has to navigate a litany of federal and state investigations arising from those revelations Wall Street will be his first port of call when he presents third quarter results on Friday Investors are seeking reassurance that a suddenly chastened Wells Fargo can rebuild its reputation and retain profits while overhauling the hard charging sales culture at the heart of the scandal over unauthorized accounts Sloan s nearly 30 years with Wells largely spent on the corporate and institutional side of the bank and his moderate temperament make him an experienced pair of hands But as chief operating officer of the bank since November 2015 he had oversight over Wells retail division where the unauthorized accounts were created some of them during his tenure as COO Such proximity will make it difficult to silence critics in Washington who are also investigating the scandal and have said it proves that some large banks should be broken up I remain concerned that incoming CEO Tim Sloan is also culpable in the recent scandal serving in a central role in the chain of command that ought to have stopped this misconduct from happening said Maxine Waters the top Democrat of the House Financial Services Committee in a statement Wells shares gave back the gains accrued on Wednesday in after hours trading when Stumpf s departure was announced and were last down nearly two percent to 44 47 The stock is nearly 11 percent below the level it was trading at before the scandal broke CALCULATING THE TAB Wall Street is trying to get a handle on what a long list of probes and lawsuits regarding the bank s opening of unauthorized customer accounts will ultimately cost So far the tab has been relatively small Wells agreed to a 190 million settlement last month representing less than 1 percent of its annual earnings But that deal itself led to a range of other inquiries the San Francisco based bank is now contending with Wells Fargo is expected to say how much money it has set aside for legal costs it can reasonably predict when management discusses results on Friday At least nine separate regulators prosecutors enforcement agencies and congressional committees appear to be looking into the bank s actions according to a Sept 26 Bernstein Research report That comes in addition to private lawsuits from shareholders customers and former workers Wells settlement on Sept 8 with the Consumer Financial Protection Bureau Office of the Comptroller of the Currency and a Los Angeles prosecutor revealed that the bank fired 5 300 employees for improper practices and is now working to retool risk management protocol as well as pay incentives and training for workers Former employees have described a pressure cooker sales culture inside the bank where managers had browbeat staff into hitting aggressive daily sales quotas which in turn led some workers to create unauthorized accounts As government authorities examine Wells Fargo it is likely they will find abuses in other parts of the bank beyond retail customers said Harvey Pitt founder of consulting firm Kalorama Partners and a former chairman of the U S Securities and Exchange Commission The damage to customers could be much more significant said Pitt Earlier this month Reuters reported a probe by U S Senator David Vitter has found 10 000 small business customers were also victims of improper practices A Wells Fargo spokesman did not respond to requests for comment CUTTING FORECASTS It is difficult to estimate the total cost of the probes and litigation Wells will face over the unauthorized accounts analysts said Some matters could drag on for years before being resolved and there are a range of possible outcomes Even so most analysts have cut profit forecasts for Wells Fargo citing fallout from the scandal The average estimate for Wells Fargo s 2017 net income is now 20 8 billion down 300 million since Sept 7 according to Thomson Reuters data State and local municipalities including Illinois California Seattle and Chicago have publicly cut ties with Wells While some analysts expect other government entities to make similar moves the impact on Wells Fargo s revenues appears immaterial at this point Less than 1 percent of Wells Fargo revenue comes from working with local governments non profit hospitals and universities according to a presentation the bank made to investors earlier this year
The bank has also lost some retail customers though Wells is still opening more accounts than it is closing senior executives said on an internal call on Monday that was reported by the Wall Street Journal |
WFC | Gold From Price Plundered Toward 1500 | They had every chance to wreck Gold this past week especially Friday and place it below the solid Market Profile support that spans from Base Camp 1377 down into the 1360s of which we wrote a week ago Indeed in anticipation for two weeks now of at least some profit taking they did take a run at it late in the week They even nudged Gold one point beneath the 1360s to 1359 Quel drame mes amis Then quick as a wit Friday upon the release of our StateSide payroll data Gold ripped like a rocket shot to the upside by better than 30 points in mere minutes And punch drunk from such blast off they exclaimed wha jus hapn d What just happened was Gold s seeing through it all and thus adding fuel to its upside case despite there being rationale for price to pull back with respect to which let us consider the following two notions First technically per yesterday s Prescient Commentary twas penned prior to the payroll data release Gold 1370 continues to seek protection in the 1370s 1360s albeit its own Baby Blues are rolling over the lower end of the support clump in its Market Profile is being probed and its daily MACD crossed negatively yesterday which per the Market Rhythms page has a 90 probability for at least 20 points lower from Thursday s settle down to 1347 We thus start with this chart since May of Gold s daily bars wherein you can see that rightmost MACD downside crossing Yesterday s robust recovery notwithstanding one ought keep a civil eye to this particular study for as we ll later see our Baby Blues too are rolling over Second fundamentally per the positive effect on the Economic Barometer from the U S August payroll data to be sure the S P got an initial scare at the lower revision to July payrolls which in turn were more than offset to the upside in August with the unemployment rate dropping a pip to 7 3 whilst both hourly earnings and the average workweek increased This can only mean that the Fed shall be pressed on 18 September to announce the commencement of its terrible taper and thus Gold ought rightly have gone bye bye Right Wrong Instead it went sky high relative from the 1359 low by session s end having traded as much as 34 points higher to close out the week s trade slightly above the midpoint So Gold s net loss over the last two weeks comes to 7 8 points Nuthin but noise as the revitalized Golden Bull is back And why not Gold is no fool It knows the more meaningful you re not supposed to talk about it U6 measure of unemployment which now at 13 7 is only one mere pip below where twas in March as well as where twas going into January 2009 Nuthin but noise indeed for therein nothing has materially improved What has become noisy of late is the rate of interest Recall a couple of weeks ago such backing up of rates leading Wells Fargo to announce the letting go of some 2 300 employees due to the bank s mortgage re fi business becoming prohibitively more costly As was then discussed today s nominal rates of interest still appear comparatively low to those back in the days of healthy economic growth however having doubled of their own accord shows us just how interest cost sensitive is the financial sector Which again begs the question Can the Fed economically afford to tamper by taper Cosmetically one might opine the Fed could put on a bit of a show about it all For example rather than spinning the debasement presses to the tune of 85 billion per month they taper that say to 75 billion Big whoop Tis still a Gold Positive And should the recent rise in interest rates further become indicative of materially impinging the economy can the Fed then glue back on a tapered tip Maybe twill come to that for as we look at this track of the yield on the 10 year Treasury Note which year over year indeed has doubled it may just now be running into at least resistance technically per this chart of its weekly bars And if so what fundamentally reduces rates Treasury purchases mmb And inordinately by whom Squire The Fed mmb No doubt about it the boy gets it As does Gold Here next we ve the entirety of its one minute trading track from Sunday s opening a week ago right through yesterday Note the aforementioned support zone nicely containing the profit taking drop in turn leading to Friday s post payrolls rocket shot Through the eyes of the Long Gold trader 30 points straight up as powered by Golden Thrust is a beautiful thing Through the eyes of the Long Gold investor here we ve Gold ponderously making its move back up and thus narrowing the gap toward the still declining 300 day moving average this animated graphic comparing such stance from three weeks ago to present So having been fairly bulled up to this point of the missive we re nevertheless as noted at the outset keeping our own cautious eyes on these two Market Trends charts which follow They display for the last three months to date the daily bars for Gold and Silver along with their attendant Baby Blues which are the dots that depict 21 day linear regression trend consistency and for the two markets have begun to somewhat wane by rolling over The beauty of the Baby Blues is that they generally do not change direction rapidly nor rarely whipsaw Their inherently smooth tracks which for all the components of our BEGOS spectrum are updated daily on the Market Trends page provide reasonable directional guidance for the trader as well as timing for the investor Albeit our still being a bit cautious on Gold near term should its recent pullback remain supported per the 1370s 1360s zone or instead the MACD study as shown earlier see price follow though to tag the upper 1340s a turn back higher by the Baby Blues likely shall herald price tracking on up through the 1400s Indeed at this writing we re still seeking 1500 by month s end Given that notion Gold is certainly maintaining its negative correlation to the S P the latter having been known to historically sport some horrid Septembers And should the Fed taper a tad Twould still be rationally great for Gold as the Great Debasement would continue but in turn be lousy for the S P per the negative correlation especially should that 10 year T Note yield backup into the 3 s Specific to stocks I ve not perused MarketWatch in many a month however I did swerve by their once great now totally tabloid all blog site early Thursday and it really put well into perspective the Great Unknown for the S P Two pieces on the front page not three inches apart on a desktop screen proclaimed the following 1 Analyst S P 500 at 1 840 in 12 months and 2 S P is setting up for a drop below 1 600 Well which the deuce is it Hearing more and more of late that there is little if any real growth in corporate earnings ex finance the cited S P 1840 price would at static profit levels put our price earnings ratio for it at just north of 30x and the yield around 1 9 Again the yield as we saw earlier on the 10 year Treasury note is now 2 938 Clearly at the current S P level of 1655 a drop below 1600 would be nothing Moreover by my reckoning down to S P 1200 would also be nothing for our calculation of the p e would still be almost 20x expensive by that of which we were taught in B school But that was then as today we live in a far different paradigm Folks used to have savings accounts the stock market being that into which the white collared elite would place risk capital toward at the very least offsetting the value erosion of inflation if not hit the occasional Jackpot But today s savings account for one and all is the Fed supported at all costs stock market by which if Jack isn t nimble he shan t have a pot in which to peel his potato Meanwhile in Europe growth by its advanced economies is being noted as encouraging so says the OECD in raising its growth forecasts for France Germany and the UK The latter reported construction surges in August a sign that weaker parts of its economy are benefiting from rises in demand But its BOE in continuing to err on the side of caution just announced no changes to interest rates nor its bond buying program Across the Channel so is caution being stated by the ECB s Mario Draghi who in spite of the EuroZone s apparent economic pickup stated this past week Recent developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions Further round the globe twas reported that almost half of Japanese charitable foundations some of which have sizable assets think Prime Minister Shinzo Abe will need to increase his economic stimulus program And regardless of any foundationless currency s colour stimulus by the printing press is Gold stimulative to whose trading profile we now turn Finally we ll give it a wrap with the Gold Stack Gold s All Time High 1923 06 September 2011 The Gateway to 2000 1900 The Final Frontier 1800 1900The Northern Front 1750 1800The Floor 1579 1466The 300 day Moving Average 1559Le Sous sol Sub 1466Structural Resistance 1445 1525 1554 1562 159710 Session volume weighted average price magnet 1398 directional range 1434 down to 1359 75 points or 5 Trading Resistance 1396 1406 1411 1419 1428Gold Currently 1389 weighted average trading range per day 28 points Base Camp 1377Trading Support 1369Structural Support 1349 1345 1262The Weekly Parabolic Price to flip Short 1217Traditionally post StateSide Labor Day is when the markets heat up or indeed melt down It seems however due to the uncertain political posturing over Syria not to mention the Wednesday to Friday run of Rosh Hashanah that up until Friday s release of our jobs data market participants were not acting so much as were they all glaring at one another to see who first blinked Look for that to turn to rapid eye movement as we accelerate into the new week and toward Edition No 200 of The Gold Update |
WFC | Fed s Flawed Playbook Is Scoreless | The surprise delivered by Ben Bernanke with the FOMC voting to keep QE3 intact is well documented by now and markets are adjusting to new guidance whatever that is while the underlying economic message is less than inspiring During the press conference a reporter asked Was it a surprise It certainly looks that way and it was a calculated risk because equity markets floundered after Mr Bernanke s remarks a few months back jeopardizing the Fed s strategy Be careful what you wish for Mr Bernanke and please revisit the story about the boy that cried wolf As an additional interesting point during the press conference Mr Bernanke dismissed the falling labor force participation rate as a structural and demographic phenomenon Don t bet on it because if people are getting older and not seeking employment they don t need houses and the Fed chief cannot have it both ways At this juncture I don t know what the Fed is looking for at least publicly and I suspect that neither do they Just in case someone is wondering deflation is still the Fed s problem Then less than 48 hours after Bernanke told us that QE3 would remain unchanged St Louis Fed President James Bullard opined that it s possible you get some data that change the complexion of outlook and make the committee be comfortable with a small taper in October and markets adjusted once again Maybe a variation of a few thousands of one percent in some data series in the next 30 days will be the straw that broke the camel s back Impossible to comprehend So let s pump stocks again because that is what the Fed s playbook dictates The reasoning is based on the well known wealth effect but unlike a decade ago many Americans no longer can engage in spending based on paper profits that don t exist Over the last five years many were forced to pillage whatever assets they had retirement accounts included and that is the main reason why only the upper echelons of society from a financial measurement have benefited from the Fed s experiment Low rates and mindless bond buying have failed to stimulate the economic engine by any stretch of the imagination and the housing industry will be entering a new declining phase in short order as the demand from investment firms runs its course as highlighted in Distorted Housing Market Gives False Hope In addition the lower rates that Greenspan delivered over a decade ago fueling the housing boom that wasn t acknowledged by the Fed until it cratered were absorbed by a population with a very different outlook on the future Now many of them have been bitten by the dot com bust and the housing debacle and are in no mood or unable to gamble again A recent indicates that the underlying economic damage of years past continues to take its toll Twenty percent of U S adults one in five polled last month said that at times in the past year they did not have enough money to buy food for themselves or their families according to Gallup s findings That s nearly as many hungry Americans as in 2008 when the nation was submerged in its deepest economic slump since the Great Depression nearly 80 years earlier the national polling firm said Furthermore a by Sentier Research showed that the average American household is earning less than when the Great Recession ended four years ago registering a 4 4 decline between June 2009 and June 2013 Yet the recent for auto sales showed a 17 increase in August to a seasonally adjusted annual rate of 16 1 million units and the fastest pace since October 2007 But there s more here than meets the eye and from Experian Automotive shows auto leasing hit a record high with 27 6 percent of financed new vehicles purchases in the second quarter being a lease By comparison only three years ago just 17 7 percent of vehicles bought with financing were leased Todd Skelton who oversees AutoNation dealerships in Palm Beach and Broward County Florida said customers are now hunting for the lowest monthly payment with a new car or truck and often that means taking out a lease We re still squeezing every penny to keep up with the Joneses especially since home equity is no longer the financing source that it used to be and it is of the utmost importance to ignore the Fed s linear unreliable and somewhat rosy projections and look for the anecdotal evidence and subtle hints that abound In another More Americans are buying homes in all cash deals which in itself says a lot about the effects of QE and the influence investment firms have on the housing market All cash purchases accounted for 40 of all sales of residential property in July 2013 up from 35 during the previous month and 31 in July 2012 according to data from real estate data firm RealtyTrac released Thursday That s the second highest rate since the survey began in January 2011 second only to 53 in March 2012 Getting back to Bernanke s press conference he mentioned fiscal policy and to that end what we have is increased government debt supply which in this case translates into higher rates because there s only so much money to go around In addition let s not forget Europe and their ongoing appetite for debt to keep the old continent afloat and give the false sense of solvency In defense of the Fed the institution is with maintaining maximum employment stable prices and moderate long term interest rates statutory objectives that were set by Congress Ah Congress the source of all wisdom Well never mind As I see it fighting inflation is a task that can be accomplished by raising rates to the sky but deflation is not so simple Maximum employment Dream on because there are far too many moving parts over which the Fed has no control Expectations from the institution are extremely high and unreasonable although the Fed thinks that it is far more powerful than it actually is and is not very good at evaluating itself and understanding its limitations The Fed can play all sorts of market games but economically speaking they re virtually irrelevant while the institution s only specialty lies in the ability to bust runaway bubbles not prevent them Just ask Greenspan how the Fed Funds rate 4 25 1 00 to 5 25 between June 2003 and June 2006 worked out Only 2 1 2 years later the Fed Funds rate was decreased to 0 easily showing that the Fed is constantly chasing its tail So much for price stability never mind maximum employment The Fed is an institution with a budget around 3 5 billion and a balance sheet worth 3 5 trillion that spends its days adoring useless number crunching and is far too intellectual for its own good I recently attended a Demi Lovato concert at the Los Angeles County Fair with my teenage daughter bonding process and feel that Ms Lovato can teach the Fed plenty She knows her business great performer knows her audience thanked the parents for their support and knows how to communicate told everyone young and old alike to stay off drugs and alcohol I shall also borrow a quote from Ms Lovato that she delivered during an episode of the X Factor still bonding after a contestant completed the audition You re like an elephant trying to skydive with a tiny parachute in a room That s the Fed Now that Summers dropped out will Yellen or anyone else including Mickey Mouse be better Not really Simon Cowell should be invited to the next press conference because his bluntness would be refreshing embarrassing to the usual suspects and funny From a stock market perspective plenty of forecasts have been delivered by a wide spectrum of individuals and institutions and I will not add anymore because frankly I don t know Only as an example and not a personal attack Gina Martin a Wells Fargo strategist is for a market plunge and she has been bearish on stocks all year while the S P 500 is up 21 I don t play those games because I don t have a crystal ball and if anyone was so accurate doubling their money every year would be a cinch I also don t need the accolades of being right or the spankings for being wrong and only seek to be profitable year in and year out However I am certain that the messaging is distorted and historical benchmarks were made to be broken and keeping an open mind is the best strategy Despite the recent market gyrations we proceed forward with short and long term trends still positive across the board and that is derived from technical analysis which is the stock market s equivalent of a political poll when read correctly From a macro economic perspective I advance that we have another twelve years of this misery and false starts and with every false start consumer confidence will wane further So stick with short term tactics because that s all that is left As a concluding note I no longer write as much because I am focused on CXA s Generational Cycles a theory that I developed and a wider view of humanity through the title Sexuality Economics and Religion which is closely related to the cycle theory above My name will be attached to it so if there s even a hint of insanity and or stupidity everyone knows whom to blame The challenge that I extended in May went unanswered as expected and I will add another clue 1953 The Year That Economics Changed And Nobody Noticed to be published in November |
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