Regional Banks

What Energy Bankers Are Really Saying: "We Are Looking To Save Ourselves Now"

"Now, while your borrowing base might be upheld, there will be minimum liquidity requirements before capital can be accessed. It is hitting the OFS sector as well. As one banker put it, "we are looking to save ourselves now," with banks selling company debt for as low as $0.10 on the dollar on companies that only had a 50-75% borrow rates to start."

S&P Downgrades Banks With Highest Energy Exposure; Expects "Sharp Increase" In Non-Performing Assets

Moments ago S&P continued its downgrade cycle, this time taking the axe to the regional banks with the highest energy exposure due to "expectations for higher loan losses." Specifically, its lowered its long-term issuer credit ratings on four U.S. regional banks by one notch: BOK Financial Corp., Comerica Inc., Cullen/Frost  Bankers Inc., and Texas Capital Bancshares. The  outlooks on these banks are negative.

Either Banks Are Cheap... Or The Market's Gonna Crash

Simply put, either large cap Financials are cheap, or the entire U.S. equity market is still overpriced. Their precipitous decline year to date means markets fear they are both the transmission mechanism for a global slowdown/recession to come and a primary victim of that event.

"HY Primary Markets Are All But Shut" - What Keeps BofA's Junk Bond Analyst Up At Night

"HY primary markets are all but shut except for very high quality issuers. And if this trend continues for a while (the probability of which in our opinion is very high), we could envision a world where enterprises, big and small, find it harder to acquire financing across all industries, leading to widespread defaults, even outside of commodities."

BoJ Adopts Negative Interest Rates, Fails To Increase QE

Well that did not last long. After initial exuberance over The BoJ's wishy-washy decision to adopt a 3-tiered rate policy including NIRP, markets have realized that without further asset purchases (which were maintained at the current pace), there is no ammo to lift stocks. An almost 200 point surge in Dow futures has been erased and Nikkei 225 has dropped 1000 points from its post BOJ highs... as 10Y JGB yields hit record lows at 11bps and 20Y JGB yields drop to 82bps - the lowest since 2003

 

Equities Soar, Oil Back Over $30 On Hopes For More Stimulus Following Disturbing Chinese Data

Last night's Chinese data deluge can only be classified with one word: bad. So if bad news was again bad news as many claim, both commodities (read oil), and US equity futures should be tumbling right now... but just the opposite is happening and in fact both Brent and WTI have already jumped over $30 this morning. This happens even as the IEA said this morning that global oil markets could “drown in oversupply,”  And yet this morning both commodities, global stocks and futures soaring? Simple: the following Bloomberg headline summarizes it: "Brent Rallies More Than $1 as China GDP Spurs Stimulus Bets," and where Brent goes, so goes risk, and the S&P.

Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears

The Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week when first nothing the rumor, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses would exceed the current tier 1 capital tranches.

When Omnipotence Fails: JPMorgan Warns Upside Uncompelling As Central Bank Put Wanes

It would be hard for a year to start any worse than 2016 has... "Prices are oversold and sentiment hasn’t been this despondent in a long time (even Aug/Sept wasn’t this palpably negative) but any bounce will not be particularly impressive and in a lot of ways that is the main problem as the upside just isn’t compelling enough to make a major stand...as Western central banks attempted to mollify sentiment with dovish rhetoric but to no avail."