Bank of America

Bank of America

Frontrunning: July 19

  • Turkey's Erdogan recounts night of coup, mulls death penalty (AP)
  • Dissidents Silenced, GOP Convention Turns Attacks on Clinton (WSJ)
  • U.S. police deaths build momentum for law to treat attacks as hate crimes (Reuters)
  • Police across US patrolling in pairs after ambush attacks (AP)
  • UK will not invoke EU Article 50 this year, government lawyer says (Reuters)

US Futures Dip, European Stocks Slide After EU Court Slams Italian Bank Bailout Plans

After a head-scratching S&P500 rally - which not even Goldman has been able to justify - pushed stocks to new all time highs with seemingly daily record highs regardless of fundamentals or geopolitical troubles, overnight US equity futures dipped modestly, tracking weak European stocks as demand for safe haven assets including U.S. Treasuries and gold rises. Asian stocks outside Japan fall. Crude oil trades near $45 a barrel. 

Frontrunning: July 18

  • Global stocks rise on SoftBank bid for ARM, dollar up vs yen after Turkey crushes coup (Reuters)
  • U.S. backs justice for coup plotters but urges Turkey to keep rule of law (Reuters)
  • Law and Order Will Be a Big Republican Convention Them (WSJ)
  • SoftBank to buy UK chip designer ARM in $32 billion cash deal (Reuters)
  • Rate-starved U.S. banks happily gobble mortgage business (Reuters)

Bank of America Profit Tumbles 19% As NIM Hits Record Low, EPS "Beat" On Surge In Cost-Cutting

Moments ago Bank of America joined the parade of "beating" banks despite declining earnings, when it reported adjusted Q2 EPS of $0.37 (excl. DVA), "higher" than a sharply reduced in recent weeks consensus estimate of $0.33, even as profits tumbled 19% from the $0.45 a year ago on sliding revenues of $20.6 billion ($20.4bn reported), vs consensus of $20.4 billion: the top line was $1.6 billion lower than a year ago if $0.9bn higher than Q1.

US Futures Rebound Sharply From Friday's Coup Fears, Focus Shifts To M&A

Having panciked briefly on Friday night on news of a Turkish coup, which has since not only failed but been cast away as speculation rises that it was staged and designed to give Erdogan even more authoritarian power, markets have moved on and are now focusing on the main overnight event which was the surprising $32 billion bid by Japan's SoftBank for U.K.’s semiconductor giant ARM which has sent comparable semis higher in European trading and pushing the Stoxx Europe 600 Index up by 0.6%, after surging 3.2% last week. After sliding sharply on Friday, US equity futures are up 0.1% in early trading.

"All-Time-Highs"

"...central bankers seem to view elevated security valuations as “wealth.” The longer this fallacy persists, the worse the subsequent fallout will be. I have little doubt that future generations will look at the reckless arrogance of today’s central bankers no differently than we view speculators in the South Sea Bubble and the Dutch Tulip-mania. Unfortunately, there is no mechanism by which historically-informed pleas of “no, stop, don’t!” will penetrate their dogmatic conceit. Nor can we change the psychology of investors."

JPM Revenue Rebounds On Stronger Fixed Income Trading, Jump In Lending

JPMorgan Chase & Co., the biggest U.S. bank by assets, said second-quarter profit fell 1.4 percent, beating analysts’ estimates as fixed-income trading revenue and loan growth jumped. Revenue climbed 2.8 percent to $25.2 billion, beating the $24.5 billion average estimate of seven analysts surveyed by Bloomberg. The company said average core loans increased 16 percent from a year earlier.

Why Active Managers Are Having The Worst Year On Record

It has already been an abysmal year (and decade) for hedge funds in particular, and active asset managers in general. But how abysmal? According to Bank of America, "just 18% of large cap funds outperformed the Russell 1000 in 1H16, so far making it the worst year for active funds in history (since ’03)."

US Consumers No Longer "Eating Out" - Restaurant Guest Counts Tumble To Three Year Lows

Knapp-Track casual dining same store sales for the month of June were down 2.3% with guest counts down 4.8%. These results compare against same store sales that were up 1.5% and guest counts that were down 1.1% in June 2015.  Sales and guest counts in June were the weakest since January 2014 (more than two years) and February 2013 (more than three years), respectively. On a two-year basis, same store sales were down 0.8% with guest counts down 5.9%.

Charting The Epic Collapse Of The World's Most Systemically Dangerous Bank

It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed. But, if the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful.

Bank of America Throws In The Towel: "The Profits Recovery Won't Live Up To Expectations"

"In the wake of the weaker-than-our-expected 1Q results and recent macro headwinds, we are trimming our S&P 500 EPS forecasts by 3% in 2016 and 2% in 2017. Given the S&P 500’s 15% rally since mid- February, we are concerned that much of the improvement in earnings growth may already be priced in, especially with signs that earnings revision trends may be rolling over."

The Reason For The Relentless Scramble For US Corporate Debt In One Chart

While the $5.9tr US IG corporate bond market represents only 12% of that global market, it is now responsible for 33.0% of its total (effective) yield payment. In other words, nearly one in three (global) dollars paid out in the global IG broad market is paid to investors in the US IG corporate bond market.