sleepydragon Posted March 21, 2020 Share Posted March 21, 2020 Yield curve is no longer flat or inverted. Companies drawing their credit lines. All these should be good for the bank. Don’t understand why banks sold off so much. Link to comment Share on other sites More sharing options...
Cigarbutt Posted March 21, 2020 Share Posted March 21, 2020 Yield curve is no longer flat or inverted. Companies drawing their credit lines. All these should be good for the bank. Don’t understand why banks sold off so much. Investing in WFC implies much more than the shape of the yield curve but, based on this criteria alone, when an inverted curve reverses historically has acted (correlation) as a leading indicator of future opportunities to buy bank stocks. From the horse's mouth, March 2019 https://www08.wellsfargomedia.com/assets/pdf/personal/investing/investment-institute/COTW_04032019_FINAL_ADA.pdf from the Fed March 2020, click max https://fred.stlouisfed.org/series/T10Y2Y An obvious counter-argument is that (since the virus effect is so obvious) the oncoming economic difficulties are priced in. I may be wrong but I've decided to wait because I feel that the underlying economy was showing significant signs of weakness much before the virus. One has to wonder if consequences of a slowdown in a levered environment may not be underestimated. Maybe the Fed can pull it off again but the hole is getting deeper? Link to comment Share on other sites More sharing options...
ander Posted March 21, 2020 Share Posted March 21, 2020 https://finance.yahoo.com/news/wells-fargo-asks-fed-lift-124236716.html Link to comment Share on other sites More sharing options...
Spekulatius Posted March 21, 2020 Share Posted March 21, 2020 Is WFC really better deal than other banks that don’t have operational issues? BAC, USB would be pot. buys before I would touch WFC. They are all cheap anyways. Link to comment Share on other sites More sharing options...
CorpRaider Posted March 21, 2020 Share Posted March 21, 2020 Wells has asked to remove asset cap so that it can support its customers per the FT. Charlie Scharf bought ~$5MM in stock. Let's go. Link to comment Share on other sites More sharing options...
rb Posted March 21, 2020 Share Posted March 21, 2020 Besides the messed up thing they did, wells is a good bank. From an investment perspective it has the advantage of being much cheaper than the other banks. And they're all incredibly cheap. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 21, 2020 Share Posted March 21, 2020 Wells has asked to remove asset cap so that it can support its customers per the FT. Charlie Scharf bought ~$5MM in stock. Let's go. It’s a great opportunity to redeem themselves. I think the Fed will grant this request. Link to comment Share on other sites More sharing options...
LC Posted March 21, 2020 Share Posted March 21, 2020 Wells has asked to remove asset cap so that it can support its customers per the FT. Charlie Scharf bought ~$5MM in stock. Let's go. It’s a great opportunity to redeem me themselves. I think the Fed will grant this request. Given their recent absence of a spine I fail to see why not ;D Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 22, 2020 Share Posted March 22, 2020 Wells has asked to remove asset cap so that it can support its customers per the FT. Charlie Scharf bought ~$5MM in stock. Let's go. It’s a great opportunity to redeem me themselves. I think the Fed will grant this request. Given their recent absence of a spine I fail to see why not ;D Everyone else is getting let off early: there have been calls to release prisoners in order to mitigate the crisis https://www.aljazeera.com/news/2020/03/coronavirus-prison-cases-raise-alarms-calls-inmate-release-200319152245414.html Link to comment Share on other sites More sharing options...
plato1976 Posted March 25, 2020 Share Posted March 25, 2020 I am comparing WFC with PNC and USB The later two have slightly lower divided yield, but seems higher quality and less reputation damage? Wells has asked to remove asset cap so that it can support its customers per the FT. Charlie Scharf bought ~$5MM in stock. Let's go. It’s a great opportunity to redeem me themselves. I think the Fed will grant this request. Given their recent absence of a spine I fail to see why not ;D Everyone else is getting let off early: there have been calls to release prisoners in order to mitigate the crisis https://www.aljazeera.com/news/2020/03/coronavirus-prison-cases-raise-alarms-calls-inmate-release-200319152245414.html Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted March 27, 2020 Share Posted March 27, 2020 So many (nearly all? all?) of the big banks are committing to not laying anyone off at the same time non performing loans are probably skyrocketing. https://www.reuters.com/article/us-health-coronavirus-morgan-stanley/two-us-banks-halt-layoffs-amid-coronavirus-uncertainty-idUSKBN21D2QD Wells has also initiated at least two different bonus programs https://www.bizjournals.com/charlotte/news/2020/03/24/wells-fargo-to-temporarily-shutter-local-branches.html The WFC story was largely a cost cutting story, right? But in the short term costs are going to be higher, interest rates lower, and I lack the mental capacity to even conceptualize of what non performing loans are going to look like. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 27, 2020 Share Posted March 27, 2020 The WFC story was largely a cost cutting story, right? The story is an extra $1 of sustainable earnings from cost cutting is $15 a share at 15x earnings. These extraordinary pay increases over the next 5 months don't noticeably erode that. Link to comment Share on other sites More sharing options...
plato1976 Posted March 28, 2020 Share Posted March 28, 2020 A few sectors were hit badly during this crisis and some may be permanently impaired one is oil&gas but we learned wfc has limited exposure to this sector; the other is commercial real estate (esp. malls) and most old retailers; I think the damage to these two sectors may be long lasting, we don't know wfc's exposure to retailers/malls hotels and travel related sectors were also hit badly, could be just one time hit, but still poses risk to wfc's loan if exposed The WFC story was largely a cost cutting story, right? The story is an extra $1 of sustainable earnings from cost cutting is $15 a share at 15x earnings. These extraordinary pay increases over the next 5 months don't noticeably erode that. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 28, 2020 Share Posted March 28, 2020 A few sectors were hit badly during this crisis and some may be permanently impaired one is oil&gas but we learned wfc has limited exposure to this sector; the other is commercial real estate (esp. malls) and most old retailers; I think the damage to these two sectors may be long lasting, we don't know wfc's exposure to retailers/malls hotels and travel related sectors were also hit badly, could be just one time hit, but still poses risk to wfc's loan if exposed The WFC story was largely a cost cutting story, right? The story is an extra $1 of sustainable earnings from cost cutting is $15 a share at 15x earnings. These extraordinary pay increases over the next 5 months don't noticeably erode that. Real estate exposure is way more of a concern than energy, which is pretty limited. If real estate gets impaired broadly then a lot of dominos will tumble. In the end, banks are just levered bets on the economy. Lower NIMs and much higher loan losses are not a great combination. Link to comment Share on other sites More sharing options...
sleepydragon Posted March 30, 2020 Share Posted March 30, 2020 Anyone know why WFC down a lot more than peers today? I can’t find any relevant news. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 30, 2020 Share Posted March 30, 2020 Anyone know why WFC down a lot more than peers today? I can’t find any relevant news. I believe it's due to growing concerns around MBS and profitability of mortgage underwriting going forward. Link to comment Share on other sites More sharing options...
plato1976 Posted March 30, 2020 Share Posted March 30, 2020 but why today? is there any especially bad news related to real estate/mortgage coming out today? Anyone know why WFC down a lot more than peers today? I can’t find any relevant news. I believe it's due to growing concerns around MBS and profitability of mortgage underwriting going forward. Link to comment Share on other sites More sharing options...
Johnson Posted March 30, 2020 Share Posted March 30, 2020 https://www.barrons.com/articles/wells-fargo-looks-exposed-to-coming-mortgage-crunch-analyst-says-51585592165 Link to comment Share on other sites More sharing options...
gary17 Posted April 1, 2020 Share Posted April 1, 2020 UK banks suspended dividends - may be US banks are next Link to comment Share on other sites More sharing options...
Junto Posted April 1, 2020 Share Posted April 1, 2020 UK banks suspended dividends - may be US banks are next unlikely at this point but it is definitely going to be a stressful time the next couple of months. Q1 shouldn't demonstrate much impact yet... Link to comment Share on other sites More sharing options...
CorpRaider Posted April 1, 2020 Share Posted April 1, 2020 https://www.barrons.com/articles/wells-fargo-looks-exposed-to-coming-mortgage-crunch-analyst-says-51585592165 "With unemployment expected to remain high, after forbearance ends, servicing costs could impact 2020 earnings by 0.1% to 0.8%." "The same expectations could hit earnings to competitor shadow bank mortgage originators and servicers by 1000%. They are already screaming for mercy because they are blowing up. Now, get the fk out of my office." - Me. Just now. Link to comment Share on other sites More sharing options...
undervalued Posted April 1, 2020 Share Posted April 1, 2020 https://www.reuters.com/article/us-health-coronavirus-fed-banks/federal-reserve-temporarily-eases-some-bank-leverage-requirements-idUSKBN21J6VN Link to comment Share on other sites More sharing options...
Castanza Posted April 3, 2020 Share Posted April 3, 2020 Can anyone speak to the risk (if any) banks are taking in with this influx of small business loans? BofA had 10k applications in the first hour. Link to comment Share on other sites More sharing options...
gfp Posted April 3, 2020 Share Posted April 3, 2020 Can anyone speak to the risk (if any) banks are taking in with this influx of small business loans? BofA had 10k applications in the first hour. They won't have any risk but they will earn a fee for processing / administering these programs. Link to comment Share on other sites More sharing options...
matts Posted April 3, 2020 Share Posted April 3, 2020 Banks stand to make billions from US small business rescue https://www.ft.com/content/c584885c-6d64-4531-99e6-334c6ec0c57c Banks will receive processing fees, paid by the federal government, for making the loans. The fees will vary with loan size: 5 per cent for loans under $350,000, 3 per cent for loans under $2m, and 1 per cent for loans greater than $2m. The loans will not incur a capital charge. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now