BAC investors should be aware that a win by the leftwing Syriza party in Greece's elections on Sunday may have a negative impact on the market next week. A good article to read is "Upcoming Greek Elections Could Be Trouble For European Debt Holders".
For those doing day trading in BAC's stock, a short position next week may be advantageous due to this. However, such an outcome would likely have minimal impact in the long run on the U.S. economy, and BAC's upward potential. So if an associated pullback were to occur in BAC's stock, it would IMO create another buying opportunity for long positions.
Also remember there is a Fed meeting this coming week, and lots of companies reporting results, which will also have impact on the U.S. market. Just things to consider in the very near term.
Precious metals are bought for two reasons. One is to protect against expansions in the money supply. The other is during times of recession as a safe haven. Tracking futures and options activity, for both the entire stock market and separately for precious metals, ones notes several things.
Yes there is an increase in call option activity for precious metals. However, the overall call to put ratio for the entire market is heavily weighted toward non precious metal calls. Plus there have been many reports that most of the precious metal buying is occurring in the Asian markets which has always been seen.
Since QE expands the money supply, actions recently taken by the ECB as well as other countries are forecasted to increase the worldwide money supply by approx. $360 billion per quarter. Therefore, based upon the data available, precious metal buying is mostly likely being driven by currency expansion.
We saw in the U.S., as their QE program began to wind down, the significant drop in precious metal prices. It would therefore be reasonable to extrapolate that while new worldwide QE programs will drive up precious metals in the short term, as the worldwide economy continues to improve that precious metal prices will continue their significant drop.
While the significant and continual increase is the U.S. debt is unsustainable, it is still not at levels which have not been seen before. Therefore, with an ever improving American economy (strongly supported by declining unemployment rates), there is time to address the issue.
With all of that said, as an investor one must look at risks versus rewards. Since any risk from default of U.S. on their debt is quite a ways in the future, and precious metal investments are not likely to offer more then maybe a 20% return over the next year or two and that will be at risks when interest rates begin to rise, that makes BAC a much better investment at this point in time IMO.
Starting this year, and going forward during the next couple of years there is quite a list of items that will help drive BAC's stock price higher:
1) Dividend increases
2) Establishment of stock buyback program (company cancelled plans last year to address account irregularity)
3) Bottom line BAC improvements from previously implemented cost saving programs
4) Increased borrowing by individual consumers with money saved from lower oil prices
5) Increased fees from individual credit card usage at stores and restaurants
6) Continual improvements and increases in home sales
7) Older workforce being replaced by younger works who spend a greater percent of their income
8) Minimum wage increases in 23 states and DC at beginning of 2015
9) More people entering the work force as unemployment rate continues to drop
10) Eventual fed rate hike increase as low employment rate begins to drive wage inflation, leading to increased profits by BAC off of lending spread
11) Lower oil prices will directly help China and India the most populated nations in the world, and improve their economic status. This will benefit BAC's global operations.
12) ECB QE program will benefit BAC as they buy up debt, increasing value of European debt BAC holds
13) Stock market being more fully valued will result in wealthier investors reaching out to sources such as BAC for increased money management as easier investment returns become more difficult to identify
14) Increased capital expenditures by businesses as U.S. economy continues to improve and expand
15) Increased fees from merger, acquisition, and stock issuance activities in EU market driven by ECB QE program much as seen from US QE program
16) Increased foreign investments flowing into U.S. from those seeking protection from increased global risks and benefits of a stronger dollar
This is just some of the more obvious drivers. The impact of them will not happen all at once, but their accumulated impact will occur over the next few years.
Perhaps we can work together to get this board back on track. BAC at this point is a fascinating investment opportunity, and there are so many topics regarding BAC that this board could be sharing knowledge on, and discussing.
Sometimes the stars line up just right for a stock, and in this case they certainly have for BAC. It is not often that such excellent "long" investment opportunities come along for a company of this size, with extremely minimal downside risk, and tremendous upside potential. Investing in BAC at this price point is such a no brainer, it is almost ridiculous. Over the next couple of years, there is no doubt that BAC investors are going to be well rewarded.
Hd, quote from a Jan article: "Banks pay out a much lower percentage of their earnings than they used to. Between 1999 and 2006, big banks on average paid about three-quarters of their income out as dividends or share buy backs, according to analysts at Credit Suisse, but the ratio in the last few years has been under 50 percent.
The decline in payouts comes in large part because regulators started overseeing dividend payments and share buybacks in 2009. The Federal Reserve was looking to prevent a repeat of 2007 and 2008, where banks paid out more than they earned. Banks have trouble cutting dividends in tough times because they fear the move will signal weakness to customers and investors, further weakening their business.
Banks are set up to be able to pay out more and they will do that — we just don't know when," said Tony Scherrer, director of research at Smead Capital Management, which owns shares in Bank of America Corp, Wells Fargo & Co and JPMorgan Chase & Co.
The biggest banks are seeking approval for their 2015 dividend plans with the Federal Reserve now, and will learn the results in March."
With regard to BAC, their current dividend payout is extremely low which was tied to the large litigation expenses they were incurring, and bad debt they needed to clean up. In the 4th qtr we have seen those expenses wind down rapidly, and they should likely have much less impact on BAC's bottom line profits going forward.
In addition, BAC's cost saving initiatives are starting to help improve profits. With 2015 projected as the first year of BAC finally being able to return to more normal operations, and sufficient reserves held per current regulatory requirements... I would expect to see some growth in dividend payouts during the coming year.
QE objective is not to lower bond prices. As warrcee pointed out, the buying of bonds frees money to move into the stock market. This allows companies to raise capital for investment thru the issuance of new or additional stock shares. In markets where credit is tight and or banks are weak, this works as a means to drive capital expansion which in turn creates and supports jobs.
In addition EC expands the money supply. This helps in the battle against deflation which the EU is trying to avoid, as deflation tends to hurt the labor market and stymies growth. This is one of the major problems that Japan had when they initially tried to address their economic problems. That along with the fact that their accounting system was different from ours. In our system capital assets are based upon historical cost, while Japan's system previously allowed assets on books to be based upon estimated current values. This led to manipulation of corporate books and over valuation of many Japanese stocks.
The expansion of the money supply also eventually leads to inflation, which is then controlled through raising of interest rates. That is why for investors in bank stocks, they applaud such actions as they eventually drive bank stocks up as inflation grows, and interest rates are raised. So govs are always trying to balance control of the money supply against inflation.
You do not seem to have a very good understanding of economics or the tools that govs have to stimulate growth and how they work. While such knowledge is not needed to be a successful investor, it certainly helps those that do. My recommendation you work to expand your knowledge in this area.
I am not aware of England or Japan defaulting on their debt. Exactly when did that happen? In addition, analysis of the impact of QE policies worldwide, by professionals included data from those countries in their analysis.
Anyone that has studied the Japanese stock market and economy understands the issues they faced were completely different and preceded the 2007-8 recession.
Regarding England "The November 2014 edition of our (PriceWaterhouseCooper) UK Economic Outlook report argues that the recovery will be sustained in 2015". Quote "In January 2015, the IMF left their growth forecast for the UK, last made in October 2014, unchanged at 2.7% in 2015. This puts forecast GDP growth for the UK in 2015 ahead of that for most of the other G7 countries..." Quote: "There were 30.80 million people aged 16 and over in employment in the UK in September to November 2014. The number of people in employment increased by 37,000 compared to the previous quarter and by 512,000 compared to the same period last year."
Facts speak much louder then fiction IMO...
Yet, we can see the results of the Fed's QE over on the last several years on the U.S. stock market. Since the EU focused their initial polices on belt tightening, following the 2007-8 worldwide recession, they are in many ways actually in much better economic position then the U.S. In addition, lower worldwide oil prices will benefit many European countries even more then the U.S. Since agriculture consumes 4-5 times more energy then manufacturing, poorer EU countries that are not significantly developed but remain largely agriculture based economies will benefit even more. So your statement and logic is certainly not supported by historical analysis of the impact of QE policies.
Reviewing after hours trading of BAC on Nasdaq's site, at 18:03 you had a block of 614,000 shares traded at $16.09. At 18:11 you had another block traded of 500,014 shares traded at $16.09. If dumping was going on these would of traded at lower prices. A detailed analysis of after hour trading activity shows you are correct longwood that this is being driven by continual heavy buying.
From a 2011 article, quote "Bank of America. $134 billion in revenue, 20 percent from overseas... Europe is the biggest overseas region for Bank of America". In addition; historical analysis by professionals of the impact of QE on different industries, shows that the banking and financial services industries benefit from such actions.
While lower oil prices may delay the fed increasing interest rates, it will lead to increased acquisition and merger activity in the O&G industry from which BofA will share in making money.
From another article we see in the U.S "Builders broke ground in December on the most single-family homes in almost seven years, propelling an unexpectedly large gain in U.S. housing starts that signals construction will contribute more to economic growth in 2015." This bodes well for the entire U.S. banking sector. Further supporting is comes from the Dec employment report "Construction added 48,000 jobs in December, well above the employment gains in recent months. Specialty trade contractors added jobs in December +26,000), with the gain about equally split between residential and nonresidential contractors. Employment also increased in heavy and civil engineering construction (+12,000) and in nonresidential building (+10,000)." In addition both Oct and Nov previously reported jobs added numbers were adjusted upward all supporting improving U.S. economic conditions.
The 4.41% today in BBC's stock price, on very strong volume, shows strong interest by major players. In addition, recent larger then normal leap (Call) option purchases are another indicator of increased interest in BBC by institutional buyers. Especially as increased option activity often reveals in advance increased institutional purchasing of a stock. While interest rate increases might not happen immediately, institutional investors do not just buy on news, they buy ahead of news. This also supports increased institutional buying of BBC over next 12-18 mths.