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The Zacks Analyst Blog Highlights: McGraw-Hill Financial, Barclays, Bank of America, HSBC Holdings and JPMorgan Chase

Zacks Equity Research

For Immediate Release

Chicago, IL – July 12, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include McGraw-Hill Financial Inc. (MHFI-Free Report), Barclays PLC (BCS-Free Report), Bank of America Corporation (BAC-Free Report), HSBC Holdings plc (HBC-Free Report) and JPMorgan Chase & Co. (JPM-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday’s Analyst Blog:

Another Big Draw, Crude Stays Over $100

The U.S. Energy Department's weekly inventory release showed that crude stockpiles fell sharply for the second time in as many weeks amid climbing refinery runs. The report further revealed that within the ‘refined products’ category, gasoline stocks fell, while distillate supplies were up from the week-ago level.

The bullish data from the U.S. government, together with the ongoing unrest in Egypt that could destabilize the resource-rich Middle East and further tighten the global supply picture, has kept the commodity above $100 a barrel since last week. However, indications of a slowdown from China – the world’s second largest economy – may play spoilsport and pull back oil prices.

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 9.87 million barrels for the week ending Jul 05, 2013, following a decrease of 10.35 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. (MHFI-Free Report) – had expected crude stocks to go down some 3.8 million barrels. An uptick in refinery processing rates – to their highest level since 2007 – led to the massive stockpile drawdown with the world's biggest oil consumer even as imports and production rose.

In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – were down 2.69 million barrels from the previous week’s level to 46.97 million barrels. Stocks are currently 9.5% under the all-time high of 51.86 million barrels reached in Jan.

As a result of the second successive weekly inventory plunge, at 373.92 million barrels, current crude supplies have gone 1.1% below the year-earlier level, though it is still close to the upper limit of the average for this time of the year. The crude supply cover was down from 24.5 days in the previous week to 23.6 days. In the year-ago period, the supply cover was 24.1 days.

Barclays Wins Dismissal of Credit Union Case

Barclays PLC (BCS-Free Report) heaved a sigh of relief when the U.S. District Judge in Kansas City dismissed a case by National Credit Union Administration (:NCUA) – the U.S. regulator for credit unions. The lawsuit had accused the company of selling risky mortgage based securities (:MBS) worth approximately $555 million from 2006–2007.

While dismissing the case, the U.S. District Judge stated that the NCUA had waited too long to file the case against Barclays. The chargesheet should have been lodged within 3 years (by Mar 20, 2012) of the NCUA being named the conservator of credit unions. However, the case was filed in Sep 2012.

Barclays was accused of selling MBS to 2 corporate credit unions – the U.S. Federal Credit Union and the Western Corporate Federal Credit Union – leading to their failure in 2009. Since then, the NCUA has been trying to recover the losses.

The dismissal of the case is a setback for the NCUA. The regulator had sued 10 major global banks on similar charges.

Out of these, Bank of America Corporation (BAC
-Free Report), Deutsche Bank AG, HSBC Holdings plc (HBC-Free Report) and Citigroup Inc. settled their respective cases with the NCUA, thereby enabling the regulator to recover roughly $335 million. However, Credit Suisse Group, Goldman Sachs Group Inc., Wells Fargo & Company, JPMorgan Chase & Co. (JPM-Free Report) and UBS AG continue to face similar charges from the NCUA.

The dismissal of the case removes a legal headwind for Barclays. However, the company still faces a number of lawsuits related to its conduct during the financial crisis. Though the London Interbank Offered Rate (:LIBOR) manipulation scandal led to a fine of £290 million ($453 million) in Jun 2012, Barclays has moved forward to regain investors’ confidence through various transformational initiatives.

Currently, Barclays carries a Zacks Rank #3 (Hold).


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