|Bid||23.60 x 900|
|Ask||23.72 x 800|
|Day's Range||23.60 - 23.72|
|52 Week Range||18.20 - 24.29|
|Beta (3Y Monthly)||0.22|
|PE Ratio (TTM)||8.43|
|Forward Dividend & Yield||1.02 (4.34%)|
|1y Target Est||N/A|
Fewer workers feel confident in managing money versus last year, even as employers ramp up efforts to provide more guidance, according to a new study.
(Bloomberg) -- Signs that stress in U.S. funding markets is rebuilding ramped up pressure on the Federal Reserve to permanently increase reserves by boosting Treasury holdings, even as it was preparing a temporary liquidity injection for a fourth straight day.The New York Fed plans to do another $75 billion overnight repo operation on Friday. It follows liquidity doses of the same size Thursday and Wednesday, and $53.2 billion on Tuesday. The central bank is deploying this remedy for the first time in a decade.The Repo Market’s a Mess. (What’s the Repo Market?)This week’s actions have helped calm the funding market, with repo rates declining to more normal levels after soaring to 10% Tuesday, four times last week’s levels. However, swap spreads tumbled to record lows Thursday amid concern Fed policy makers haven’t announced more aggressive steps. Swaps are signaling less appetite for Treasuries, driven by concern traders won’t be able to fund purchases through the repo market.“The Fed needs to do at least double what they offered now and maybe even be more vigilant and do something even more significant,” said Thomas Simons, senior economist at Jefferies LLC. “This attitude of trying to kind-of fix the problem is not great.”There are others signs of investor apprehension about future funding levels, which is manifesting in different ways.Treasury bill sales on Thursday were met with a poor reception, as investors demanded to be compensated via higher yields for locking up cash. Meanwhile, in cross currency basis -- which show floating-rate payments in different currencies -- the premium for the Australian dollar over its U.S. counterpart collapsed by the most in eight years during Asian trading hours.So while overnight general collateral repurchase agreement rates have retreated, trading around 1.95% Friday, around Thursday’s levels, market participants say the Fed needs to reveal a permanent fix, rather than these ad-hoc overnight operations.“We expect these episodes of funding stresses to become more frequent with demand for funding and U.S. Treasury supply forecast to increase heading into year-end and the Fed’s reserve levels likely to drop further,” Jerome Schneider, head of short-term bond portfolios at Pacific Investment Management Co., wrote in a note Wednesday with his colleagues.The operations, once common before the 2008 financial crisis, temporarily add cash as the Fed takes government securities as collateral. Wall Street bond dealers submitted about $84 billion of securities for Thursday’s Fed action, the most in the three days.The latest addition of liquidity follows the Federal Open Market Committee’s move Wednesday to reduce the interest rate on excess reserves, or IOER, by more than their main interest rate, an attempt to quell money-market stresses.Given the added supply, banks’ holdings of Treasuries have risen and are increasingly being financed by money-market funds investing in repo, which leaves “U.S. funding markets more fragile,” Schneider wrote. He said this adds to other reasons why the Fed needs to do more to engineer a long-term fix.Cap BustedAfter policy makers wrapped up the two-day meeting Wednesday, Fed Chairman Jerome Powell said the central bank will keep doing these repo operations if that’s what it takes to get markets back on track. He spoke hours after the effective fed funds rate busted through the central bank’s cap.Powell also said the Fed would provide a sufficient supply of bank reserves so that frequent operations like the ones they’ve done this week aren’t required.The only way “to permanently alleviate the funding stress is to rebuild the buffer of reserves in the system,“ according to Morgan Stanley strategist Matthew Hornbach.Relying on repo operations doesn’t resolve the issue of reserves declining as the Treasury rebuilds balances, Hornbach wrote in a note. Having regular operations will also increase market uncertainty as the Fed could halt purchases at any time, while the size of its buying will have to expand over time as reserves drop, he said.“It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought,” Powell said, referring to the central bank potentially buying securities again to permanently increase reserves and ensure liquidity in the banking sector.Read: Fed Should Be Worried About ‘Collateral Damage,’ BofA SaysMany strategists had predicted the Fed would take even more aggressive measures to reduce the pressures. One idea that’s gotten a fair amount of attention is something called a standing fixed-rate repo facility -- a permanent way to ease funding pressures. Many analysts even predicted a Wednesday announcement that the Fed would start expanding its balance sheet.That didn’t happen. However, with the Fed apparently ready to keep injecting liquidity whenever it’s needed, “it’s enough for now,” said Jon Hill of BMO Capital Markets.“This week’s dramatic moves in the short-term funding markets serve as a case in point for the need to carefully consider liquidity in the financial system,” Rick Rieder, global chief investment officer of fixed income at BlackRock Inc., wrote in a note.“All of this funding market gyration points to the increasingly obvious fact that the end of Fed reserve draining is insufficient to stabilize these markets,” he said.(Updates with Friday repo levels.)\--With assistance from Edward Bolingbroke and Stephen Spratt.To contact the reporters on this story: Liz Capo McCormick in New York at firstname.lastname@example.org;Alexandra Harris in New York at email@example.comTo contact the editors responsible for this story: Benjamin Purvis at firstname.lastname@example.org, Nick Baker, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Bank of America (NYSE:BAC) stock has been benefiting from a huge rebound in bank stocks. BAC stock is up 15% over the past few weeks, while JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and others are also riding higher.Source: Andriy Blokhin / Shutterstock.com However, many of these names are running into potential resistance -- including Bank of America stock.That makes it a much harder buy than it was a few weeks ago, when it was sitting near support. Of course, it isn't just sentiment and broad-market action that's moving the banks. The banks are widely impacted by the gyrations in interest rates and how much money they can make as a result.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 8 Dividend Stocks to Buy for a Recession Over the last few weeks, various spreads between long- and short-dated bonds were widening, which aids in the banks' profitability. Therefore, BAC stock and others were on the move higher. Previously, tightening in these spreads -- such as the widely watched 10-year/2-year spread -- caused a brutal decline in many of these stocks.Up big so far this month, is BAC stock worth buying now? Trading BAC StockHopefully InvestorPlace readers are sitting on big gains in BAC stock. We flagged this name a few weeks ago as it sat on range support, and the rally from that point has been impressive. Now though, shares have gone from range support to range resistance. Click to EnlargeIn late July, BAC stock was on the cusp of a major breakout. Shares were consolidating between $30 and $30.50 and looked set to make a significant move higher. This followed solid earnings and a recent increase in capital returns.But then all the yield-curve worries came about, as bond prices surged and spreads collapsed. This was a jarring couple of days for the stock market in general and extra tough on the bank stocks.As you can see on the chart, Bank of America stock has been consolidating between $29.50 and $30, as traders eye BofA for a potential move into range resistance.From a trading perspective, getting the bounce from around $26.50 to $30+ is really all we need in order to justify exiting the position. For new longs or those looking for more upside though, this consolidation period is 100% necessary for a breakout to even be possible.Without it, BAC stock price would surely be rejected from the $30.50 to $30.80 area.Given the amount of false breakouts we've had in BAC stock, I eventually want to see a close above $31. That puts the 52-week high of $31.37 on the table and above that, a further rally can ensue.If BAC stock need more time and/or is rejected from range resistance, let's see if either the 20-day or 50-day moving average can support the stock. Below the 200-day and another test of range support is possible. Valuing Bank of America StockThe thing about the banks? They're quite cheap.Bank of America stock trades at roughly 10.5 times this year's earnings expectations. The bank is expected to post modest earnings growth this year and next year, with 8% growth in 2019 and 6.7% growth in 2020.Revenue is a different story though, with expectations within 10 basis points of flat for both this year and next year. Essentially, analysts predict that BAC will generate roughly the same amount of revenue in 2020 that it did in 2018. Not impressive.Some may argue that they like JPM and Citigroup more than BAC. After all, both have better yields, better revenue growth, better earnings growth this year and in the case of Citigroup, a lower valuation. Not that JPM's 11.6 times earnings should be considered expensive.And while that statement may look like a negative for BAC stock, it's not intended to. The three stocks all have low valuations and solid earnings growth projections. Further, BofA was approved for a buyback up to $30.9 billion and a 20% increase in its dividend. Shares now yield 2.4%, which is respectable in a low-rate environment, although less than the 3% and 2.9% investors can still get in JPM and C, respectively.At the end of the day, most of this group moves in tandem. If BAC is breaking out, it's likely C and JPM have the wind in their sails too. Keep this group on your radar, looking for a pullback or a breakout opportunity.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long BAC and C. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 8 Dividend Stocks to Buy for a Recession * 10 Companies Making Their CEOs Rich * The 7 Best S&P 500 Stocks of 2019 So Far The post How to Trade Bank of America Stock as It Approaches ResistanceÂ appeared first on InvestorPlace.
On Sept 18, the Federal Reserve cut interest rates by 25 basis. The expected move came amid concerns about trade wars and a potential economic slow down globally. Yet Fed officials were divided about the decision -- as well as over the need for any future cuts. Variables such as interest rates, economic growth, global political and trade worries and activity in the housing markets can impact a bank's stock price. Therefore, today I'd like to discuss the outlook for Bank of America (NYSE:BAC), one of the largest banks globally, and BAC stock.Source: Michael Vi / Shutterstock.com Right after the interest rate announcement, there was increased volatility in the equity markets. Initially, broader indices fell after the decision. Toward the close of trading, stocks rebounded. The recovery was led by banks and the big tech. Although I like BAC stock for a long-term diversified portfolio, I expect market volatility to continue for several more trading sessions.In case of further pullbacks in BAC stock in the coming days, investors may consider buying into Bank of America shares on the dip. Here's why.InvestorPlace - Stock Market News, Stock Advice & Trading Tips BAC Stock and the EconomyThe outlook given by Bank of America as well as CEOs of other major corporations in recent months shows that the economic or banking cycle in the U.S. isn't at its most attractive point. Our economy had fired on almost all cylinders for a number of years. Now it may be poised to glide onto a slower growth trajectory. * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars Bank stocks are exposed to economic ebb and flow. If you are considering buying banking stocks, it'd be important to remember that two main factors affect a bank's revenue and earnings: * Interest rates: As interest rates increase, a bank can earn more money from its loan portfolio. * Economic activity outlook: In a robust economy, more money circulates through the system, fueling a bank's non-interest income.In short, if the U.S. economy cools down in the coming months, Bank of America stock is likely to be adversely affected. Despite the potential economic headwinds, it is not quite possible to know if or when we will enter a recession in the coming quarters. Interest Rates and Bank of America StockBank of America stock's income is divided into two main categories: net interest income (NII) and non-interest income.Like other banks, BAC stock earns income on loans and other interest-earning assets. It pays interest on deposits and other interest-bearing liabilities. We can arrive at the bank's net interest income by deducting interest paid from the total interest earned.In general, decreasing interest rates mean headwind for banks including Bank of America as lower interest rates put pressure on NII and margins.The low interest rate environment in the U.S. has indeed had negative impact on BAC stock's net interest income. On July 17, Bank of America released Q2 earnings. Although the bank still expects to see growth in the face of expected interest rate cuts and slower economy, management lowered its full-year guidance of NII.During the conference call, Chief Financial Officer Mr. Donofrio cut 2019 NII growth outlook to 2%, assuming interest rates stayed stable. He said that if the Fed were to cut interest rates twice in 2019, then the BAC's NII growth would be about 1%.Several of our readers may well remember that earlier in April, Bank of America had already cut its NII growth outlook to 3% in a stable interest rate environment. Since the release of Q2 earnings in July, we have had two Fed rate cuts, one in late July and one this week.At present, Fed's rate-hike cycle is over. However, we do not know if the central bank may cut rates further. One can even argue that we have some ambiguity over future Fed rate decisions. In other words, later in the year, if there is another rate cut, then BAC stock's earnings from loans could even suffer further. BAC Stock Has Attractive Valuation LevelsIn the U.S., the Bank of America serves about 66 million consumers and small business clients, giving the bank an attractive deposit base. It has over 4,350 retail financial centers and plans to increase that number in the coming quarters. The group's online and mobile banking operations are also growing fast, adding to increased fees charged for banking activities.Due to extensive expense-management measures over the past several years, Bank of America's efficiency ratio has improved (i.e., gone down). It now stands at 57.48%.A decrease in the ratio means that the bank has incurred lower costs to generate every dollar of income. For banks, the objective is to get the efficiency ratio as close to 50% as possible. This respectable overall number by BAC shows how effective management's cost-cutting initiatives have been.The efficiency ratio is calculated by dividing the BAC's non-interest expenses by its net revenue. Non-interest expenses may include personnel salaries and other related expenses, marketing costs, and real estate rent, etc.Furthermore, the trailing P/E ratio for BAC stock stands at an attractive 10.7. And value investors may be interested to know that its price-to-book (P/B) ratio is 1.14.P/B ratio is used widely to value for asset-heavy companies, such as banks or other financial institutions. In general, for banking stocks, a number below 2 could imply good long-term value. However, investors should due further due diligence by looking at other metrics, too. Where BAC Stock Price Is NowYear-to-date, Bank of America stock is up over 21%. However, over the past several months, BAC stock has been trading in a range, between about $26 and $31.BAC stock's 52-week range has been $31.37 (Sep. 21, 2018) and $22.66 (Dec. 24, 2018). In other words, we are at the anniversary of last year's highest level.The share price is now hovering around $30, where there is substantial resistance from a technical point of view. If Bank of America stock cannot go and stay over the 52-week high of $31.37 soon, there will likely be profit taking in the stock. Then, I'd expect the stock to fall toward $27.50 level, where it will find initial support.I would not advocate bottom-picking in case of near-term price weakness. Yet, I find Bank of America stock to be a buy candidate if the price declines toward $27.50 or even lower. If BAC shares can build up momentum, then investors are likely to push to price to a new high in the last quarter of the year. By the end of 2020, long-term investors may indeed see the price reach $34-$35.Meanwhile, BAC shareholders can also enjoy a dividend yield of about 2.4%. In Q2, the bank paid a dividend of 18 cents per share, representing a 20% increase over the prior-year quarter. Management also continues to buy back shares, which supports Bank of America stock price. * 8 Dividend Stocks to Buy for a Recession The Bottom Line on BAC StockIn the coming weeks, BAC stock, like many other stocks in the broader market, is likely to be impacted by the rhetoric of the U.S.-China trade wars as well as global growth worries. Therefore, I expect further volatility in the share price, especially until the next earnings expected to be released on Oct. 21. However, long-term investors may consider buying the dips in BAC shares.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 8 Dividend Stocks to Buy for a Recession * 10 Companies Making Their CEOs Rich * The 7 Best S&P 500 Stocks of 2019 So Far The post Should Long-Term Investors Buy Bank of America Stock After the Rate Cut? appeared first on InvestorPlace.
American workers in high-deductible health plans are embracing health savings accounts, a new survey shows, but their value as a potential retirement-savings vehicle is still largely untapped and not understood.
Shares of Bank of America (NYSE:BAC) are up 22% year-to-date, putting the stock ahead of the Financial Select Sector SPDR (NYSEARCA:XLF), the largest financial services exchange-traded fund, by about 220 basis points.Source: Andriy Blokhin / Shutterstock.com Impressively, Bank of America stocks is up nearly 11% this month. Prior to today's Federal Reserve rate cut announcement, an array of banks, including BAC, warned about the impact of lower interest rates on net interest margins during their second-quarter earnings calls. In fact, that issue was one of the primary takeaways from banks' most recent round of of earnings updates.Bank of America rivals, such as JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), are already complaining that lower interest rates are weighing on earnings. All that simply because of a mere eight-basis point squeeze (on average) in net interest margins.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs is the case with its competitors, lower rates are a real consideration with Bank of America. And they likely explain why analysts have recently grown bearish on the name. On Aug. 29, Raymond James lowered its rating on Bank of America stock to "market perform" from "outperform." A week later, Keefe, Bruyette & Woods did the same thing, while slashing its price target on BAC stock to $29 from $36. The shares closed just under $30 on Sept. 17."… in a falling rate environment where the yield curve remains inverted, we believe that creates an environment where it will be difficult for shares to outperform and a Market Perform is appropriate," said KBW's Brian Kleinhanzl. Dueling Views On BAC StockOther headwinds for Bank of America stock include speculation that the economy is slowing and the lingering U.S.-China trade war. Those two issues are joined at the hip. If the U.S. and China cannot come to terms on trade, both economies will suffer. If the U.S. economy languishes, lending will contract, putting further strain on the financial services sector.Additionally, the Fed is said to be "data dependent." This means that economic reports revealing a slowing economy, will prompt the central bank to step in, likely with lower interest rates. This would further suppress interest margins for money center banks. * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars One area of good news is that, in recent weeks, President Donald Trump appeared eager to work with China on trade, even implying that a resolution could be realized over the near term.Another factor, albeit wider-ranging in nature, is the recent rotation out of growth stocks into value names. BAC stock is a value play. The S&P 500's Value Index allocates 21.8% of its weight to financial stocks, about 550 basis points more than the benchmark's second-largest sector allocation.At 9.9 times forward earnings and 1.1 times book value, BAC stocks fits the bill as a value name -- and one that could benefit from a lengthy growth-to-value rotation. The Bottom Line on Bank of America StockThe Fed has set the stage for banks to boost buybacks and dividends. Yielding just 2.4%, Bank of America stock has ample room for dividend growth.Additionally, BAC has enviable market positions across an array of pivotal financial services and products. According to Morningstar, Bank of America is racking up accolades in investment banking, credit cards and several other financial services.That gets investors to a compelling long-term story with short-term macro issues with Bank of America stock.As of this writing, Todd Shriber owns shares of XLF. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post Bank of America Burns Savers, But Investors May Like BAC Stock appeared first on InvestorPlace.
A new mixed-use development is getting started near Polaris Fashion Place, and it'll be anchored by a major banking player that's ramping up its Central Ohio presence. A joint venture of VanTrust Real Estate and NP Ltd. is breaking ground on a second phase for the Pointe at Polaris project along Lyra Drive. This project will include a 145,000-square-foot office building and a 260-unit apartment project.
Charlotte-based Bank of America Corp. is under investigation to determine whether it opened unauthorized customer accounts, according to information released on Tuesday by the Consumer Financial Protection Bureau.
In documents posted on its website Tuesday, the watchdog agency said it has sought information from the bank concerning account openings going back to March 2014.
Bank of America has passed U.S. Bank as the St. Louis retail market leader in deposits. Bank of America had $12.61 billion in deposits in St. Louis as of June 30, a 14.09% market share, edging ahead of U.S. Bank's $12.48 billion, a 13.96% share, according to the latest Federal Deposit Insurance Corp. (FDIC) report.
(Bloomberg Opinion) -- There’s still plenty of time for things to go off the rails, but 2019 is shaping up to be one of those rare years when the global stock, bond, commodities and foreign-exchange markets are all poised to deliver positive returns. The last time that happened was in 2010. Investors say three things would keep the good times rolling; unfortunately, two of those items are unlikely to happen, starting with the Federal Reserve’s monetary policy decision on Wednesday.The latest monthly survey of global fund managers by Bank of America Merrill Lynch found that German fiscal stimulus, a 50-basis-point rate cut by the Fed and Chinese infrastructure spending would be the most bullish policies for risk assets over the next six months. But the famously austere Germans look hesitant to fend off a slowdown in Europe’s largest economy just by spending. Finance Minister Olaf Scholz said last week that Germany would stick to a balanced budget, but was ready to act in moments of crisis. As for the Fed, the odds that policy makers on Wednesday will announce a half-point cut in their target rate for overnight loans between banks instead of a quarter-point reduction has shrunk to less than 15% from more than 40% last month. This follows a string of data showing that, thanks to the consumer, the U.S. economy is holding up pretty well amidst the ongoing trade war with China. There are even some economists and strategists, such as those at Brown Brothers Harriman, who say the Fed maybe doesn’t need to lower rates at all this time. The most likely scenario is that the central bank will ease monetary policy on Wednesday, while saying any further loosening will depend on the data, which is something that isn’t exactly priced into markets. “There is a risk that absent a strong signal that the Fed is clearly at the beginning of a sustained easing cycle, we could see some disappointment,” BNY Mellon strategist John Velis wrote in a research note Tuesday.So if the Germans and the Fed disappoint, that leaves the heavy lifting to China. Here, though, there is some good news. Bloomberg News reported last month that China is considering allowing provincial governments to issue more bonds for infrastructure investment. Policy makers may raise the annual quota for so-called special bonds from the current level of 2.15 trillion yuan ($305 billion), Bloomberg News reported, citing people familiar with the situation who asked not to be named as the matter wasn’t yet public.OIL MARKETS HAVE A DEEP THROATOne day after soaring almost 15% following an attack that wiped out about half of Saudi Arabia’s output capacity, oil plunged as much as 7% as Reuters reported the kingdom’s output will be fully back on line in the next two to three weeks, which is much sooner than the months some expected it would take. No matter that Reuters cited one unidentified Saudi source who was briefed on the timeline – traders wanted to believe. It helped that Saudi officials later confirmed that at least one of the damaged facilities will be back to producing oil at pre-attack levels by the end of the month. However, oil traders might be wise to be a bit more skeptical. It’s not crazy to think that Saudi officials would want to downplay the success of the strikes at a time when its military is getting a lot of criticism for not detecting and stopping whatever it was that crippled the facilities. “We flip from worst case scenario to best case scenario in less than 24 hours,” John Kilduff, a partner at Again Capital LLC, told Bloomberg News. “We still need damage assessments and what it takes for those repairs.”CAN’T SPELL FUNDING WITHOUT ‘FUN’The repurchase, or repo, market went haywire for a second straight day on Tuesday, forcing the Fed to inject billions of dollars of cash into the system for the first time in a decade to temper a surge in short-term rates. All of this sounds concerning, especially since the financial crisis was partly exacerbated by a seizing up of the funding market. But that’s not what’s happening here. Market participants say the spike in short-term rates is a result mainly of a confluence of technical events, including the sudden withdrawal of cash from money-market funds by companies needing to pay taxes. But there are still reasons to be concerned. The first is that this all comes with the new York Fed still without a formal head of its markets group following the abrupt departure of the widely respected Simon Potter earlier this year. The implication is that if Potter were still around, traders at the central bank might have been better prepared to handle any unforeseen stresses in funding markets. The second reason for concern is that the move in the repo market has definitely had some knock-on effects, especially in overnight bank funding costs. Those reached 45 basis points Monday before easing to 41.9 basis points Tuesday, levels that are more in line with times of broad market turbulence. Bank earnings are already under pressure from a flat yield curve, and this spike in funding cost won’t help, which may explain why the KBW Bank Index fell the most in more than two weeks on Tuesday.SHAKING THE BEARS OUTTo say it hasn’t been a good month for the U.S. Treasury market would be an understatement. The Bloomberg Barclays U.S. Treasury Index was down 1.96% in September through Monday, putting the benchmark on track for its worst monthly performance since it dropped 2.67% in November 2016 following President Donald Trump’s election victory. The swift decline has many wondering whether the bond market is at the beginning of a sustained turn for the worse. The evidence, though, suggests the move has been more about positioning than anything fundamental. That is seen in the Bank of America survey. For the second straight month, it found that being “long” Treasuries was the most crowded trade in global markets, followed by being “long” technology and growth stocks and being “long” gold. So, with so many investors and traders leaning one way, it doesn’t take much for a move in the opposite direction to force traders to rebalance. On the positive side, JPMorgan Chase & Co.’s widely followed weekly survey of bond traders released on Tuesday suggested that the sell-off may be ending. Its index tracking clients who are “short” is back near its lowest level since 2016, suggesting all those who want to bet against the bond market have already done so.EARNINGS DON’T MATTERThe latest Bloomberg News survey of where Wall Street strategists expect the S&P 500 to end the year came out on Tuesday, and the results confirm just how reliant equities are on low interest rates. It’s not so much that strategists see the S&P 500 ending the year at 3,000, or little changed from current levels; it’s that they expect equities to be resilient in the face of ever lower profit forecasts. They now forecast 2019 earnings per share of $166.35 for the gauge, down from their estimate of $172.25 at the start of the year. Also back then, the strategists we’re only expecting the S&P 500 to end the year at 2,913. So they’ve raised their forecasts for how high the index will go while also cutting their earnings estimates. That may seem counter-intuitive, until you consider that simple discounted cash-flow analysis shows how lower rates make future earnings more valuable now, justifying higher multiples for equities even without profit growth. So, logic would dictate that the lower rates go, the better for equities. This makes Wednesday’s Fed meeting all the more important for equities, especially with the S&P 500 trading at about 18.2 times this year’s expected earnings, which is the highest since January 2018.TEA LEAVESA big drop in mortgage rates is giving new life to the U.S. housing market despite a slowing economy. The National Association of Home Builders/Wells Fargo Housing Market Index released on Tuesday increased to 68 in September from an upwardly revised 67 in August. The current level is at an 11-month high. Also on Tuesday, the Mortgage Bankers Association said its data show that mortgage applications for new home purchases increased 33% in August from a year earlier. Both reports are good omens for Wednesday’s government report on housing starts and permits. The median estimate of economists surveyed by Bloomberg is for starts to have rebounded 5% in August after falling 4% in July. Permits are seen declining 1.3%, but that shouldn’t be worrisome after July’s outsized 6.9% gain, which was the biggest since 2017.DON’T MISS Chaotic Funding Market Fell Asleep at the Wheel: Brian ChappattaStock Pickers Are Just Imagining an Index Bubble: Nir KaissarConflicted Dealers Shouldn't Advise the Treasury: James BiancoDraghi Lets Lagarde Pick Up the Pieces: Ferdinando GiuglianoEmpty Hair Salons Can't Be Saved by a Central Bank: Daniel MossTo contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The Federal Deposit Insurance Corp. released its annual survey of branch office deposits on Sept. 13.
A Bank of America branch is relocating – a move that makes way for rising retail construction in Research Triangle Park.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Many of JPMorgan Chase & Co.’s clients are worried that the rise in bond yields threatens the stock market rally. For the broker and a number of major fund managers it’s actually a blessing.This month’s retreat in fixed income has fueled concerns about the possible risk to the equity bull run. Yet, so far, the stock market has defied the doomsayers, and the reason behind the jump in yields -- improved economic optimism -- has reassured the likes of Eaton Vance Management and Fidelity International that the rally can continue.The flight from havens and crowded bond proxies has triggered a switch into equity sectors that are more sensitive to the economy. The broadening of the gains to include value and cyclical stocks will support the rally, said JPMorgan in a note to clients. In the past decade, equities rose every time bond yields spiked by at least 50 basis points, climbing by 6% on average, it said.The cause for the shift in sentiment is key to understanding the equity market’s nonchalant attitude toward the bond market sell-off. The rise in yields happened amid optimism that the U.S.-China trade talks will continue, which is a positive signal for economic growth and as a consequence, for stocks.“Government bond yields offer less of a signal for equity investors than they have in the past,” said Eddie Perkin, chief equity investment officer at Eaton Vance Management. “If bond yields are rising due to optimism about the economy, that should be good for equities, especially since a lot of recession fears had recently been priced into the equity market.”If the yields continue to climb rapidly or the economic picture becomes overly rosy, fueling speculation about a halt to central bank rate cuts, things could “get scary” for stocks, according to Legal & General’s John Roe. But this appears unlikely, he said.Modest investor positioning in stocks also supports the bulls. Despite the MSCI World Index posting a 17% return in 2019, investors have pulled $198 billion from global stocks, while $342 billion surged into bonds as traders sought havens amid trade-war-related concerns.“Bond yields have moved too far year-to-date as we are not expecting a recession,” said Nick Peters, a multi-asset portfolio manager at Fidelity International, which oversees about $413 billion and favors equities. “As a result, we could see a sell-off in bonds without equities being impacted in the short term.”Stocks are traditionally sensitive to sharp moves in debt, with the latest example occurring last month, when the inversion of the yield curve fueled a retreat from riskier assets. But the correlation between bonds and equities remains “resolutely” negative and higher yields shouldn’t pose a problem to stocks, according to JPMorgan.“Higher yields usually go hand in hand with improving inflation and growth outlook,” said JPMorgan strategists led by Mislav Matejka. “This is usually a good combination for equities.”This creates an environment for an equity rotation away from more defensive bond proxies and in favor of more volatile shares that are sensitive to economic growth. Financial and energy sectors have roared ahead in September, leaving the likes of real estate, healthcare and utilities behind.The Bank of America Corp. survey published on Tuesday showed that fund managers don’t expect this outperformance to last, with just 7% of surveyed investors forecasting that value equities will beat growth stocks over the next 12 months.Eaton Vance, Wells Capital Management and GW&K Investment Management are among the funds that have picked up cyclical and value stocks this month. Just like bonds, growth and momentum stocks had gotten “too expensive” and this is a “healthy correction,” said Dan Miller, a director of equities at the $40-billion GW&K.“If we do see growth expectations improve a little and inflation expectations firm a little, that could lead to an environment where yields rise and equity markets still tread water or help us touch new highs,” said Brian Jacobsen, a multi-asset strategist at Wells Capital Management.(Updates with BofA fund manager survey in third-last paragraph.)To contact the reporter on this story: Ksenia Galouchko in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Jon Menon, John ViljoenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
According to the Federal Deposit Insurance Corporation, these are the Triangle's biggest banks by deposit market share.
The number of local bank branches continues to dwindle as big players like McLean-based Capital One Financial Corp. (NYSE: COF), Atlanta-based SunTrust Banks Inc. (NYSE: STI) and Winston-Salem, North Carolina-based BB&T Corp. (NYSE: BBT) cut dozens of branches, according to new data. The D.C. metro area saw its overall number of bank branches drop by 57, from 1,549 to 1,492 from July 1, 2018, to June 30, 2019, according to an annual metro-area level snapshot by the Federal Deposit Insurance Corp. The cuts are the latest in a multiyear trend of banks consolidating branches. In 2012, the D.C. metro area had 1,774 branches, a number that has dropped annually since then even as new banks, such as JPMorgan Chase & Co. and others, continue to enter the local market.
Merrill Lynch was in the process of selling itself to Bank of America. With $639 billion in assets and $619 billion in debt, Lehman’s was the biggest bankruptcy filing in the nation’s history. Wall Street CEOs and government officials had met over the weekend before the filing hoping to find a solution.
Since early 2018, on four separate occasions, Bank of America (NYSE:BAC) stock has traded up to at least $30 per share. Each time, the BAC stock price has subsequently dropped. For its loyal shareholders, however, this should be the time that Bank of America finally breaks through overhead resistance and continues to run.Source: Michael Vi / Shutterstock.com Why's that? Three things are now working in Bank of America's favor: Yields are going the right way, the recession scare triggered by the yield curve inversion has faded, and the bank plans to retire a huge load of BAC stock in coming quarters. Let's dive in. Stock Yields SurgeAll summer, bank stocks had been slumping. It wasn't hard to see why. Bond yields kept going down and down. Both overseas and at home, yields dropped to multi-year -- in some cases all-time -- lows. This is bad news for banks, who prefer higher interest rates, all else held equal.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Tech Stocks You Should Avoid Now Banks have already been paying depositors next to nothing on savings and checking accounts for years. So they get little benefit from rates going down because they aren't going to save money on their funding costs. Meanwhile, the rates they can charge on mortgages and other loans plunged.However, it appears that we've hit an inflection point. Over the past two weeks, the 10-year Treasury Yield has gone from a trough under 1.5% to nearly 2%. That's the equivalent of two 25-basis point Fed rate hikes worth of movement. Similarly, the 30-year yield has gone from 1.9% to 2.4% over the same stretch.That, in turn, will allow banks to make similar adjustments to their mortgage and other long-term loan rates in coming weeks. This will lead to a higher net interest margin (NIM) for banks in general and Bank of America stock in particular. Goodbye Yield Curve InversionOn a related note, the infamous yield curve inversion has gone away. Well, to be technical, it's mostly gone away, depending on which parts of the yield curve you look at in particular. In general, however, long-term interest rates are now higher than short-term rates. This is the normal state of affairs, and has both a positive effect on the general economic outlook and the banking sector's earnings. It's no coincidence that BAC stock has taken off as the yield curve reverted.There's also the sentiment factor to consider. The media loves scary headlines, and the yield curve inversion was a good one. As they so frequently said, yield curve inversions, historically, have almost always been followed by recessions. And that's true. But generally a recession takes 12-18 months to arrive following a yield curve inversion. The fact that rates inverted this summer means we shouldn't expect a big economic downturn until at least fall 2020.On top of that, there's a decent chance the yield curve indicator won't work this time. Yes, I know it's risky to say "this time is different." However, in the past, far fewer people watched this indicator for a sign of recession. Now, with everyone talking about it, policy-makers -- including the Fed -- have adjusted, easing monetary conditions aggressively to offset the potential danger.The fact that everyone saw the yield curve inversion and started planning for it could mean it won't have the predictive power that it used to when it wasn't a commonly-watched recession indicator.In any case, the yield curve is already back to a healthy normal state and is getting steeper (which is better for BAC stock) with almost every passing day. It's still worth watching as conditions could worsen on this front again. But for now, it seems people got overly worried about it. Bank of America Stock-Specific UpsideWhile you can make a great case for the banking sector in general -- and I've bought bank stocks heavily this summer -- let's turn to BAC stock in particular. The most appealing thing about BAC stock is its massive capital return.As you may know, the Fed has been limiting the amount of dividends that large banks can pay as a portion of their profits. This has allowed banks to offer reasonable dividend yields; BAC stock is offering 2.4% at the moment. Rivals like Wells Fargo (NYSE:WFC) and JP Morgan (NYSE:JPM) are offering 4.2% and 2.7% respectively. However, these are fairly small portions of their overall earnings, as the big banks are trading for 10x earnings or less. That means they have earnings yields of 10%+ and could theoretically pay dividends that size as well if regulators didn't constrain them.So, instead of paying large dividends, what are banks doing with the capital? Huge share buybacks. In the case of BAC stock, the bank announced a plan to repurchase more than $30 billion, or close to 12% of the total outstanding share base.Think about that for a second. All else equal, even if net income is flat, Bank of America's earnings go up double digits next year simply due to the much smaller outstanding share count. BAC Stock Is a Strong BuyThe share buyback alone makes Bank of America stock a compelling play. Earnings should rise 10% or more even assuming flat underlying conditions thanks to the share buyback. Now consider that the yield curve is starting to play into Bank of America's favor. The worst of the net interest margin squeeze is finishing up, and they should be able to drive some growth there as well. With the overall economy healthy, there should be plenty of opportunities to make new loans too.If these favorable trends continue, Bank of America should be able to boost its operating income while at the same time sharply reducing its share count. This will lead to earnings growth in the teens. That, in turn, should power strong upside in BAC's stock price once the technical resistance goes down. Look for $35 a share on BAC stock shortly, with it quite possibly hitting $40 in coming months.At the time of this writing, Ian Bezek owned WFC stock. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post The Bank of America Stock Price Is Finally Heading to $35 and Up appeared first on InvestorPlace.
Bank of America is the largest holder of deposits in South Florida, even as its number of physical branches continue to decline. The Charlotte, North Carolina-based bank had 188 branches in the tri-county area as of June 2019, compared to 193 in 2018.
Within five months of opening in Downtown Crossing, Chase put itself within striking distance of several competitors that have been in the neighborhood for years, according to the FDIC data.
Greater Washington’s retail banking market may have new entrants vying for business and upstarts gaining market share, but the biggest players remain the same. The overall top 10 banks by deposits in Greater Washington remain unchanged, according to the data, which is an FDIC snapshot of deposits in the region as of June 30.
Earlier this year marked 52 years since Warren Buffett first bought into the insurance industry. His initial foray was modest, by current standards; he paid $8.6 million dollars to acquire National Indemnity. On the surface, it didn’t look like such a great deal. National was worth $6.7 million, so Buffett paid a premium of $1.9 million to control the company. But controlling the company was not his main goal.What Buffett was really after was National’s float – the cash the company controlled as a result of the natural lag between receiving premiums and paying policies. At the time, National Indemnity controlled $19.4 million in float – that is, it had collected that much in premiums and had not yet received customer claims against it. In controlling the company, Buffett controlled the float. Instead of putting it into safe, low-yield investments – as insurers usually did – Buffett started on his current path, of investing other people’s money into higher-yielding investments. The capital was the customer’s, of course, but the profits on it were Berkshire Hathaway’s (BRK.B – Get Report).National Indemnity remains, to this day, a subsidiary of Berkshire Hathaway. Buffett prefers owning or controlling insurance companies outright, rather than investing in the stock, as ownership comes with control of the float – and Berkshire’s float totaled $114.5 billion at the end of 2017. Some of that money, however, gets invested in insurance companies, and there are currently two insurers in Buffett’s portfolio.We’ve dipped into TipRanks’ Stock Screener database to find out where some of Buffett’s favorite ‘float’ stocks stand in today’s market. Globe Life, Inc.Formerly known as Torchmark, the company changed its name and stock ticker in August of this year to become Globe Life (GL – Get Report). Globe Life is a holding company, owning in its turn a variety of life and health insurance providers. It’s a microcosm of Buffett’s own attitude toward the insurance industry – control the companies that sell the policies, and in your turn control the float.Globe Life, as an investment, is a good fit for Warren Buffett. He has held the stock since 2001, and has enjoyed the 10.5% annualized return it has brought in. GL pays out a modest but reliable dividend of 0.73%, paying 69 cents per share annually. The stock has appreciated 84.7% in the last five years, and is up 27% year-to-date.So, the long-term fundamentals of the stock look healthy, which is what Buffett has always said he looks for in an investment. In an oft-quoted quip, Buffett says, “Our favorite investment horizon is forever.” The most recent review, however, doesn’t rate the stock as highly. GL holds a Moderate Sell rating, and the average price target of $86 suggests a 9% downside from the current share price of $94.Despite the low rating, GL continues to be a solid performer in its industry. In its last reported quarter, the company showed EPS of $1.67, a 1.2% positive surprise from the $1.65 forecast and a 5% increase from the year-ago quarter. Sales were also robust, adding 4% in Q2. In short, the fundamentals show why Buffett continues to own over 6.35 million shares of GL, worth more than $568 million. Travelers Companies, Inc.With Travelers, we get to the second largest casualty insurer in the US, and the third largest underwriter of personal insurance. Travelers (TRV – Get Report) is an industry leader and blue chip giant of the stock market, and the company’s stock performance shows why Buffett has invested over $890 million in 5.9 million shares.TRV is up 22% year-to-date, notably higher than the S&P 500’s 19% gain, and the five-year gain is an impressive 75%. Like most of the stocks that Buffett keeps, TRV pays out a dividend, 2.23% with an annualized payment of $3.28 per share. Travelers has been a Berkshire investment since 2018, but expect Buffett’s company to hold this stake for the long haul. Berkshire Hathaway is already Travelers’ seventh largest investor, with 2.3% of the company’s stock.A weak second quarter pushed TRV shares down in the analysts’ estimation, and the stock currently gets a Hold from the consensus rating. 5-star analyst Mark Dwelle, of RBC Capital, described the company’s situation after the Q2 report: “The quarter was weighed down by higher commercial auto severity and non-catastrophe weather-related claims, even though neither is seen as a significant drag for Travelers' future quarters.” Dwelle gave TRV a hold, but raised his price target by 10% to $160. His target suggests an 8.8% upside to the stock.Shares in TRV are selling for $30.03, and the average price target of $158 gives the stock an upside potential of 8%. Bank of America CorporationInsurance companies are not the only industry that rides on float. Banks, which take customer deposits and hold them until they are withdrawn, are the essence of float. And Buffett has long placed them among his favorite holdings. Per the most recent 13F filing, Berkshire Hathaway’s largest bank holding is Bank of America (BAC – Get Report). Buffett owns 927,248,600 shares of BAC, worth an estimated $26.89 billion. The bank makes up 12.92% of Berkshire’s portfolio.BAC stock has shown solid gains in recent years, appreciating 91% on the five-year horizon. The year-to-date gain is 22%. BAC shares pay out a 2.39% dividend, although the low share price keeps the payout to a modest 72 cents per share.Morgan Stanley analyst Betsy Graseck gives the stock a Buy rating with a $31 price target, saying, “BAC has the most efficient consumer bank in our coverage with an expense ratio of only 45%. The consumer division has generated 1400bp of improvement in the expense ratio over the past five years as it has driven up revenues while bringing expenses down.” Her target implies an modest upside of 3%.Weighing in from Oppenheimer, Chris Kotowski was more bullish. He increased his price target from $42 to $43, suggesting an impressive 42% upside potential to the BAC.Overall, BAC shares have a Moderate Buy rating, based on 4 buys and 3 holds given in the past three months. Shares are selling for $30, and the $34 average price target implies an upside potential of 13%.Visit TipRanks’ Trending Stocks page, and find out what stocks have Wall Street’s undivided attention.