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Thread: Watching the Banks

  1. #49

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    Default Re: Watching the Banks

    Reality is starting to set in for the banks in a zero interest rate policy environment. The more the banks drop, the more likely dividend cuts are to occur, but if buybacks are suspended, free cash could keep dividends from disappearing.
    Wells Fargo (WFC), one of the largest U.S. banks, has acknowledged that it will be a casualty. It announced late last month that its third-quarter dividend will need to be reduced, from its current 51 cents a share.

    Research firm IHS Markit is projecting that the bank’s payout will be slashed by 60%, to 20 cents a share.

    One tail wind for dividends is that many companies—large banks in particular— have cut back on share repurchases. Instead of directing cash to what had become a popular way to return capital to shareholders in recent decades, companies might now have spare cash for dividends.

    Last year, Nijenhuis says, S&P 500 members spent roughly $800 billion on buybacks. He expects that figure to be halved this year. “That does make paying a dividend much easier,” he observes.
    https://www.barrons.com/articles/div...ut-51594306801

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  3. #50

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    Default Re: Watching the Banks

    Sitting on moving average and trendline support. Need the "value stocks" to join in if the market isn't going to collapse. What's it going to be?

    xlf2.JPG

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  5. #51

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    Default Re: Watching the Banks

    While Robinhooders watch TSLA, NKLA, AAPL, the banks put in a higher low.

    xlf3333.JPG

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  7. #52

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    Default Re: Watching the Banks

    XLF now above June highs.

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  9. #53

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    Default Re: Watching the Banks

    Second weekly close above June highs, leaning bullish towards a recovery.

    xlf highs.jpg

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  11. #54

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    Default Re: Watching the Banks

    That large gap is a little scary.
    May the force be with us.


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  13. #55

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    Default Re: Watching the Banks

    About a month ago, we highlighted a bearish divergence in the semiconductor ETF (SMH) that indicated a potential rotation away from this growth-oriented group into more value plays. That rotation played out fairly well, as the SMH has indeed pulled back and broken its swing low from February.

    Now we are detecting a similar bearish pattern in the Financial Sector ETF NYSEARCA: XLF as well as many of the big financial stocks and regional bank names.
    Video could have been one minute instead of ten, but David Kellar is calling for a move lower in banks. Sure doesn't help that NMR and CS are down over 10% today.



    https://www.seeitmarket.com/bearish-...ector-etf-xlf/

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  15. #56

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    Default Re: Watching the Banks

    The Fed last week said 23 of the largest banks had adequate capital to withstand a crisis, a necessary hurdle for banks to pass to return money to shareholders. The central bank had restricted shareholder payouts during the pandemic, asking banks to preserve capital in case the recession led to a wave of soured loans.
    MS, GS, BAC, JPM, WFC all increasing dividends by a substantial amount after getting the green light. A very bullish move.

    Banks are probably the best all around value play that's left out there. Oil sector can get another push higher, but it's very cyclical, prone to big swings, and will sell off well before the numbers start to show peaking inventories. Sold my only oil sector stock two weeks which I picked up when oil was some $30 cheaper. The fed turmoil hit my stop and even though there is probably more upside, oil stocks are always just a swing trade for me and this just happened to be a wonderful snap back rally.

    Bank stocks though, those are long term holds, especially when dividends are rising.

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  17. #57

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    Default Re: Watching the Banks

    Quote Originally Posted by Bullitt View Post
    MS, GS, BAC, JPM, WFC all increasing dividends by a substantial amount after getting the green light. A very bullish move.

    Banks are probably the best all around value play that's left out there. Oil sector can get another push higher, but it's very cyclical, prone to big swings, and will sell off well before the numbers start to show peaking inventories. Sold my only oil sector stock two weeks which I picked up when oil was some $30 cheaper. The fed turmoil hit my stop and even though there is probably more upside, oil stocks are always just a swing trade for me and this just happened to be a wonderful snap back rally.

    Bank stocks though, those are long term holds, especially when dividends are rising.
    I just looked at MS and GS.

    Both are at their highest point since 2008, and before that, since the 2000 bubble crash.

    Am I seeing it wrong? Banks seem in the same territory they’ve been in during recent crashes.



    Sent from my iPhone using TSP Talk Forums

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  19. #58

    Default Re: Watching the Banks

    Here's the monthly chart of GS and MS going back to 1999...

    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Please do your own due diligence.

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  21. #59

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    Default Re: Watching the Banks

    On a valuation basis, financials are the "cheapest" sector out there and are still well below 2000 and 2008 valuations. See charts below.

    https://www.yardeni.com/pub/mktbriefsppesecind.pdf

    Banks also passed their stress tests and have been allowed to begin buybacks and dividend increases as a result. Their balance sheets are in much better shape than 2008. The problem right now is rates aren't doing what the market expected them too. Rates are actually dropping again despite all this hyper inflation nonsense. Banks would be more profitable if rates were higher since low rates are somewhat of a headwind.

    Financials also are underweight the S&P 500 relative to historical standards. (Currently, financials are around 11.27%, chart below only goes to Oct 2020. Side note: IT is either in a new paradigm or the danger zone.)

    https://einvestingforbeginners.com/w...r-weight-3.png

    As far as the technical analysis goes, I think it has some bearing on the short term, possibly intermediate term, but resistance lines from 12 or 21 years ago don't mean anything.

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  23. #60

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    Default Re: Watching the Banks

    Big week for banks earnings and so far not looking too good. Actually, they are good, but it's another case of "how will the market react". In this case, the news has been solid, but they're selling off. Yields are the biggest drag right now. Low yields are detrimental to bank earnings going forward.

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