The Institutional Risk Analyst

In an earlier issue of The IRA, we noted that one reason that the GSE shares may be suffering is that the Trump Administration is apparently wrestling with how to take Fannie Mae and Freddie Mac out of conservatorship.

At one point last year, HOOD was up several hundred percent, but has given back much of those gains. Yet the leaders of our finance group have outperformed the broad market.

Industry results in 2024 were reasonably good, but the banking industry is still 200 bp below 2019 levels of asset and equity returns

Fed Chairman Jerome Powell now reports up to National Economic Council head Kevin Hassett.

Private equity portfolio companies are about 10 times as likely to go bankrupt as non-PE-owned companies.

The markets got their rate cut over the past six months and now may have to give some of that back.

If you believe that there is no recession coming in 2025, what is the logical response from an informed investment professional?

The Q3 interest rate rally still leaves the industry with a negative capital position since the average securities yield is only 3%

In dollar terms, the moves in 2023 were tiny vs the post March rally in 2020.

Citigroup leads the pack with a net loss rate of 133 basis points (bp) that is almost five times the average for Peer Group 1 at 27 bp.

BMO arguably has the weakest reserve position among the large Canadian banks....

How much in synthetic CRT transactions will be done in 2024? Our best guess is many hundreds of billions globally...

We remind readers that unrealized losses on securities are still a bigger problem for banks than CRE.

Direct lenders are the pawnbrokers of the 21st Century for subprime commercial borrowers, usually firms financed via leveraged buyouts.

With a budget deficit projected to be $1.8 trillion in 2024, the odds of the FOMC actually controlling inflation are pretty low. 

We think it is reasonable to push expectations of a cut in the target for Fed funds into Q1 2025. 

When NYC is forced to recognize reality, it will already be too late to avoid another fiscal crisis.

Are there bank bargains down in the cellar waiting to be discovered?

McCargo's actions and the fact that the case has not been dismissed in its entirety is very unhelpful given current market conditions.

We see higher credit costs, narrowing NIM and still rising funding costs squeezing the banking industry in Q1 2024...