The Institutional Risk Analyst

Owners of crypto tokens hold nothing except an option to sell their flutter to a greater fool. The real worry for the future is that another financial debacle — à la FTX — where crypto was revealed to be pure fraud will surprise the markets as burned punters flee their speculations. The fact that crypto prices are increasingly being supported by stock issuance and schemes like perpetual futures contracts (Perps) suggests the end of the game is nigh.

Smaller issuers of stable coins will soon be competing with Verizon (VZN) and JPMorgan (JPM), while platforms offering turnkey coin solutions will multiply like Lantern Flies. 

We all were more than a little amused to learn that in the most recent bank stress tests the Federal Reserve Board decided to ignore the massive financial and reputation risk in private equity and private credit. With cash bids for private assets plummeting, and sponsors in full flight due to prospective litigation by jilted clients, how do the Fed and other bank regulators retain any credibility? Our friend Nom de Plumber had an appropriate observation...

The intriguing thing about private coin empires is that they are obviously not a positive for existing payment systems, yet neither are they dependent upon crypto. Larger sponsors may be able to create exclusive coin ecosystems without actually touching crypto assets at all. Fiat to AMZN coin, “ZON,” is really all that the sponsor needs.

As of yesterday's close, BK was right behind SoFi Technology (SOFI) leading the bank surveillance group higher. BK closed yesterday at 14x forward earnings and 1.6x book value, roughly the same PE multiple as JPM but at a lower book value multiple.

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.

TD was up about 6% over the past three months, the only name in our test group with a positive three-month market return, of note.

Some of the largest banks by assets have dropped from the top quartile into the bottom half of the distribution for the top 100 banks

And just why do financial firms like HOOD, SoFi Technologies (SOFI) and Block (XYZ) talk about EBITDA in their investor materials?

We think it is notable that AMP has underperformed the other members of the group other than SCHW over the past year.

GS had not appeared in the top 25 since we began the indices a year ago, while MS had made it three times.

The SVB duration management from 2020 onward was recklessly negligent by any reasonable standard

As and when GS can exit the loss leading credit card relationship with AAPL, the performance of the business should improve significantly.

Last year, when a lot of people were predicting the demise of SCHW, we told our readers to calm down.

WFC is not even out of dodge yet, but TD has cut off the fingers of one hand in yakuza style and is now headed for years of misery

SCHW needs to take advantage of their strong operating leverage and repair some needless damage done during COVID by inept bank management.

GS saw loss provisions fall slightly in Q2 2024 to $282 million but the number was still $600 million in the first half of the year...

The larger banks led the way in January and February, but today the top 25 names in terms of total return include many smaller banks.

Big banks have big CRE exposures, too. So what drives this marvelous progression up the wall of worry?

BAC is in big trouble, not due to credit but because of sub-par asset returns. BAC’s return on assets has fallen to just 0.8% in Q1 2024