JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability

Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan. It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC. As such, they are able to sustain high growth without needing too much capital for long periods of time”The return on equity that they’re gener


Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan.
It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC.
As such, they are able to sustain high growth without needing too much capital for long periods of time”The return on equity that they’re gener
JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-09  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, sheet, profitability, banks, morgan, capital, return, modi, sector, high, offers, growth, bullish, vietnamese, visibility, investment


JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability

Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan.

It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC.

As such, they are able to sustain high growth without needing too much capital for long periods of time

“The return on equity that they’re generating is quite high. The return is higher than balance sheet growth,” Modi said during an interview in November. What that implies is Vietnamese banks theoretically do not need to raise capital to fund current growth, but they do so, anyway, for purposes like having higher capital ratios and satisfying regulatory requirements, he explained.

As a result, without putting in a lot of money, investors are potentially able to see balance sheet growth for those banks sustaining for a period of time, with their stocks staying at reasonably high multiples. “That is the attraction of the sector,” Modi said.

In a November note that Modi co-authored, J.P. Morgan analysts said they expect Vietnamese banks under the firm’s coverage to deliver 15% to 21% return on equity over the next two years as they have “started making money on both sides of the balance sheet.” The investment bank is overweight on Vietcombank, Techcombank and Asia Commercial Bank.

Better macroeconomic factors are driving much of the optimism surrounding Vietnamese banks, according to Modi. Improving productivity in export-oriented sectors is drawing foreign direct investments, which improves the visibility of exports and the current account surplus for the next few years, and ensures reasonably adequate domestic liquidity in the country, he explained. Vietnam is said to be benefiting from the ongoing U.S.-China trade war that has resulted in a shift in the global supply chain.

“Since we have that kind of visibility on exports and current account surplus and liquidity, that’s why we’re comfortable forecasting significant amount of visibility on banking system growth and banking system profitability,” Modi said.


Company: cnbc, Activity: cnbc, Date: 2019-12-09  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, sheet, profitability, banks, morgan, capital, return, modi, sector, high, offers, growth, bullish, vietnamese, visibility, investment


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JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability

Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan. It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC. As such, they are able to sustain high growth without needing too much capital for long periods of time”The return on equity that they’re gener


Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan.
It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC.
As such, they are able to sustain high growth without needing too much capital for long periods of time”The return on equity that they’re gener
JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-09  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, investment, banks, morgan, visibility, offers, vietnamese, modi, return, sheet, sector, growth, bullish, profitability, capital, high


JP Morgan is bullish on Vietnamese banks, says sector offers high growth and profitability

Vietnam’s banking sector is an attractive investment opportunity because it is generating a lot of capital and growing fast, according to a senior banker at J.P. Morgan.

It is a rare combination where Vietnamese banks are growing fast and are quite profitable, Harsh Modi, co-head of Asia ex-Japan for financials research at the investment bank, told CNBC.

As such, they are able to sustain high growth without needing too much capital for long periods of time

“The return on equity that they’re generating is quite high. The return is higher than balance sheet growth,” Modi said during an interview in November. What that implies is Vietnamese banks theoretically do not need to raise capital to fund current growth, but they do so, anyway, for purposes like having higher capital ratios and satisfying regulatory requirements, he explained.

As a result, without putting in a lot of money, investors are potentially able to see balance sheet growth for those banks sustaining for a period of time, with their stocks staying at reasonably high multiples. “That is the attraction of the sector,” Modi said.

In a November note that Modi co-authored, J.P. Morgan analysts said they expect Vietnamese banks under the firm’s coverage to deliver 15% to 21% return on equity over the next two years as they have “started making money on both sides of the balance sheet.” The investment bank is overweight on Vietcombank, Techcombank and Asia Commercial Bank.

Better macroeconomic factors are driving much of the optimism surrounding Vietnamese banks, according to Modi. Improving productivity in export-oriented sectors is drawing foreign direct investments, which improves the visibility of exports and the current account surplus for the next few years, and ensures reasonably adequate domestic liquidity in the country, he explained. Vietnam is said to be benefiting from the ongoing U.S.-China trade war that has resulted in a shift in the global supply chain.

“Since we have that kind of visibility on exports and current account surplus and liquidity, that’s why we’re comfortable forecasting significant amount of visibility on banking system growth and banking system profitability,” Modi said.


Company: cnbc, Activity: cnbc, Date: 2019-12-09  Authors: saheli roy choudhury
Keywords: news, cnbc, companies, investment, banks, morgan, visibility, offers, vietnamese, modi, return, sheet, sector, growth, bullish, profitability, capital, high


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In 2019, almost every investment worked

The S&P 500 is up more than 25% and counting. Treasurys, which tend to fall when risk assets rally, also gained in 2019. For stock investors specifically, it was hard to guess wrong. A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year. All 11 S&P 500 sectors are ending the year with positive returns.


The S&P 500 is up more than 25% and counting.
Treasurys, which tend to fall when risk assets rally, also gained in 2019.
For stock investors specifically, it was hard to guess wrong.
A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year.
All 11 S&P 500 sectors are ending the year with positive returns.
In 2019, almost every investment worked Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-12-02  Authors: yun li
Keywords: news, cnbc, companies, sectors, investment, 500, rates, investors, 2019, stock, sheet, markets, corporate, worked, returns


In 2019, almost every investment worked

Traders work on the floor of the New York Stock Exchange Lucas Jackson | Reuters

This year is shaping up to be one of the best ever for investors of all stripes with nearly every single asset class on track to finish 2019 in the green. From stocks to government debt to corporate bonds to commodities, no matter where you went, you reaped a profit this year. The S&P 500 is up more than 25% and counting. Treasurys, which tend to fall when risk assets rally, also gained in 2019. Oil, gold and corporate bonds all scored double-digit returns. For stock investors specifically, it was hard to guess wrong. A look at the S&P 500 companies’ internal performance shows only 64 names, or 12%, are down this year. All 11 S&P 500 sectors are ending the year with positive returns. Tech is the biggest winner this year with a 41.5% gain. Communication services, industrials, financials, real estate, consumer sectors all skyrocketed more than 20% this year.

‘Buy everything’

It might seem a little too good to be true as the markets have been grappling with a handful of risks that are almost unprecedented — a costly trade war with China and a bid to impeach the president. But thanks to the Federal Reserve for coming to the rescue. The central bank pulled a 180, cutting rates three straight times this year. The Fed has also been pumping billions into the financial system after the mid-September tumult in very short-term lending markets. “We’ve gotten three rate cuts as we know and a dramatic rise in the size of their balance sheet in a very short period of time,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. The markets “see an expansion of the Fed’s balance sheet to the extent it’s grown and the only response is, it’s QE. Buy everything.” The stimulus has lowered interest rates, pushing all assets up at the same time.

Will the markets hold up?


Company: cnbc, Activity: cnbc, Date: 2019-12-02  Authors: yun li
Keywords: news, cnbc, companies, sectors, investment, 500, rates, investors, 2019, stock, sheet, markets, corporate, worked, returns


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The Fed is looking at a ‘standing repo’ operation to handle overnight funding issues

The minutes noted that Fed officials also met by videoconference on Oct. 10 to discuss a strategy. The repo market is considered the plumbing of the U.S. financial system as it is the place where banks go for the overnight loans they use to fund operations. The standing repo idea is a popular one on Wall Street. In addition to the standing repo, officials discussed “modestly sized, relatively frequent repo” operations that nonetheless would not be permanent. Fed officials said they will continue


The minutes noted that Fed officials also met by videoconference on Oct. 10 to discuss a strategy.
The repo market is considered the plumbing of the U.S. financial system as it is the place where banks go for the overnight loans they use to fund operations.
The standing repo idea is a popular one on Wall Street.
In addition to the standing repo, officials discussed “modestly sized, relatively frequent repo” operations that nonetheless would not be permanent.
Fed officials said they will continue
The Fed is looking at a ‘standing repo’ operation to handle overnight funding issues Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-20  Authors: jeff cox
Keywords: news, cnbc, companies, handle, officials, issues, looking, fed, sheet, rate, minutes, funding, overnight, market, reserves, standing, federal, operation, repo


The Fed is looking at a 'standing repo' operation to handle overnight funding issues

U.S. Federal Reserve Chairman Jerome Powell speaks during the “The Economic Outlook and Monetary Policy” panel discussion hosted by the Swiss Institute of International Studies at the University of Zurich in Zurich, Switzerland September 6, 2019.

One option that received considerable discussion was a so-called standing repo facility – essentially a mechanism where the Fed will step in whenever needed to supply banks with reserves in exchange for ultra-safe collateral like Treasury debt.

The minutes noted that Fed officials also met by videoconference on Oct. 10 to discuss a strategy.

The discussions came about a month and a half after funding pressures sent repo rates soaring and the fed funds rate briefly above its target range. The repo market is considered the plumbing of the U.S. financial system as it is the place where banks go for the overnight loans they use to fund operations.

At their October 29-30 meeting, Federal Open Market Committee members weighed several options ahead for keeping the repo market stable and maintaining the central bank’s key lending rate within its target range.

Federal Reserve officials are continuing to look at ways to make sure funding pressures in the overnight lending market don’t cause a problem again.

The standing repo idea is a popular one on Wall Street. But policymakers said they are not yet ready to make any decisions, instead deciding to continue to watch how market operations instituted since the September problems are working.

A standing repo “would likely provide substantial assurance of control over the federal funds rate, but use of the facility could become stigmatized, particularly if the rate was set at a relatively high level,” minutes from the October meeting stated.

“And by effectively standing ready to provide a form of liquidity on an as-needed basis, such a facility could increase the risk that some institutions may take on an undesirably high amount of liquidity risk,” the minutes said.

In addition to the standing repo, officials discussed “modestly sized, relatively frequent repo” operations that nonetheless would not be permanent.

There’s been some debate about how to see the operations the Fed has instituted to handle the repo issues, which were attributed to a high degree of Treasury auction settlements and corporate tax payments that drained liquidity from the system.

Fed officials have repeatedly emphasized that the efforts to expand the balance sheet, with the aim of increasing bank reserves, is not akin to the quantitative easing program used to stimulate the economy during and after the financial crisis.

However, markets have treated it to some extent as a “QE4” type of operation.

The balance sheet has expanded about 7.4% since the repo issues to near $4.1 trillion, while the S&P 500 has gained about 4.5%. Bank reserves, meanwhile, have grown little – just $11.6 billion since Sept. 11, or less than 1%.

Fed officials said they will continue to examine the issue.

Members “commented on the need to carefully evaluate these design choices to guard against the potential for moral hazard, stigma, disintermediation risk, or excessive volatility in the Federal Reserve’s balance sheet,” the minutes said.


Company: cnbc, Activity: cnbc, Date: 2019-11-20  Authors: jeff cox
Keywords: news, cnbc, companies, handle, officials, issues, looking, fed, sheet, rate, minutes, funding, overnight, market, reserves, standing, federal, operation, repo


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Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more

Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019. Here are the biggest calls on Wall Street on Wednesday:RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders. “With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareho


Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019.
Here are the biggest calls on Wall Street on Wednesday:RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders.
“With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareho
Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-13  Authors: michael bloom
Keywords: news, cnbc, companies, worries, apple, biggest, day, significant, cash, taketwo, interactive, analyst, worlds, balance, nike, wednesdayrbc, flow, calls, strength, sheet


Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more

Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019.

Here are the biggest calls on Wall Street on Wednesday:

RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders.

“With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareholders. Tariffs, success/costs of new service offerings, and phone cycle slowdown concerns likely to headline investor worries, but our longer-term outlook remains favorable.”

Read more about this call here.


Company: cnbc, Activity: cnbc, Date: 2019-11-13  Authors: michael bloom
Keywords: news, cnbc, companies, worries, apple, biggest, day, significant, cash, taketwo, interactive, analyst, worlds, balance, nike, wednesdayrbc, flow, calls, strength, sheet


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Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more

Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019. Here are the biggest calls on Wall Street on Wednesday:RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders. “With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareho


Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019.
Here are the biggest calls on Wall Street on Wednesday:RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders.
“With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareho
Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-13  Authors: michael bloom
Keywords: news, cnbc, companies, worries, apple, biggest, day, significant, cash, taketwo, interactive, analyst, worlds, balance, nike, wednesdayrbc, flow, calls, strength, sheet


Here are the biggest analyst calls of the day: Apple, Nike, Take-Two Interactive & more

Tim Cook at the Apple launch event in Cupertino Calif. on Sept. 10th, 2019.

Here are the biggest calls on Wall Street on Wednesday:

RBC said in its initiation of Apple that the company has strength in its balance sheet to deliver significant cash flow back to shareholders.

“With arguably the world’s most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers’ lives and the balance sheet strength to return significant cash flow to shareholders. Tariffs, success/costs of new service offerings, and phone cycle slowdown concerns likely to headline investor worries, but our longer-term outlook remains favorable.”

Read more about this call here.


Company: cnbc, Activity: cnbc, Date: 2019-11-13  Authors: michael bloom
Keywords: news, cnbc, companies, worries, apple, biggest, day, significant, cash, taketwo, interactive, analyst, worlds, balance, nike, wednesdayrbc, flow, calls, strength, sheet


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Boeing: Balance sheet can handle settlements over grounded 737 Max

Boeing can handle the settlements it’s likely to pay to airlines over the forced grounding of its 737 Max jet, the company’s new chairman told CNBC on Tuesday. “There’s no question there will be a fair number of settlements,” said David Calhoun, a Blackstone executive and longtime Boeing board member. The 737 Max fleet of nearly 500 planes has been grounded across the globe since mid-March following two crashes over less than five months that killed 346 people combined. “We put our future in the


Boeing can handle the settlements it’s likely to pay to airlines over the forced grounding of its 737 Max jet, the company’s new chairman told CNBC on Tuesday.
“There’s no question there will be a fair number of settlements,” said David Calhoun, a Blackstone executive and longtime Boeing board member.
The 737 Max fleet of nearly 500 planes has been grounded across the globe since mid-March following two crashes over less than five months that killed 346 people combined.
“We put our future in the
Boeing: Balance sheet can handle settlements over grounded 737 Max Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-05  Authors: jessica bursztynsky, leslie josephs
Keywords: news, cnbc, companies, balance, told, grounded, airlines, southwest, boeing, million, handle, grounding, sheet, max, 737, settlements, calhoun, squawk


Boeing: Balance sheet can handle settlements over grounded 737 Max

Boeing can handle the settlements it’s likely to pay to airlines over the forced grounding of its 737 Max jet, the company’s new chairman told CNBC on Tuesday.

“There’s no question there will be a fair number of settlements,” said David Calhoun, a Blackstone executive and longtime Boeing board member. “Our company and our balance sheet has provided for what we think that resolution will be.”

The 737 Max fleet of nearly 500 planes has been grounded across the globe since mid-March following two crashes over less than five months that killed 346 people combined. The grounding has forced airlines to cancel thousands of flights, driven up costs and dented airlines’ profits.

To make up for the expected loss in services, Boeing in the second quarter took a $4.9 billion after-tax charge to compensate airlines but final amounts are unknown because regulators haven’t yet lifted the grounding.

But airlines are getting hit. American Airlines said last month that the grounding would reduce its pretax income by $540 million this year, up from an estimate of $400 million it made in July.

Likewise, Southwest Airlines, the largest U.S. operator of the Max, said late October that the grounding cost it $210 million in revenue in the quarter and $435 million in revenue in the first nine months of the year. The airline added that it expects “the damages to grow into 2020.”

“We’re not happy about our situation,” Southwest CEO Gary Kelly told CNBC’s “Squawk on the Street” in October. “We put our future in the hands of Boeing in the Max and we’re grounded. I want to settle with Boeing to settle our damages.”

It’s a problem that Calhoun said he understands.

“There’s no question: We have let him down. He knows [the Max] has served him well and he knows it has served his safely,” Calhoun said of Kelly on “Squawk Box.” “But this gap, where he needs capacity and it’s not there, is a real problem for him. Anybody at that moment in time has to make the decision that we’re going to consider other alternatives.”

Boeing’s current rival to the 737 Max is Airbus.

“We’re going to have to step up to the plate if and when that day happens and put our best foot forward,” Calhoun added.

Shares of Boeing were up about 1.2% in premarket trading.

-CNBC’s Leslie Josephs contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-11-05  Authors: jessica bursztynsky, leslie josephs
Keywords: news, cnbc, companies, balance, told, grounded, airlines, southwest, boeing, million, handle, grounding, sheet, max, 737, settlements, calhoun, squawk


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Citi predicts the greenback could weaken ‘substantially’ — to as low as 85 on the dollar index

The U.S. dollar index could fall to as low as 85 as the Federal Reserve grows its balance sheet again by purchasing more bond assets, a Citi strategist said Thursday. The dollar index is a measure of the greenback’s value relative to a basket of currencies, largely made up of the United States’ most significant trading partners. The Fed increases its balance sheet by buying up bonds and Treasurys as a way of pumping cash into the market. That’s because the Fed’s balance sheet has expanded quickl


The U.S. dollar index could fall to as low as 85 as the Federal Reserve grows its balance sheet again by purchasing more bond assets, a Citi strategist said Thursday.
The dollar index is a measure of the greenback’s value relative to a basket of currencies, largely made up of the United States’ most significant trading partners.
The Fed increases its balance sheet by buying up bonds and Treasurys as a way of pumping cash into the market.
That’s because the Fed’s balance sheet has expanded quickl
Citi predicts the greenback could weaken ‘substantially’ — to as low as 85 on the dollar index Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-11-01  Authors: abigail ng
Keywords: news, cnbc, companies, index, sheet, low, pause, going, fact, bond, greenback, fed, substantially, dollar, weaken, citi, balance, predicts


Citi predicts the greenback could weaken 'substantially' — to as low as 85 on the dollar index

The U.S. dollar index could fall to as low as 85 as the Federal Reserve grows its balance sheet again by purchasing more bond assets, a Citi strategist said Thursday.

“Our latest projections are that it would weaken even further — maybe to the high 80s, perhaps even as low as 85,” Mohammed Apabhai, head of Asia Pacific trading strategies group at Citi, told CNBC’s “Street Signs.” Technical analyst Daryl Guppy said last year that 85 is a “historical support level” for the dollar.

The dollar index is a measure of the greenback’s value relative to a basket of currencies, largely made up of the United States’ most significant trading partners.

The Fed increases its balance sheet by buying up bonds and Treasurys as a way of pumping cash into the market. That in turn makes bond yields — which move inversely to prices — drop as the bond prices rise. The dollar usually weakens when bond yields fall.

“We’re basically saying that the Fed is probably going to be the most dovish of all the central banks, regardless of the fact that … they’ve put rates on pause,” he said. The U.S. central bank on Wednesday cut interest rates for the third time this year, but signaled that a pause was ahead.

That’s because the Fed’s balance sheet has expanded quickly, by more than $205 billion since the beginning of September, Apabhai explained. In comparison, an increase of that size would take the European Central Bank more than a year to complete, he said.

“For us, the fact that the Fed has gone into pause mode is not really as significant as the fact that the balance sheet of the Fed is going to expand,” he said. “We’re basically looking at substantially weaker levels on the dollar.”

If the dollar index were to weaken to 85, the euro could strengthen to 1.21 against the greenback, Apabhai predicted. “That’s … going to be very positive for emerging market equities.”


Company: cnbc, Activity: cnbc, Date: 2019-11-01  Authors: abigail ng
Keywords: news, cnbc, companies, index, sheet, low, pause, going, fact, bond, greenback, fed, substantially, dollar, weaken, citi, balance, predicts


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Worries grow over the Fed’s efforts to fix funding issues: ‘This is all likely to get much worse’

The central bank has been working feverishly to address issues that popped up more than a month ago in the repo market, the overnight lending place where banks go to borrow money from each other. A cash crunch led to a spike in several rates, leading the Fed to institute programs to maintain proper liquidity levels. “The repo market has been drugged into submission by the Fed,” said Jim Bianco, head of Bianco Research. The effort also is aimed at keeping the Fed’s own overnight funds rate within


The central bank has been working feverishly to address issues that popped up more than a month ago in the repo market, the overnight lending place where banks go to borrow money from each other.
A cash crunch led to a spike in several rates, leading the Fed to institute programs to maintain proper liquidity levels.
“The repo market has been drugged into submission by the Fed,” said Jim Bianco, head of Bianco Research.
The effort also is aimed at keeping the Fed’s own overnight funds rate within
Worries grow over the Fed’s efforts to fix funding issues: ‘This is all likely to get much worse’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-10-22  Authors: jeff cox
Keywords: news, cnbc, companies, market, rate, rates, fed, issues, worries, grow, sheet, reserves, likely, funding, repo, younger, overnight, feds, target, efforts, fix, worse


Worries grow over the Fed's efforts to fix funding issues: 'This is all likely to get much worse'

Wall Street is getting worried that the Federal Reserve’s aggressive efforts to control short-term borrowing rates have run into some potholes, with more danger ahead. The central bank has been working feverishly to address issues that popped up more than a month ago in the repo market, the overnight lending place where banks go to borrow money from each other. A cash crunch led to a spike in several rates, leading the Fed to institute programs to maintain proper liquidity levels. While the effort has worked fairly well so far — rates rose last week, though not merely as much as in mid-September — finance professionals fear that the market problems are not fixed and funding issues can happen again.

“The repo market has been drugged into submission by the Fed,” said Jim Bianco, head of Bianco Research. “That’s fine for a while. But what I am getting concerned about is that they’re not figuring a way to get it off the drug and get it back to normal, and that will be a problem longer-term for them.” Investors have long complained about the Fed hand-holding the market, injecting trillions of dollars in liquidity and keeping interest rates artificially low during and after the financial crisis. This is a different situation, though. Rather than looking to goose the economy back to health, the Fed is now using its balance sheet to make sure banks have enough reserves and an adequate amount of capital is flowing through the system to keep things running efficiently. The effort also is aimed at keeping the Fed’s own overnight funds rate within the 25 basis point target range it employs.

Likely ‘to get worse … before it gets better’

To do so, the central bank earlier this month announced a new bond-buying program that initially will target about $60 billion a month of short-term Treasury bills. The program began last week with about $20 billion worth of purchases. As the balance sheet expansion kicked off, the funds rate, pushed to the upper end of its target range, hitting 1.9% for a few days, or 10 basis points above the interest on excess bank reserves, which is supposed to serve as a guardrail for the funds rate. The repo rate similarly rose, eclipsing 2% at one point. Market pros worry that a confluence of factors will make the Fed’s market balancing act difficult. Bianco insists that the Fed is not being discerning enough about credit quality in providing cash in exchange for collateral; others are concerned with what happens as the year draws to a close and banks are more focused on shoring up their liquidity mandates than keeping cash flowing in the overnight markets. “With year-end coming up, this is all likely to get much worse, in our view, before it gets better,” J.P. Morgan Chase fixed income analysts led by Joshua Younger said in a note. Younger pointed to last week’s rate bump as indications that all is not settled in the repo markets. The Fed has said that large settlements of Treasury auctions were at the root of September’s disturbance — along with payment of corporate income taxes — that sapped money out of the system. But Younger said such events, rather than serving as excuses, “look much more like warnings.” “Given the benefits of our newfound perspective, we recommend viewing these moves as highlighting the limitations of the Fed’s chosen solution to their operational issues,” he wrote. In addition to buying T-bills, the Fed has been conducting a series temporary operations to keep the overnight markets humming.

The balance sheet is ‘a much bigger deal’


Company: cnbc, Activity: cnbc, Date: 2019-10-22  Authors: jeff cox
Keywords: news, cnbc, companies, market, rate, rates, fed, issues, worries, grow, sheet, reserves, likely, funding, repo, younger, overnight, feds, target, efforts, fix, worse


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Airbnb’s cash numbers could show that it’s not another WeWork in the making

Airbnb, the room-sharing site that plans to go public next year, has more than $3 billion on its balance sheet, according to a person familiar with the matter. Following a report from the Information earlier on Thursday, which showed the company’s loss doubled in the first quarter from a year earlier, Airbnb’s cash position could soothe investors concerned that the company is poised to be the next WeWork. Airbnb, a website that connects homeowners with travelers, is a much different type of busi


Airbnb, the room-sharing site that plans to go public next year, has more than $3 billion on its balance sheet, according to a person familiar with the matter.
Following a report from the Information earlier on Thursday, which showed the company’s loss doubled in the first quarter from a year earlier, Airbnb’s cash position could soothe investors concerned that the company is poised to be the next WeWork.
Airbnb, a website that connects homeowners with travelers, is a much different type of busi
Airbnb’s cash numbers could show that it’s not another WeWork in the making Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-10-17  Authors: deirdre bosa
Keywords: news, cnbc, companies, report, numbers, quarter, public, making, airbnbs, billion, airbnb, york, wework, support, sheet, cash, earlier, person


Airbnb's cash numbers could show that it's not another WeWork in the making

Brian Chesky, CEO and co-founder of Airbnb, speaks to the Economic Club of New York at a luncheon at the New York Stock Exchange (NYSE) in New York, U.S. March 13, 2017.

Airbnb, the room-sharing site that plans to go public next year, has more than $3 billion on its balance sheet, according to a person familiar with the matter.

Following a report from the Information earlier on Thursday, which showed the company’s loss doubled in the first quarter from a year earlier, Airbnb’s cash position could soothe investors concerned that the company is poised to be the next WeWork.

In addition to the $3 billion on its balance sheet, which is down from about $3.5 billion as of the end of March, the company has never touched its $1 billion line of credit, said the person, who asked not to be named because the numbers are confidential.

Airbnb, a website that connects homeowners with travelers, is a much different type of business than WeWork, which leases massive office buildings and rents out the space. Still, in an environment where public market investors are dumping shares of cash-burning companies Lyft and Uber and rejecting WeWork’s numbers, Airbnb needs to show the market that it has a much different story to tell about a path to profitability.

According to the Information, which cited undisclosed financial data, Airbnb’s sales and marketing investments rose 58% year over year to $367 million in the first quarter and marketing spend is expected to come in above the $1.1 billion spent in 2018. Revenue reportedly grew 31% from a year earlier to $839 million, while expenses climbed 47%.

In a statement about the earlier report, Airbnb said, “We can’t comment on the figures, but 2019 is a big investment year in support of our hosts and guests.”

— CNBC’s Ari Levy contributed to this report

WATCH: Airbnb executive on company’s support of UAW members, potential IPO


Company: cnbc, Activity: cnbc, Date: 2019-10-17  Authors: deirdre bosa
Keywords: news, cnbc, companies, report, numbers, quarter, public, making, airbnbs, billion, airbnb, york, wework, support, sheet, cash, earlier, person


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