Posts filed under “Analysts”
It is all but unavoidable: Assume the average age of the senior echelons of most research departments are age 50-60; That leads us to a top level of management who all came of age during the 1960s & ’70s — quite a prolific and influential period for music. (Most of them probably wouldn’t have passed the industry mandated urine test back when they were in college)
Which brings us to today’s tidbit: An extended Led Zeppelin reference-fest in the market commentary by Bernie McSherry of Cuttone & Co. It includes paragraphs such as this one:
“Corporate guidance has been positive in recent months and assuming that there hasn’t been a widespread communication breakdown, analyst expectations of a 184% YOY increase in profits for the S&P 500 should be exceeded. Banking stocks in particular should lead the way, however, if Alcoa’s disappointing report is any indication of what we can expect, this earnings season may turn out to be a heartbreaker.”
I spy 2 Zep songs in that paragraph alone, 7 in the article all told (see first comment for my short list). Did I miss any?
Hat tip Paul, Dow Jones Market Talk
Is She Buying the Stairway To Heaven?
Cuttone & Co., January 12, 2010
Alcoa reported a Q4 2009 loss of $277 million loss, on lower sales and higher costs. Losses narrowed from a year ago when they were $1.2 billion dollars. Pro forma operating profits were 1 cent, missing analysts estimates of a 6 cent profit, and begging the question of HTF can you report a per share…Read More
Invictus is a bulge bracket asset manager with $100+ million AUM. He has no patience for money losers, hacks, partisans pretending to be financial analysts . . . this is the first in a series of critical looks at analysts, media, economists, financial TV. Feel free to share any thoughts in comments. Here’s Invictus: ~~~…Read More
I hereby invoke Bob Farrell’s Rule #9: When all the experts and forecasts agree — something else is going to happen. Let’s look at the forecasted year-end 2010 levels for the S&P500 and S&P500 earnings: Firm Strategist 2010 Close 2010 EPS Bank of America David Bianco 1275 73 Bank of Montreal Ben Joyce 71 Barclays…Read More
In today’s Baron’s, Mike Santoli discusses “A forecaster worth listening to sees more gains ahead.” He has penned missives such as “A Bear Is in Sight” and “Why This Rally Is Really Different” Santoli adds: This guy, though, is the one whose dispatches I saw as the very uncertain market trajectory took shape, illuminating the…Read More
> Interesting discussion on one of my favorite subjects — The Folly Of Forecasts — on NPR with Chicago/Austrian economist Russ Roberts, now at George Mason University. click here for audio > Previously: Apprenticed Investor: The Folly of Forecasting Barry Ritholtz TheStreet.com, June 07, 2005 http://www.thestreet.com/story/10226887/apprenticed-investor-the-folly-of-forecasting.html Source: The Folly Of Economic Forecasts NPR, December 7,…Read More
Invictus is a street insider, a long-suffering “lifer” whose close work with Wall Street research teams gives him unique insight into the current strategist spat. Enjoy: ~~~ It was noted back in October that a feud seemed to be simmering between the former Merrill Lynch Chief North American Economist David Rosenberg (now at Gluskin Sheff)…Read More
Barron’s Mike Santoli points out a short list of market myths that currently seem to have currency amongst the investing and chattering classes. The five are: • “The dollar is collapsing.” • “Portfolio managers are trailing the market and might need to rush into stocks.” • “The hoopla over Dow 10,000 shows that Wall Street…Read More
> Citigroup and BAC jump on Friday afternoon; JPM and then the S&P 500 followed: > > Stocks tanked on Friday with the ugly employment report. But stocks rebounded, led by a big rally in major banks stocks. Yesterday Goldie touted the big bank stocks. Did you get a Friday afternoon call? The S&P 500…Read More
U.S. stocks rebounded today, aided by a rally in financials. Why was the group strong? Because a team of analysts at a well-known Wall Street firm upgraded the large banks sector. And why did they do that? Bloomberg gives us the lowdown in “Wells Fargo, Biggest U.S. Banks Raised by Goldman”:
Wells Fargo & Co., JPMorgan Chase & Co. and the biggest U.S. banks were raised to “attractive” from “neutral” by Goldman Sachs Group Inc., which said share prices don’t reflect prospects for earnings growth.
“We believe this difference in earnings power hasn’t been fully reflected in share prices,” New York-based analysts led by Richard Ramsden wrote in a note to clients today. “We estimate that normalized earnings for large banks are 39 percent higher than in 2007 despite the 36 percent decline in share prices.”
Wells Fargo, based in San Francisco, was upgraded by Goldman to “buy” from “neutral” after its tangible assets per share increased 70 percent in the second quarter. “The reason is simple: Wells bought Wachovia at a depressed price,” Ramsden said. Banks have increased earnings with acquisitions that will add to earnings over the “long term,” he said.
Wow, pretty powerful stuff, eh? Then again, maybe not. You see, if you go back and look at what Goldman said in late-January, when most bank stocks were trading at far lower levels than they are now, the firm wasn’t exactly upbeat on the group. Again, Bloomberg had the details in “U.S. Banks May Be the ‘New Utilities,’ Goldman Says”:
Large U.S. banks risk becoming the “new utilities” as governments introduce greater regulation and force lenders to increase capital ratios, Goldman Sachs Group Inc. analysts said.
Return on equity at the biggest U.S. banks will be limited by higher capital requirements and greater regulatory controls, analysts led by Richard Ramsden in New York said in a report to clients today. The measure of how effectively banks invest earnings may shrink to between 10 percent and 12 percent, from the 15 percent banks generated between 1990 and 2006, they said.
U.S. Bancorp was cut to “sell” because the Minneapolis- based company, while “a good bank,” is already highly valued, the analysts wrote. Goldman also re-instated its sell rating on Citigroup Inc., saying “investors should avoid the stock given no core earnings power clarity.”
Bank of America Corp. was cut to “neutral,” the same rating given Morgan Stanley, Wells Fargo & Co. and PNC Financial Services Group Inc. The analysts recommend buying JPMorgan Chase & Co., which they said may show earnings improvement as the economic cycle turns.
Large banks, particularly Citigroup, U.S. Bancorp and Bank of America, have “thin” capital cushions compared with Goldman’s estimates for losses in the industry, the note said.