5 Bank Stocks to Avoid Despite Favorable Rate Environment

5 Bank Stocks to Avoid Despite Favorable Rate Environment

The current FOMC meeting will be the last one for outgoing Fed Chair Janet Yellen, and the Fed is likely to keep its interest rate forecast intact (three hikes next year), as lagging inflation (still below 2%) remains a concern.
Following the massive tax rate cuts (from 35% to 20%) for U.S. businesses, the unemployment rate is likely to decline further from the present 4.1%, driven by the assumption of more job creation.
Given these two favorable factors, there is a chance that the Fed may move the interest rate higher at a faster pace as economic growth improves further.
Also, rising rates show an improving economy.
Bank Stocks to Avoid Now While several rate sensitive banks witnessed an uptick in net interest income and net interest margin following the hike in June, another rate hike will modestly support banks’ top-line growth, which has been under pressure amid a tough operating environment.
So, a rate hike is not likely to be enough to mitigate the larger woes in the banking industry.
We have shortlisted five banking stocks with a market capitalization of at least $3 billion and a VGM Score of D or F. Further, these stocks carry a Zacks Rank #4 (Sell) or 5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Further, so far this year, the stock has lost 12.7% against industry’s rise of 3.3%.
Further, so far this year, the stock has lost 0.1% against industry’s growth of 5.8%.

News Highlights: Top Financial Services News of the Day

News Highlights: Top Financial Services News of the Day

With California Wildfires, Insurers’ Losses Keep Spiraling Higher Raging wildfires in Southern California could push the amount of insured losses this year from natural disasters to a record.
The Force Behind Bitcoin’s Meteoric Rise: Millions of Asian Investors Unlike past financial frenzies such as the dot-com bubble of the late 1990s, individual investors have been first to the party, fueling bitcoin’s 1,600% rise this year.
Economists See Three Fed Rate Rises Next Year, Lower Unemployment Private economists expect the Federal Reserve to raise interest rates after its meeting Wednesday and then lift them three times in 2018 and twice in 2019, amid a strengthening economy and a falling unemployment rate.
Bet on UniCredit for Europe’s Banking Recovery The threat of higher capital charges isn’t over for European banks, but UniCredit, Italy’s biggest lender, can take this in its stride.
Passport Capital to Shut Flagship Hedge Fund John Burbank’s Passport Capital, famed for its profitable bets against subprime housing ahead of the financial crisis, will shutter its flagship fund after persistent losses.
SEC Chairman Warns Investors Against Bitcoin Wall Street’s top regulator on Monday raised alarms about the money flooding into bitcoin trading and other cryptocurrency markets, warning the red-hot corner of less-regulated finance is burning with risk for retail investors.
The Fed Versus Tax Cuts The Republican tax plan has been driving the market.
The Federal Reserve could be next behind the wheel.
KKR Bolsters Its Direct Lending Business KKR & Co. LP is replacing Blackstone Group LP as the manager of FS Investment Corp., a business development corporation.
(END) Dow Jones Newswires December 12, 2017 16:15 ET (21:15 GMT)

Wondering what bonjour/hi was all about? Pre-election nerves

Wondering what bonjour/hi was all about? Pre-election nerves

The motion is non-binding.
Over the past few years, Montrealers have learned to take the noise from the national assembly in stride.
What the political mechanics of the unanimous vote reveal about the mindset of Quebec parties 10 months before a fall election is more instructive.
The opportunities for self-congratulations have been few and far between since he became party leader.
The latest Léger Marketing poll, published this month, pegged PQ support at barely 19 per cent.
At this rate, Lisée will lead his sovereigntist party to a rout next fall.
The Léger poll puts the Liberals only four points behind the Coalition Avenir Québec provincewide.
It is the overwhelming support of anglophone and allophone voters that has been keeping the Liberals afloat in the polls.
At year’s end, the next Quebec election looks like it is Legault’s to lose.
Even as the centre-right CAQ is riding high provincially, Trudeau’s anything-but-conservative government is riding higher federally.

Hong Kong homebuyers to face worsening affordability crisis

Hong Kong homebuyers to face worsening affordability crisis

KUALA LUMPUR (Dec 12): If you think Malaysian aspiring first-time homebuyers have it bad, spare a thought for Hong Kong folk.
The ex-British territory’s property segment will be pushed higher by the wealth generation from its booming stock market, record-low unemployment and high economic growth, the South China Morning Post (SCMP) reported yesterday.
“The dream of owning a home in Hong Kong will become even less attainable for those seeking to get on the housing ladder next year, as prices in the city are forecast to rise 10% to 20%, according to predictions by the city’s two major property consultants,” reported the Hong Kong English daily.
Cushman and Wakefield in its property market review and outlook for 2018 forecast a 10% growth in Hong Kong home prices while JLL said they can potentially increase by as much as 20% next year.
Home prices in Hong Kong rose 11% this year, with the biggest rise seen in nano flats and luxury homes, SCMP reported.
Nano flats are usually less than 200 sq ft and cost about HK$4 million (RM2.09 million).
Still very expensive Hong Kong’s residential prices have gone up 75.9% compared to the market peak in 1997 after the city island was handed back to China, said JLL.
Well, maybe one could try renting?
Things are also not too bright for tenants.
A 200 sq ft studio in a 30-year-old development in Wan Chai costs more than HK$16,000, reported the paper.

US wholesale prices up 0.4 percent in November

US wholesale prices up 0.4 percent in November

WASHINGTON – Prices at the wholesale level rose 0.4 percent in November and 3.1 percent over the past year.
It was the biggest annual jump in nearly six years and reflected a big spike in the price of gasoline and other energy products.
Last month’s increase in the producer price index, which measures inflation pressures before they reach the consumer, marked the third straight month that wholesale prices have risen by 0.4 percent, the Labor Department reported Tuesday.
The 3.1 percent rise from November 2016 was the biggest 12-month gain since a matching 3.1 percent increase for the 12 months ending in January 2012.
Core inflation, which excludes volatile energy and food prices, rose 0.3 percent in November and 2.4 percent for the past 12 months, a more benign reading on inflation.
The November increase reflected a 4.6 percent increase in energy costs, the biggest since May 15.
That increase was paced by a 15.8 percent surge in gasoline costs, the sharpest one-month gain in gasoline prices since an 18.6 percent jump in August 2009.
Food costs rose a modest 0.3 percent after a bigger 0.5 percent gain in October.
The government will report on consumer prices Wednesday and economists are looking for a 0.4 percent November increase due to rising energy prices at the retail and wholesale levels.
The Federal Reserve seeks to manage interest rates to keep inflation rising at a moderate 2 percent but over the past six years, it has failed to reach that goal.

Why the RBA is unlikely to cut interest rates despite a slowdown in Australia’s housing market

Why the RBA is unlikely to cut interest rates despite a slowdown in Australia’s housing market

George Tharenou and Carlos Cacho, Economists at UBS, played devils advocate on that front earlier this month, pointing to the chart below to show that when house prices weakened by a similar amount in the past, it has almost always resulted in the RBA cutting official interest rates.
“In particular, previous downturns in house prices followed a succession of RBA rate increases, which pushed mortgage rates sharply higher.
The first looks at the relationship between annual house price growth and mortgage rates.
“The current downturn in house prices has not come after a tightening cycle.
In comparison, this next chart shows the relationship between the annual change in Australia’s unemployment rate to movements in the cash rate.
Australia’s unemployment rate has recently fallen to 5.4%, leaving it at the lowest level in close to five years, going someway to explaining why ANZ is forecasting that the RBA will lift the cash rate to 2% by the end of next year despite the slowdown in the housing market.
“In our view, a [housing] cycle driven by credit is likely to play out very differently from one driven by higher interest rates,” it says.
“Expecting the current housing cycle to play out like those caused by movements in interest rates, strikes us as likely to end in disappointment.” Indeed, outside of the recent price deceleration caused by credit rather than mortgage rates, ANZ points to a variety of other housing market indicators that suggest there’s little need for the RBA to cut rates.
“Our forecasts have nationwide house price inflation slowing to zero in 2018, but this also includes the impact of the two RBA rate hikes we expect in 2018.
If these don’t take place then we would expect less of a slowdown in housing inflation, probably to the low-to-mid single digits mentioned above.” ANZ says recent strength in Australian building approvals data, supporting the view that credit cycles play out differently from rate hike cycles, provides further evidence why RBA rate cuts are not required on this occasion.

‘Pretty bleak’: British firms are more pessimistic about hiring workers than any point in 5 years

‘Pretty bleak’: British firms are more pessimistic about hiring workers than any point in 5 years

Drivers wait next to their parked lorries on the M20 motorway, which leads from London to the Channel Tunnel terminal at Ashford and the Ferry Terminal at Dover, as part of Operation Stack in southern England, Britain July 31, 2015.
The survey said there were signs of a skills shortage in freight driving.
Reuters / Neil Hall Pessimism about hiring UK staff is growing.
Just 4% UK employers planned to hire rather than cut staff in the last months of this year.
LONDON — Falling unemployment has been a bright spot in a bleak picture for the economy since the Brexit vote, but pessimism about hiring staff is growing.
A new poll of 2,102 employers found a net balance of just 4% UK employers plan to hire rather than cut staff in the first quarter of 2018, the lowest figure in five years.
That figure fell furthest in London to 0%, blamed on the capital’s prospects after leaving the EU, and to 3% in south-east England.
The survey was conducted by employment agency ManpowerGroup Solutions, and it is used by the Bank of England to track hiring sentiment.
It comes ahead of official jobs figures on Wednesday.
The Treasury predicted unemployment would rise by more than 500,000 in two years following a vote to leave the EU, but it has fallen.

Will we work for robots or will robots work for us?

Will we work for robots or will robots work for us?

At the same time, many people fear that robots will ‘steal’ their jobs.
Or will robots work for us?
It doesn’t seem so far-fetched that in the near future robots like Sophia will be doing some jobs just as well as, if not better than, their human counterparts.
Recently there has been a lot of speculation about the risks robots and artificial intelligence pose to jobs.
Well, 61% of consumers think that computers, automation or robots will take the jobs of humans in the near future, with factory workers, receptionists and telemarketers cited as some of the people most at risk.
In many cases machine learning and robotics will allow us to “take the robot out of the human”, freeing up time and resource for people to focus on the tasks that require a more ‘human’ touch.
The emergence of the Internet is a recent example of this: it has changed the way we work, the way we communicate, and the way we consume.
So whether it’s machine learning, artificial intelligence or robotics, business leaders will continue to embrace technological change and the benefits it can bring.
There will certainly be jobs in the future, but the jobs of the future will be different to those we know now.
Related topics : Artificial Intelligence Bank of England

Rahul Gandhi: Rise of the Gandhi family scion

Rahul Gandhi: Rise of the Gandhi family scion

Rahul Gandhi has been elected as the new president of India’s main opposition Congress party.
Congress’ new leader is the scion of India’s unofficial First Family, the Gandhis.
Rahul has some big shoes to fill: Jawaharlal Nehru, the son of two-time Congress President Motilal Nehru, was one of the principal leaders, with Mahatma Gandhi, of India’s independence movement.
Jai Prakash “Congress party people took it upon them to protect the Prince,” a senior Congress official told Al Jazeera, using a Rahul nickname often used derisively by his opponents, particularly Narendra Modi, India’s prime minister. “When you meet him in person, he comes across as an intelligent man who is willing to listen.
In politics you have got to be affable but not overly so,” says veteran Congress leader Kamal Nath, who has known Rahul since his childhood.
He is supposed to rally his party’s supporters to take on Modi, whose public approval numbers remain consistently high, three years after he steered the Hindu nationalist BJP to a sweeping parliamentary election victory.
Indian politics has evolved over the years from single-party rule to an era of coalitions and alliances.
Alliance building As Congress president, Sonia managed to win the support of political outfits of ideologies ranging from the left to the centre-right. “He is never dismissive of anyone – neither senior leaders nor the younger ones,” says Sushmita Dev, a young Congress leader who works closely with Rahul in New Delhi.

The Fed’s Concerns

The Fed’s Concerns

Yet on the other, the Fed has reaffirmed its determination to raise interest rates and shrink its balance sheet.
From a trader’s point of view, this must sound confusing, since most of them believe that the Fed’s main aim is to enrich them and make their lives easy.
For the Fed, they and markets are far from the main concern.
Policy makers put the state of the economy first and with it an urgent need to adjust their basic policy stance, to “normalize” it, as Fed Chair Janet Yellen has said on numerous occasions.
Taking short interest rates down to zero stood as a remarkable move next to historic levels that typically saw the federal funds and treasury bill rates well in excess of the rate of inflation.
Of late, news from labor markets has added to the urgency behind the Fed’s normalization drive.
Alone this suggests that the productive capacity of the economy may have reached a point where further growth might soon become problematic.
Such reassurance, however welcome otherwise, cannot entirely erase concern about the impact of a tight labor market on growth potentials.
Keeping that concern in the front of policy makers’ minds is the recent acceleration in wages and costs to business.
According to the Bureau of Labor Statistics, hourly labor compensation has accelerated from a 1.0 percent rate of advance last year to a 3.4 percent annualized rate of advance this year through September, the most recent period for which data are available.