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Afternoon Note

A Bank Shareholder Windfall Expected

By Charles Payne, CEO & Principal Analyst
6/28/2017 1:40 PM
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The market is bouncing back nicely today, even technology, which struggled early after President Trump hinted at some kind of tax action against Amazon. (Jeff Bezos is the founder of Amazon and on the verge of becoming the richest man in the world, but he also owns the Washington Post, which has run virtually non-stop negative articles against the President.)

Today however is all about the banks, as the conclusion of the Comprehensive Capital Analysis & Review (Stress Test) will decide how much they can return to their shareholders.  Consensus sees $120 billion.

Sector Performance

% Change

S&P 500 Index

 

+0.83%

Consumer Discretionary (XLY)

 

+0.98%

Consumer Staples (XLP)

 

+0.72%

Energy (XLE)

 

+0.80%

Financials (XLF)

 

+1.52%

Health Care (XLV)

 

+0.63%

Industrials (XLI)

 

+1.05%

Materials (XLB)

 

+1.08%

Real Estate (XLRE)

 

+0.23%

Technology (XLK)

 

+0.66%

Utilities (XLU)

 

-0.06%

 
 
Last year saw a strong combination of dividend hikes and stock buybacks. This year, there’s a chance regional banks will be allowed to return a large percentage of capital.
 

2016 CCAR Review

Dividend

Buyback

Million USD

ALLY

$0.08

$700

AXP

$0.32

$3,300

BAC

$0.075

$5,000

BK

$0.19

$2,140

C

$0.16

$8,600

CFG

$0.12

$690

COF

$0.40

$2,500

CMA

$0.23

$440

DFS

$0.30

$1,950

FITB

$0.135

$660

HBAN

$0.075

$0

JPM

$0.48

$10,600

KEY

$0.085

$350

MS

$0.20

$3,500

MTB

$0.73

$1,150

NTRS

$0.38

$275

PNC

$0.55

$2,000

RF

$0.065

$640

STI

$0.26

$960

STT

$0.38

$1,400

USB

$0.28

$2,600

ZION

$0.08

$180

 
In economic data, pending home sales, contract signed for the month of May, dropped 0.8% to 108.5 from April’s revised 109.4.  Year over year, pending sales is down 1.7%. 

Critically low supply, especially in the lower end price range where first time home buyers are most impacted, and higher prices is leading the decline. 

Another contributor to the decline may be weaker financial and economic confidence as more are beginning to think that tax reform and infrastructure initiatives may not happen this year.  Pending home sales, fell regionally across the board with the highest decline in the west.


 

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