Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500</li>
<li>Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap</li>
<li>4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.</li>
</ul>


While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500
Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap
4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.


Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans</li>
<li>Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs</li>
<li>None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple </li>
</ul>


New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans
Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs
None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple 


US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

<ul>
<li>The data coming out of US bank results should not surprise and it is also not something that should suddenly improve</li>
<li>BAC reported net charge offs at USD1,498m in 1Q24 up from USD807m in 1Q23, a substantial YoY delta. The QoQ delta is accelerating too, up USD306m in the 90 days</li>
<li>Net interest income is now in decline at BAC at -3% YoY in 1Q24, given the disproportionate rise in funding costs vs interest income</li>
</ul>


The data coming out of US bank results should not surprise and it is also not something that should suddenly improve
BAC reported net charge offs at USD1,498m in 1Q24 up from USD807m in 1Q23, a substantial YoY delta. The QoQ delta is accelerating too, up USD306m in the 90 days
Net interest income is now in decline at BAC at -3% YoY in 1Q24, given the disproportionate rise in funding costs vs interest income


BAC - Net Charge Offs Up 86% YoY And -3% YoY Net Interest Income Growth

<ul>
<li>Wells Fargo has seen its net interest income growth move to -8.3% YoY in 1Q24 from +8.3% YoY in 1Q23</li>
<li>The rate of net interest income growth at JPMorgan has nearly halved in the most recent quarter, to +11.4% YoY</li>
<li>Banks' high-frequency data on balance sheets suggest that there will remain worsening growth rates of net interest income for US banks</li>
</ul>


Wells Fargo has seen its net interest income growth move to -8.3% YoY in 1Q24 from +8.3% YoY in 1Q23
The rate of net interest income growth at JPMorgan has nearly halved in the most recent quarter, to +11.4% YoY
Banks' high-frequency data on balance sheets suggest that there will remain worsening growth rates of net interest income for US banks


US Banks - Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>We explore Citibank’s upcoming division of CitiBanamex and the forthcoming legacy Banamex IPO; given the market’s premium PBV ratios, this should support the Banamex IPO valuation</li>
<li>Sector trends to January show continued loan growth, but headwinds are building; rising funding costs are eroding credit spreads and credit costs are worsening, even though NPL coverage is healthy</li>
<li>BanBajio generates an ROE of 28%+, whilst highly capitalized and on more modest multiples than Banorte; we stay cautious on Banorte, due to the growing risks to returns and valuation</li>
</ul>


We explore Citibank’s upcoming division of CitiBanamex and the forthcoming legacy Banamex IPO; given the market’s premium PBV ratios, this should support the Banamex IPO valuation
Sector trends to January show continued loan growth, but headwinds are building; rising funding costs are eroding credit spreads and credit costs are worsening, even though NPL coverage is healthy
BanBajio generates an ROE of 28%+, whilst highly capitalized and on more modest multiples than Banorte; we stay cautious on Banorte, due to the growing risks to returns and valuation


Banamex Update and Mexican Banks’ January Data – First Look at Early 1Q 2024 Trends

United States

Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.

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Citigroup Inc (C US)

Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

Shift Exposure From Growth to Value; Downgrading Tech to market weight $XLK; Upgrading Industrials $XLI to Overweight; Upgrading Utilities $XLU to...

Vermilion Research

US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

Zions bank is reporting incredibly high time deposit growth, with negative implications for forward net interest income, and both Zions and Cade...

Daniel Tabbush

BAC - Net Charge Offs Up 86% YoY And -3% YoY Net Interest Income Growth

BAC now shows two consecutive quarters of negative net interest income growth, and in 1Q24 it also shows substantially higher total net charge...

Daniel Tabbush

US Banks - Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen

US bank's are now reporting 1Q24 data with far worse net interest income growth, which should not surprise our readers, and this should only...

Daniel Tabbush

Banamex Update and Mexican Banks’ January Data – First Look at Early 1Q 2024 Trends

Sector trends show headwinds credit costs and maybe opex. BanBajio's strong ROE, high capital ratio and modest valuations make it a more attractive...

Victor Galliano

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