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>For US banks outside the largest 100, credit card charge off rates are soaring now at 8.5% compared with a total charge off rate of 0.25%</li>
<li>Often smaller finance companies or non-traditional banks can see deterioration that hits the mainstream later, like in Thailand in 1997, and  like with HSBC Finance, Countrywide, Indymac in the past.</li>
<li>Ally Financial has already revealed a renewed surge of credit costs in 3Q23, defying the decline in the preceding two quarters. Maybe COF and others will show this too?</li>
</ul>


For US banks outside the largest 100, credit card charge off rates are soaring now at 8.5% compared with a total charge off rate of 0.25%
Often smaller finance companies or non-traditional banks can see deterioration that hits the mainstream later, like in Thailand in 1997, and  like with HSBC Finance, Countrywide, Indymac in the past.
Ally Financial has already revealed a renewed surge of credit costs in 3Q23, defying the decline in the preceding two quarters. Maybe COF and others will show this too?


US Banks - Credit Card Charge-Offs Soaring to 8.5%, Can Catch Some Off Guard with Focus on CRE, C&I

<ul>
<li>US Federal Reserve Bank balance sheets are released weekly and more current than commercial banks. Latest Fed B/S is for 4 October, shows -USD47bn WoW in loans, securities, repos.</li>
<li>Liquidity conditions in the US banking system are becoming tighter faster, with the most recent week showing loans, securities, repos at -9.4% YoY vs -8.3% four weeks ago.</li>
<li>With tighter liquidity we should expect less loan growth, but also more difficult conditions for cash-strapped companies, prompting more defaults, and higher credit costs at banks.</li>
</ul>


US Federal Reserve Bank balance sheets are released weekly and more current than commercial banks. Latest Fed B/S is for 4 October, shows -USD47bn WoW in loans, securities, repos.
Liquidity conditions in the US banking system are becoming tighter faster, with the most recent week showing loans, securities, repos at -9.4% YoY vs -8.3% four weeks ago.
With tighter liquidity we should expect less loan growth, but also more difficult conditions for cash-strapped companies, prompting more defaults, and higher credit costs at banks.


US - Fed Liquidity Moves USD147bn Lower In Past 3 Weeks, Pace Is Accelerating

<ul>
<li>US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans</li>
<li>Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth</li>
<li>Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?</li>
</ul>


US large banks are showing more cash emphasis in the latest weekly data, increased signs of risk aversion, with MBS in sharp decline and CRE loans
Loan loss reserves continue to rise at over 18% YoY, and this will mean that banks are taking a lot more credit costs, impacting returns, net profit growth
Large time deposits accelerating, up 88.0% YoY in the most recent week; with all of these points, perhaps it is no wonder that shareholders' equity is stagnant?


US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

<ul>
<li>Weekly data to 23 July in the US shows 30 year fixed mortgage rates hitting new highs at 7.23%</li>
<li>The past two weeks show mortgage rate increases accelerating, and up 45bps from 20 July data</li>
<li>Mortgage loan volume index is approaching 1990, weekly purchases index continues downward</li>
</ul>


Weekly data to 23 July in the US shows 30 year fixed mortgage rates hitting new highs at 7.23%
The past two weeks show mortgage rate increases accelerating, and up 45bps from 20 July data
Mortgage loan volume index is approaching 1990, weekly purchases index continues downward


US Banks - Weekly Data: Mortgage Loan Rates A New High, Loan Volume Index Approaches 1990 Further

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

<p>Stocks Highlighted: WFC, COF, DFS, GS, JEF, RJF, LIN, ALB, AKZOY, OLN, CC, CDAY, RHI, MAN, TNET, ASGN, NSP, TBI, KELYA, BBSI, DHX, BGSF, AMN, and CCRN.</p><p>Cyclical value areas are starting to play catch-up as interest rates show signs of bottoming -- all kickstarted by Friday's better-than-expected employment report. We see many actionable opportunities, particularly within the Financial and Materials Sectors, and also several retail stocks within Consumer Discretionary. As we noted last week, despite mixed signals from the market, there continues to be an absence of breakdowns at the index and Sector level which supports our overall constructive outlook.</p>

Stocks Highlighted: WFC, COF, DFS, GS, JEF, RJF, LIN, ALB, AKZOY, OLN, CC, CDAY, RHI, MAN, TNET, ASGN, NSP, TBI, KELYA, BBSI, DHX, BGSF, AMN, and CCRN.Cyclical value areas are starting to play catch-up as interest rates show signs of bottoming -- all kickstarted by Friday's better-than-expected employment report. We see many actionable opportunities, particularly within the Financial and Materials Sectors, and also several retail stocks within Consumer Discretionary. As we noted last week, despite mixed signals from the market, there continues to be an absence of breakdowns at the index and Sector level which supports our overall constructive outlook.

Cyclical Value Areas Improving -- Add Exposure To Financials, Materials

United States

Discover Financial Services is a credit card issuer and electronic payment services company.  The Company issues credit cards and offers student and personal loans, as well as savings products such as certificates of deposit and money market accounts  and operates an automated teller machine(ATM)/debit network, which includes ATMs, as well as POS terminals nationwide.

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Discover Financial Services (DFS US)

US Banks - Credit Card Charge-Offs Soaring to 8.5%, Can Catch Some Off Guard with Focus on CRE, C&I

Credit card charge off rates are now at 8.5% for US banks outside the largest 100, they are incredibly high, and we may expect spillover to...

Daniel Tabbush

US - Fed Liquidity Moves USD147bn Lower In Past 3 Weeks, Pace Is Accelerating

Fed data shows USD147bn lower liquidity in just the past 3 weeks, and the pace is accelerating. There are negative implications for bank loan...

Daniel Tabbush

US Large Banks - New B/S Data: CRE Craters, MBS Sharp Decline, LLR & Big Fixed Deposits Up+, SE Flat

HFD shows risk aversion increasing at large US banks. LLR rising a lot and big fixed time deposits, can mean worsening net profit delta. With less...

Daniel Tabbush

US Banks - Weekly Data: Mortgage Loan Rates A New High, Loan Volume Index Approaches 1990 Further

New weekly data for US mortgage loan applications and mortgage loan rates, suggest major deterioration in home lending for US banks during 3Q23....

Daniel Tabbush

Cyclical Value Areas Improving -- Add Exposure To Financials, Materials

Cyclical value areas are starting to play catch-up as interest rates show signs of bottoming. We see many actionable opportunities, particularly...

Vermilion Research

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