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

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.

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

In last Tuesday’s Compass (10/27/20) we noted the S&amp;P 500’s break below 3425 short-term support opened the door for potential visits to 3325 and 3200. Support at 3325 was violated by Wednesday, however the 3200-3230 level has held and remains important support moving forward.  In today’s report we highlight attractive Groups and stocks within Financials: Asian Banks, Puerto Rican Banks, Banks, Southwest, and Investment Banking &amp; Brokerage, Mid-Cap

In last Tuesday’s Compass (10/27/20) we noted the S&amp;P 500’s break below 3425 short-term support opened the door for potential visits to 3325 and 3200. Support at 3325 was violated by Wednesday, however the 3200-3230 level has held and remains important support moving forward.  In today’s report we highlight attractive Groups and stocks within Financials: Asian Banks, Puerto Rican Banks, Banks, Southwest, and Investment Banking &amp; Brokerage, Mid-Cap

U.S. Equity Strategy: Markets Bouncing off Key Support

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*First Out Of The Gate: J.P, Morgan &amp; Co. (JPM.US) [JPM] reported 3Q20 results of USD 9.3 bn or USD 2.92 per share – well ahead of consensus of USD 2.22 per share. Results improvement was led primarily by JPM’s USD 9.9 bn (94.2%) reduction in loss provisions on a linked quarter basis. Offsetting the stellar bottom-line performance, we note several troubling trends: a) net interest income declined on the back of NIM compression and loan portfolio contraction; b) a significant decline in capital markets related revenues; and c) expenses increases;    *Credit Weakness Decelerates: Despite calculating that NCOs were actually a negative USD 1.4 bn, we find that net new NPLs linked quarter amounted to a positive USD 184 mn or 7.0% on an annualized basis. While still weakening, the pace of increase has decelerated from the 26% posted in 2Q20; and* CAPM and Cost Pressure: Volatile capital markets-related revenues took a bit of a digger – declining USD 3.9 bn (26.7%) linked quarter - representing a declining 66.9% of total revenues at 3Q20 (down from the 77.0% posted at 2Q20). When we exclude compensation costs which have a large variable component, we note that the more fixed expenses increased. Comp/revenue, despite the overall bottom-line improvement, worsened to 53.5% - up 3.8% during the period while JPM’s efficiency ratio worsened to 57.9% versus 51.4% in 2Q20.

*First Out Of The Gate: J.P, Morgan &amp; Co. (JPM.US) [JPM] reported 3Q20 results of USD 9.3 bn or USD 2.92 per share – well ahead of consensus of USD 2.22 per share. Results improvement was led primarily by JPM’s USD 9.9 bn (94.2%) reduction in loss provisions on a linked quarter basis. Offsetting the stellar bottom-line performance, we note several troubling trends: a) net interest income declined on the back of NIM compression and loan portfolio contraction; b) a significant decline in capital markets related revenues; and c) expenses increases;    *Credit Weakness Decelerates: Despite calculating that NCOs were actually a negative USD 1.4 bn, we find that net new NPLs linked quarter amounted to a positive USD 184 mn or 7.0% on an annualized basis. While still weakening, the pace of increase has decelerated from the 26% posted in 2Q20; and* CAPM and Cost Pressure: Volatile capital markets-related revenues took a bit of a digger – declining USD 3.9 bn (26.7%) linked quarter - representing a declining 66.9% of total revenues at 3Q20 (down from the 77.0% posted at 2Q20). When we exclude compensation costs which have a large variable component, we note that the more fixed expenses increased. Comp/revenue, despite the overall bottom-line improvement, worsened to 53.5% - up 3.8% during the period while JPM’s efficiency ratio worsened to 57.9% versus 51.4% in 2Q20.

JP Morgan & Co. – Good Credit Omen For US and Global Banks

Public Relations and Social Media Manager, Dechert LLP

Peggy Heffner

Public Relations and Social Media Manager

Dechert is a global specialist law firm

Dechert LLP

Dechert is a global specialist law firm.
Focused on sectors with the greatest complexities, legal intricacies and highest regulatory demands, we excel in delivering practical commercial judgment and deep legal expertise for high-stakes matters.

Our work is widely recognized. We have 20 standout practices noted by Chambers Global, including global-wide rankings for arbitration, corporate investigations, anti-corruption, investment funds and life sciences. Named Antitrust Team of the Year, Chambers USA commends our “accomplished group” as “routinely sought after to handle some of the most significant litigation and transactions in the antitrust world.” 

In an increasingly challenging environment, clients look to us to serve them in ways that are faster, sharper and leaner without compromising excellence. We developed a first-of-its kind legal project management department, which uses technology, people and processes to drive efficiency and deliver value for our clients.

We are innovators. Dechert ranked #7 in the Financial Times’ Top North American Innovative Law Firms. Financial Times also recognizes us among the Top European Innovative Law Firms and highly commends World Compass, our marketing compliance service, which offers investment firms advice in more than 100 jurisdictions.

Thematic (Sector/Industry)

<ul><li>The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last six years.</li><li>It remains to be seen what plans the incoming administration will bring to this area.</li><li>However, new regulatory proposals and other developments continue to present a complicated regulatory climate for banks and other large financial institutions.</li></ul>

The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last six years.It remains to be seen what plans the incoming administration will bring to this area.However, new regulatory proposals and other developments continue to present a complicated regulatory climate for banks and other large financial institutions.

The New Future of US Banking and Financial Services Regulation

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process. History suggests, however, that the policies of candidates can be a predictor of likely regulatory trends.

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process. History suggests, however, that the policies of candidates can be a predictor of likely regulatory trends.

Implications of the 2016 Election for Banks and Systemically Important Financial Institutions

United States

Jefferies Financial Group Inc. is a global diversified financial services company focusing on investment banking and capital markets, asset management and direct investing. The Company offers a full range of investment banking, equities, fixed income, asset and wealth management products and services.

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Jefferies Financial Group (JEF US)

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

U.S. Equity Strategy: Markets Bouncing off Key Support

In today’s report we highlight attractive Groups and stocks within Financials: Asian Banks, Puerto Rican banks, Banks, Southwest, and Investment...

Vermilion Research

JP Morgan & Co. – Good Credit Omen For US and Global Banks

JPM Results, A Good Credit Omen For US and Global Banks. Reserve Reversals Likely To Be A Trend For 4Q20 Results Season -Although Issues Persist

Thomas J. Monaco

The New Future of US Banking and Financial Services Regulation

The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last...

Dechert LLP

Implications of the 2016 Election for Banks and Systemically Important Financial Institutions

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process....

Dechert LLP

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