Global Markets Mixed As Options Expire
Options expiration day. Global markets are mixed, futures down fractionally, as the Greek Prime Minister said restructuring of the debt was not going to happen (no one seems to believe him).
This is not a bad start, considering earnings season has not started with a bang. Traders are interpreting Google and Alcoa as overall more negatives than positives, while JPMorgan is neutral.
Meanwhile, March CPI was not quite as high as feared (core PPI, an indication of inflation at the wholesale level, was a bit hotter than expected yesterday), as CPI was up 0.5 percent, core CPI (ex-food and energy) up 0.2 percent.
1) Bank of America reported earnings, let's not even get into whether it was above or below expectations. Let's call it a kitchen sink quarter, with $3 billion for litigation charges.
They did set aside less for potential loan losses, but like JPMorgan revenues declined, in their case about 15 percent. FICC (fixed income, currency and commodities) trading was down, equity trading was a bit better, mortgage originations were down 33 percent (ugly but seem to be expected). Loans were down but not much more than expected. Assets under private wealth management dropped 13 percent, that seems like a lot to me.
Tangible book value was $13.21, and that has not dropped. This is probably the most important fact, and likely the reason the stock is up 10 cents in the pre-open.
2) Credit improving: For the fourth consecutive month, Capital One reported a decline in net U.S. charge-offs (payments it does not expected to collect) in March (5.87 percent, down from 5.91 percent. Meanwhile, delinquencies in the U.S. (payments to the company that are more than 30 days late) also fell to 3.59 percent from 3.83 percent
3) IPO market breaks hot streak: Sequans Communications , a French fabless 4G semiconductor designer for wireless broadband (that's French for mobile phone chip maker), priced its IPO below expectations. They sold 7.7 million shares at $10, below talk of 9.17 million shares at $11-$13.
4) Mortgage insurer Assured Guaranty jumps 14 percent pre-open after announcing it has agreed to a settlement with Bank of America on the securitization of various residential mortgages. As part of the settlement, Bank of America will pay $1.1 billion in cash to Assured Guaranty.
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