Trader Talk

Credit Delinquencies Improve for Banks


Banks are reporting July master trust data, and the data shows modest improvement.  July data is coming in this morning from American Express , Capital One, Citi, Discover , and JPMorgan.

Trust data is essentially securitized credit card receivables, and while reading this trust data is not always a reliable indicator (according to Fox-Pitt-Kelton, only 50 percent of JP Morgan's credit card receivables were securitized), at least the trends are improving.

Simply put, losses seem lower than expected.  Modest improvement in the two areas most carefully watched: net charge-offs (essentially total losses) and delinquencies (which go into different "buckets" or 30, 60, and over 90 days past due).

For example, JP Morgan showed improvement in both net charge-off and delinquency trends.  Most importantly, the "bucket" of delinquencies more than 30 days past due is stabilizing.

At American Express, delinquencies declined for the fifth straight month.

The data is still choppy, however; for example Capital One delinquency rates that are 30-59 days past due got worse, not better.

Elsewhere, TrimTabs reporting that insider buying feeble in August, insider selling remains high. With the markets bottoming in March, you would have thought insiders would have been more interested in buying their own stock, but that's not happening.

In August, insiders have sold $3.0 billion, more than 33 times the $90 million they have bought. The ratio of insider selling to insider buying in August is the highest since TrimTabs records begin in 2004.

Insider buying has been feeble from April through the present day, despite the summer rally; insider selling began intensivyting in March and has been strong throughout the summer.



Questions?  Comments?