Of all the cases of economic espionage charged by the DOJ's National Security Division since 2012, more than 80% of them implicated China.World Politicsread more
"Whilst there is a big dispute at the moment, I think there's also potential for resolution," UBS chairman Axel Weber says of the U.S.-China trade negotiations.Singapore Summitread more
Cryptocurrency fans will hope the futures contracts, which are federally regulated, can provide some much-needed legitimacy to bitcoin.Cryptocurrencyread more
Despite mixed fan and critic reactions to the final season of "Game of Thrones," the eight-season epic took home the top prize in the drama category at the Emmy Awards on...Entertainmentread more
There are alternative financial centers and investors can turn to Singapore, Tokyo or Shanghai if Hong Kong doesn't "shape up," says the founder and chairman of Citic Capital.Singapore Summitread more
The Kingdom and oil and gas industry have been slow to shore up defenses, raising red flags about the possibility of longer term fall-out in the region.Technologyread more
Tensions between South Korea and Japan may ultimately disrupt the high-end tech sectors, says Heenam Choi, CEO at South Korea's sovereign wealth fund.Singapore Summitread more
On Sunday, the 71st Primetime Emmy Awards honored the best comedies, dramas, limited and variety series from the last year.Entertainmentread more
U.S. President Donald Trump's national security advisor said on Sunday that White House Asia policy adviser Matt Pottinger would become his top deputy.Politicsread more
Removing Neumann is a difficult decision for Son, who has long believed in WeWork and Neumann's vision to quickly expand the company.Technologyread more
Datadog went public on Thursday and instantly hit a $10 billion valuation, becoming the fourth cloud software debut to reach that level this year.Technologyread more
Bank of America could see its profits take a hit over the next year as long-term interest rates continue to fall and "the potential for several additional rate cuts" from the Federal Reserve threaten the bank's income growth, Raymond James said in a note Thursday.
The brokerage downgraded Bank of America shares to market perform from outperform ahead of the expected headwinds, warning clients that the megabank is especially sensitive to changes in the shape of the yield curve, given its large lending business and deposit base.
"We now see its greater than peer asset sensitivity positing a greater challenge to net interest income given further flattening of the yield curve and the potential for several additional rate cuts from here," analyst Michael Rose wrote. "In turn, we see waning prospects for the company to generate positive operating leverage next year," which warrants a move to the sidelines.
Bank of America declined to comment.
Slowing growth in net interest income — one of the most fundamental ways banks make money — is perhaps the largest investor concern for financials heading into 2020. Bank stocks have struggled over the past month as the Fed in July cut the overnight lending rate for the first time in 11 years and promised to remain "data dependent" and more flexible with monetary policy.
The central bank's move was almost immediately accompanied by renewed belief that economic slowdowns in Europe and Asia could soon spread to the U.S. Concerned with the Fed's perceived inability to keep inflation near its 2% target, investors flocked to long-term debt and sent the yield on the benchmark 30-year U.S. bond to an all-time low. Prices and yields move in opposite directions.
"We have reduced EPS estimates for nearly all banks within our collective coverage universe," Rose said, noting the reductions reflect net interest revisions across the board in light of the market's confidence in at least two rate cuts before the end of the year. He also downgraded Cadence Bancorporation and Texas Capital Bancshares.
The flight to safety also flattened and inverted a key portion of the Treasury yield curve, the plot of U.S. rates based on maturity duration. An inverted yield curve, where long-term debt rates are lower than short-term rates, tends to narrow lenders' profit margins and discourage loanmaking.
Those fears appeared to be of utmost importance to Bank of America shareholders last month, when the company reported second quarter profits that topped expectations. Despite record first half profit, the stock rose only 0.5% on the news and has fallen more than 7% since.
That may be thanks to ongoing profit concerns stemming from Chief Financial Officer Paul Donofrio's warning in April that growth of net interest income this year would be half the 6% the bank generated in 2018. The measure may slow further to about 1% this year if the Fed reduces rates multiple times in 2019, Donofrio told analysts during a conference call on July 17, days before the central bank voted to reduce the overnight lending rate.