Adam Sarhan IBTimes Quote: Bank of America Corp Q2 Earnings Preview:


Bank of America Corp Q2 Earnings Preview: Small Gains Predicted In Line With Housing market Recovery, But Rising Rates Could Weigh

on July 15 2013 2:11 PM

Bank of America Corp. (NYSE: BAC) is expected to report a 4 percent increase in second-quarter profits as the slow recovery of the housing market continues to assist all of Wall Street’s big banks.

The bank will issue its second-quarter results on Wednesday before the market opens.
Analysts polled by Thomson Reuters expect Bank of America to report net income of $2.9 billion, or $0.25 per share, on revenue of $22.8 billion, up from the year-earlier period’s net income of $2.1 billion, or $0.19, on revenue of $21.96 billion.
However, some analysts are predicting losses in some of the bank’s holdings.
“While the bank stands to gain from the slow recovery of the housing market, increases in interest rates may incur losses on bonds and other securities for the bank. Although the bank’s nonperforming loans ratio has been decreasing (2.6 percent in 2012), it is still quite high when compared to the industry average,” said Business & Financial Services research analyst Sheetal Kothari.
Kothari also believes that the current interest rate environment could dent the bank’s capital ratio, currently at 16.3 percent.
“However, price-to-book value of Bank of America stands at 0.65, which is much below its competitors (Citigroup stands at 0.77). Analysts expect this multiple to reach close to 1, thereby indicating greater growth potential for this bank in the future quarters,” said Kothari.
Adam Sarhan, of Sarhan Capital, believes BAC should beat the general analysts’ prediction of $0.25 per share, much like Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) have done so far.
“In the same period last year, BAC earned $0.19, so if they just meet estimates earnings, they will have vaulted over 30 percent, which is not an insignificant sum,” said Sarhan.
This year’s trend of housing market gains gives Bank of America hope for a positive outcome. Sarhan believes they will grow up to 7.9 percent but concedes that most eyes will be on the bank’s corporate and commercial banking sector, which should be looking at about 29 percent growth.
“For the same reasons as JPMorgan, Bank of America has a high exposure to the U.S. economy and specifically the housing market. On average, all their lines of business benefited from a healthy environment and an improving housing market,” said Sarhan.

Reuters Quote: Gold hits two-month low on China tightening fear

By Frank Tang
NEW YORK | Thu Jan 20, 2011 3:58pm EST
(Reuters) – Gold fell nearly 2 percent to two-month lows on Thursday due to technical selling and as worries over further monetary tightening in China triggered a commodities rout.
Silver, which sharply outperformed gold last year, dropped almost 4 percent for its biggest one-day decline in 1-1/2 months, sending the closely watched gold-to-silver ratio to its highest in nearly two months.
Gold, which rose 30 percent last year, has fallen 5 percent this month as investors took profits and put more cash into assets such as equities and industrial commodities.
“In the short term, some of the flood into the gold from the European crisis has subsided somewhat. We are poised for a decent-size correction here in all risk markets, and gold is getting caught up in that,” said James Dailey, portfolio manager of the Team Asset Strategy Fund (TEAMX.O).
The Reuters-Jefferies CRB index .CRB, a commodities benchmark, looked set for its largest one-day loss in over two weeks, led by 2 percent drops in oil and copper on fears that strong growth in China could prompt more monetary tightening.
Spot gold fell as low as $1,342.65 an ounce, its weakest since November 19. It slipped 1.4 percent to $1,350.90 by 2:15 p.m. EST. U.S. gold futures for February delivery settled down $23.70 at $1,346.50.
Turnover in the U.S. futures market was stronger than usual. COMEX gold totaled 260,000 lots, up two-thirds from the 30-day average, and volume in COMEX silver was about 50 percent higher, preliminary Reuters data showed.
Worries that Chinese tightening could derail global economic recovery sparked losses in stock markets too, with equities falling on both sides of the Atlantic.
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Analysts also cited weaker demand at gold-backed exchange traded funds as a factor behind the metal’s weakness.
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, continued to decline, falling to 1,251.433 tonnes on January 19 — its lowest since May 2010. Its holdings are down more than 29 tonnes so far this year.
Gold came under further pressure after the dollar rose as better-than-expected housing and employment data pointed to an improving U.S. economy, though hopes for an easing in Europe’s debt crisis limited euro selling.
On technical charts, a new downward trend could be forming for the U.S. February gold contract after prices broke below their 100-day average to hit a two-month low on Thursday.
“For the past few weeks, we are seeing a series of lower highs and lower lows forming on the charts. Technically, this suggests a new downward trend is forming,” said Adam Sarhan, chief executive of New York-based Sarhan Capital.
Silver, which rose more than 80 percent in price last year due largely to continuous investment, came under pressure following another outflow of metal from top silver ETF iShares Silver Trust.
Silver dropped 3.9 percent to $27.66 an ounce and has fallen around 11 percent so far this month, putting it on track for its largest monthly decline since June 2009.
The prospect of tighter monetary policy in China, the top consumer of many industrial commodities, also hit the metal, which has a far greater industrial demand base than gold.
The gold-to-silver ratio — the number of ounces of silver needed to buy an ounce of gold — rose to a near two-month high at just below 49, showing that silver is underperforming gold in a falling market.
Platinum fell after two consecutive days of gains that took the price to its highest since July 2008. It lost 0.9 percent to $1,815 an ounce, while palladium inched up 0.2 percent to $813.22.
(Additional reporting by Jan Harvey and Amanda Cooper in London; Editing by Dale Hudson)
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Media Quote: COMMODITIES-Oil pierces $90; grains rally on thin volume

Thursday December 23, 2010 08:44:19 AM GMT
Oil at 2-year high after sharp drop in US stockpiles
* Grains at multi-month peak; copper off from record
* Trading volumes stay thin as holidays get nearer
* Coming up: US jobless claims data on Thursday
By Barani Krishnan
NEW YORK, Dec 22 (Reuters) – Oil broke $90 a barrel, grains hit multi-month highs and metals retreated slightly as supply woes and other positive fundamentals kept investor sentiment in commodities intact on Wednesday despite thin trading volumes.
The 19-commodity Reuters-Jefferies CRB index extended Tuesday’s 26-month highs, even as combined volumes in energy, metals and agriculture were 60 percent below the 30-day average by 12:30 p.m. EST (1730 GMT).
Oil hit two-year highs. Copper fell marginally after record peaks in the previous session. Wheat rose almost 2 percent and corn hit 28-month highs to lead agricultural markets higher.
Aside from the sharp drop in U.S. crude stockpiles that boosted oil, investor sentiment in commodities was supported somewhat by higher global equity markets, and data showing the U.S. economy growing a touch higher than expected in the third quarter.
Even so, some of the price action in commodities this week has surprised some investors, traders and analysts expecting at most a little turbulence from book squaring activity ahead of the holiday season, which begins with Friday’s pre-Christmas holiday.
Volumes are expected to be thinner on Thursday, even as investors face a flurry of economic data that includes weekly U.S. jobless claims.
Call it the Santa Claus rally, the end of the year rally or whatever you want, but you’re definitely seeing markets being bid higher, though on very light volume,” said Adam Sarhan at New York-based financial advisory Sarhan Capital.
“The bulls are definitely in control and until we see some technical or structural damage setting in, we have to err on the side of being positive.”
The CRB index has had an eventful year, poised to finish up 15 percent, after dropping 10 percent in the first six months and rising 25 percent in the second half of the year.
Besides copper, cotton and gold are other markets that are about 3 percent or less away from testing new record highs. Sugar is near 30-year peaks while arabica coffee hovers around 13-1/2 year tops.
Although global recovery from the financial crisis had not reached desired levels, economists have broadly raised expectations for 2011, with a Reuters poll showing a relatively bullish mood compared to the start of this year.
“With two days to go until Christmas Eve risk markets have ignited the afterburner, reinforcing one more time the all-pervasive mantra throughout 2010, “What crisis?”, said a research note from Wall Street bank JPMorgan.
Crude oil’s benchmark front-month contract in New York rose to $90.80, its highest since Oct. 2008, after U.S. government data showed a 5.33 million barrel decline in crude stocks.
Oil prices are up 13 percent year-to-date, with more than two-thirds of the gains coming in the last two months after better supply-demand conditions and positive sentiment related to a $600 billion U.S. economic stimulus package.
In copper, the benchmark three-month futures contract in London closed down $15 at $9,350 a tonne, after reaching an all-time high $9,392 on Tuesday. New York’s most-actively traded copper contract, March, settled a touch lower at $4.2750 a lb.
Copper prices have risen 27 percent on the year, falling in the first six months before surging as the dollar weakened in the third quarter and the U.S. Federal Reserve announced its multi-billion dollar economic stimulus.
Analysts said although current economic readings were not entirely bullish for copper, the metal used in construction and power was seeing strong support from a steady drop in stockpiles this year and export problems faced in the near-term by No. 3 copper miner Collahuasi.
U.S. corn futures rose for a sixth straight session, touching 28-month highs above $6.05 a bushel.
Wheat jumped 2 percent to a 4-1/2 month high above $7.85 a bushel on technical buying. Soybeans hit a 5-1/2 week peak above $13.30 a bushel on strong Chinese demand prospects and concerns that bad weather would cut Argentine crops.