Truist loaded up on perpetual preferred stock YTD to keep the regulators at bay as it deals with merger cost savings delays and an overleveraged balance sheet going into pandemic. Catching up on all fronts. Still commond dividend may be more at risk versus other big regionals. Sell Stock and benchmark Bond, Preferred stock fully priced. Very Low regulatory risk and Low counterparty risk.
Citizens Financial is not out of the pandemic and credit cycle woods as it continues to pretend it is in the growth mode; when it very much needs added capital to bolster the balance sheet. Still too much credit quality pressures even without a pandemic. Sell on stock, benchmark bonds, and preferred stock. Regulatory and counterparty risk stays at Medium levels which is high for a regional bank given weak economic earnings.
Capital One is hanging on by a hair as government stimulous support has kept its credit quality together. But it could easily humpty dumpty fall and crash into millions of credit loss pieces. Sell capital stack (Stock & Bonds), Counterparty risk to Medium-to-High. Regulatory risk Medium.
Bank of America did not show the same nominal lift in capital markets trading and investment banking that the other peer trading banks did. Still, Merrrill retail held its own by growing units via customers and products. Rate pressure really harming the biggest retail deposit bank with swaps hedges rather ineffective. So back to cash securities strategies. Sell on Capital Structure (debt & equity). Regulatory/Counterparty Indicatiors stays at Medium risk.
JPMorgan tried to wow the investor/risk mgt crowd with seemingly blockbuster results. Excluding one-offs it was a yawn of a quarter. JPM overconfident that worst of pandemic impacts is over. We are a Sell on the Equity and benchmark debt. And systemic risk and counterparty rise to Medium levels.
Fifth Third is on happy pills as it believes that its loan credit quality won't spill into the red. We beg to differ and believe it is very short of common equity capital under a more severe economic/health climate. We are a Sell across its Stock & benchmark Bonds. And recognize Medium Systemic and Counterparty Risk.
KEY was another cool regional bank presenter that was not too panicky on its future credit development and reserves. We beg to differ and see a big capital need if losses go to new highs given the health pandemic. Sell Stock, Buy benchmark Bonds on relative value basis. Higher regulatory and counterparty risk.
Ferroglobe has an improved EBITDA 2Q20 quarter. And it has fulcrum security leverage on its 9 3/8s notes and as it renegotiates bank lines. Good for the bonds, but bad for the stock in the short term. Buy Bonds, Sell Stock.
Copper's on a roll, and Viola Risk is riding the bull case with Taseko Mines, among the most cost efficient in the world. As the world normailizes, post-Covid-19, Taseko will rocket higher on its bonds (BUY) and stock (BUY).
Curo may have the magic elixer to ricochet out of the deep subprime lending doldrums. Though VERT risk is high, Curo does have strong equity drivers to reset the EBITDA trend rate higher. Buy on HY Bonds, Buy on Stock.