Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth</li>
<li>Mortgage loan applications index shows some of the worst figures in years in the latest weekly data</li>
<li>Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans</li>
</ul>


Weekly high frequency data on US banks shows a major slow down continuing in residential mortgage loan growth
Mortgage loan applications index shows some of the worst figures in years in the latest weekly data
Core net interest income and credit costs can surprise even from an area that is traditionally not risky compared with CRE and C&amp;I loans


US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500</li>
<li>Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap</li>
<li>4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.</li>
</ul>


While the market remains in consolidation/pullback mode and we are not out of the woods, it is possible that further downside is limited from here on the S&amp;P 500
Since late-February, we've discussed important gap support from 2/22/24 at 4983-5050 on the SPX, with bulls in control if above 4983. Selling last week has simply filled this gap
4920-4950 is now support near last week's lows. Downgrade: Technology (XLK) to market weight. Upgrades: Manufacturing/Industrials (XLI) to overweight and Utilities (XLU) to market weight; individual stock buys highlighted.


Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>With US inflation figures higher than expectations, there is an increase in risk that the Fed's next move may be a hike.  Some HSI constituents are set to benefit.</li>
<li>
<a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a>, <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing APAC (1876 HK),</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> have significant USD net cash position and will be gainers.</li>
<li>
<a href="https://www.smartkarma.com/entities/sunny-optical-technology-group" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical Technology Group (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> have large China operations but they are net long on USD balance and this will make them beneficiaries.</li>
</ul>


With US inflation figures higher than expectations, there is an increase in risk that the Fed's next move may be a hike.  Some HSI constituents are set to benefit.

Orient Overseas International (316 HK), Budweiser Brewing APAC (1876 HK), and Galaxy Entertainment Group (27 HK) have significant USD net cash position and will be gainers.

Sunny Optical Technology Group (2382 HK) and Haier Smart Home (6690 HK) have large China operations but they are net long on USD balance and this will make them beneficiaries.


HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

<ul>
<li>New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans</li>
<li>Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs</li>
<li>None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple </li>
</ul>


New quarterly data from Zions shows huge growth in time deposits, and also far worse credit metrics in commercial real estate and home equity loans
Cadence reveals incredibly high growth of net charge offs in the year, but also far worse credit costs and NPLs
None of this should surprise, and we remind that often banks reveal worsening credit metrics with some lag - it not always immediate, neat, simple 


US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

<ul>
<li>The data coming out of US bank results should not surprise and it is also not something that should suddenly improve</li>
<li>BAC reported net charge offs at USD1,498m in 1Q24 up from USD807m in 1Q23, a substantial YoY delta. The QoQ delta is accelerating too, up USD306m in the 90 days</li>
<li>Net interest income is now in decline at BAC at -3% YoY in 1Q24, given the disproportionate rise in funding costs vs interest income</li>
</ul>


The data coming out of US bank results should not surprise and it is also not something that should suddenly improve
BAC reported net charge offs at USD1,498m in 1Q24 up from USD807m in 1Q23, a substantial YoY delta. The QoQ delta is accelerating too, up USD306m in the 90 days
Net interest income is now in decline at BAC at -3% YoY in 1Q24, given the disproportionate rise in funding costs vs interest income


BAC - Net Charge Offs Up 86% YoY And -3% YoY Net Interest Income Growth

United States

JPMorgan Chase & Co. provides global financial services and retail banking. The Company provides services such as investment banking, treasury and securities services, asset management, private banking, card member services, commercial banking, and home finance. JP Morgan Chase serves business enterprises, institutions, and individuals.

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JPMorgan Chase & Co (JPM US)

US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Residential mortgage loan data is dismal and worsening for US banks, which we see in weekly data of loan growth and in the Mortgage Bankers Loan...

Daniel Tabbush

Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

Shift Exposure From Growth to Value; Downgrading Tech to market weight $XLK; Upgrading Industrials $XLI to Overweight; Upgrading Utilities $XLU to...

Vermilion Research

HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...

Osbert Tang, CFA

US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

Zions bank is reporting incredibly high time deposit growth, with negative implications for forward net interest income, and both Zions and Cade...

Daniel Tabbush

BAC - Net Charge Offs Up 86% YoY And -3% YoY Net Interest Income Growth

BAC now shows two consecutive quarters of negative net interest income growth, and in 1Q24 it also shows substantially higher total net charge...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

US Banks - Residential Mortgage Loans Weekly Data Is Dismal

Residential mortgage loan data is dismal and worsening for US banks, which we see in weekly data of loan growth and in the Mortgage Bankers Loan...

Daniel Tabbush

Shifting Exposure From Growth to Value; Downgrading Technology; Upgrades: Manufacturing & Utilities

Shift Exposure From Growth to Value; Downgrading Tech to market weight $XLK; Upgrading Industrials $XLI to Overweight; Upgrading Utilities $XLU to...

Vermilion Research

HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

​HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...

Osbert Tang, CFA

US Banks - Zions Reporting 195% Higher Time Deposits, Cadence Reporting 926% Higher Net Charge Offs

Zions bank is reporting incredibly high time deposit growth, with negative implications for forward net interest income, and both Zions and Cade...

Daniel Tabbush

BAC - Net Charge Offs Up 86% YoY And -3% YoY Net Interest Income Growth

BAC now shows two consecutive quarters of negative net interest income growth, and in 1Q24 it also shows substantially higher total net charge...

Daniel Tabbush

HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...