Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher. Moving capital targets, weaker UK credit, a poorly structured US business,  and higher operational costs from Brexit give us cause for pause as well.* Is a US Deal Imminent Now?: HSBC’s US business operating profit metrics may actually be the absolute worst of any American bank. If nothing is materially done with the US operation in the immediate term…

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher. Moving capital targets, weaker UK credit, a poorly structured US business,  and higher operational costs from Brexit give us cause for pause as well.* Is a US Deal Imminent Now?: HSBC’s US business operating profit metrics may actually be the absolute worst of any American bank. If nothing is materially done with the US operation in the immediate term…

Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>All banks passed the BoE’s annual stress tests for the first time. No new capital is required, but some capital will become incorporated into regulatory requirements.</li>
<li>With the UK banking system facing cyclical risks back at normal levels, the FPC announced another 50bp CCyB hike to 1.0%, which it sees as cyclically normal for the instrument. However, it will reconsider its adequacy in 2018 H1.</li>
<li>
Normalisation of the countercyclical macroprudential policy instrument matches the maturing of the cycle,…</li>
</ul>


All banks passed the BoE’s annual stress tests for the first time. No new capital is required, but some capital will become incorporated into regulatory requirements.
With the UK banking system facing cyclical risks back at normal levels, the FPC announced another 50bp CCyB hike to 1.0%, which it sees as cyclically normal for the instrument. However, it will reconsider its adequacy in 2018 H1.

Normalisation of the countercyclical macroprudential policy instrument matches the maturing of the cycle,…


BoE: FPC Hikes to Normal Well Ahead of MPC

<ul><li>The BoE has delivered its first rate hike in a decade. Future moves will respond to its trade-off, with slack and inflation determining timing. I expect May-18 next.</li><li>Rate changes may be absorbed in spreads, which would pressure the MPC to hike faster and further than my already hawkish forecast (every six months back to 2%).</li><li>With a positive output gap potentially building, rates need to return to neutral, but markets place excessive focus on growth over gaps and do not price this.</li></ul>

The BoE has delivered its first rate hike in a decade. Future moves will respond to its trade-off, with slack and inflation determining timing. I expect May-18 next.Rate changes may be absorbed in spreads, which would pressure the MPC to hike faster and further than my already hawkish forecast (every six months back to 2%).With a positive output gap potentially building, rates need to return to neutral, but markets place excessive focus on growth over gaps and do not price this.

BoE: Transmitting Periodic Hawkish Surprises

<ul>
<li>Gloomy headlines about new car registrations falling 9.3% y-o-y overstate current weakness. Sales were stricken by tax changes but have been recovering since. Sales growth in Q3 is unusually high with an even larger swing to support GDP growth. </li>
<li>Scrappage schemes and attractive credit policies are also helping, albeit with some financial risks. Stress tests mostly miss the risks rising in this sector, though, with losses set to increase sharply beyond the 10% price fall under consideration.</li>
</ul>The…


Gloomy headlines about new car registrations falling 9.3% y-o-y overstate current weakness. Sales were stricken by tax changes but have been recovering since. Sales growth in Q3 is unusually high with an even larger swing to support GDP growth. 
Scrappage schemes and attractive credit policies are also helping, albeit with some financial risks. Stress tests mostly miss the risks rising in this sector, though, with losses set to increase sharply beyond the 10% price fall under consideration.
The…

FLASH: UK Car Sales Recovering; Stress Would Be Nonlinear

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

Global technicals still relay a bullish outlook. Breakouts and bullish inflections are widespread, especially in Europe and Japan right now, as well as once-laggard sectors like energy.  In addition to our weekly global market recap and outlook, today’s report highlights actionable investment opportunities in global energy stocks and European financials.

Global technicals still relay a bullish outlook. Breakouts and bullish inflections are widespread, especially in Europe and Japan right now, as well as once-laggard sectors like energy.  In addition to our weekly global market recap and outlook, today’s report highlights actionable investment opportunities in global energy stocks and European financials.

Buy Energy Stocks; Brent Is Bottoming; Japan Breaking Out; Buying Opportunity in European Financials

United Kingdom

Lloyds Banking Group plc, through subsidiaries and associated companies, offers a range of banking and financial services. The Company provides retail banking, mortgages, pensions, asset management, insurance services, corporate banking, and treasury services.

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Lloyds Banking (LLOY LN)

HSBC Holdings Plc – Swing & A Miss

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher....

Thomas J. Monaco

BoE: FPC Hikes to Normal Well Ahead of MPC

All banks passed the BoE’s annual stress tests for the first time. No new capital is required, but some capital will become incorporated into...

Phil Rush

BoE: Transmitting Periodic Hawkish Surprises

The BoE has delivered its first rate hike in a decade. Future moves will respond to its trade-off, with slack and inflation determining timing. I...

Phil Rush

FLASH: UK Car Sales Recovering; Stress Would Be Nonlinear

Gloomy headlines about new car registrations falling 9.3% y-o-y overstate current weakness. Sales were stricken by tax changes but have been...

Phil Rush

Buy Energy Stocks; Brent Is Bottoming; Japan Breaking Out; Buying Opportunity in European Financials

Global technicals still relay a bullish outlook. Breakouts and bullish inflections are widespread, especially in Europe and Japan right now, as...

Vermilion Research

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