Author Topic: Are big banks value traps ?  (Read 29454 times)

sleepydragon

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Re: Are big banks value traps ?
« Reply #160 on: May 23, 2020, 09:57:51 AM »
In other news, in an example of the fake vol suppression that accompanies illiquid investments; the TIAA real estate account, which owns low leverage “core” real estate, some cash, and REITs, including 37% office and 20% retail IS FLAT year to date. TIAA’s general account guarantees liquidity to people who own QREARX.

This happened in ‘08 too, allowing saavy non profit workers to punch out and buy risk assets (or go to cash) at fake marks.

If anyone knows a teacher or professor or cop or whatever that might be long this, I suggest you get in touch with them and explain that a fund that is 57% office and retail should not be flat year to date and strongly recommend they sell (either to replace with REITs or hide out in something else that isn't so mismarked).

https://fluenttech.tiaa.org/pdf/factsheet/878094200.pdf

Check out the two largest investments, malls held alongside BPY and SPG.

Flat year to date, hah!

Fashion Show Mall: Fashion Show is held in a joint venture with Brookfield Property Partners LP, in which the Account holds 50% interest, and is presented gross of debt. As of March 31, 2020, this debt had a fair value of $417.9 million

Florida Mall: The Florida Mall is held in a joint venture with Simon Property Group, L.P., in which the Account holds a 50% interest, and is presented gross of debt. As of March 31, 2020, this debt had a fair value of $155.8 million.

https://www.wsj.com/articles/when-your-lookalike-funds-dont-act-alike-11590159641?redirect=amp&from=groupmessage&isappinstalled=0#click=https://t.co/CBMF5IIYSB

I am willing to bet Jason Zweig is a member on COBF


elliott

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Re: Are big banks value traps ?
« Reply #161 on: June 27, 2020, 02:19:20 AM »

https://thehill.com/policy/finance/504616-fed-bans-stock-buybacks-caps-dividend-payments-for-big-banks-after-stress

Cullen Roche:
Quote
Let me translate this for you. The Fed is very worried about the banking system.

sleepydragon

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Re: Are big banks value traps ?
« Reply #162 on: June 27, 2020, 04:31:22 AM »

https://thehill.com/policy/finance/504616-fed-bans-stock-buybacks-caps-dividend-payments-for-big-banks-after-stress

Cullen Roche:
Quote
Let me translate this for you. The Fed is very worried about the banking system.

I don’t think the Feds are worried about the banking systems. The data says it all. Banks will need to lose a lot of money in the stress test scenario. We are still far from that. The whole point of stress test is the data is transparent. People can see banks have enough capital to weather the problem.
The dividends caps merely indicate that Feds admit they don’t know when the virus will ends, which shows Fed is rational. It’s also formula based so good banks can keep paying dividends but bad banks stops.

wabuffo

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Re: Are big banks value traps ?
« Reply #163 on: June 27, 2020, 07:55:59 AM »
The massive expansion of the Federal Reserve's balance sheet since the Great Financial Crisis (GFC) has helped to increase the safety and soundness of the US commercial banking system.  I think that is an important aspect that most people miss when they think about this crisis vs the last major crisis (GFC).

Pre-GFC, (using the Fed's H.8 and H.4.1 reports for July 6, 2006 as an example of a point in time before the mortgage crisis), the US banking sector had $10.6B of reserves on deposit at the Fed vs $8.229t of total bank assets (0.1% of total assets).

By comparison, if one looks at the latest numbers (as at June 17th, 2020), all federally-chartered US commercial banks combined have $3.069t in reserve balances* at the Federal Reserve vs total assets of $20.246t.   So 15.2% of the entire US banking sector's assets are on deposit in cash at the Federal Reserve!  It really is night and day vs pre-GFC.
 
That's part of the reason for the repo mess last September, bank regulators are leaning on banks to use their deposits at the Fed as the primary asset to meet liquidity coverage ratios and "living will" requirements.
 
wabuffo

* the $3.069t of banking reserves on deposit at the Fed from the H.4.1 report matches the "non-seasonally adjusted bank cash assets" of $3.084t on the Fed's H.8 report.  The small difference is minor amounts of cash and vault cash held by the banks at their branches.
« Last Edit: June 27, 2020, 08:01:19 AM by wabuffo »