Bank stress issue
Oppenheimer notes on Wednesday, April 22, the Wall Street Journal reported that it had viewed a confidential document that the Federal Reserve gave banks in February that outlined the cookie cutter assumptions to be used in the stress tests that are to be applied to bank loan portfolios. Firm says while they are highly dubious of any analysis that would be done on such cookie cutter analysis, given a credible source like the Wall Street Journal and the inclusion of specific numbers, they felt honor-bound to run and publish the numbers. The firm says they do so with great trepidation because the more they look at the numbers and the more they think about the methodology, if this report accurately reflects how the tests are to be done, then the more they agree with Wells Fargo Chairman Richard Kovacevich's characterization of the tests (see article titled "Wells Fargo Assails TARP, Calls Stress Test 'Asinine,'" Bloomberg.com, 3/16/2009). In brief, according to the WSJ, the assumptions are that unemployment will be 10.3% at year-end 2010 and that banks would have to project two-year losses in the following amounts: First-lien mortgages 8.5%, home equity lines of credit 11%, commercial and industrial loans 8%, commercial real estate 12% and credit cards 20%.
The unemployment is tracking to be worse than 10.3% at end of 2010. It might hit that in August.
ACI Arch Coal misses by $0.03, reports revs in-line (14.91 )
Reports Q1 (Mar) earnings of $0.21 per share, $0.03 worse than the First Call consensus of $0.24; revenues fell 2.6% year/year to $681.0 mln vs the $680.5 mln consensus.
This is a small decrease in reveneues compared to a larger 40% decrease in a miner like FCX.
FAZ seems to be supporting $8.75 level. I might nibble at the end of the day if lower. |
