Archive for March, 2014

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DFS: Capital, Opportunity, and Discipline

We estimate DFS has excess capital of $2.5bn (given that its 2015 Tier 1 common ratio is 8.7% under the CCAR severe-stress scenario, after the just-approved capital plan, versus a minimum requirement of 5% of risk-weighted assets that are currently

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Petrochemical-Fest – A Summary of the Texas Gathering

General euphoria over the opportunity presented to the US by the abundance of shale gas – estimates of expected investments in the sector 30-40% higher than they were a year ago. There have been plenty of basic chemical investments announced

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No Free Lunch: A Primer on Interchange and Debit

This note comments on the WMT suit filed yesterday against Visa in the context of the broader impact of interchange on the structure of the card payments industry, particularly in debit. The dynamics are more involved than in many industries

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Quick Thoughts – BAC Capital Tsunami: Expect Stock Buyback of over $10bn in 2015

Last night, the Fed announced its review of bank capital plans for 2014 (March through March), including BAC. BAC was approved to buyback $4bn of stock and raised the dividend to 5 cents/quarter from a token penny. BAC also announced

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March 26, 2014 – Facebook: Dream Until Your Dreams Come True

In its first year of trading, FB struggled to transition to mobile, delivering lackluster growth and failing to get back to its $38 IPO price. However, with its 2Q13, the company demonstrated a new ability to monetize its increasingly mobile

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AXP: Structurally Improving Business Model

The economics of AXP’s business model are improving meaningfully as it overcomes the anti-competitive constraints imposed by V and MA through the exclusionary rules (preventing Amex from distributing its network services through the bank channel) which were struck down by

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SSR Index of Current-Quarter Healthcare Demand Growth: Interim 1Q14 Estimates

  We expect 3.4% (nominal) y/y growth in US health services demand during 1Q14, the product of 2.4% growth in demand intensity and 1.0% growth in price. Intensity growth reflects a 10bp improvement over actual 4Q13 growth of 2.3%, but

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Quick Thoughts: Appeals Court Ruling on Debit will Galvanize MCX

Late Friday, an Appeals Court overturned a July-ruling from the District Court that the Durbin cap on debit interchange be lowered and that debit cards be activated for unaffiliated networks to handle signature-authenticated transactions (as opposed to the Federal Reserve

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Quick Thoughts: BAC/COF – Rising Net Interest Margins and Payout Ratios

Bank stocks have rallied sharply as the market interpreted comments on Wednesday by Fed Chairman Yellen that short rates would increase earlier than previously discounted. We continue to see BAC (up 4% over last two days) as the best play

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After The Storm Clouds Clear – What to Buy On A Dip

We expect many of the companies in our coverage universe to miss first quarter estimates – either choosing to guide down proactively over the next few weeks or simply coming up short when they announce.  This will provide some incremental

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