Fed officials say rates could shift in ‘either direction’ depending on economic growth

Market participants are now betting that there’s a higher likelihood the Fed will cut rates this year, according to CME Group’s FedWatch. No one is …
Federel Reserve building

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The Federal Reserve doesn’t look like it will be raising interest rates again this year, but U.S. central bankers are in no way committed to this policy path, records of the Fed’s most recent rate-setting meeting show.

Officials on the Federal Open Market Committee (FOMC) said muted inflation pressures, as well as “significant” uncertainties surrounding slowing growth, trade tensions and Brexit, are warranting a patient approach to interest rate adjustments. Yet “several participants” noted that this “patient” policy would need to be reviewed regularly, as those situations evolve and as more data about the economy comes in.

“Views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments,” the Fed said in its minutes from the March 19-20 gathering, released Wednesday in Washington. “Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Those discussions all surrounded the Fed’s unanimous decision to keep interest rates unchanged in a target range of 2.25 percent and 2.5 percent. Officials also lowered their expectations for economic growth this year and slashed their projections for additional hikes from two to zero.

Interest rates on hold amid muted inflation

Information contained within the records from that meeting doesn’t differ much from what was previously communicated, says Julia Coronado, president and founder of MacroPolicy Perspectives who used to work for the Fed’s board of governors.

“This is a committee that’s on hold. It seems like it would take a lot for them to shift that stance,” Coronado says. “They’re not in a panic. They just want to take their time and watch things as they unfold.”

But as officials continue to say they’re on pause, investors instead seem to be hearing “cut.” Market participants are now betting that there’s a higher likelihood the Fed will cut rates this year, according to CME Group’s FedWatch. No one is predicting a rate hike.

Officials in the minutes indicated that they’d like to see a pickup in inflation before adjusting interest rates again. Inflation judged by the Fed’s preferred target hasn’t come close to substantially breaching 2 percent since the objective was first defined in 2012. Prices in January rose by 1.4 percent, according to the most recent reading from the Department of Commerce.

“Some participants noted that the appropriate response of the federal funds rate to signs of labor market tightening could be modest, provided that signs of inflation pressures continue to be limited,” the minutes said.

There wasn’t much in the minutes indicating what the threshold for either a rate cut or a rate hike would be, says Eric Stein, co-director of Eaton Vance’s global income group. But judging from these muted inflation pressures, it’s likely that the bar is higher for an increase, he says.

“The Fed is pretty clearly neutral,” he says. “If things get worse, they’ll be cutting. If things don’t, they’ll be on hold.”

Continue saving, paying down debt

The Fed being on hold is good news for borrowers, who were hit with four rate hikes in 2018, says Mark Hamrick, Bankrate’s senior economic analyst.

“Many have been given a bit of a gift here, particularly those in the market for a home or are considering mortgage refinancing. This is why we’ve recently seen a big pickup in refinancing as mortgage rates have backed down from their highs,” Hamrick says. “Continue to make paying down debt a priority, amid other money goals while the economy remains relatively solid.”

But the move might not be a boon to savers, who typically see higher yields after an interest rate hike, he adds.

(Read: The best high-yield savings accounts for April 2019)

“We may be seeing a bit of a short-term top on savings rates. But the most important aspect to this realm remains that it pays to shop around for the best rates,” Hamrick says. “And as we continue to benefit from steady but slower growth, now is the time to sock away emergency savings for the time when the economy truly enters downturn mode.”

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CEOs of big banks defend more resilient financial system since crash

… “shadow banks,” which is a term used to describe non-bank companies getting into financial products, particularly financial technology companies.

NEW YORK (AP) — The heads of seven of the largest banks in the U.S. fielded sometimes contentious questions from a House committee Wednesday, some dealing with current risks to the financial system and other focused on more politically charged topics.

The appearance by the chief executives of JPMorgan Chase and Goldman Sachs and five other banks represented the largest gathering of leaders of the banking industry before Congress since the financial crisis.

The CEOs told members of the House Financial Services Committee they’ve taken steps to improve the stability of their institutions since the financial system nearly seized up in 2008. The banks have raised capital, are more diverse, and are more resilient than they were before the financial crisis, the CEOs said.

“There is no doubt that the strength, stability and resiliency of the financial system has been fundamentally improved over the course of the last 10 years,” said Jamie Dimon of JPMorgan. “Post-crisis reforms have made banks much safer and sounder in three important areas: capital, liquidity and resolution and recovery.”

The backdrop of this hearing is the 10-year anniversary of the 2008-2009 financial crisis. The banking system required extraordinary efforts by regulators — and a bailout by U.S. taxpayers — in order to survive. All seven banks appearing in front of Congress received funds under the $700 billion Troubled Asset Relief Program, and all paid billions of dollars in penalties and fines for their behavior heading into the housing bubble.

“I am concerned that several of these institutions are simply too big to manage their own operations, too big to serve our communities and too big to care about the harm they have caused,” said Rep. Maxine Waters, D-California, who is the chair of the Financial Services Committee.

The hearing had some policy questions, but many members of Congress took their time to ask politically charged questions of the CEOs, on topics from gun regulations and executive compensation. Democrats took their time to laud Bank of America and Citigroup’s decision not to finance gun manufacturing companies, while Republicans took their turns to lambast them.

Rep. Jim Himes, D-Connecticut, asked all CEOs what they considered to be the products or businesses most at risk in the banking system. No CEOs mentioned home mortgages — the product that caused the 2008 financial crisis — but instead the two dominant answers were cybersecurity risks and growth of leveraged corporate lending, or lending to companies with already large debtloads. Another threat mentioned was “shadow banks,” which is a term used to describe non-bank companies getting into financial products, particularly financial technology companies.

A Republican congressman, Steve Stivers of Ohio, asked the CEOs what they considered the biggest non-business risks to the banking system. The CEOs talked about how economic growth is slowing across the globe, and again mentioned cybersecurity as a big risk to the banking industry.

Along with Dimon, among those appearing are David Solomon of Goldman and Brian Moynihan of Bank of America. The CEOs of Citigroup, Bank of New York Mellon, State Street and Morgan Stanley are also testifying. One executive not at the hearing is Tim Sloan, who resigned from his position at Wells Fargo last week, days after a separate appearance before the same committee.

Of the group, only one is still running the same firm as he was 10 years ago: Dimon. All other CEOs at the other firms were replaced either shortly after the financial crisis, or their predecessors decided to retire in the last year.

The hearing comes after the banking industry had a record year for profits in 2018, thanks partly to the tax cuts passed by Republicans in late 2017. Meanwhile, the banking industry’s lobbyists have been pushing Congress to further unwind the rules and regulations put into place after the 2008 financial crisis.

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Two Sigma Investments LP Takes $607000 Position in Banco Bilbao Vizcaya Argentaria SA (BBVA)

Two Sigma Investments LP bought a new position in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) in the fourth quarter, according to its most …

Banco Bilbao Vizcaya Argentaria logoTwo Sigma Investments LP bought a new position in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) in the fourth quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The fund bought 114,780 shares of the bank’s stock, valued at approximately $607,000.

A number of other hedge funds have also modified their holdings of BBVA. Susquehanna Fundamental Investments LLC purchased a new position in shares of Banco Bilbao Vizcaya Argentaria in the 4th quarter worth about $700,000. Barclays PLC raised its position in shares of Banco Bilbao Vizcaya Argentaria by 492.6% in the 4th quarter. Barclays PLC now owns 76,416 shares of the bank’s stock worth $404,000 after acquiring an additional 63,522 shares in the last quarter. Abacus Planning Group Inc. bought a new position in shares of Banco Bilbao Vizcaya Argentaria in the 4th quarter worth approximately $1,097,000. Natixis Advisors L.P. raised its position in shares of Banco Bilbao Vizcaya Argentaria by 51.4% in the 4th quarter. Natixis Advisors L.P. now owns 375,119 shares of the bank’s stock worth $1,984,000 after acquiring an additional 127,429 shares in the last quarter. Finally, Hsbc Holdings PLC increased its position in Banco Bilbao Vizcaya Argentaria by 5.8% during the 4th quarter. Hsbc Holdings PLC now owns 90,101 shares of the bank’s stock valued at $477,000 after buying an additional 4,904 shares in the last quarter.

BBVA stock opened at $6.03 on Wednesday. Banco Bilbao Vizcaya Argentaria SA has a twelve month low of $4.99 and a twelve month high of $8.18. The company has a debt-to-equity ratio of 1.16, a current ratio of 1.09 and a quick ratio of 1.09. The company has a market cap of $40.71 billion, a P/E ratio of 6.85, a P/E/G ratio of 3.70 and a beta of 0.95.

Banco Bilbao Vizcaya Argentaria (NYSE:BBVA) last posted its quarterly earnings data on Friday, February 1st. The bank reported $0.16 earnings per share for the quarter. Banco Bilbao Vizcaya Argentaria had a return on equity of 7.66% and a net margin of 24.54%. The company had revenue of $5.46 billion during the quarter. Equities research analysts forecast that Banco Bilbao Vizcaya Argentaria SA will post 0.72 earnings per share for the current fiscal year.

The business also recently disclosed a semiannual dividend, which will be paid on Monday, April 29th. Investors of record on Tuesday, April 9th will be given a dividend of $0.1821 per share. This represents a yield of 6.02%. The ex-dividend date is Monday, April 8th. Banco Bilbao Vizcaya Argentaria’s dividend payout ratio (DPR) is presently 21.59%.

A number of research analysts recently weighed in on BBVA shares. Zacks Investment Research lowered Banco Bilbao Vizcaya Argentaria from a “hold” rating to a “sell” rating in a research report on Monday, January 14th. HSBC lowered Banco Bilbao Vizcaya Argentaria from a “buy” rating to a “hold” rating in a research report on Tuesday, January 15th. Deutsche Bank raised Banco Bilbao Vizcaya Argentaria from a “hold” rating to a “buy” rating in a research report on Monday, April 1st. Finally, ValuEngine lowered Banco Bilbao Vizcaya Argentaria from a “sell” rating to a “strong sell” rating in a research report on Friday, March 1st. One analyst has rated the stock with a sell rating, four have issued a hold rating and three have assigned a buy rating to the stock. The stock has a consensus rating of “Hold” and a consensus price target of $7.27.

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Banco Bilbao Vizcaya Argentaria Profile

Banco Bilbao Vizcaya Argentaria, SA, together with its subsidiaries, provides retail and wholesale banking, asset management, and private banking services. The company accepts various deposits, such as current and savings accounts, term deposits, subordinated deposits, and other accounts. It also offers loan products; and foreclosed real-estate assets from residential mortgages and developers, as well as lending to developers.

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Institutional Ownership by Quarter for Banco Bilbao Vizcaya Argentaria (NYSE:BBVA)

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Branch introduces virtual debit cards in partnership with Visa

The latest investment round, led by Foundation Capital, involves both existing investors – Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, …

Digital financial services company, Branch International has entered into a partnership with Visa, a global payments technology company, in a bid to expand access to financial services in sub-Saharan Africa.

The agreement will see both companies distribute virtual Visa prepaid debit cards numbers to over two million un-banked users of the Branch lending mobile application. With the virtual cards, Branch customers have the option to receive credit at physical Automated Teller Machines (ATM) without the need for a bank account.

Visa’s payment services will also be implemented into the Branch platform to give consumers the ability to make payments using a card or a mobile phone, as Visa looks to leverage mobile technology to digitize payments.

“Traditional barriers such as a credit score and bank account make financial accessibility a challenge for millions of people … By focusing on digitizing payments, we aim to build a more digitally inclusive ecosystem,’’ Visa’s Vice President for Strategic Partnerships, Fintech and Ventures, Otto Williams said.

Furthermore, Branch is looking to help merchants grow their businesses and drive financial inclusion among the small merchant segments that are often unable to access quick loans.

Thus, it will be offering preferential loan terms to Visa merchants. The loans will provide merchants, who accept Visa on mobile Quick Response (QR) codes, with funds to grow their business. The service will be launched first in Kenya, with plans of extending it across the region, particularly to Tanzania and Nigeria.

“It only makes sense to be working together with Visa to bring world-class financial services to merchants,” Branch’s Chief Executive Officer, Mathew Flannery said, adding that the platform hopes to create a larger and more robust “open-loop payments ecosystem” for all participants.

$170 million series C funding

The partnership between Branch and Visa has seen the lender secure a $170 million series C funding to finance its expansion plan targeted at the unbanked.

The latest investment round, led by Foundation Capital, involves both existing investors – Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, CreditEase, and Victory Park – and new investors including Greenspring, Foxhaven, and B Capital.

Venture capitalist, Charles Moldow of Foundation Capital, observed that emerging markets are one of the biggest growth areas for financial technology and the company’s history of successful FinTech investments is evidence that the investment in Branch is a right call. He also lauded the Branch team and encouraged the platform to become the “cross-border financial super-app”

With traditional barriers like bank accounts, financial accessibility remains a challenge for over two billion people in the world. Yet, many in under-served markets, have a financial tool right in their pockets – their mobile phones. By tapping into the rise of mobile technology worldwide, Branch aims to radically expand financial access, making full global inclusion a reality, Nairametrics notes.

Founded in 2015, Branch offers financial services targeted at the unbanked. The company uses the power of data science – an algorithmic approach – to determine creditworthiness through customers’ smartphones. With over 13 million loans processed and three million customers, the digital lender has disbursed over $350 million.

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Big bank CEOs are about to face angry lawmakers. Their plan: Let Jamie Dimon take over

There’s a joke going around Washington about the best strategy for the Wall Street chief executives when they face off with lawmakers this week: Stay …

“This week’s hearing will reinforce both the criticality of these well-capitalized, customer-driven firms, and the fundamental strength of our financial system,” Kevin Fromer, the forum’s president, said in a statement. The largest banks are “integral to the success of our economy,” he added.

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