Lead Capital Partners: The rise from zero % interest rates is moving more slowly than Wall Street had hoped, and it looks likely that it is going to affect the banks’ top line. The big banks have battled their way to profitability by trimming headcounts but this could go even further to meet the new goals as stress tests are back again.
David Eckhart, Chief Market Strategist at Lead Capital Partnerssaid, “This is the first of two weeks in which the Fed will reveal the results of its regulatory exams for banks. After the markets close on Thursday, the quantitative results of banks’ tests on capital cushions will be revealed. US banks may have performed well in the past and are expected to pass in the first week, but many in Wall Street could have trouble in passing the second week of tests.
“We’re not expecting any failures on the first part of the stress tests but when regulators reveal qualitative results, it could have serious repercussions, especially with expectations of interest rates going negative.”
And this week there is also the question of Brexit. Markets have recently become very jittery on watching the polls in the UK but if by chance it narrowly votes to quit the EU it would have a huge effect on banks in the EU and the US. Over the past couple of years, Bank of America and Citigroup returned $19 billion to shareholders via dividends and buybacks.
The stress tests have extended into one of the most commanding instruments regulators can wield and they affect how much a bank can pay out via dividends and share buybacks, the amount of capital they must hold and their return on equity.
Lead Capital Partners considers the tests to be a delicate balancing act to make decisions that please both shareholders and regulators.

About Lead Capital Partners:
Lead Capital Partners is an independent investment management practice founded on the philosophy that an active, opportunistic and adaptable approach to investing provides our clients with the best chance for the realization of long-term positive returns irrespective of prevailing market environments.
It is our firm belief that the “buy and hold” investment strategy that has traditionally served investors to such great effect over the decades can, now, lead to significant losses in bear markets, or to little or no profit in markets that persist in trading in ranges unless they are actively managed by seasoned professionals such as those at Lead Capital Partners.