Showing posts with label Rivals. Show all posts
Showing posts with label Rivals. Show all posts

Monday, September 16, 2013

Track of the Day: "Bitter Rivals"


Past Tracks


If the nascent football season needed a soundtrack, it may’ve just found one in Sleigh Bells’ stadium-stomping single “Bitter Rivals.” From its chopped and screwed “We Will Rock You” beat to its title to the feral Jock Jams breakdown in its coda—not to mention guitarist Derek Miller’s LSU jersey and tiger-striped guitar—it’s almost as if the song was commissioned by the NCAA. Pigskin overtures aside, though, “Bitter Rivals” is also Sleigh Bells affirming its status as an honest-to-God pop act. As a duo, Miller and singer Alexis Krauss released two fine records previously, but they were obtuse enough to keep Sleigh Bells confined to minor indie stardom. “Bitter Rivals” cleverly moves the dial closer to the center without sacrificing all the thrash and sonic hubris that made them critical darlings in the first place.


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Track of the Day: "Bitter Rivals"

Wednesday, August 14, 2013

Rivals to Hillary Corleone Already Sleeping With the Fishes



Barack Obama’s favourite movie is The Godfather. He once said of his aide Robert Gibbs that “I’ve seen a little bit of Sonny in him once in a while”, referring to the most violent and unstable of Don Corleone’s sons. His former chief of staff, Rahm Emanuel, once sent a dead fish to a pollster who had disappointed him.


But Obama himself, with his cooler-than-thou mien and disdain for the transactional nature of governing, is an unlikely Family head. He is from Al Capone’s Chicago but somehow not of it. For that aspect of politics, no one does it better than the Clintons.


Doug Band, Bill Clinton’s right-hand man, is said to keep a list on his BlackBerry of people who are “dead to us” because they dared to cross the Clintons in the 2008 campaign. Back then, Bill Richardson, a second-rate former cabinet secretary, endorsed Obama after initially promising fealty to the Clintons, to whom he owed his career, during a Super Bowl game.


Bill Clinton’s 1992 campaign manager, James Carville, immediately denounced Richardson as a Judas Iscariot who had betrayed the Clintons in return for Obama’s 30 pieces of silver. Richardson’s career was essentially over. Carville, like the Clintons, has never taken prisoners. One of his campaign adages is: “When your opponent is drowning, throw the son of a bitch an anvil.” And Emanuel was with the Clintons long before Obama appeared on the scene.


All this is worth remembering now that Hillary Clinton is preparing for a 2016 presidential bid. Sure, she could opt to spend more time with her family or baking cookies, but no one close to the Clinton political family believes she won’t run. It would be like Don Corleone retiring to an allotment.


While Hillary is temporarily absent from the fray, Clinton loyalists have set up a Ready for Hillary super-Pac (political action committee) on her behalf — legally, she cannot associate with them. It’s a clever move. The group has been busy signing up top Democratic donors and enlisting the best operatives.


As well as Carville, backers include former Clinton capos Thomas “Mack” McLarty, Harold Ickes and Ann Lewis. It’s also been an opportunity for some to make amends. A prominent supporter has been Senator Claire McCaskill of Missouri, an Obamaite in 2008 who was on the “dead to us” list after saying Bill Clinton was “a great leader but I don’t want my daughter near him”. On Friday she was at a “Madam President” event in Iowa saying she was dreaming of Hillary’s “moment”.


The first casualty of the Ready for Hillary effort appears to have been Vice-President Joe Biden. Old Joe (his teeth and hair are considerably younger but he turned 70 last year) had reckoned, as the incumbent vice-president, that he had a strong claim to be the next Democratic nominee. That was before his 2008 pollster Celinda Lake signed up with Ready for Hillary and the top two grassroots organisers for the Obama-Biden 2012 campaign went to work for the outfit.


Now, Biden is intimating he won’t run if Hillary does. Other potential Democratic rivals are also withering on the vine. Governor Andrew Cuomo of New York, another former Clinton cabinet secretary, is likely to sit out 2016. So, too, is Newark mayor Cory Booker, sometimes described as America’s second black president. It looks as if the field is clear for Hillary.


Usually it is the Republicans who plump for the previous runner-up — Bob Dole in 1996, John McCain in 2008 and Mitt Romney last year. This time, they look set for a bloody, chaotic campaign. New Jersey governor Chris Christie and Senator Rand Paul of Kentucky are already tearing lumps out of each other while Senator Marco Rubio of Florida, former Romney running mate Paul Ryan and George W. Bush’s younger brother Jeb are biding their time for now.


Ironically, Obama’s 2008 win has persuaded other newly elected Republican senators that they too could be commander-in-chief. It may well be, however, that after choosing an untested Obama in 2008, America will be looking for a known quantity next time. Hillary’s campaign will be framed as a historic one to elect the first female president. Just as Republicans have found it hard to attack Obama without appearing racist, running against Hillary means the cry of sexism is never far away.


For more than a decade, she has been shedding her old image as a radical Lady Macbeth and crafting a centrist reputation. McCain recently described her as a “rock star” who did a “fine job” at the state department. An easy primary campaign would mean she could resist moving to the left while watching Republicans having to pander to their conservative base.


Obama emerged stronger from his epic 2008 primary battle with Hillary, but that was the exception and, unlike the Republicans now, the ideological differences between the two were minimal.


At 65, Hillary could be almost a generation older than a Republican opponent. Attacking a woman on age grounds, however, could appear distinctly unchivalrous and while the hefty, trash- talking Christie is often portrayed as a Sopranos character, few Mob aficionados would bet on a Soprano against a Corleone.


The Clintons are making it plain they will not tolerate anyone messing this up for them. Anthony Weiner, the weasel-faced New York mayoral candidate, is already in trouble for disrespecting his wife Huma Abedin, Hillary’s senior aide and a beloved sister in the Clinton world.


After the latest revelations of his sexts to a young woman, it was made known the Clintons were displeased. Aides leaked that Philippe Reines, Hillary’s consigliere, had launched an expletive- laced tirade against Weiner during a conference call, threatening to “pull out” his throat. When Abedin visited Doug Band at his apartment, Weiner was ordered to wait outside while his wife took their son in.


The comic drama of the Weiner campaign, not to mention the inevitable dragging up of Bill’s Monica Lewinsky escapade in the 1990s, has given Republicans hope that the new, shiny Clinton brand can be tarnished again. If Weiner should win the New York mayoral primary next month, expect to hear of his body floating in the Hudson shortly afterwards. 




RealClearPolitics – Articles



Rivals to Hillary Corleone Already Sleeping With the Fishes

Thursday, August 8, 2013

Politics to fore as Egyptian rivals celebrate Eid

CAIRO (Reuters) – Bitterly divided Egyptians prayed in public and children played as they celebrated the Eid al-Fitr holiday on Thursday.


Reuters: Top News



Politics to fore as Egyptian rivals celebrate Eid

Politics to fore as Egyptian rivals celebrate Eid




Members of the Muslim Brotherhood and supporters of deposed Egyptian President Mohamed Mursi walk with their families in the sit-in area of Rab


1 of 2. Members of the Muslim Brotherhood and supporters of deposed Egyptian President Mohamed Mursi walk with their families in the sit-in area of Rab’a al- Adawiya Square, where they are camping, on the first day of the Eid al-Fitr holiday after the end of the fasting month of Ramadan, in Cairo August 8, 2013.


Credit: Reuters/Asmaa Waguih






CAIRO | Thu Aug 8, 2013 7:10am EDT



CAIRO (Reuters) – Bitterly divided Egyptians prayed in public and children played as they celebrated the Eid al-Fitr holiday on Thursday.


But the barbed wire and armoured vehicles in the streets of downtown Cairo and the barricades around Islamist protest camps attested to the dangerous political edge to the festivities.


Rival supporters of ousted Egyptian President Mohamed Mursi and the new army-installed government converged on separate sites in the capital of the Arab world’s most populous nation against the background of crisis.


Families flocked to dawn prayers at the Rabaa al-Adawiya mosque, focal point of Islamist opposition to the government, then strolled and picnicked around the area.


“This is the best Eid of my life,” said Ali Mohamed, 40, a farmer from a village near the Nile Valley town of Minya, south of the capital. “It’s victory or death now. We had five elections and that traitor Sisi has reversed all that.”


He was referring to army chief General Abdel Fattah al-Sisi, who led the overthrow of the Islamist Mursi on July 3 after huge demonstrations against his rule.


Egypt has been dangerously polarised since then with Mursi’s Muslim Brotherhood and its loyalists demanding his reinstatement and the government and its supporters saying they are finished.


Tension has prevailed at the Brotherhood protest camps after the security forces threatened to dismantle them. Protesters have erected sandbag-and-brick barricades and armed themselves with sticks to confront any attack.


But Eid – the four-day holiday which marks the end of the Muslim fasting month of Ramadan – offered a measure of relief.


Thousands packed into the Rabaa camp, spilling onto a street where security forces shot dead more than 80 Mursi supporters in clashes on July 27.


Boys lit firecrackers and worshippers handed out sweets and offered greetings to each other, an Eid tradition. Street stalls sold tea, snacks and plastic toys.


Others hawked posters of Mursi and green headbands with the Islamic inscription “No God but God”. One table sold tear gas masks and swimming goggles.


Groups chanted “Interior ministry thugs! “Egypt, our country,” and beat drums.


“We want to live as free Muslims,” said a 45-year-old English teacher, who gave her name only as Emmy. She wore a full face veil and gloves, a style favoured by the ultraconservative Salafi Muslims.


“We don’t want to be insulted in police stations. We don’t want to be harassed for wearing these veils or for growing beards.”


She said she wanted to work as an interpreter but companies would not hire her because of her dress.


Emad Abdelaziz, 53, an engineer, attended prayers with his wife and three daughters, all dressed smartly for the occasion.


“We came to Rabaa for the prayer because this year is not like any other. We are here to demand Mursi’s return,” he said.


Ghada Idriss, 35, had traveled from rural Minya province with her husband, two young sons, and two-month-old daughter.


“I came here because I want to make a small difference,” she said. “By sitting here peacefully, they will understand and know that we refuse the return of the system of Hosni Mubarak.”


TAHRIR RAP


Supporters of the government began gathering in Tahrir Square, the focal point of the uprising that brought down long-ruling strongman Mubarak in February 2011 and set in train Egypt’s prolonged and troubled revolution.


Some leftist and youth groups called for public prayers in the square to support what they regard as the second revolution — the overthrow of Mursi with mass public demonstrations.


Soldiers lounged atop armoured personnel carriers in the streets off the square, including outside the Egyptian Museum, home to a trove of antiquities for the age of the pharaohs.


Awad Abdel Gawad, a 60-year-old woodworker, said: “I am here to say happy Eid to the people of the revolution, of Tahrir Square. I want the revolution’s demands met and the country to flourish. Every revolution has troubles at the start but God will help us.”


Mursi supporters at the Rabaa and Nahda protest camps should avoid violence and give up peacefully, he said.


“The Rabaa people think Mursi’s coming back but he isn’t. He is gone,” Abdel Gawad said.


“I want to tell those in Rabaa ‘we are all Egyptians, all Muslims, and what harms you harms us, and we want a president who fixes the country and we are all with him.”


Although Mursi was democratically elected in June 2012, his rule divided the country. Many Egyptians feared he was trying to impose an Islamist regime on the country of 84 million people, while he failed to get to grips with a deteriorating economy.


The army justified his overthrow by saying it acted at the behest of millions who took to the streets to demand that he go.


Reem Adel, 17, a student at the University of Commerce, said she was at Tahrir to celebrate Eid prayers and commemorate the people she said had died under Mursi’s rule. She gave a cautious endorsement to Egypt’s new military strongman.


“Sisi has been good so far though we are worried about the future. We want Rabaa and Nahda dispersed but with the least loss of life because we are afraid violence would be used against us too later,” she said.


On a stage in the center of the sprawling Tahrir Square, a singer sang anti-Brotherhood rap and nationalist songs. Hundreds of mostly young people came early to the square, which was expected to fill up later in the day.


Portraits of Sisi hung from trees and lamp-posts, and some banners denounced U.S. President Barack Obama and U.S. Ambassador Anne Patterson – perceived by government supporters as favouring the Islamists.


Flag vendors sold banners saying: “Egypt is guarded by the army. The Egyptian people delegate the Egyptian army to fight terrorism.”


(Reporting by Maggie Fick and Shaimaa Fayed; Writing by Angus MacSwan; Editing by Paul Taylor)





Reuters: Top News



Politics to fore as Egyptian rivals celebrate Eid

Wednesday, July 24, 2013

Apple wobbles in China as rivals offer more, for less


An iPhone 5 is pictured on display at an Apple Store in Pasadena, California July 22, 2013. REUTERS/Mario Anzuoni

An iPhone 5 is pictured on display at an Apple Store in Pasadena, California July 22, 2013.


Credit: Reuters/Mario Anzuoni






SAN FRANCISCO | Tue Jul 23, 2013 11:40pm EDT



SAN FRANCISCO (Reuters) – Investors breathed more easily after Apple Inc turned in a quarterly report card with a pleasant iPhone sales surprise. But the resultant share-price rally may prove short-lived as Wall Street frets about sliding margins and puzzles over a dramatic revenue drop-off in its No. 2 market of China.


Without releasing a new product, Apple sold 31.2 million units of the iPhone – its most important device in the fiscal third quarter – or about 20 percent more than analysts had envisioned.


The company’s shares climbed 5 percent in after-hours trade, partly on Apple saying it will buy back stock at a faster pace.


But revenue from all Apple products in greater China plummeted 43 percent from the previous quarter and 14 percent from a year earlier – worrying for a region where smartphone penetration is still low.


Growing competition in a maturing global smartphone market, coupled with the rising number of lower-priced devices in Apple’s line-up, such as iPad minis and older-model phones, pushed third-quarter profit margins to below 37 percent from more than 42 percent just a year earlier.


Analysts and executives struggled to explain the slowdown in greater China, which includes Hong Kong and Taiwan and accounts for 13 percent of Apple’s fiscal third-quarter revenue.


Tuesday’s stock rally may quickly lose steam, as Apple is dogged by issues such as lower selling prices and an uncertain product pipeline, said Colin Gillis, an analyst with BGC.


“We’re not likely to have any new product shipping in June,” Gillis said. Average selling prices (ASP) “are declining and margins are going to be under pressure. These things look like the realities.”


Apple’s average selling price during the quarter was $ 581, which is about $ 27, or 4 percent, down from the previous year. Apple attributed this decline to the “mix of products” – the company saw significant growth in the lower-priced iPhone 4 – and foreign exchange problems.


“It’s not just the ASP per se,” said Gartner analyst Carolina Milanesi. “What you have seen with iPhone 5 is the bill of materials is going up. You are spending more.”


CHINA DROPS OFF


The global battle for mobile supremacy is now being played out between heavy-hitters like Apple, South Korea’s Samsung Electronics Co Ltd and relative newcomers like Huawei Technologies Co Ltd and ZTE Corp in China. Samsung, which for a year or more has been steadily encroaching on Apple’s turf particularly in Asia, is also showing signs of fatigue and issued a disappointing earnings forecast earlier this month.


Even excluding China, Apple’s revenue in the Asia Pacific region was down 35 percent sequentially.


Apple CEO Tim Cook – who has presided over a 20 percent drop in the California-based company’s share price so far in 2013 – blamed the shortfall partly on the economy and said he remained bullish on China.


The “economy clearly doesn’t help us, nor others,” Cook told analysts on a conference call.


He said however that the revenue numbers didn’t tell a complete picture. Apple books revenue when it sells to resellers, who then sell the products to consumers. Sales to consumers – or sell-through in industry parlance – were down just 4 percent from the year-ago quarter in China.


By that same measure, mainland Chinese sell-through sales were actually up 5 percent year-over-year, though that was a deceleration in growth, Cook said.


Finally, sales of the iPad – the device that catapulted tablet computing into the mainstream – underperformed. Apple shipped 14.6 million tablets in the quarter, a few million below rough estimates.


Some investors argue that Apple’s hold on the market it created may slip as the field gets increasingly crowded, with the smartphone makers as well as Google Inc and Amazon.com Inc piling in.


Cook however drew attention to usage data showing the iPad still commands a dominant share of Web traffic.


“iPad accounts for 84 percent of the Web traffic from tablets,” he said. “So if there are lots of other tablets selling, I don’t know what they are being used for.”


But Frank Gillett, principal analyst at Forrester, warned that the iPad numbers bear watching going forward.


“You are to wonder if we are reaching saturation,” he said. “But you can’t believe that as the idea of a tablet is very compelling.”


Given all those factors, the immediate stock rally should not be seen as proof that concerns surrounding the stock have abated, some analysts said.


“It’s nice to see a bit of a beat for a change,” said Hudson Square Research analyst Daniel Ernst. But “earnings are still down year over year.”


“It’s going to take a new product introduction before we see earnings turn positive,” Ernst said. “It’s a step in the right in the direction, with low expectations.”


(Reporting by Poornima Gupta and Edwin Chan, Editing by Peter Henderson and Stephen Coates)





Reuters: Most Read Articles



Apple wobbles in China as rivals offer more, for less

Apple wobbles in China as rivals offer more, for less


An iPhone 5 is pictured on display at an Apple Store in Pasadena, California July 22, 2013. REUTERS/Mario Anzuoni

An iPhone 5 is pictured on display at an Apple Store in Pasadena, California July 22, 2013.


Credit: Reuters/Mario Anzuoni






SAN FRANCISCO/HONG KONG | Wed Jul 24, 2013 3:46am EDT



SAN FRANCISCO/HONG KONG (Reuters) – A sharp drop in Apple Inc’s China revenue in April-June underscores the challenges it faces in its second-largest market as the technology gap with cheaper local rivals narrows and as Samsung Electronics keeps up a steady stream of new models across all price ranges.


While investors marked up Apple shares as the company sold more of its iPhones than expected, the stock rally may prove short-lived as demand for its products fades in China. Analysts predict Apple will lose market share in the world’s leading smartphone sector.


“There’s some cannibalization of Apple’s market share from competitive mid-tier models that cost a lot less and perform as well, from vendors such as Xiaomi and Vivo,” said Huang Leping, an analyst at Nomura in Hong Kong, referring to rival Chinese models.


Salespeople at several electronics shops in Hong Kong said South Korea’s Samsung was a bigger hit with consumers as it offers more products. Some display counters didn’t carry any Apple devices.


“Samsung products have enjoyed greater sales than Apple as many mainland (Chinese) tourists tend to buy Samsung due to a greater variety of models with a wider price range,” said a saleswoman at a Hong Kong computer centre. “That’s why we stock more Samsung products.”


SLIPPING DOWN


In the first quarter of this year, Apple ranked top in Hong Kong with 46 percent market share in smartphones, though that was down from 54 percent in the last quarter of 2012, according to market research firm Canalys.


Even without releasing a new product, Apple sold 31.2 million iPhones in its fiscal third quarter, around a fifth more than analysts had predicted. But revenue from all Apple products in Greater China, which includes Hong Kong and Taiwan, slumped 43 percent from the previous quarter and was down 14 percent from a year earlier – worrying in a region where smartphone penetration is still low.


Greater China accounted for 13 percent of Apple’s sales, or $ 5 billion, in April-June – down from nearly 19 percent in the previous quarter. Hong Kong was a particularly weak spot. “It’s not totally clear exactly why that occurred,” CEO Tim Cook said on a conference call with analysts.


“In the past three months, the number of mainland Chinese consumers of Apple products dropped about 50 percent,” said Sunny Tang, a salesperson at another Hong Kong electronics store that sells Apple products. “Android (Google’s operating system in many Samsung phones) is much better than Apple, and in that period Samsung released at least five phones and tablets.”


Nicole Peng Luping at Canalys said: “China is a very diverse market so you need to have very diverse products to serve different levels of customers – and that’s the weakness for Apple.”


HEATING UP


In the first quarter, Apple ranked 5th in China with 9.7 percent market share, well behind leader Samsung with 17.7 percent, and lagging, among others, Lenovo Group Ltd and Huawei Technologies, which said on Wednesday it was on track to hit 10 percent revenue growth this year.


Nomura’s Huang expects Apple’s China market share to slip 1-2 percentage points in the coming quarters as the novelty of the iPhone 5 fades and as new buyers opt for cheaper smartphones.


The global battle for mobile supremacy is not just between Apple and Samsung. Huawei and ZTE Corp are growing across their Chinese home base, and South Korea’s LG Electronics said on Wednesday it sold a record 12.1 million smartphones in April-June, more than double its year-ago sales.


As high-end smartphone sales hit a plateau, the $ 2 trillion industry – telecom carriers, handset makers and content providers – is buckling up for a bumpier ride as growth shifts to emerging markets, primarily in Asia.


Even excluding China, Apple’s revenue in Asia Pacific fell 35 percent quarter-on-quarter.


CEO Cook, who has seen Apple stock fall by more than a fifth so far this year, blamed China’s slowing economic growth, but said he remained bullish on that market. The “economy clearly doesn’t help us, nor others,” he told analysts.


He said, however, that the revenue numbers don’t tell the whole story. Apple books revenue when it sells to resellers, who then sell the products to consumers. Sales to consumers – or sell-through – slipped just 4 percent in Greater China from a year ago. By that same measure, mainland Chinese sell-through sales actually rose 5 percent year-on-year, though that was a deceleration in growth, Cook said.


WEB TRAFFIC


Beyond the Asia weakness, Apple’s sales of its iPad – the device that catapulted tablet computing into the mainstream – underperformed. Apple shipped 14.6 million tablets in April-June, some way below rough estimates.


Some investors argue that Apple’s hold on a market it created is likely to slip as rival smartphone makers as well as Google and Amazon.com Inc pile in, but Cook noted that usage data shows the iPad still commands a dominant share of Web traffic.


“iPad accounts for 84 percent of the Web traffic from tablets,” he said. “So if there are lots of other tablets selling, I don’t know what they are being used for.”


Given the pressures and increasing competition, Apple’s stock rally should not be seen as proof that concerns over its outlook have abated, some analysts said. “It’s nice to see a bit of a beat for a change,” said Hudson Square Research analyst Daniel Ernst. But “earnings are still down year over year.”


“It’s going to take a new product introduction before we see earnings turn positive.”


(Additional reporting by Edwin Chan in SAN FRANCISCO; Yimou Lee, Brian Yap and Lavinia Mo in HONG KONG; Writing by Anne Marie Roantree; Editing by Ian Geoghegan)





Reuters: Business News



Apple wobbles in China as rivals offer more, for less

Thursday, July 18, 2013

Analysis: Bank of America"s interest-rate exposure may be worse than rivals"


The sign of a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010.REUTERS/Fred Prouser

The sign of a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010.


Credit: Reuters/Fred Prouser






NEW YORK | Thu Jul 18, 2013 12:52am EDT



NEW YORK (Reuters) – Bank of America Corp’s (BAC.N) balance sheet suffered from rising bond yields in the second quarter, suggesting that the second-largest U.S. bank may be more exposed to interest-rate risk than some of its major rivals.


The bank posted a profit for shareholders of $ 3.57 billion in the second quarter, but on its balance sheet the picture was not as good – its net worth fell by $ 6.26 billion as a result of investment losses. Rivals JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) both managed to increase their net worth as measured by their book value.


The unrealized losses bode ill for investors hoping Bank of America will increase share buybacks and dividends.


As bond yields – and eventually interest rates – rise, further losses in its portfolio could prevent it from building its net worth, making it hard to convince regulators the bank can return more capital to shareholders.


Bank of America appears to have used mortgage bonds in an investment portfolio to bet yields would stay stable and relatively low, say analysts who studied the size and composition of its holdings.


It lost that bet. U.S. bond yields surged after Federal Reserve Chairman Ben Bernanke said the bank would taper its latest bond buying programs. Bank of America booked some $ 5.73 billion of paper losses from these securities in the quarter, and still held about $ 170 billion as of June 30.


Those losses and others were in a portfolio, known as the “available-for-sale” book, which affects a bank’s balance sheet but does not affect earnings.


The Charlotte, North Carolina-based bank also may have made similar, large bets about rates in the derivatives markets that will lead to more losses if yields rise, analysts said, based on the bank’s prior disclosures.


“Every bank has their risk where they’re willing to go out on a limb, and rate risk is what Bank of America is willing to go out on a limb for,” said Charles Peabody, a partner at Portales Partners, an equity research and trading firm.


According to Peabody’s estimates, Bank of America has a higher percentage of residential mortgage-backed securities in its available-for-sale portfolio than JPMorgan and Citigroup. Higher exposure to RMBS implies it has greater exposure to rising rates.


“They shine at taking rate risk over time, but it can come back to haunt them, too,” Peabody said. He rates Bank of America an “underperform,” and last month correctly predicted that the bank would generate billions of dollars of losses in its available-for-sale portfolio.


Bank of America spokesman Jerry Dubrowski declined to comment.


For this year, the bank already has approval from regulators to buy back up to $ 5 billion in common shares and redeem approximately $ 5.5 billion in preferred stock.


By some measures, the bank is building capital, and is ahead of rivals. For example, Bank of America boosted its capital levels under new international rules, known as Basel III, above those of JPMorgan. Regulators consider multiple measures of capital and leverage in assessing a bank.


GOOD AND BAD SCENARIOS


As of Wednesday, investors seem to be more pleased with the bank’s lower operating expenses and higher revenues than worried about any decrease in tangible book value. Bank of America shares closed at $ 14.31, their highest level since March 2011.


Many investors also hope that bond yields have stabilized at higher levels. So far this month, the 10-year U.S. Treasury yield has remained relatively flat at 2.49 percent. It rose 0.87 percentage points to 2.49 percent between May 3 and the end of the second quarter.


In this scenario, Bank of America may be able avoid hits to its balance sheet from losses in its investment portfolio and deflect criticism from investors.


Continued growth in earnings would also offset those unrealized losses. Chief Financial Officer Bruce Thompson said it would likely take three years for net interest income to offset the decline in its securities portfolios due to the rise in yields.


“You’re going to have earnings improving, which is what the markets are going to be looking at. It just takes a little time to get there,” said Marty Mosby, an analyst at Guggenheim Securities.


But in a worst-case scenario, one of minimal economic growth coupled with rising bond yields, the bank’s income could be squeezed and it could suffer further investment losses. Both of those factors would decrease bank capital.


Declines in the value of the bank’s available-for-sale portfolio have another impact on its books: they prevent the bank from using tax benefits it has accumulated, known as “deferred tax assets.”


Bank of America’s rate risk has spooked some investors.


“Rising rates will not be a benefit for Bank of America or any big bank in the short-term. That’s why we’re staying away,” said Malcolm Polley, chief investment officer at Stewart Capital Advisors, which has about $ 1.1 billion under management.


(Editing by Paritosh Bansal, Peter Henderson and Edwina Gibbs)





Reuters: Business News



Analysis: Bank of America"s interest-rate exposure may be worse than rivals"

Analysis: Bank of America"s interest-rate exposure may be worse than rivals"


The sign of a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010.REUTERS/Fred Prouser

The sign of a Bank of America ATM machine is pictured in downtown Los Angeles October 8, 2010.


Credit: Reuters/Fred Prouser






NEW YORK | Thu Jul 18, 2013 12:52am EDT



NEW YORK (Reuters) – Bank of America Corp’s (BAC.N) balance sheet suffered from rising bond yields in the second quarter, suggesting that the second-largest U.S. bank may be more exposed to interest-rate risk than some of its major rivals.


The bank posted a profit for shareholders of $ 3.57 billion in the second quarter, but on its balance sheet the picture was not as good – its net worth fell by $ 6.26 billion as a result of investment losses. Rivals JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) both managed to increase their net worth as measured by their book value.


The unrealized losses bode ill for investors hoping Bank of America will increase share buybacks and dividends.


As bond yields – and eventually interest rates – rise, further losses in its portfolio could prevent it from building its net worth, making it hard to convince regulators the bank can return more capital to shareholders.


Bank of America appears to have used mortgage bonds in an investment portfolio to bet yields would stay stable and relatively low, say analysts who studied the size and composition of its holdings.


It lost that bet. U.S. bond yields surged after Federal Reserve Chairman Ben Bernanke said the bank would taper its latest bond buying programs. Bank of America booked some $ 5.73 billion of paper losses from these securities in the quarter, and still held about $ 170 billion as of June 30.


Those losses and others were in a portfolio, known as the “available-for-sale” book, which affects a bank’s balance sheet but does not affect earnings.


The Charlotte, North Carolina-based bank also may have made similar, large bets about rates in the derivatives markets that will lead to more losses if yields rise, analysts said, based on the bank’s prior disclosures.


“Every bank has their risk where they’re willing to go out on a limb, and rate risk is what Bank of America is willing to go out on a limb for,” said Charles Peabody, a partner at Portales Partners, an equity research and trading firm.


According to Peabody’s estimates, Bank of America has a higher percentage of residential mortgage-backed securities in its available-for-sale portfolio than JPMorgan and Citigroup. Higher exposure to RMBS implies it has greater exposure to rising rates.


“They shine at taking rate risk over time, but it can come back to haunt them, too,” Peabody said. He rates Bank of America an “underperform,” and last month correctly predicted that the bank would generate billions of dollars of losses in its available-for-sale portfolio.


Bank of America spokesman Jerry Dubrowski declined to comment.


For this year, the bank already has approval from regulators to buy back up to $ 5 billion in common shares and redeem approximately $ 5.5 billion in preferred stock.


By some measures, the bank is building capital, and is ahead of rivals. For example, Bank of America boosted its capital levels under new international rules, known as Basel III, above those of JPMorgan. Regulators consider multiple measures of capital and leverage in assessing a bank.


GOOD AND BAD SCENARIOS


As of Wednesday, investors seem to be more pleased with the bank’s lower operating expenses and higher revenues than worried about any decrease in tangible book value. Bank of America shares closed at $ 14.31, their highest level since March 2011.


Many investors also hope that bond yields have stabilized at higher levels. So far this month, the 10-year U.S. Treasury yield has remained relatively flat at 2.49 percent. It rose 0.87 percentage points to 2.49 percent between May 3 and the end of the second quarter.


In this scenario, Bank of America may be able avoid hits to its balance sheet from losses in its investment portfolio and deflect criticism from investors.


Continued growth in earnings would also offset those unrealized losses. Chief Financial Officer Bruce Thompson said it would likely take three years for net interest income to offset the decline in its securities portfolios due to the rise in yields.


“You’re going to have earnings improving, which is what the markets are going to be looking at. It just takes a little time to get there,” said Marty Mosby, an analyst at Guggenheim Securities.


But in a worst-case scenario, one of minimal economic growth coupled with rising bond yields, the bank’s income could be squeezed and it could suffer further investment losses. Both of those factors would decrease bank capital.


Declines in the value of the bank’s available-for-sale portfolio have another impact on its books: they prevent the bank from using tax benefits it has accumulated, known as “deferred tax assets.”


Bank of America’s rate risk has spooked some investors.


“Rising rates will not be a benefit for Bank of America or any big bank in the short-term. That’s why we’re staying away,” said Malcolm Polley, chief investment officer at Stewart Capital Advisors, which has about $ 1.1 billion under management.


(Editing by Paritosh Bansal, Peter Henderson and Edwina Gibbs)





Reuters: Business News



Analysis: Bank of America"s interest-rate exposure may be worse than rivals"