We tend to look at the latest rumors about possible increases in bank capital requirements from a buyer’s perspective when it comes to our treasury arm Morgan Stanley (MS) and Wells Fargo (WFC). strong. The Wall Street Journal reported on Monday that financial industry regulators could release proposals as early as this month aimed at boosting emergency funding for big banks. After the failure of Silicon Valley Bank in March, followed closely by two other banks, U.S. regulators appear to want banks better prepared to weather future crises. Morgan Stanley and Wells Fargo, while not at all worried during the recent mini-banking crisis, are struggling to regain their footing after their stocks fell in the wake of the SVB bankruptcy. In our view, the Journal’s report was largely predictable, with bank stocks already reflecting the potential for increased regulatory scrutiny dating back to the first bank bombing. The change could amount to an increase of up to 20% in total capital requirements for large U.S. banks, according to a journal report, with a certain buffer against risk-weighted assets to protect customers (and businesses). In the event of a loss you need to keep One common metric used to measure this is the Common Equity Tier 1 ratio (or CET1 for short), which we highlight in every bank earnings report. The magazine also suggests that regulators will consider taking into account the bank’s business activities, particularly fee-generating activities, including Morgan Stanley’s, which generates a large amount of fees from its wealth management business. It will affect names like Critics of potential regulatory changes do not believe a fee-based approach is the right move, arguing that it would penalize banks for something that is not necessarily operational risk. As our members know, we prefer fee-based income because it tends to be less volatile than non-fee-based income, which is highly dependent on interest rates. Should Morgan Stanley really be penalized more than other companies just because it offers fee-based wealth management solutions that have grown through strong enforcement? Details about are currently limited. However, we tend to opportunistically consider changes to our capital requirements, especially as they relate to Morgan Stanley. At a higher level, WSJ News reports, along with certain agreements made to raise the U.S. debt ceiling, such as resuming student loan repayments and work requirements related to the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. , supports the following: The Fed should not raise interest rates further at next week’s June meeting. As of Monday afternoon, the market is placing an almost 80% chance of such an outcome, according to the CME FedWatch tool. Called by some a “hawkish moratorium,” this means the Fed will release more economic data and as much as possible to gauge the impact of the direct monetary tightening that has already taken place. The scenario is that the meeting will refrain from raising interest rates for the 11th time in a row. . But another part of the “hawkish pause” would be a repeated statement that the Fed will continue to rely on data and may resume rate hikes if needed. Markets are now looking less and less likely to cut interest rates by the end of the year. (Jim Cramer’s Charitable Trust is long MS, WFC. See here for a full list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, Jim trades before he makes a trade. Receive an alert. Jim waits 45 minutes after sending a trade alert before buying or selling shares in the charitable trust’s portfolio. If Jim talks about a stock on his CNBC television, after issuing a trade alert he waits 72 hours before executing the trade. The Investment Club information above is subject to our Terms of Use and Privacy Policy, along with our Disclaimer. No fiduciary duty or obligation shall exist or be created by your receipt of any information provided in connection with The Investment Club. No specific results or benefits are guaranteed.
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When it comes to club finances, we tend to look at the latest rumors about a possible increase in bank capital requirements from a buyer’s perspective. Morgan Stanley (MS) and wells fargo (WFC).
