Citigroup
This is one of the largest bank holdings in America, providing clients of various sizes with a full range of financial services. The company has its own representative offices in various countries, including North America, Asia, Europe, the Middle East and Africa.
In 2020, the company was plagued by a whole series of problems. First of all, it is worth remembering that the employees of the credit department of the enterprise mistakenly transferred 900 million credit dollars to Revlon, which demonstrated the low degree of modernization of the company. A little while later, the regulator presented the bank with a fine of $ 400 million, presenting an obligation to eliminate shortcomings in the security system. Finally, the stable position of the company was undermined when CEO M. Karbot retired earlier than the previously agreed deadline.
The beginning of 2021 was a time of hope for the company. At that time, D. Fraser came to the post of general director of the company, who immediately decided to start her activity with the restructuring and renewal of the company. First, the head decided to give up 1 franchise, in her opinion, pulling the bank to the bottom. She believed that it was best at this time to focus on franchises that bring decent profits. It was also decided to focus on capital management, to a greater extent in the international segment. Forecasts for the restoration of the stability of the enterprise and its high performance encouraged investors, and the company's securities immediately began to rise in price.
However, this trend did not last long. Since the middle of 2021, paper has become cheaper again. The main reason for the fall is the insufficiently impressive financial report, which showed that the company's expenses increased, while market conditions significantly tightened. The company had to sell its consumer banking business in Australia. In the 3rd quarter of the same year, there was a loss in the tax system in the amount of $ 68 million.
After this situation, the company announced the closure of the consumer division in Korea, which threatens with penalties in the amount of $ 1.5 billion. The next blow for the company and investors was the statement by Mark Mason, the company's CFO, about the termination of the asset repurchase process due to new regulatory sanctions regarding risk management in the derivatives market.
Three perspectives for a short time
Should we consider the assets of Citigroup and JPMorgan as promising?
All these problems make us doubt the need to take seriously both the company itself and its shares. Next, let's talk about several catalysts that can radically change the position of the company:
- We are waiting for the report for the last quarter of fiscal year 2021. He will show how effective the company's work has been over the entire period, what forecasts he makes to himself, as well as what plans the company has for further asset repurchase.
- We are waiting for the "Investor Day". This event, scheduled for March 2, 2022, which will allow the bank's management to outline its own plans and prospects in detail. Plans for the coming metamorphoses, the real goals that the company sets for itself, what expenses are planned, as well as what profit the company expects in the near future will be announced here.
- We are waiting for a decision on franchises. Further release of franchises will lead to the release of about 4.3 billion dollars of capital. If these steps are successful, then sales in Australia and Korea will become higher.
A few more advantages
If we take into account the general reasons that should be taken as a basis for the acquisition of assets, then one of the most important is the low cost. It is one of the largest banks with more than 4% of the American market deposits, trading at about $63 per asset, and having a book value of 80%. In accordance with analysts' expectations, the indicator should be similar in the 4th quarter of 2021. Even with such an increase, the cost of paper will remain at a completely acceptable level than that of competitors. For example, Wells Fargo TBV has it close to 140%.
At the moment, the company's dividend yield is above 3%, which is quite an impressive parameter, higher than that shown by other US banks. This is an excellent passive income, accumulated in the future until the end of all transformations. However, it must be said that Citigroup would rather buy back assets than raise and pay dividends. However, if the situation stabilizes in the near future, it is expected that the dividend yield will increase.
By the 2nd half of the last month of 2021, the next wave of asset growth was observed. After leaving the $46 area, it rose to $54.4. Further growth is planned to reach $ 56.5, and up to $ 160.
JPMorgan Chase
The announcement of the US regulator to reduce the financial assistance program and tighten monetary policy was a real blow for JPMorgan Chase. Do I need to consider the company's shares as promising for investments? Let's talk about this further.
JPMorgan Chase is the largest of the State banks, with assets of at least $3 trillion. If we compare, the second largest US bank by capitalization has a similar indicator of $ 2.4 trillion.
JPMorgan Chase is the world's largest bank not only in terms of capitalization, but also in terms of size. The issuer owns more than 4,900 branches operating on all continents. The company provides a full range of services to large and private clients, starting with conventional or mortgage lending for asset management and investment banking.
Among the main advantages, it is worth noting the extensive diversification of the business, which helps it successfully resist its competitors and global economic crises. For example, in 2020, during the crisis caused by the pandemic, most American companies showed rather weak results. Against this background, JPMorgan Chase's increased revenue and return on equity, which increased by 12%, seemed quite impressive.
Another advantage is the high digitalization of business. Four years ago, the bank announced the launch of a new strategy aimed at making the digital sphere convenient for customers and for the bank, and has recently achieved significant success. The company also pays a lot of attention to the development of the ESG concept, requiring contractors to do the same.
Inflation and banking
Inflation, which is growing at an active pace, requires the regulator to make urgent decisions. In accordance with the Fed's plans, in 2022 there is a very real probability of an interest rate increase by 3 times at once. This is generally useful for banks, because it allows you to increase the percentage of free income, but not in all cases. Sometimes an increase in interest rates seriously harms financial companies.
For example, an overly active increase in interest rates can seriously reduce the net interest income of an enterprise due to the discrepancy between short-term and long-term obligations.
High interest rates will invariably hit borrowers who already have loans with floating interest or those whose rate changes in accordance with changes in interest rates offered by the Central Bank. All this will undoubtedly damage the company.
About financial results
At the end of the 3rd quarter of 2021, JPMorgan showed impressive results in terms of revenue. This parameter increased by 2%, and in terms of profit per asset by 25%. Such powerful results were the result of the improvement of the economic situation in the country and in the world. This allowed the company to release reserves accumulated during the period of uncertainty caused by the pandemic, as well as in accordance with the merger activity with M&A.
For the 3rd quarter of 2021, the company reported revenue of $ 29.66 billion. This indicator is 1% higher than the same one last year. The indicator of commissions for asset management in the amount of $ 5.2 billion increased by 18% compared to 2020, and by 1% compared to the last quarter.
The company has concentrated the commission in the investment banking sector by $ 3.3 billion, which is by a hair's breadth higher than the one known for the 3rd quarter of 2020. However, this parameter showed a decrease of 5% compared to Q2 2021.
Accordingly, the company's net profit increased by 24, compared to the same period in 2020, and amounted to $ 11.7 billion.
What to do with assets?
The tightening of monetary policy planned for next year will provide the company with a huge range of opportunities to increase its own interest rates, as well as the profitability of individual loans.
Experts are quite optimistic about the prospects of the bank. It is expected that together with all companies operating in this sector of the economy, the issuer's situation will improve in the near future, as well as other companies. Regardless of the fact that the situation with coronavirus in the world remains unstable, problems with energy prices, supply disruptions, the country's GDP will grow, and in 2022 it will show a 6% jump.
This fact stimulates further vaccination, which returns humanity and the economy to the pre-pandemic indicators of life and development. If we take the technical side of the picture, then the company's shares are growing in price. In just a couple of recent days, JPMorgan shares have been slowly but surely creeping up. Already now we can say that some of the losses have been leveled. Today, assets are still worth a fairly affordable price, since the price has not yet reached an annual maximum. From the current level, we can expect assets to grow to $ 190 per unit.
Euro/DollarThe euro rose against the US dollar to the level of 1.1165. There was a positive trend in trading on Wednesday.After reaching the maximum values in March, the yield of ten-year US bonds fell slightly to 2.351%.The next round of negotiations between Russia and Ukraine gave hope that military operations should stop soon. This caused a wave of positivity in the financial markets.Meanwhile, in the Eurozone in March, the composite index of business and consumer confidence fell from 113.9 points to 108.5 points, which did not justify the forecasts of experts who expected a smoother decline to 109 points.Such a sharp deterioration in the indicator is primarily due to record inflation rates and the military conflict in Ukraine.On Thursday, traders expect the publication of data from the labor market of the United States and the Eurozone, information on the unemployment rate in Germany and the Eurozone, as well as a change in the number of applications for unemployment benefits.Pound/DollarThe currency pair is consolidating above the support border of the European session, around 1.3127. The course is strongly influenced by the news background. The key resistance level at the moment is 1.3202.Meanwhile, the yield of ten-year British bonds has approached the maximum values of March and is now at 1.668%.Today, the dollar is under pressure from other world currencies. According to the final data of the Ministry of Trade, in the last reporting quarter of 2021, the economy of the United States grew by 6.9% year-on-year, and not by 7%, as previously reported. Experts expected that the indicator would be revised upwards to 7.1%. As for consumer spending, in the fourth quarter it increased not by 3.1%, but by 2.5%. Imports soared by 17.9%, exports rose by 22.4%.Today, traders expect the release of British GDP, data from the labor market of the United States, information on the cost of residential real estate.GoldThe banking metal is still reacting to the movement of the US dollar. After a week of growth, gold gained a foothold near the $1,928 per ounce mark. Important information for the market is the US unemployment index for March. Strong data will help reduce the Fed's purchases of securities.The trading environment ended with a fall in the US stock market, due to negative dynamics from the financial, consumer services, and technology sectors. The Dow Jones fell by 0.19%, the S&P 500 index fell by 0.63%.Inflation continues to gain momentum. This month, consumer prices in Germany rose by 7.6% year-on-year, while analysts expected a rise of no more than 6.7%. In February, the indicator was 5.5%.In Japan, last month there was a decrease in retail sales by 0.8% compared to February 2021, which did not meet the forecasts of analysts who reported a decrease of 0.3%.CryptocurrenciesBTC is currently in the price range of $48051 – $46810 with a strong resistance level of $48051. Most likely, traders are waiting for information from the American labor market.According to the results of Wednesday, the capitalization of the crypto market amounted to 2.15 trillion US dollars, while on Tuesday there were figures of 1.90.The Opera browser now supports bitcoin and other digital currencies. Solana and BTC are currently only available in Opera for Android. Support in the crypto browser should appear within a few months.Cryptocurrencies may be affected by the publication of data from the US labor market, the release of the index of personal consumption expenditures, as well as the level of business activity in the manufacturing sector. 
Nutanix shares, a virtual server platform, are trading 40% below the maximum levels of 2021. Despite the growth of quotations in 2020 and 2021, the securities still look attractive from the point of view of long-term purchase. The value of the company (EV) is $6 billion, in 2022 revenue is expected to be $1.9 billion (+20% YoY), which means the forward EV/S ratio is 3. From current levels, securities may well rise to $40 in the coming months.The advantage of Nutanix is that the service allows you to configure a hybrid infrastructure. Not all companies can afford to switch completely to “cloud” storage, both due to regulations and security reasons, as a result of which intermediate options are in demand in the market, and Nutanix is ready to guarantee that customers will receive quality comparable to advanced “cloud" models. If the company used to sell equipment, now it offers users only software, which had an extremely positive effect on the margin: -0.2% against last year's -12.4%. Positive changes have also occurred in terms of FCF: $17.2 million versus $28.4 million.According to the results of the fourth quarter of 2021, revenue increased by 19% YoY, to $413.1 million. ARR increased by 55% YoY, to $1.04 billion, and ACV billings - by 37% YoY, to $218 million. This trend hints at a possible acceleration of growth rates in the coming months. 
What we are currently seeing on risky assets looks rather unnatural. US technology stocks and cryptocurrencies are growing amid a whole heap of problems related to geopolitical tensions, rising inflation, the expected tightening of the Fed's monetary policy, a possible recession of the American and global economy, and so on. Yes, investors could well get tired of the constant negativity, but this is not a strong enough reason for such a powerful rebound. That is why it is hard to believe in the long-term nature of the current growth.At the moment, BTC is near the upper limit of the correction channel, which was formed as part of the global downtrend that started in November 2021. Further price behavior may shed light on the medium-term outlook of the market. With the greatest probability, we should expect a breakdown of the upper limit, the removal of sellers' stop orders, the collection of liquidity and a trip to the south with renewed vigor.Indirectly, this possibility is evidenced by the situation with other cryptocurrencies. For example, the native Solana token is currently executing a “bearish” Wolf wave pattern, according to which quotes should go to a fall and fall in price by 30-40% from current levels. Something similar is observed for the rest of the top coins. At the same time, there is simply no positive news that can support the current growth and is not expected in the near future. 
Euro/DollarThe euro rose against the US dollar to the level of 1.1132, while the US currency weakened despite strong consumer confidence data. During the day, there was a positive trend in euro/dollar trading. At the moment, the pair is consolidating in the price range of the beginning of March 1.1143 – 1.1058.The yield of ten-year US bonds shows a slight decline to the level of 2.402%.The results of the negotiations between Russia and Ukraine in Turkey had a positive impact on the single European currency. The market revived after hearing about positive developments in resolving the conflict, including the preparation of an agreement on the neutrality and nuclear-free status of Ukraine.Earlier, the dollar was supported by growing expectations about the tightening of the Fed's monetary policy. Today, the market has already included a rate increase of 2 percentage points.The current situation contributed to an increase in the yield of ten-year US Treasuries to 2.5% on the first day of the week. However, by the end of the auction, the indicator decreased slightly. On Tuesday, the yield of Treasury securities increased to 2.472%.Among the main news for today is the GDP of the United States for the fourth quarter and the index of employment in the non–agricultural sector from ADP.Pound/DollarDuring trading on Tuesday, the pound and the US dollar stuck to the 1.3090 mark. The currency pair has not been able to break through the support boundary of the European session. If the exchange rate still manages to go beyond the level of 1.3082, the prospect of reaching the area of 1.3006 will open.In the yield of ten-year British government bonds, there is a slight decrease to the level of 1.6560%.The publication of important economic statistics led to a new strengthening of the dollar, the pound followed the American currency.This month in the United States, the consumer confidence index increased to 107.2 points relative to the revised February figures of 105.7 points. The data was obtained from the Conference Board research organization. The indicator exceeded the expectations of experts who predicted a decline in the indicator to 107 points.It is worth recalling that last autumn the level of consumer confidence in the country fell sharply amid the spread of new strains of coronavirus infection. At the moment, Americans are under pressure from the disruption in global supply chains and the consequences of the military conflict in the East.On Wednesday, the currency pair will be sensitive to US economic statistics – GDP for the fourth quarter and the non-agricultural employment index from ADP.GoldThe banking metal has turned around from the minimum values and at the moment continues to adhere to positive dynamics. In the case of another wave of growth, a promising target is the resistance limit of 1925 dollars per ounce.Trading Tuesday ended with a rise in the US stock market, due to strong signals from the consumer services, goods and technology sectors. The Dow Jones increased by 0.97%, the S&P 500 index rose by 1.23%.The news background of recent days has a positive effect on gold and liquid securities.Meanwhile, this month the level of consumer confidence in the United States rose to 107.2 points relative to the revised February figures of 105.7 points.In Japan, last month there was a decrease in unemployment to 2.7% from 2.8%, while experts predicted that the indicator would remain at January levels.CryptocurrenciesAt the moment, bitcoin is consolidating in the price range of $48051 – $46820, after an unsuccessful ride to break through the resistance limit of $48051. The recent increase in volatility in financial markets has forced investors to take a wait-and-see attitude. The publication of the GDP of the United States and data from the labor market can greatly affect financial assets, including cryptocurrencies.According to the results of Tuesday, the capitalization of the crypto market amounted to 2.11 trillion US dollars, while on Monday there were figures of 2.13.According to media reports, the MicroStrategy subsidiary received a loan from Silvergate Bank in the amount of US$205 million to purchase bitcoins.Meanwhile, the US Treasury proposed to approve a document for cryptocurrencies, according to which information on foreign accounts of citizens over 50 thousand dollars should be reported to the tax service. If approved, the requirements will take effect as early as 2023.The Hong Kong Stock Exchange will open a platform for trading security tokens called Diamond. 
Shares of eBay, an online marketplace, are trading 27% below the maximum marks of 2021. In the current conditions, investors want to deal with the most reliable companies that pay dividends and conduct programs to buy their own shares from the market. eBay not only fits these criteria, but also plans to significantly increase the amount of revenue, as a result of which it has a good chance of a tangible rebound from recent lows.Management adheres to the right strategy: instead of competing with Amazon on all fronts, eBay focuses on the most important, unique areas: collectibles, auto parts, electronics and others.At the moment, the platform earns only $1.1 billion through advertising (sponsored placements and promoted lots) - this is about 11% of total revenue. By 2023, it is planned to increase this figure to $2 billion. Another growth driver is the payment system. The platform launches its digital wallet in order to reduce dependence on the current payment service - PayPal.A few more important points: the amount of quarterly dividends was increased by 20% to $0.22 per share, and a $4 billion share repurchase program was introduced (about 12% of capitalization).However, not everything is as smooth as we would like. Compared to the previous quarter, the number of active buyers decreased by 5 million to 147 million in the fourth quarter. After the pandemic peaks, activity on the platform begins to decline, and with it the revenue indicator, which increased by 5% YoY to $2.61 billion over the period. At the current stage, it is necessary to observe how eBay will increase margins and EPS. 
Shares of electric car manufacturer Tesla have gained about 40% since mid-March and are now trading not so far from the maximum marks. There is a feeling that the rising cost of oil and raw materials is a positive driver for the company: most models were completely sold out in the United States by the end of 2022. In addition, Tesla had to start fighting with wholesale buyers in China, who bought cars in large batches and sold them at a markup. Now Chinese buyers are forced to sign an agreement that they will not resell the cars for 12 months after purchase.The February lows became a bear trap for the bulls, who believed that Tesla was waiting for the fate of other technology companies, whose shares sank by 50-70% from the highs. It should be understood that Tesla does not stand still and now it is a profitable company with decent FCF values. Moreover, the manufacturer does not indifferently observe the rise in the cost of raw materials for batteries, such as nickel and lithium, but increases the cost of products in order to maintain margin values.Compared to other major industry players like Volkswagen, General Motors and Ford, which have been suffering from supply chain disruptions for a long time, and now rising raw material prices have been added to the problems, Tesla looks pretty good. Moreover, the company has launched new plants in Texas and Berlin. In other words, there are all the prerequisites for further growth of stocks to the level of record highs and above. 
The securities of Pegasystems, a leading developer of enterprise software, fell 45% below last year's peaks. We can say that at the moment the company's shares should be considered as a long-term investment and there are reasons for this. Today, the company's value is 6.5 billion US dollars. In the current year, management expects a profit of $ 1.5 billion, therefore, EV/S is equal to 4.5. It is worth noting that these are quite small figures for a growing organization. Management predicts that by 2025 the total targeted market will be equal to $110 billion, which indicates good prospects for revenue growth. At the moment, PEGA is transitioning to a subscription model, which will also have a positive impact on the company's revenue. The results of the last reporting quarter of 2021 show a profit growth of only 6%, to $316.2 million. This situation has developed due to the fact that in the process of switching to a subscription, key customers began to pay in portions. Despite a loss of $26 million in 2020, in the last three months in 2021, the firm received revenue of $18.8 million. At the end of this year, revenue is projected to grow to $65-86 million. 
Euro/DollarDuring the versatile dynamics of trading, the euro turned against the dollar to the level of 1.0992.The yield of ten-year US bonds on Monday showed a slight decline to the level of 2.440%.Meanwhile, the chairman of the Federal Reserve Bank of New York, John Williams, suggested that the Fed could raise the rate by 0.5 percentage points in the near future. He also noted that central banks, before making decisions on monetary policy, should think about how certain actions may affect other countries.The consumer confidence index is expected to be released on Tuesday. The US currency may react this week to the publication of changes in the number of initial applications for unemployment benefits, the level of employment in the non-agricultural sector and GDP.Pound/DollarThe pound/dollar currency pair continues to adhere to a downward trend. Having reached the minimum level of 1.3081, there was an attempt to make a reversal and form a new price range amid the expectation of important news. In case of growth, the first target is the resistance area of 1.3146.The yield of ten-year British bonds has turned around from the maximum values and is currently fixed at 1.6210%.Trading Monday showed the strengthening of the US dollar against the British pound, the Japanese yen and the single European currency. This is facilitated by the stable growth of treasury securities, due to increased expectations of another Fed rate hike. At the moment, the market provides for an increase in the rate by 2 percentage points.The income of 2-year-old US Treasuries increased by 13 bps, 10-year-old - by 5 bps. The increase in rates contributes to an increase in purchasing activity around the US currency.Today, the pound will be sensitive to the volume of mortgage lending. Among the important economic indicators on Tuesday are the PMI in the manufacturing sector, GDP, the BRC retail price index, the change in the value of residential real estate Nationwide.GoldAt the moment, the banking metal has dropped to the trading framework of last week, continuing to adhere to the downward trend. A further decline may lead to reaching the mid-March levels of $1,906 per ounce.Trading Monday ended with the growth of the US stock market on the background of positive dynamics from the sectors of technology, consumer goods and services. The Dow Jones approached a one-month high, rising by 0.27%, the S&P 500 index rose by 0.71%. Gold held up negatively.The dynamics of trading is still affected by the news background. The weakening of the yen was influenced by the growing divergence in the monetary policy of the Bank of Japan with other Central Banks.Meanwhile, on Monday, there was an increase in the yield of 10-year Japanese bonds to 0.25%.The downside risks of the global economy are still very high. According to S&P Global Ratings, due to record inflation rates in the UK, economic growth will slow down to 3.5% this year.CryptocurrenciesBTC continues to adhere to positive dynamics. In the case of another wave of growth, the prospect of reaching the resistance area – 49511 and 50611 will open.According to the results of Monday, the capitalization of the crypto market amounted to 2.13 trillion US dollars, while on Sunday there were figures of 2.10.According to media materials, the association “Virtual Assets of Ukraine” with the support of deputies proposed to make the country a full member of the European Blockchain Partnership. The request was made in the form of a letter, among the addressees are the head of the Administration of the President of the European Commission, Bjorn Siebert, as well as the President of the European Commission, Ursula von der Leyen. The document says that blockchain technologies can greatly help in the restoration of Ukraine after the end of hostilities.Meanwhile, Fed Governor Chris Waller believes that blockchain is overvalued, and some CBDC studies are very similar to commercials.