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Preferred Bank (NASDAQ:PFBC) Beats Expectations for Q4

By
Andy Parker
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Preferred Bank (NASDAQ:PFBC) had a fairly strong 4Q2015 and fiscal 2015 in which both earnings per share and overall revenue impressed. The acquisition of United International Bank (UIB) that was concluded late in 2015 also added to top-line growth in the quarter and the year.

4Q results

Preferred Bank generated net income of $7.5 million or $0.54 per share for the quarter. Post adjustment, Preferred’s Q4 EPS jumped to $0.57. The Street was looking for EPS of $0.54 for the quarter. Preferred posted EPS of $0.57 in the previous quarter and $0.50 in the same period a year ago.

Revenue of $23.3 million for the latest quarter not only exceeded the consensus estimate of $23.2 million, but also surpassed $21.6 million in the previous quarter and $19.4 million a year ago quarter.

The acquisition of UIB resulted in a $658,000 hit on 4Q earnings, although the acquisition did boost deposits.

Annual results

For the full year, Preferred Bank reported net income of $29.7 million or $2.13 per share. The company generated EPS of $1.78 in the same quarter a year earlier. Revenue for the year was $83.8 million, up from $71 million in the previous year. Top-line gains in the latest quarter were supported by a strong loan book.

The bank finished 2015 with deposits of $2.29 billion, up from $1.78 billion in the previous year. The spike in total deposits was partly driven by the acquisition of UIB, which contributed $158 million of additional deposits.

In terms of assets, Preferred had $2.6 billion at the end of 2015, up nearly 26.6% from assets of $2.05 billion at the end of 2014.

Bank management reported that nonperforming assets in 2015 declined to just $6.4 million. The decline was primarily as a result of shifting nonperforming loans to what is called OREO status, or Other Real Estate Owned.

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U.S. Dollar Gains Against Euro, New Zealand and Australian Dollars

By
Andy Parker
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The US Dollar was seen trading higher against the Euro this morning, continuing a trend that began in the late Asian trading hours. The EUR/USD pair traded up by 0.2% to 1.082 as market participants showed some optimism following the European Central Bank chief’s dovish statements on monetary policy last week. It is widely anticipated that the ECB will announce fresh easing measures during its upcoming meeting in March.

Disappointing data in Australia

Meanwhile, the New Zealand dollar pared early day gains after strengthening against the greenback. Currency traders are now awaiting signals on another rate hike from the Federal Reserve. NZD/USD shed 0.25% and was trading near 0.6476 today. The pair has support at 0.6409 and resistance at 0.6563.

Like the New Zealand dollar, the Australian dollar also shed its gains and was trading weaker against the dollar. The pressure on the Australian dollar built after data showed muted business confidence in the region, firming up demand for the world’s reserve currency. AUD/USD was down by as much as 0.36% to 0.6977. The pair’s support and resistance levels are at 0.6945 and 0.7088 respectively. In the early morning today, the Australia’s National Bank reported that the business confidence index slipped to 3 from 5 in December.

On the look out for the Federal Reserve’s statement

Divergent monetary policies between the Federal Reserve and other central banks are giving the US dollar some strength. Investors are now closely awaiting the Federal Reserve’s update on policy direction, which is expected to be released on Wednesday. Investors will look for any signal from the Fed on the pace of interest rate hikes this year, if any.

The U.S. dollar traded higher against the British Pound as well. GBP/USD was seen trading marginally down by 0.04% to 1.4259. The U.S. Dollar index is now at 99.39, reflecting a loss of 0.2% from Friday’s close.

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Cerberus Comments Helps Boost Avon (NYSE:AVP) Shares

By
Andy Parker
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Avon Products Inc (NYSE:AVP) surged as as high as $2.79 off lows of $2.21 last week after comments from Cerberus Capital Management helped the beauty product company recover from earlier declines. Avon’s biggest institutional investor said that the cosmetics company was not having any liquidity concerns, as its shares were significantly undervalued.

Cerberus bought a 17% stake in the cosmetics company back in December in the form of convertible shares at a $5 strike. On the eve of its investor day conference, a Cerberus spokesperson said its management would be working hand in hand with Avon officials to ensure an effective turnaround for the company.

How rewarding is the deal?

Both Cerberus and Avon have defended the decision to enter into the financial agreement. According to Sheri McCoy, Chief Executive of Avon, the decision was taken after taking an exhaustive review of the options available, which included making alterations in the way the products of the company are sold and going private altogether.

Avon sells skin creams, makeup, home accessories and is known globally for its beauty products and door to door sales business model in over 100 countries. Over the past few years, the cosmetic company has lost some of its hold on the market and has been struggling to bounce back.

Ms. McCoy said that the involvement of Cerberus in Avon has opened doors for her company, but it was not the right time to take Avon private since its stock is trading so low.

Cerberus pumped as much as $435 million into Avon through its 17% stake and will be acquiring 80% of the North American business of the company, which will separate the unprofitable section from the international business division of Avon.

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Will Oil Now Hold Above $30?

By
Carol Harper
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oil

Global oil prices staged an impressive recovery gaining more than 9% in Friday’s trade above $32 per barrel. The oil price has bounced by 21% since hitting 12-year lows. Now, the question in trader’s minds is whether the worldwide oil price can stay above $30 per barrel, seen as a line in the sand, or whether the bounce will be short-lived.

Upcoming Snowstorm

There is now renewed optimism that the oil price might stay above $30 per barrel mark for two reasons. One is the upcoming snowstorm in the US and the possibility of central banks announcing more stimulus. Both factors are expected to drive fuel demand.

Diesel futures were able to record the largest single day percentage gains in over a decade. Also, the cold weather covering the Northeast, Mid-Atlantic, and Southeast swaths is likely to boost heating costs.

After being on the losing streak for three straight weeks, oil prices snapped the trend to post a 5.9% increase last week on the NYMEX. Similarly, Brent crude witnessed a 10% increase to $32.18 per barrel on ICE Futures in Europe. As a result, the week as a whole saw 11% gains in Brent. On Thursday, ECB President Mario Draghi, indicated the possibility of easing measures as the region came under inflation pressure due to the oil drop.

Expectations Remain High On Stimulus

Traders appear to be betting on stimulus. There was speculation that Japan’s Central Bank might also follow suit in boosting its asset-buying program. Their contention was that such measures could ignite economic activity, which, in turn, might boost demand for fuel.

Standard Chartered Bank’s Commodities Research Head, Paul Horsnell, said that oil has been long due for a significant short-covering rally. He also said that it was too early to predict that the oil price has bottomed out. Goldman Sachs Group Inc. (NYSE:GS) predicts that the oil price would trade between $20 and $40 a barrel. Some traders believe that the recent recovery will not last long as worldwide inventories continued to grow. Weather may hold some respite for the near-term.

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Many Popular Apple (NASDAQ:AAPL) iPhone Apps Missing From Apple Watch

By
Andy Parker
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Apple Inc.’s (NASDAQ:AAPL) Apple Watch has gained momentum off of the popular iPhone App Store, but there are many popular apps that are still not available for Apple Watch users.

According to app analytics firm App Annie, only 5 top iPhone apps in the health and fitness category were available on the Apple Watch even as the device is touted as a health and fitness tracking tool. The same number of apps were available on the Apple Watch for the travel and navigation category.

In shopping, social networking and news, 6 of the top ten apps were available for Apple Watch users, while 4 of the top ten apps were available in the entertainment and music category. In the sports category, only 2 of the most popular apps were available with no top gaming apps available at all. The statistics indicate many new opportunities for app developers to expand on their Apple Watch portfolios.

Apple Watch OS 2.2 software

Meanwhile, Apple has released Apple Watch OS 2.2 software for developers which will include some new features like maps and an option to pair multiple smartwatches with the iPhone.

The Maps app that can be found in the Glance section will help find directions and highlight locations of interest. The Nearby feature will show places for shopping, travel, food, drinks and health. Even detailed summaries of workouts can be created in the updated watch. The new updates will be available on health apps developed by Apple and third-party developers. Also, users will be able to pair multiple smartwatches with one iPhone.

The company has not announced the updates for the public yet but the updated Apple Watch will be powered by the iOS 9.3 software.

Remote Control App to Operate Appliances

Meanwhile, Peel has created a remote control app for the Apple Watch that will help users operate more than 400,000 electronics and home appliances from their watch. While most of the devices can be controlled using Wi-Fi, Pronto hardware will be required for others. The Pronto 360-degree IR blaster feature is already used for the iPhone and allows operation of television and other electronics using Bluetooth.

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Even if Stocks Headed Higher, Investors Warned to Sell Rallies

By
Carol Harper
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bluebird

The worst January for US stocks in Wall Street history has analysts arguing about what the cause may be. From China to oil to general sluggishness, there seems to be no agreement on the horizon.

CNBC for its part quoted Deutsche Bank’s Chief International Economist, Torsten Slok, as saying that if China was to be blamed for the woes in the United States equity market, then the same yard stick was applicable to the Eurozone and Japan. He pointed out that both the regions have a strong trade relationships just like the US. Slok further said that the manufacturing sectors in Japan and Europe were performing much better than their peers in the United States. According to him, it is dollar strength that is dragging the US economy down.

He also pointed out that even as the dollar was trending higher in the last couple of years, the Euro has moved sideways since March of last year. The dollar might only continue to gain strength against emerging market currencies.

Risks Loom Large

Following the reports of a slowdown in China, investment managers are advising their clients to pare back risk in their investments. Also, two European investment bankes, Societe Generale SA (OTCMKTS:SCGLY) and the Royal Bank of Scotland Group PLC (NYSE:RBS) expect the equity market in America to face further downside. Both are warning that the oil price may trade below $20 with a possible 75% rout in stocks. Aside from these two, J.P. Morgan’s investment manager has reportedly advised clients to sell on rallies rather than buy on dips.

This could mean that even if there is going to be a rally in the market, the associated gains could be capped by consistent selling on any significant rally.

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How Falling Oil Prices Have Affected Bank of America (NYSE:BAC)

By
Carol Harper
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Bank of America Corp (NYSE:BAC)

There are two factors that are driving down Bank of America Corp (NYSE:BAC) this year. These are the slowing rate of worldwide economic growth and falling oil prices to record 12-year lows. The company’s stock witnessed a 20% drop and is the worst hit of the top three banks in the United States. The significant drop in oil prices forced the bank to make increased provisions for loan losses in the energy sector.

Further Slowdown Seen

The slump in Bank of America and other banking stocks was due to increased fears of a global economic slowdown according to Vining Sparks analyst, Marty Mosby. Already, China as well as other emerging markets have rattled investor sentiments. Mosby indicated that the current worry was that a full-blown recession is around the corner, and that will cause more losses to banks.

So far in 2016 banking shares have been dismal performers compared to benchmark indices. For instance, the S&P500 fell only 7% while the KBW Bank Index slipped close to 15%. The index tracks the performance of the 24 biggest lenders in the US. Citigroup Inc (NYSE:C), which is the country’s fourth largest bank, witnessed a huge drop of 21% among the top four banks.

Earnings beat for 2015

Bank of America meanwhile reported earnings of $15.9 billion for the year 2015, beating estimates.

There is also uncertainty on the further hike in interest rates in the wake of a possible slowdown in global economic growth. This is possibly why investors did not cheer Bank of America’s record earnings. In December, the Federal Reserve hiked key interest rates by 25 basis points for the first time nearly in a decade. BofA is regarded as one of the best positioned to gain from higher rates.

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Why Airline Consumers Did Not Profit from Falling Oil Prices

By
Carol Harper
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Delta Air Lines, Inc. (NYSE:DAL)

Who is the bigger gainer from falling fuel prices – passengers or airline companies? National carriers have reported a big jump in profits for the year 2015, and the biggest reason for it was the drop in oil prices. However, gains appear not to have passed on to consumers. In order words, the sinking oil price has not made airlines make big cuts in airfares.

Appeasement Mode

For example, Delta Air Lines, Inc. (NYSE:DAL) CEO, Richard Anderson said that results for the last year were a record on all fronts. Delta’s profit jumped to $4.5 billion in 2015 from $659 million in the preceding year. Instead of passing on the benefit of weak oil prices, airline firms appear to be in appeasement mode as some carriers have brought back free snacks to economy fliers. Some carriers have resorted to buying newer planes as well as renovating terminals.

Oil prices dropped over 30% last year whereas demand for air travel boosted only 9%. However, there was no change in domestic airfares in the last year. According to online ticket price trackers, the cheapest domestic airfare witnessed a 1.5% increase last year. The Transportation Department is yet to calculate the airfares for the full year. However, the average fare for the first half was $388, which was 1% lower than the prior year period.

Demand Dictates Pricing

Airlines Weekly Managing Partner, Seth Kaplan, said that as long as the demand for air travel was strong, airline firms were not going to slash prices. He said that these firms were not doing any charity and that airlines were not ready to provide consumers the gains of falling oil prices just for the sake of doing it.

There is a reason for domestic airliners not passing the cost benefits of low oil prices. The past decade witnessed a series of mergers in the domestic airline sector. According to a Portland University finance professor, Richard Gritta, 70% of domestic traffic was controlled by four airline companies, Southwest Airlines Co (NYSE:LUV) American Airlines Group Inc (NASDAQ:AAL), United Continental Holdings Inc (NYSE:UAL), and Delta Air Lines, Inc. (NYSE:DAL). The same four firms were controlling 50% of air traffic a decade ago.

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Obama Sounds off on Innovation and Information Technology

By
Carol Harper
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Barack Obama

United States President Barack Obama is now seeking the support of Congress for innovation and research in information technology apart from clean energy initiatives. During his State of the Union speech, he focused more attention on innovation beyond enhancing the education system. He also pledged that his administration would establish complete web portals where taxpayers can see the way their money is spent in an effort at increasing transparency.

Calls For Hiring Teachers

The President also urged schools to hire 100,000 fresh engineering, technology, science, and math teachers in the coming years. This appears to be in line with the objectives of big technology companies like International Business Machines Corp. (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC). Obama said that the nation needs to outbid the rest of the world in innovation in the field of education.

Obama pushed for immigration reform arguing in favor of education for the children of illegal immigrants as well as foreign students.

Focus On Broadband Network Investment

Though Obama talked about the healthcare system and the fiscal deficit, he focused on continuing investments in broadband networks. In saying this, he was referring to the Federal Communications Commission’s efforts to free the spectrum for mobile broadband in the US though he did not provide details on broadband. He lamented that South Korea has overtaken America in providing greater internet access to homes thoughout the nation with better infrastructure.

The President predicted that broadband providers would deploy their next-generation mobile broadband to 98% of US citizens within five years. He expects farmers in rural areas will benefit by gaining access to more markets and selling their crops throughout the world whereas firefighters would have the capability to download the layouts of burning buildings layouts. His objective is to connect every part of the United States to the digital age.

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Alphabet (NASDAQ:GOOGL) Will Be Hosting The “Love Your Language” Forum In India

By
-

Alphabet Inc (NASDAQ:GOOGL) is now hosting a “Love Your Language” forum to encourage Indian language representation on the internet at the Jaipur Literature Festival (JLF) is taking place over a five day period, ending tomorrow.

Google stated that it aims to provide better representation for some Indian languages, Currently, Google can translate 9 out of the 22 official Indian languages and aims to popularize all those languages by making them more internet friendly. The event is open to participants and spectators alike.

The forum looks to aid in gaining more input from the community to enable Google to enhance its translation of Indian languages, and thus make content on the internet more accessible to people in the country. Sapna Chadha, marketing manager of Google India, said that putting Google tools up for Indian users will help in the building of a web that will work for millions globally. She added that the festival is very popular for bringing together all those who are passionate about the culture and language.

Google has set up a demonstration zone at the Google Mughal Tent at the JLF with the aim of helping people learn more about Google Translate. Highlights of Indian culture and heritage will also be available for festival-visitors on the Google Cultural Institute. A virtual display of Indian monuments, art works as well as narratives will be presented at a dedicated zone at the festival. Arguably the biggest literature festival in India started onThursday and will end on the 25th.

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