Friday, September 23, 2016

Aqumin Volatility Newsletter 9-23-16 $WFC

Banks HIT the Brakes
This was not a good week for banks.  WFC’s CEO did the perp walk in front of the Senate and really had nothing to say. What could he?  Somehow 5000+ employees went off the reservation and did slightly naughty things opening up accounts.  For a bank that prides itself on risk control and sidestepped most of the financial crisis this was a big black eye.  It might also be a symptom of how hard banking has become in the face of new regulations and a low interest rate environment.  One would think that would be a recipe for volatility.  Not really.

Since we look at volatility in this blog, my AlphaVision® landscape shows WFC is a standout for more short term realized vol (up building) on the 10 day cycle and more 30 day volatility.  If you look at most of the Financials, realized volatility has steadily decreased (down pointing buildings) for the last two months.  Even the really bad news did not cause WFC to fall out of bed too badly.  While it is the most volatile big bank, BRK.B is in the lower left corner of the sector, it is not a scale wipe for WFC.  The bigger trend is the easing of movement overall in banks.  With the Fed telegraphing rate for the the end of 2016 and in 2017 things could get better and not worse for banks.  Not homeruns but just boring decent returns.  The way banks should be.  WFC is a scoop.
Read more from Andrew at Option Pit

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