blindfolded dartsOnline Credit Growing; Loan Loss Reserves And Re-Fi Shrinking

“Manually collecting and analysing the information needed to understand whether a business can remain solvent is a costly activity.  That usually makes it uneconomic to lend the small amounts of cash that small businesses need — and explains why many proprietors opt to meet short-term cash needs with their credit cards.”  But several “online credit” startups are changing the landscape (alt): “the ability to pull in accounting data automatically from a borrower’s own books, for instance, has been made easier by the fact that much of that information now resides in cloud services.  Most lenders also draw on other pools of data — from government census surveys to user reviews on online sites such as Yelp — to build their risk models and gather a full picture of a business’s prospects.”  Furthermore, “crunching the data with algorithms, rather than human analysts, has further reduced overheads.”  Meanwhile, JP Morgan didn’t come up with as many cookies as hoped for in Q1: “Ahead of the bank’s earnings report, analysts at KBW had said they expected a reserve release in the first quarter of $1 billion at J.P. Morgan, compared with what it said was management guidance for a release of $400 million.  That could foreshadow a trend that rivals reporting over the next few days could also demonstrate.  Analysts widely expect banks to start building their provisions for potential losses as they start to make more loans.”  Keep this in mind, however: “earnings are viewed by many investors as more repeatable and indicative of a strong financial picture when they don’t’ include big loan-loss reserves.”  Meanwhile, should we put a nail in the coffin of the re-finance boom?  Wells Fargo, “the country’s biggest mortgage lender,” lent “$36 billion worth of mortgages in the first quarter — a big number until you consider that it’s down 67% from a year ago, when the bank originated some $109 billion worth of mortgages.”  Finally, it doesn’t take a Wonkblog to figure out that Jamie Dimon is making the big bucks (then again, maybe it does).

Nasdaq Does The Tax Day Sway; Outlook Bright For Tech, E-Commerce And Trailer Parks

The markets are pretty volatile right now (alt) in case you didn’t notice.  Yesterday, the Nasdaq dropped 3.10 percent, “its worst daily decline since 2011.”  It appears to be a one part Tech, one part Momentum selloff, with a dash of Tax Day sway.  Demand is strong, however, for a good stock market story.  Like this one: “soon there will be more than 6 devices leaking information connected for every man, woman and child on the planet.”  That comes from a Citigroup analysis of the future for cloud computing/IT companies like Cisco.  By 2020, they predict 6.58 small, thinking robots per human.  Here’s the kicker: ~14% growth in online retail sales over the next 3 years.  Meanwhile, you won’t believe this hot new investment “vehicle”!!!  “Trailer parks have unusual economics…It’s a supply and demand curve that’s super attractive to investors…What’s at work here is the shrinking middle class.  People with bad credit and criminal histories are often unable to rent or buy homes, and are forced into trailer parks — where owners are usually willing to overlook credit and criminal activity.”

Trading In The Dark Makes Throwing Darts Only Slightly Worse

This isn’t what Michael Lewis had in mind: “U.S. securities regulators are considering testing a proposed reform that could drive business to major stock exchanges and away from alternative trading venues such as “dark pools” that critics say may be hurting investors by reducing the quality of pricing…They say that the amount of trading being done in the “dark” means that publicly quoted prices for stocks on exchanges may no longer properly reflect where the market is, meaning that investors may not be getting the best prices for their trades.”  Also, SEC Chairwoman Mary Jo White says “high-frequency traders have added liquidity and some price advantages” to the markets.  But its not all bad for Michael Lewis: “If we are setting our agenda by Michael Lewis books, we have to take them as we see them.”  Meanwhile, Fidelity and BlackRock are leading other asset management companies (alt) by “discussing the creation of a joint equity trading venue…that would rival traditional stock exchanges and so-called “dark pools” of liquidity.”

EU: “We Will Do Something” About Low Inflation

Zis is ‘ow you do Forward Guidánce!

China: The Optimist’s Take On Credit In China

USA: Activist Investor Of The Year

That’s an actual proxy statement filed with the SEC by Joseph Stilwell, a shareholder in Harvard Illinois Bancorp, Inc.  Scroll down for the gold.


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