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Recent Bank Ads on WSJ

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We know CEOs of some of the nation’s largest banks are buying their companies’ stocks, to show their confidence on their respective company.

It’s also interesting to see some of the leading banks are putting up a lot Ads on Wall Street Journal. I took some pictures here from WSJ in these days and share them here.

(Citi bank shows a happy couple/home owners who got mortgage from Citi)

(This JetBlue ads encourage CEOs to ditch their business jet and use the discount carrier)

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Friends don’t let friends buy BAC

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(Update Feb 5) It appears BoA CEO Ken Lewis bought additional 200,000 BAC shares yesterday (source: bloomberg).

(Original Feb 4) Today Bank of America stock (NYSE: BAC) fell below $5 the first time since 1990s. The company was in trouble earlier this month as the loss from Merrill Lynch turned out to be much bigger then originally thought. There are lots of talk about the potential nationalization, as the rumor also hit another big troubled bank, Citi group (NYSE: C). Some retail investors got excited about the “appears cheap” price, and they bought into the stock and hoped for a big profit in near future.

Don’t !!! Although the insiders of BoA, including its CEO Ken Lewis, bought a bunch of stocks on Jan 20 when the stock dropped under $6 briefly (and around the same time, JP Morgan CEO Jemy Dimon bought JPM stocks), the insider buy looked more like the “confidence showing stock buyback” nowadays. Note in the good old days, companies bought back stocks because they felt the stocks are really cheap. Nowadays many companies bought back stocks to prop up stock price, or to offset the excessive stock awards to its employees. This “Ken Lewis” smelled more like a show to me, just like the Obama’s blaming Wall Street excessive bonus (before he hand out another round of carrots to banks soon).

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Banking crisis?

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It seems the financial crisis has been more like a banking crisis these days, with the RBS virtually nationalized by the British goverment, and Citi and Bank of America increasingly can not stand on its own. The No. 1 and No. 2 US banks according to market cap, J.P.Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC), are also under pressure today, both hovering around $20 and $15, respectively.

RBS telegraph uk

Of course this all happens today as the new US president sworn into office. It appears to me the market does not like the stimulus package proposed by Obama team, or the uncertainty around it? Plus the controversy around his treasury secratery pick. All this bring uncertainty to the market, and we know the market does not like uncertainty.

What will we go from here? Will all the big US banks taken over by the federal goverment? It seems unlikely because this country lives or dies on the private business or entreprenuership. With goverment controlling large banks, it will be like (dare I say) China.

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My thoughts on Bank of America (NYSE: BAC)

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Bank of America is back in the news because they asked and got $20 billon from US govement, to back the loss from Merrill Lynch acquisition.

(Source: Yahoo Tech-ticker)

Personally I like Bank of America, ever since I became their customer serveral years ago. Two benefits of being BoA checking acct cosumer: 1) Their branch and ATMs are all over the country; 2) In addition to that, since I travel to China once a while, I like the fact I can withdrawl Chinese Yuan (RMB) from China Construciton Bank (CCB is BoA Chinese partner), without transaction fees. CCB is also a large bank in China and their ATMs can be found in many places.

Now to the investing of BoA (NYSE: BAC). Did I say investing? With the stock price of BoA approach to $7, it seems to me it’s more and more like speculating. I remember someone (Jim Cramer?) once said any bank stock traded under $5 is speculative.

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China: embracing bear market after Olympics?

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Couple days ago I suggested the China stock market could have a relief rally after Olympics, when the party is over without major glitches. I still belive Beijing Olympics will turn out to be ok, amid so much worries from human rights protests to security threats. I also believe Chinese economy will not stand still after the Olympics.

But I change my view on Chinese stocks today, after the Chinese ADRs dropped big in the US: from FXI (NYSE: FXI), to CHL (NYSE: CHL), to Sohu (Nasdaq: SOHU), all dropped around 5% or more today, less than 14 hours before the opening ceremony (which will begin Beijing time 8:08 PM, Aug.8 ). The problem is not only the expected slow down of Chinese economy, but also due to most Chinese stocks (from Shanghai, to Honghong, to NewYork) are over valued. Now they will get a reality check. Give an example, ICBC (1398.HK, 601398.SS), traded at 3 times book value, according to JRJ. That’s much higher than the US counter part such as BoA (NYSE: BAC), Wells Fargo (NYSE: WFC). Algthough we know US banks are in trouble lately because of subprime/credit crisis, ICBC can not justify its 3 times PB ratio if its growth slows down (which is possible).

So hold some cash, hold your breath, and I expect we are having a rough ride in the near future 🙂

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Demystify the sale of CCB shares

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Coule day a ago I came across this BoA (NYSE:BAC) bought CCB (China Construction Bank, Hongkong 0939) shares at dirt cheap price story from my Chinese friend StrengthTrader (English news here). After that I read this one original written by 21cbh, titled The Mystery of 70% Off of CCB Shares, here is a faster link from baidu finance. BTW, I always bought and liked 21cbh when I was in Shanghai last year.
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