This News Could Spoil the Party for Bank Shareholders

[Inside Wall Street with Nomi Prins]( Welcome to Inside Wall Street with Nomi Prins! It’s the only daily newsletter featuring the insights of renowned author and former Wall Street insider, Nomi Prins. Every day, Nomi shines a light on a massive wealth transfer she calls The Great Distortion. That’s the true cause of the permanent disconnect she sees between the markets and the real economy. And she shares ways you can come out ahead, if you know where the money is flowing. You’ll find all Nomi’s Inside Wall Street issues [here](. If you have questions or comments, send Nomi a note anytime [here]( or at feedback@rogueeconomics.com. This News Could Spoil the Party for Bank Shareholders By Nomi Prins, Editor, Inside Wall Street with Nomi Prins If you own bank stocks, or are thinking of getting in, I have a warning for you today… Bank shareholders may be seeing some light at the end of the tunnel. The American banking sector got good news recently. And it’s celebrating… by promising to pay out higher dividends. But as I’ll show you today, news coming out this week may overshadow the celebrations. And it may cause banks to hit the pause button on the party. So today, I want to make sure you’re prepared – and know what to look out for… Fed Tests Banks’ Resilience to Risk First, the good news… Once a year, the Federal Reserve tests banks. This is to see if they can navigate stressful financial and economic conditions. Media and economic commentators refer to these tests as “stress tests.” The tests evaluate whether banks have enough liquid capital to continue operations during times of economic and financial market stress. The idea is that they should be able to make payments on their own debt and lend to households and businesses. The tests also determine whether banks have solid capital-planning strategies in the event of extreme-risk conditions. The Fed then uses the stress test results to set something called the stress capital buffer (SCB) requirement. This is the level of capital each bank is required to keep on hand. It’s based on its risk profile and likely losses as measured by the Fed’s stress tests. [Featured: Goldman Sachs Alum Sounds Alarm on “Next US Crisis”]( The parameters for this year’s stress tests were set in February. They supposed a 3.5% decline in GDP for 2022 and an unemployment rate of 10%. They also included a 55% drop in stock prices and a 40% plunge in commercial real estate values. The Fed’s stress tests are supposed to determine whether banks have enough money on hand to absorb losses in the event of these stressful economic conditions. And of course, the overall aim is to avoid any banks requiring a bailout from the taxpayers… Recommended Link [[DEMO] Penny or Dollar? (Not what you expect)]( Something odd is going on with our money. If you understand what’s going on, you could come out far ahead if you make the right moves. But if you don’t, you could be blindsided in the days ahead. According to Nomi Prins, PhD, this could be the most important story in the financial world in 2022… It has little to do with stocks, bonds, or cryptocurrencies… In fact, it all traces back to the humble copper penny. [image]( Knowing this secret could unlock the key to lining your pockets with cash in the months ahead. [Click here to see Nomi’s short Demonstration.]( -- What Stress Tests Say About Wall Street The 2022 results came out in the last couple of weeks. So how did the banks do? Well, if this Bloomberg headline is anything to go by, they did pretty well… Banks Ace Fed Stress Tests, Pave Way for Shareholder Payouts All 34 U.S. banks tested passed their stress tests. This means that the Fed decided they could all survive a major economic downturn without needing a bailout. And if you just read the headlines, you might be under the mistaken impression that everything is rosy on Wall Street… But looking under the hood, it’s clear some banks did better than others. Gold stars went to Goldman Sachs, Morgan Stanley, and Wells Fargo. They all got lower SCB levels. In fact, Goldman’s SCB fell by 10 basis points. That was due to growth in its consumer business. But several banks might need to increase the level of capital they have in reserve. This group includes Bank of America, Citigroup, and JPMorgan Chase. Bank of America and JPMorgan Chase are concerned they might start to see more defaults in credit or loan payments. For Citigroup, higher trading losses, lower fee income, and higher expenses impacted their capital levels. Recommended Link [$100 is all it takes to make money in this market]( [image]( “Buying Tesla, Apple, Amazon, Bitcoin, or anything else right now is a devastating financial mistake.” - Jeff Clark I’ve joined the ranks of the top 1% of wealthy Americans by ignoring 99% of the entire stock market. I trade this one very special stock. I call it, “The One Stock Retirement” because I’ve used it through every market condition and closed on triple-digit gains – time and time again. Starting with just $100, this trade has the potential to change the lives of everyday folks…maybe even yours…. [Click here to watch how I do it.]( -- Good, But Not As Good As Last Year But deciding on the banks’ SCB levels isn’t the only outcome of the stress tests. The Fed also uses the results to determine whether banks can redistribute some of their excess capital to shareholders in the form of dividends, or even share buybacks. Typically, those that do not perform well in the stress tests are not allowed to raise their dividends. They may also be required to hold off on stock buybacks until they raise the amount of liquid capital they have on their books. Following their stress test results, Goldman Sachs, Morgan Stanley, Bank of America, and Wells Fargo raised their dividends. But if you look closer, you’ll see that the increases were much lower than last year. [Featured: Caught on Camera - Florida man leaves crypto crowd speechless…]( Last year, Goldman Sachs raised its dividend by 60%. This year, it will raise dividends for the quarter by 25% to $2.50 per share. In 2021, Morgan Stanley doubled its dividend after the stress tests. This year, it raised its dividend by just 11% to 77.5 cents per share. It also announced that it would initiate a $20 billion share buyback program. Bank of America raised its quarterly dividend by 5% to 22 cents per share. But that’s significantly lower than last year’s increase of 17%. And, having doubled its quarterly dividend after the 2021 stress test, this year Wells Fargo raised its dividend by just 20% to 30 cents a share. So, most of the banks are being cautiously optimistic… And JPMorgan Chase and Citigroup are not increasing their dividends at this time. But, as I mentioned up top, there’s something happening soon that might show the banking industry in a different light… Recommended Link [Be Warned: Fill Up While You Can, America…]( [image]( Something is about to happen to your neighborhood gas station. Get in front of this federally mandated nationwide rollout… [Click here now.]( -- What This Means for Your Money Starting on Thursday, banks will release their second-quarter earnings reports. And I believe we are likely to see signs that banks are doing less well than the stress tests indicate. That’s because quarterly earnings show what’s actually going on, not how those businesses would do in a hypothetical scenario. According to my sources on Wall Street, trading and investment bank fee volume, in particular, will be down significantly this quarter. Remember, the criteria for the stress tests were set in February. That was before the war in Ukraine began… and while the Fed was still ignoring rising inflation. A lot has changed in the world and in the markets since then. So, until we can reassess how healthy the Wall Street banks really are after this earnings period, I suggest you steer clear of megabank stocks for now. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins P.S. Investing in volatile markets like we’re seeing today isn’t as straightforward as picking a good company with good prospects and investing in its future growth. Headwinds in the market mean you need to find different ways to keep your portfolio in the black. Over the last two years, I’ve been testing and perfecting a new investing strategy that can help you make money in up and down markets. Readers who tested this strategy during the 2020 market crash were able to make up to 8x their money… in a matter of weeks. To find out more about my new strategy, [click here](. --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Inside Wall Street Feedback). --------------------------------------------------------------- MAILBAG A new subscriber writes in, sharing their gratitude for Nomi’s video updates, enthusiasm, and recommendations… I have just recently become one of your subscribers. I love your videos because they are straight to the point. I am so impressed by your knowledge and your enthusiasm that I have a suspicious feeling that we are going to be partners on this journey together for some time. I have already bought several of your recommendations and I'm hoping to do some option trading in the very near future. I'm nearly 80 years of age, so this is just another wonderful facet of my life. By the way, I have just received two of your books – Collusion and Black Tuesday. I have several investment advisers in your group. But you stand out like a beacon. I'm so pleased to have met you. Wishing you all the very best for the future. – Darby M. And another reader has taken an interest in Nomi’s new options-trading product, [Distortion Money Matrix]( Nomi – thanks for the contact regarding setting limits on options trading. I do understand that using options gives us a way to get the best prices. By the way, I so believe your approach regarding the distortion to be right on! The way the financial leaders of our country have misused and abused our trust to manage our money is atrocious. Thank you for your wisdom. – Marty P. What is your experience with trading options? Which of Nomi’s products are you getting the most from in this current economy? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: This News Could Spoil the Party for Bank Shareholders). IN CASE YOU MISSED IT… [How to trade just three stocks and fund your retirement]( The 3-Stock Retirement Blueprint When most folks think about making money through the markets, they think “buy and hold.” They think “diversification.” And they think about investing in things like index funds. But this man has a different approach. It’s called the “3-Stock Retirement Blueprint.” It’s a way to play 3 stocks – yes, just 3 – and potentially make more money than you would by trading the rest of them… Sound impossible? [Get all the details here – including the names and ticker of the three stocks.]( [image]( Get Instant Access Click to read these free reports and automatically sign up for daily research. [The Trader’s Guide to Technical Analysis]( [The Gold Investor’s Guide]( [The Ultimate Guide to Taking Back Your Privacy]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Rogue Economics welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-681-1765, Mon–Fri, 9am–7pm ET, or email us [here](mailto:memberservices@rogueeconomics.com). © 2022 Rogue Economics. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Rogue Economics. [Privacy Policy]( | [Terms of Use](