The Volcker Rule is another potential problem for the bigger banks. The rule is a ban on speculative trading by commercial banks where customer deposits are used in an attempt to achieve trading profits in stocks, bonds, commodities and currencies. Last week, the banking regulators issued a joint release delaying the implementation of this rule until July 2014. I say that this delay is the first sign that the Volcker Rule will never be implemented.
A third issue is the exposure to Notional Amount of Derivative Contracts, which decreased by 7.4% or $18.58 trillion in the fourth quarter to a still huge $231.88 trillion on the balance sheet of the FDIC-insured financial institutions. Derivatives were a major cause of "The Great Credit Crunch" and their huge numbers keeps the banking system on shaky ground.
Notional Amount of Derivative Contracts have increased by $67.1 trillion since the end of 2007 to that $231.9 trillion figure. This is a huge read flag and will be the source of additional time bombs for the global economy. De-leveraging and financial reform is supposed to provide more transparency, but I have not seen any evidence that derivatives are under increased scrutiny.
Trading Parameters for the "Too Big To Fail" Banks:
Bank of America
-- At $8.31 the stock is rated a hold according to ValuEngine with a one-year price target at $8.03. BAC traded above $10 a share on March 19 but did not close above that key level, which is a threshold for some stock mutual funds. My monthly value level is $6.24 with a weekly risky level at $9.66.
-- At $33.60 the stock has been upgraded to buy from hold according to ValuEngine this morning with a one-year price target at $35.31. Citi traded above $38 a share on March 19. My monthly value level is $30.66 with a weekly risky level at $35.60.
-- At $43.79 the stock is rated a hold according to ValuEngine with a one-year price target at $45.55. JPM traded above $46 a share on March 27. My annual value level is $41.66 with a weekly risky level at $46.86.
-- At $34.09 the stock is rated a buy according to ValuEngine with a one-year price target at $36.73. Wells is trying to take-out its March 19 high at $34.59 and if successful the upside is to my annual risky level at $38.69. My annual value level is $32.70 with a weekly risky level at $35.46.
I have no conflicts with any of these stocks. Newmont Mines is in my
ValuTrader Model Portfolio.