Fiscal Cliff, Investors and Housing.
The expiration of tax cuts enacted when George W. Bush and extended by President Obama is the biggest immediate fear for investors if the U.S. "falls off the Fiscal Cliff," with no compromise between the president and the Republican leadership of the House of Representatives on reducing the federal deficit by the end of the year. While there's been plenty of cheerful talk from the president and Democratic leaders over a possible deal to avert the Fiscal Cliff, Speaker of the House John Boehner (R-Ohio) on Thursday said after a meeting with Treasury Secretary Timothy Geithner that "despite the claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts," according to a Reuters report.
Wells Fargo's Return of Capital.
Wells Fargo's shares have now returned 24% year-to-date, following a 10% decline during 2011. The shares trade for 1.6 times tangible book value, according to Thomson Reuters Bank Insight, and for nine times the consensus 2013 EPS estimate of $3.63. The consensus 2014 EPS estimate is $3.94. Based on a quarterly payout of 22 cents, the shares have a dividend yield of 2.65%. Wells Fargo trades much higher to tangible book value than most other large-cap bank stocks in the current environment, reflecting its strong and consistent earnings performance. Over the past five quarters, the company's operating returns on average assets have ranged between 1.27% and 1.46%, and its returns on average tangible common equity have ranged between 15.59% and 16.85%, according to Thomson Reuters Bank Insight.
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