Live Markets U.s.: As oil prices climb, KBW eyes energy-exposed banks

Crossfirst Bankshares

20/09/2019 15:17

* Wall Streets three major indexes rise
    * Healthcare leads S&P sector gains, laggard Utilities
sector dips
    * Dollar index strengthens

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    AS OIL PRICES CLIMB, KBW EYES ENERGY-EXPOSED BANKS (1009
EDT/ 1409 GMT)
    With oil futures on track to end the week roughly 7% higher,
 banks with more exposure to the energy sector should benefit,
according to research from Keefe, Bruyette & Woods.
    Oil prices have been volatile this week, with U.S. crude
 CLc1  rising almost 16% to its intraday high of $63.38 on
Monday and then touching its weekly low of $57.67 on Wednesday
after a weekend attack on Saudi Arabia oil facilities raised
supply crunch concerns.
    U.S. crude trading around $60 a barrel "is a positive for
energy-exposed bank lenders in the context of future energy loan
growth and overall energy credit quality, especially for those
banks with legacy problem energy loans," wrote KBW analyst Brady
Gailey in a research note distributed on Thursday.
    Gailey pointed to six banks with energy loans worth at least
50% of their tangible common equity (TCE): Bank7 Corp  BSVN.O 
with energy loans at 122% of TCE, BOK Financial  BOKF.O  at
111%, Cadence Bancorp  CADE.K  at 76%, Crossfit Bankshares
 CFB.O , Texas Capital Bancshares  TCBI.O  at 63% and
Cullen/Frost Bankers  CFR.N  at 50%.
    The banks' shares haven't seen a boost this week
corresponding to the oil jump, because energy is still just a
portion of their loan book and banks are also contending with
interest rate volatility, according to Gailey.
    But longer-term, they could see benefits. CFR, BOKF, CADE,
TCBI, CFB and Iberiabank Corp  IBKC.O  are best positioned for
energy loan growth, while TCBI, CADE and HWC are best placed to
use strength in energy prices to improve the credit quality of
their energy books, Gailey said. 
    Much depends upon the trajectory of oil prices, of course.
Saudi Arabia's ability to avert a global oil supply crunch will
become clear only in a few weeks, because for now its crude held
in storage can fill the gap and mask the scale of damage to its
facilities, traders and analysts say.  urn:newsml:reuters.com:*:nL5N26A4DI 
    (Sinéad Carew)
     *****
    
    S&P 500: "Witch" way? (0915 EDT/1315 GMT)
    As the S&P 500  .SPX  has neared its July record highs the
index has turned indecisive. In fact, it's virtually flat for
the week. That said, volatility may be poised to pick up with a
quadruple witching Friday followed by the September equinox on
Monday.  urn:newsml:reuters.com:*:nL2N26A16S
    Indeed, with stock index futures, stock index options, stock
options and single stock futures for September set to expire,
volatility and volume may about to bubble up.
    Additionally, one notion put forth by proponents of Gann
Theory, is that U.S. markets may see turning points around the
Northern Hemisphere's fall and spring equinoxes as well as the
winter and summer solstices. Thus, some traders may be on alert
around these events, for an acceleration of the prevailing
trend, or a significant reversal.  urn:newsml:reuters.com:*:nL1N2150VD
    Meanwhile, the SPX daily Average True Range (ATR), another
historical volatility measure, is rapidly nearing a near 2-year
support line. Volatility picked up sharply in May and August
after this line was tested. (Click on chart below)
    The SPX still faces a major barrier at its July 26 record
closing and intraday highs (3,025.86/3,027.98). The resistance
line across the 2018 tops, which capped strength in July, now
comes in around 3,045.  urn:newsml:reuters.com:*:nL2N26A0FX
    Support is at Wednesday's post-FOMC trough (2,978.57) and
breaking this level may suggest a change in character,
especially given that the SPX is on track for a 6th straight
higher weekly low (last week's low was 2,957.01).
    Thus, which way the SPX is going to break may soon be
evident.
 
 
    
    (Terence Gabriel)
    *****
    
         

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