BAC Earnings Power?

[wescobrk]

Bond yield curves will be “very steep” for “a very long time,” Gross wrote in a Twitter post yesterday. A period of reflation is under way, he wrote. Investors should expect “higher long rates” and “low short rates,” according to Gross, who is based in Newport Beach, California.

 

Anyone care to comment how much greater earnings power for BAC once we have a steep yield curve? Certainly not expecting 2012 or maybe even 2013 but certainly around 2014 or 2015 and beyond?

 

Is the tally now about $8 billion in expense savings from BAC by 2015? Also, isn't the mortgage problems costing almost $2 billion a quarter? Ive heard 1% ROA, anyone think any higher than that?

 

Thanks

[bmichaud]

Gross also said yields would rise upon QE2 ending because demand would shrivel with the Fed leaving the mkt.....

[Uccmal]

Bill Gross has lost his raison d'etra.  He has been riding rising bond yields for 30 years, his entire career, and no longer knows what to do with himself.  Suffice to say, interest rates will rise, one day, but probably not anytime soon, or very quickly. 

 

When they do, the slimmed down banks will bring in mountains of cash on the spreads.  JPM Morgan has been issuing long term debt at present interest rates.  My guess is BAC will follow suit as the safety of the balance sheet becomes recognized. 

[returnonmycapital]

BAC preferreds are through par. If you remember, 4th quarter 2011 prices drifted down to 65% or so. It appears the market is recognizing safety in the balance sheet already.

 

Next stop, tangible common equity.

 

 

[txlaw]

I heard Bill Gross touting gold and commodities the other day.  And recommending the Pimco commodity investment vehicle.

 

I used to think Bill Gross was the man before I got into the whole value investing thing.  I don't think that anymore.