Forecasts, Small Banks and Hot Stoves

Once again the forecasters got it all wrong. Hillary was supposed to win a huge Electoral College victory, and stocks would rally on the continuation of the status quo. If a miracle happened and Trump won, we would see a collapse of epic proportions. We did see a very short-lived collapse Tuesday night, but it corrected quickly and the last two days have been a rally based on what everyone hopes will be the new administration's pro-business policies. Of course, he has not announced any actual policies yet, but that’s no reason to ruin a big rally.

One question I have gotten several times since the polls closed is if the trade of the decade will be ruined by a relaxing or repeal of Dodd-Frank. The short answer is no. Even a relief in the regulatory environment is not going to eliminate all the reason for banks to merge. It is still a very low growth economy; net interest margins are low, and technology costs are rising quickly. There is also a chance the SIGI limits are raised which brings a whole new group of buyers into the market next year. Of course, if I am wrong and regulatory relief drops to the bottom line and the economy picks up under President Trump driving higher earnings for small banks that is not going to hurt me as a small bank investor.

It is important to keep in mind that the consolidation trend began all the way back in the late 1980s when the interstate banking regulations changed. There have been several drivers of the trend, and the regulatory cost has been one of them. It still will be. Regulations may be reduced, but they will not be eliminated altogether. The smaller banks will still find it a huge ...

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Bankers, Memories and Winter is Coming

While everyone else is trying to trade around earnings season I find it far more valuable to sit back, relax and read what the people running the business say about their company. I find this particularly useful when it comes ...

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Real Estate, World War III and the Chicago Cubs

Just to mix things up a bit this week I will send out my weekly piece on Wednesday instead of Thursday. Tomorrow I will be hoping on a plane to fly to Chicago as my daughter and her husband have ...

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Debates, Fantasy Land and the Whipping Post

The debate had been over for about a hot minute last night when I started getting the “Stocks to buy for a Clinton Presidency” started to hit my email inbox. Today I got several “Stocks to buy for Trump Presidency ...

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A Dangerous World, the New Normal and Literary Anticipation

It's getting a little scary out there. The US and Russia are flirting with armed conflict in Syria, and there is shooting in Yemen today as the US took out some Yemeni coastal radar sites after they fired missiles ...

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Banks , REITs and Big Storms

It has been an interesting past couple of days with the wildcard games both coming to exciting, albeit heartbreaking conclusions. If the rest of the playoffs have the same quality of play, this year will be something special to watch ...

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Yield Seeking, Adult Toys and Chinese Birth Rates

It has been a busy two weeks around Chez Melvin since I last sent out a Thursday note. Between the trip to Atlanta for the FIG Bank Conference and the weekend venture down to Sanibel for our anniversary, I was ...

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Time Frames, Dangers and Economic Obstacles

I will kick off this week with some highlights from the Delivering Alpha Conference this week. A lot of smart people spoke this year, and they said a lot of things worth considering. I really liked what Marc Lasry of ...

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Recreational Reading, Morons and Semi-Degenerate Gamblers

The week has been a fairly quiet one. The Orioles have played their way back into contention dn are only a game and a half back of the division leading Red Sox. We have a weekend series with the Tigers ...

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Recreational Reading, Morons and Semi-Degenerate Gamblers

The week has been a fairly quiet one. The Orioles have played their way back into contention dn are only a game and a half back of the division leading Red Sox. We have a weekend series with the Tigers ...

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Flying Blind, Undated Call Options and Emmylou

Frank Martin of Martin Capital recently penned a shareholder letter to investors in His Hummingbird Value Fund and as always his thoughts are a worthwhile read. If you have ever read it his book A Decade of Delusions: From Speculative ...

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Interest Rates, Psychology and School days

We had a release of the Fed minutes this week and the meetings are getting a bit livelier. Some members think we need to raise, some want more evidence and some just aren’t that sure what to do. Much ...

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