In this series, we'll explore the data announcements and events that may affect the performance of bank stocks during the upcoming week.
The banks were all over the place this week, and with the most recent employment data pushing them higher early in trading Friday, some bank investors may not be sure what information to keep track of. Here's a look at the data releases and events that may influence how your bank stock moves in the coming week.
- Consumer credit: As a measure of how the average American household is using its available credit, this is an important piece of data for bank investors to track. With too little consumer credit being used, the banks have little chance of growing loan portfolios. Too much credit, and the heavy debt payment loads on the average household could dampen consumer spending and result in future drops in lending. With most of the banks operating their own credit card segments, this is a data point they will be watching closely. With consumer lending at the forefront of its revenue generation, Citigroup (NYSE: C ) may be particularly interested in how consumer credit is moving, as more credit availability opens up new business opportunities for the bank.
- MBA purchase applications: Mortgage applications grew 4% last week, with continued interest in refinancings driving more traffic to lenders. As the leader of mortgage originations in 2012, Wells Fargo (NYSE: WFC ) is counting on increased activity in the housing sector to drive more mortgage business through its doors. Likewise, Bank of America (NYSE: BAC ) is looking to increase its exposure to the mortgage market, with a need to drive up more business in that segment of its operations. Both Wells and JPMorgan Chase (NYSE: JPM ) had noted a decrease in mortgage revenue generation for the first quarter of the year, with JPM citing expectations that the drop will continue for a while longer.
- Jobless claims: This past week we saw both the positive and negative outcomes of good and bad jobs data. With the employment report on Friday propelling the entire market higher, most of the banks got a nice boost. If there is a continuation in the positive trend we saw this week, be sure to note how the banks move along with the market. If the trend doesn't continue, shares will most likely fall.
- Bloomberg Consumer Comfort Index: The Bloomberg index surveys the feelings of selected consumers about the overall economy, their finances, and their intentions of buying goods or services. With consumer spending on the rise, it's important that consumer comfort with the economic conditions also move in a positive trend. For the banks, both may give light to how spending and savings will grow, with more business to the banks as the trend improves. With the labor market improving, though not at a fast clip, there may be more opportunities for the bank to capitalize on the positive outlook of consumers.
Throughout the week
Prominent members of the Federal Reserve Board will be giving speeches or joining panels to discuss current economic and monetary policy:
- Federal Reserve Gov. Jeremy Stein will participate in a panel discussion at the Chicago Fed banking conference on dollar funding and lending by global banks.
- Richmond Federal Reserve Bank President Jeffrey Lacker will give a speech in New York City on ending "too big to fail."
- Philadelphia Federal Reserve Bank President Charles Plosser will give a speech on monetary policy to the Simon NYC conference in New York.
- Federal Reserve Chairman Ben Bernanke will give a speech at the Chicago Fed banking conference.
- Kansas City Federal Reserve Bank President Esther George will give a speech in Jackson, Wyo., on the economy.
Most of the data released in any given week won't make or break your investment. But as a Foolish investor, you know that you should pay attention to the news and information that may effect the fundamentals of the companies you invest in. Though there can be a lot of data, and choosing the right bits to pay attention to can be challenging, you can always learn more by logging on to Fool.com.
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