Finance
Opinion | We Aren’t Ready for a Financial Crisis
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istock/Getty Photos
The Federal Reserve’s stability sheet is at present at about $8.6 trillion, whereas the nationwide debt is greater than $31 trillion. These are staggering quantities that may make it tough to deal efficiently with the subsequent monetary disaster. And the subsequent monetary disaster is inevitable.
Within the Seventies, financial historian
Charles Kindleberger
famous that monetary crises occur roughly as soon as each 10 years. Current expertise bears this out, with crises coming in 2009 and 2020. The subsequent monetary disaster might happen sooner on account of a brand new conflict, the bursting of an inflated asset bubble just like the one in housing, or the Fed’s efforts to battle inflation. The subsequent disaster may occur for some unexpected purpose, as with Covid.
The central-bank playbook for coping with a monetary disaster was devised within the nineteenth century by British banker
Walter Bagehot.
The principal part is to lend freely, which the U.S. authorities did in response to the pandemic in 2020. Starting with Congress’s passage of the Cares Act, the Treasury and the Fed adopted Bagehot’s prescription, infusing about $5 trillion into the economic system via 22 emergency Treasury packages and 14 direct Federal Reserve lending packages.
The financial and monetary authorities should work collectively. The Treasury funds its lending by issuing debt, and the Fed purchases that debt by printing cash. This expands the provision of cash, which is inflationary. Direct lending by the Fed additionally inflates the central financial institution’s property. By the top of 2020, when the monetary disaster had largely abated and monetary markets had been on the upswing, the Fed’s stability sheet topped $7 trillion.
Slightly than finish the emergency funding, nevertheless, the brand new Biden administration elected to proceed it in 2021 with the $1.9 trillion American Rescue Plan. The White Home wished to spend a further $3.5 trillion later that 12 months, however Congress properly stated no. By early 2022, the Fed’s stability sheet was at a traditionally unprecedented $8.9 trillion, with about $5.7 trillion in Treasury debt and about $2.7 trillion in mortgage-backed securities. The nationwide debt was greater than $30 trillion, resulting in the runaway shopper inflation we now face.
In 2008, earlier than the housing disaster, the Fed’s stability sheet was solely about $900 billion. However then the Fed started to monetize authorities bonds, together with government-guaranteed mortgage bonds. This was quantitative easing “to principally pay the federal government’s payments via cash creation,” as former Fed Chairman
Ben Bernanke
put it. That program was alleged to be non permanent, as Mr. Bernanke assured Congress in 2011, and the Fed’s stability sheet was alleged to normalize.
Nevertheless it didn’t, and stability sheet ranges rose to greater than $4 trillion in 2014 and dropped solely to $3.8 trillion in August 2019, proper earlier than the Covid disaster hit. The Fed couldn’t dump its Treasury or mortgage debt as a result of doing so would possible trigger these markets to crash. The Fed prefers to cut back its stability sheet by letting its money owed mature, resulting in sluggish declines.
When the subsequent monetary disaster arrives, the Fed’s stability sheet will nonetheless be inflated from its efforts to comprise the earlier one. There are two immutable legal guidelines of economics: Nothing is infinite and nothing is free. The U.S. is a rich nation, which allowed it to climate the Covid monetary disaster. The greenback’s standing because the world’s reserve forex signifies that international central banks maintain most of their international reserves in {dollars} within the type of Treasury debt, and the buck is the forex of selection for worldwide transactions. These elements create excessive demand for Treasury debt, however that demand isn’t infinite. The greenback additionally faces growing competitors from currencies such because the Chinese language yuan.
Because the nationwide debt will increase, demand for U.S. Treasury debt should in some unspecified time in the future diminish and rates of interest rise, leading to a crushing interest-rate burden on the U.S. economic system and elevated inflation. The Federal Reserve can also’t infinitely develop its stability sheet and the provision of cash with out inflicting hyperinflation. All of this implies that the U.S. might at some point face a monetary disaster with out enough wealth to problem huge quantities of debt and print cash. The end result could be financial melancholy or hyperinflation.
The plain reply is to cut back federal spending, thus reducing the nationwide debt and permitting the Fed’s stability sheet to run down extra shortly. Lowering total spending requires painful trade-offs between weapons and butter. Sadly, the world is a harmful place, and making a precedence of protection spending is prudent, however the Biden administration appears to really feel it may possibly nonetheless spend freely on all the things. Its $400 billion student-loan forgiveness program is one egregious instance. If the U.S. is to climate the subsequent financial crises, budgetary prudence and restraint are required immediately.
Mr. Adler served as deputy assistant Treasury secretary for the Monetary Stability Oversight Council, 2019-21. He’s co-author of “Shocked Once more! The COVID Disaster and the New Market Bubble.”
Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared within the December 22, 2022, print version.
Finance
Vallourec SA (VLOUF) Q3 2024 Earnings Call Highlights: Strategic Moves and Financial Resilience …
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EBITDA Margin: Maintained a healthy margin similar to previous quarters.
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Full Year EBITDA Outlook: Reiterated at EUR800 million to EUR850 million.
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Cash Generation: EUR130 million in Q3, reducing net debt for the eighth consecutive quarter.
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Net Debt Reduction: Over EUR1.2 billion reduction since 2022.
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Q3 Group EBITDA Margin: Close to 19%.
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Tubes Volumes: Reduced to 292 kilotons in Q3.
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Mine & Forest Segment EBITDA: Expected slightly below EUR100 million for the full year.
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Net Debt Reduction in Q3: EUR124 million.
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Full Year Mine Production Expectation: Approximately 5 million tonnes, down from 6 million tonnes.
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Q3 Cash Flow: Total cash generation of EUR130 million.
Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Vallourec SA (VLOUF) maintained a healthy EBITDA margin in Q3 2024, driven by strong international OCTG market performance.
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The company generated significant cash flow, reducing net debt for the eighth consecutive quarter, totaling a reduction of over EUR1.2 billion since 2022.
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Vallourec SA (VLOUF) announced its first strategic acquisition in nearly a decade with Thermotite do Brasil, enhancing its position in the offshore line pipe market.
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The company is progressing well with its optimization program in Brazil, which is expected to significantly contribute to closing the profitability gap.
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Vallourec SA (VLOUF) plans to announce a dividend proposal for its 2025 AGM, marking the first dividend in 10 years, reflecting strong financial health.
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The US OCTG market experienced softness, impacting Vallourec SA (VLOUF)’s overall performance.
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The global iron ore market softened in Q3, leading to lower prices and sales volumes in the Mine & Forest segment.
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Vallourec SA (VLOUF) lowered its full-year mine production expectations to approximately 5 million tonnes, down from 6 million tonnes.
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Q3 2024 saw a reduction in tonnage sold and a slight decrease in average realized prices, leading to a year-over-year decline in revenues and EBITDA.
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The company faces potential challenges from the new tax environment in France, which could impact shareholder remuneration strategies like share buybacks.
Q: Is a share buyback still an option for shareholder remuneration given the new tax environment in France? A: Philippe Guillemot, CEO: While we never exclude any ways to return excess cash to shareholders, the potential tax implications in France make share buybacks less attractive. We plan to return cash to shareholders with a payout ratio of 80% to 100%, starting from Q3. The dividend proposal will be announced in February, based on Q3 cash generation.
SHEPHERDSTOWN, W. Va., November 15, 2024–(BUSINESS WIRE)–JSB Financial Inc. (OTCPink: JFWV) reported net income of $2.0 million for the quarter ended September 30, 2024, representing an increase of $1.3 million when compared to $643 thousand for the quarter ended September 30, 2023. Basic and diluted earnings per common share were $7.64 and $2.33 for the third quarter of 2024 and 2023, respectively. The third quarter results include the recognition of an interest recovery totaling $1.3 million, a recovery to the allowance for credit losses on loans totaling $252 thousand and a recovery of legal fees totaling $17 thousand on prior nonperforming loans. Excluding the impact of these notable items, pre-tax income of $959 thousand for the third quarter of 2024 was $187 thousand more than the same period in 2023.
Net income for the nine months ended September 30, 2024 totaled $3.4 million, representing an increase of $1.1 million when compared to $2.3 million for the same period in 2023. Basic and diluted earnings per common share were $13.33 and $8.46 for the nine months ended September 30, 2024 and 2023, respectively. Annualized return on average assets and average equity for September 30, 2024 was 0.87% and 17.65%, respectively, and 0.66% and 13.17%, respectively, for September 30, 2023. Excluding the impact of the notable items in the third quarter of 2024, pre-tax income of $2.7 million for the nine months ended September 30, 2024 was $96 thousand lower than the same period in 2023.
“We are pleased with our performance for the third quarter, which includes one-time recoveries on nonperforming loans totaling $1.5 million. Additionally, our team continued to create, deepen and expand our customer relationships which resulted in an increase in total deposits of 10% when compared to the second quarter and 17% year-over-year,” said President and Chief Executive Officer, Cindy Kitner. “During the third quarter, we saw stable loan growth, which was funded through loan maturities and deposit growth, and we continue to have strong credit quality metrics including past dues, nonaccruals, charge offs and nonperforming loans, all of which remained at historically low levels.”
Finance
Interested In Manulife Financial’s (TSE:MFC) Upcoming CA$0.40 Dividend? You Have Four Days Left
Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Manulife Financial Corporation (TSE:MFC) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Manulife Financial investors that purchase the stock on or after the 20th of November will not receive the dividend, which will be paid on the 19th of December.
The company’s next dividend payment will be CA$0.40 per share. Last year, in total, the company distributed CA$1.60 to shareholders. Looking at the last 12 months of distributions, Manulife Financial has a trailing yield of approximately 3.5% on its current stock price of CA$46.23. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Manulife Financial can afford its dividend, and if the dividend could grow.
View our latest analysis for Manulife Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Manulife Financial paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we’re encouraged by the steady growth at Manulife Financial, with earnings per share up 4.5% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Manulife Financial has increased its dividend at approximately 12% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
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