The Daily Alpha: Real Talk On Jim Cramer, Wells Fargo, Fintech and Jeff Merkley

Apr 7 2017 | 3:11pm ET

Today, we discuss the Supreme Court, troubles at Wells Fargo, Ivy League quads, how Fintech is killing traditional revenue streams, and the man who knows more about Jim Cramer than all of us combined.

Hair of the Dog

Shot: Sen. Jeff Merkley – Nov. 2013: “Thank you for your leadership RT @SenatorReid Thanks to all of you who encouraged me to consider filibuster reform. It had to be done.

Chaser:
Sen. Jeff Merkley – April 2017: “The dark deed is done. McConnell hasjust put a knife into the heart of our We the People republic.”

Quotes of the Day

“Traditional Financial Institutions are too slow in implementing things. For a startup it takes no time to adapt to new circumstances and make changes accordingly. Incumbents take forever. Integrating with them is a nightmare because they lack the culture, know-how, and they lack the incentive.”

That’s a CEO of a Latin American FinTech company. We don’t know his name because Pricewaterhousecoopers has withheld it in a stunning report on the state of financial technology (Fintech) in today’s world.

The report indicates that at least 24% of revenue is under threat at financial services firms due to the increasing implementation and integration of Fintech. PwC interviewed roughly 1,300 participants for this survey. 

Here are the notable findings of the report:

  • Battering the Bottomline: Nine in ten financial services firms globally expect to lose revenue to fintech companies. The size of loss expected is 24% on average. North American companies felt the most pressure among the regions, with the number of incumbents who said their business is at risk jumping from 69 percent to 82%
  • From threat to opportunity: Four in five financial services firms expect to partner with fintech firmss in the next three to five years, expecting a 20 percent ROI on average. 7 in 10 firms also plan to increase internal disruption
  • Partnership challenges: Regulatory uncertainty and cultural differences were cited as the two greatest obstacles to partnership by fintechs and incumbents alike
  • Blockchain finally breaking ground: More than three quarters (77%) of financial services firms plan to adopt blockchain in live production by 2020; funding for blockchain increased 70% year-over-year to $450 million. Interestingly, only 19 percent of large financial services firms said they’re investing in blockchain in the next 12 months – compared to 50% large fintech services.

 

Modern Trader has just released its annual fintech issue as well.

It’s a deep dive into the emerging trends that many mainstream media outlets and financial services companies are still ignoring.

Modern Trader is a paid subscription publication for professional traders & active investors but as a special offer from The Daily Alpha, you can take a look at the annual fintech issue here for FREE with the password fintech17.

You may also pick up a copy at Barnes & Noble, Books-a-Million, Amazon or subscribe today.

“Man Forced to Watch Jim Cramer Shows, Maintains Motor Functions”

There’s no quote to this story… just an observation.

It wasn’t long ago that the Daily Alpha did a segment called “Because You Missed Squawk Box.”

The purpose of the piece was to see how far we could get into the first hour of the CNBC show each morning without turning off the television due to sheer confusion or anger.

Apparently, The Street has taken this concept and applied it to everything that Jim Cramer does on CNBC. A young academic studying forecasting and the influence of television “noise” on investor performance could have a field day with the opinion and predictions that come out of these daily pieces. The author, The Street’s Bret Kenwell, is today’s hero.

He writes a pretty prolific amount of copy on The Street each day… but the subject is the sheer madness radiating out of Cramer’s frontal lobe. Kenwell would make a great reporter in a war room, though he doesn’t know that he’s now documenting Cramer’s track record for everyone.

There is no shortage of content on the web tracking Cramer’s performance. And there are no apologies. 

Cramer has called his work on CNBC a mix of investor education and entertainment.

We call it a guesswork and dart-throwing that some retail investors view as gospel.

Be sure to watch yesterday’s interview at the top of the screen between Kenwell and the CNBC icon. 

Notice that when Jim Cramer is interviewed on the trading floor, it always looks like he’s sitting atop a horse that refuses to stand still.

"How can you devote enough time to the other boards, given Wells Fargo's problems? You're a jack of all trades, master of none.

That’s Charles Elson, chief of the University of Delaware's Center for Corporate Governance.

The Street quotes Elston on growing concerns about the Board of Directors at Wells Fargo. Elston and other key influencers want to oust several members on the notion that they serve on too many boards right now.

Proxy advisory Glass Lewis has echoed that sentiment.

The company hasn’t exactly been the pillar of ethics over the last few years, and now many key influencers are suggesting it’s time for change at the top.

The bank will hold its annual shareholder meeting on April 25, and Glass Lewis has urged investors to vote against six – yes, six – current board members. Glass Lewis is telling shareholders to “vote against the nominees ‘based on the reputational damage’ inflicted on the company.”

Institutional Shareholder Services will also be chiming in sometime in the near future.

“Oh, my goodness. All of them, you know, got in?"

Finally, a feel good story out of Liberty Township, Ohio brothers.

Four quadruplets – all brothers – have been accepted in to Yale and Harvard.

Even more interesting, their father hasn’t checked their grades since the third grade since he was so confident that they would do well in school. The lowest grade that any of them ever received was a “B.”

Check Out Modern Trader

This week Modern Trader--the essential journal for professional traders & active investors, was named the Best Business-to-Business magazine by the Niche Media Awards committee.

Grab the Newsletter

Signup here for the daily FINalternatives Newsletter which includes the Daily Alpha.
Follow @FINalternatives

Be sure to check out the award-winning Modern Trader and a very special offer for first-time readers and follow @moderntradermag 

Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon.


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