Wednesday, May 1, 2019

Jamie Gets the Last Word for 2018

When Jamie Dimon pens his annual letter to shareholders, the market listens, reads and interprets what's on his mind 
Warren Buffet's annual letter to shareholders is legendary in financial circles.  The messages in the letters extend beyond a review of Bershire Hathaway performance. Over time they became annual seminars in investment analysis.  Reading batches of his letters from over the past two decades could comprise a business school course in evaluating investment performance--not to mention an occasional insightful analysis of accounting rules and financial derivatives.

Over the past 10 years in banking, the annual letter scripted by JPMorgan Chase CEO Jamie Dimon has become the awaited annual address to the financial industry. In years past with customary candor, Dimon has explained the benefits and drawbacks of bank regulation, painstakingly rationalized the bank's dividend-payout and stock-buyback programs, and has dissected the U.S. economy's prospects.

Dimon's 2019 letter was released in April. As he has done in previous years, he took the opportunity to analyze important issues in the financial services industry after he had a chance to applaud JPMorgan Chase's solid results in 2018 across the board.

What's on his mind in 2019? What's the last word for closing out 2018?

Dimon used sidebars to make remarks about inactions and ineffectiveness of government--including excess regulation in financial services, daunting health care costs, and deplorable U.S. public infrastructure (bridges, roads and tunnels that, he says, have become a national embarrassment).

But because he runs a bank, he won't hesitate to evaluate the global financial system, what banks do well, what they need to do going forward, and how regulation too often gets in the way. Much of his 2018 oratory on the banking system is an update on previous years' remarks; he's just now armed with more data to back him, better analysis of costs and benefits, and more heft from running an even larger, better capitalized financial institution. 

Like investment-guru Buffet, Dimon assesses performance (of the bank as a whole and of business units) based on returns on book equity, or return on capital deployed. More specifically, the bank focuses on return on tangible equity (after subtracting out goodwill and intangible assets).  Business units have capital allocated to them from upstair, and senior manager assesses how effectively they use the capital. Otherwise, the bank may choose to redeploy that capital into other businesses or decide whether to "give" that capital back to shareholders, who might invest it better elsewhere. 

Bank management assigns capital to business units based on operating needs, but also based on assessments of worst-case risks. Because shareholders have expectations for returns and performance, bank management holds each business line to similar expectations for returns on this risk-based capial--while managing the same risks banks take on to conduct these banking activities.

Year after year, in his letters to shareholders, Dimon explains and reviews returns on capital and rationalizes when the bank is better off permitting shareholders to get back their capital and do their own thing with it. This year he got to boast the bank's 2018 return on tangible capital leaped to 17% last year.

When it's time to drift into the gory details of accounting guidelines and requirements, Dimon doesn't mind. He embraces the challenge to explain arcane rules to the general public. This year he scolded the profession in inconsistencies of balance-sheet reporting. These are technical nuances that sometimes fascinate (or bewilder) Dimon, but significant enough to gain his attention because the impact in reporting may be, for JPMorgan Chase, in the billions, not in the thousands. 

Why are all the costs (today, tomorrow and long term) shown upfront in some products (like credit cards) but not in others? Why are all the revenues (today and in the futures) shown upfront in some activities (like mortgage servicing) but not in others (like other cash management services)? "Accounting can easily make people do silly things," he wrote, while warning financial analysts to be careful when reviewing bank business activities and product and service costs.

When it's time to assess bank regulation, Dimon explains where it works and describes where it's absurd. And he doesn't buffer his views with diplomatic language. For the past several years, he seems to speak for other bank leaders who (a) might not want to offend Washington bank supervisors or (b) who may not be as intimately familiar with Dodd-Frank rules as he is.

The Federal Reserve annual stress test and regulators designating JPMorgan as a bank "too big to fail" (or a globally significantly important bank) particularly irk him. There is too much "arbitrariness" in the test, he says.  The extra capital requirements that come with being "too big" are based on Federal Reserve Bank criteria and should be "risk-adjusted," he explains, based on factors that contribute to the bank being too big and based on how a bank prudently manages such big risks. 

As he has done in previous years, he questions why banks must maintain capital for operational risks, when those risks are already addressed addressed when a bank quantifies credit and market risks.  JPMorgan has about $40 billion in operational-risk capital requirements, much of which is tied to inherited risks from its acquisitions of Washington Mutual and Bear Stearns and risks that have, in  practice, disappeared as the bank vastly restructured those units. 

Volumes of books and analyses have been written on the financial crisis and the demise of Lehman and Bear Stearns: What caused it? What triggered it? How could it have been averted? The 10-year anniversary of the Lehman and Bear Stearns failures prompted Dimon to review that period in the context of today's bank regulation. 

Dimon explains how Lehman, Bear Stearns and AIG Financial Products might have survived under current Basel III and Dodd-Frank Rules.  (Lehman and Bear Stearns, if they had survived would likely have been consolidated banking organizations, subject to the rules enforced by the Federal Reserve.) The same institutions would have been subject to today's tough minimum liquidity rules and limits on balance-sheet leverage. 

Dimon points out big banks today must also maintain a fourth layer of capital cushion called "T-LAC" (unsecured, long-term debt subordinated to deposits, or "Total Loss-Absorbing Capacity"). 
If Lehman's long-term debt had been treated as a T-LAC capital-like cushion, then the firm would have had a capital base of over $130 billion, not less than $20 billion. T-LAC rules today would have pushed bank supervisors to convert $120 billion of debt into capital, a capital cushion that would have permitted Lehman to get through the crisis.

He has a long list of other laments or "things to discuss:"

The capital requirements for mortgage lending and exposures are too onerous, or they don't grant relief for banks that book well-structured, lower-risk loans. Regulation requires banks to maintain capital for worst-case risks of losses in the mortgage portfolio. Dimon argues that all mortgages aren't the same. 

Along the way, he expressed frustration the bank must comply with over 3,000 federal and state rules just to stay in the mortgage business, enough frustration to cause the bank to question its commitment to the business. 

He acknowledged the criticism levied at many financial institutions and corporates after the reductions in tax rates from last year's new tax legislation. New tax laws had a favorable impact on income, including JPMorgan Chase's 2018 earnings ($33 billion in net income last year). Critics observed many institutions didn't reinvest the extra gains, but used them to reward shareholders with higher dividends and share buy-backs. Dimon counters the gains and possible reinvestments (in loan growth at a bank) should be measured over time. 

A "fortress balance sheet" is a favorite Dimon term for a long time.  He referred to this objective long before the crisis.   A fortress balance for a big bank often means the bank is well-capitalized and isn't vulnerable to unexpected in the loan portfolio and in trading.  A fortress balance sheet means bank has substantial cash and liquid securities to respond to nervous institutional depositors or other short-term lenders. In 2019, the balance sheet has climbed above $2.4 trillion in total assets, but rising levels of capital (over $250 billion in book equity) support a growing loan portfolio that now tops $900 billion. 

He refers to the fortress balance sheet in the latest later, and it may be the title of the inevitable book he writes to reflect on his long career in banking when his days are done. 

Tracy Williams

See also:

Friday, March 15, 2019

Easing Up on Stress Tests

Big banks operating in the U.S. might be able to stress out less over regulatory stress tests
The tide had already begun to turn in the past two years.  Bank regulators in the U.S. had begun to ease on the toughest aspects of bank regulation. 

And in Feb., 2019, the Federal Reserve in the U.S. amended some of the rules, requirements and expectations of stress tests administered to big banks after it had significantly changed requirements in May, 2018, with amendments to U.S. Dodd-Frank regulation.  

In just the past two years, there are likely a hundred or so banks around the country quietly applauding such changes in stress-test requirements.   In 2019, the Federal Reserve didn't abolish stress tests; it modified requirements by applying less pressure on banks to prove they will have substantial amounts of capital during prolonged periods of stress.  

The stress tests for big banks still exist. The 2018 amendments to Dodd-Frank granted relief to medium-size banks: They are no longer subject to regulatory stress testing, although they should conduct them on their own. 

The tests for the big banks (based on asset size) are administered and run by regulators using regulators' own models and scenarios.  And big banks must still seek to pass the tests. In the latest episode of changing bank regulations, regulators promised not to apply hard pass-fail rules to the "qualitative" phases of the stress tests, the rules that make judgment calls on how banks assess whether future capital levels will be sufficient as they growth their businesses. 

Stress tests of all kinds and conducted in any manner, based on assumptions and models to show how a bank would endure a period of systemic and economic stress, are still important.  Dodd-Frank II permitted fewer banks to be subject to the Federal Reserve-administered tests. But bank regulators still expect banks to run their own tests and submit results to supervisors.  Banks don't mind it when they manage their own tests, using their data and devising their own models.  They become concerned if they are subject to tests based on others' models, especially when the details of such models are not widely available. 

The Federal Reserve version of stress testing assumes big banks will be subject to a nine-quarter period of an macro-economic downturn (adverse case, severely adverse case, etc.). The regulator performs calculations of how each big bank will perform under the scenario.  In most cases, banks will amass big losses.  The regulator doesn't guess at the losses; it calculates them as precisely as possible. It determines whether the bank under review has sufficient capital to withstand the calculated losses and meet conventional capital requirements under Basel III and U.S. Dodd-Frank rules. 

In banking (whether for regulators or for ongoing internal risk management), there are numerous kinds of stress tests:  Stress tests for loan portfolios; stress tests for trading positions and investment portfolios; stress tests focusing on liquidity, funding and deposits; stress tests for operational risks (especially related to business continuity and cybersecurity), and stress tests related to country and political risks. 

There is scenario-testing, as well:  What happens to the loan book and deposits when interest rates rise or fall by 100 basis points? 200 basis points? What happens to trading positions when interest rates rise or equity markets fall by a certain percentage? What happens in trading activity when trading counterparties default or can't meet trading terms? What happens when the value of collateral in loan exposures or trading positions declines suddenly? The scenarios are countless in number. The bigger banks run models that look at thousands of variables and scenarios. 

Most banks are well-equipped to develop the required sophisticated models to quantify such risks--whether the risks are overnight or are prolonged over a two-year period. They also develop models with the understanding that bank supervisors will have chances to review model integrity and second-guess the results.  (Models are "back-tested" to evaluate whether they successfully predicted the amount of worst-case losses.)

Stress tests provide comfort for bank risk managers, bank investors and even regulators. They permit the bank to identify shortfalls in risk management, over-exposed business activities (in the loan book or in trading positions), and single out business units that aren't bringing in the rewards for the risks they absorb.  They also help banks determine how much capital is necessary for today's balance sheet and for balance sheets in the periods to come. Stress tests contribute to bank decisions about whether they can increase dividend payouts or buy back shares. 

Risk management in banking ultimately leads to the question of whether there are sufficient amounts of capital to absorb identifiable and unforeseen, hidden risks. Capital absorbs losses and prevents losses for creditors, depositors, trading counterparties, and ultimately central governments and deposit-insurance schemes that may feel the need to bail out failing banks.  

Regulators obsess over capital adequacy. Banks obsess over calculating optimal capital levels.  They want to make sure they have capital for today's operating environment and capital to pass tests. They embrace having excess amounts of capital, but they also don't want too much capital.  Too much capital, they reason, implies wasted amounts of capital.  They rationalize increased dividends or buy-back programs if there is excess beyond excess.  

Stress tests, therefore, help regulators and banks in these calculations of what is the right amount of capital on an ongoing basis.  

In the past year, the Federal Reserve reaffirmed the value of stress testing. But they provided relief for small banks (by not subjecting them to regulators' versions of the tests) and eased up on the pass-fail requirements for big banks. 

Ease up or not, the last thing bank supervisors want is for big banks to learn how to mastermind or "game" the regulatory stress-test model to permit them to pass stress tests without difficulty. 

Tracy Williams 

See also:

Wednesday, January 30, 2019

Big Banks' Big Year

Despite volatile stock prices, big banks have begun to report blockbuster 2018 earnings in early 2019.
Bank stocks, especially those of the big, familiar "too big to fail" banks, fluctuate in value too often.  They did for much of the last quarter. Whatever happens in economies and financial markets around the globe appear to have immediate impact on bank stocks. If the economy in Taiwan coughs, then it might have impact on Goldman Sachs' market value.  If oil prices capsize, then investors presume banks will suffer losses from oil-and-gas loans, and the stock shares plummet.

Hints of a global economic recession, uncertainty in China-U.S. trade talks, the agonizing shutdown in Washington, and fear of just about everything have caused markets to shake vigorously the past few months. Take the stock of Citi (now at about $62/share). A year ago, the price had approached $80. In December, it dipped into the low 50's. Bank of America share prices (at $29/share) had been comfortably above 30, but slid below 24 in December.

No doubt big banks touch market and economic activity everywhere. They influence it, but they are influenced by it.  A change in interest rates, shifts in yield curves, or deteriorating perspectives about technology companies sometimes lead to risks and losses at financial institutions. Quickly.

Yet despite worries among investors and doomsday projections from economists who enjoy the attention they get after they predict the end of the financial world, as big banks have begun to report  2018 performance, many of them have done quite well.  Bank of America, JPMorgan Chase, and Citigroup, for example, reported annual net earnings of over $18 billion each, levels of performance they have never achieved and with returns on capital they haven't reached in a financial generation.

Granted, they are benefitting from a generous tax code, new tax legislation enacted a year ago.  JPMorgan, for example, paid 31% of pre-tax income in taxes in 2013; in 2018, it paid 20%. In 2018, it paid about $4 billion less in taxes than what it would have paid in 2013 (at a 31% effective rate).  That alone explains a 1% increase in its after-tax ROE in 2018.

But JPMorgan and other big banks have benefitted from steady increases in operating earnings--as they continue to spread their wings in many geographic and product directions (while quietly whispering about how financial regulation still keeps their hands tied). They leaped aboard the momentum of the last decade's improved economy; they have responded to threats of competition from financial technology upstarts. They have survived the ongoing threats (so far, as they cross their fingers) of cybersecurity.

So from year to year, they inch upward. They have grown their consumer and corporate loan books, have been prudential about loan-loss reserves, have retained and even increased deposits, have ensured they have more-than-excess amounts of capital and have stuck to their guns in finding ways to make money from trading (despite the handcuffs of Volcker regulation).

They get frustrated they can't grow their favorite businesses (fees from asset management and fees from investment banking) by double-digit percentages. But they embrace the minimal impact these businesses have on their balance sheets and capital requirements.

The big banks addressed bad loans. Bad loans and bad assets (especially in the mortgage categories) suffocated banks--legally and in performance.  It took almost a decade.  By 2018, loan portfolios on the balance sheet look more pristine. Non-performing loans and assets (impaired loans) have steadily declined (below 2% of total loans in most cases).  Loan-loss provisions (in expectation of future losses) have declined, suggesting that new loans booked are of better quality or have better protection (collateral, guarantees).

Such "success" (including not just operating results, but vastly restructured and improved balance sheets) have come with an expected consequence.  The same banks have comfortably passed Federal Reserve stress tests in the past year; hence, bank regulators have permitted them to reward shareholders with higher dividends and share buybacks.  The same banks blamed for contributing to the financial crisis have reached a success point where regulators have approved decreases in capital on the balance sheet and are tolerating a wee bit more leverage (while still, of course, ensuring they meet all the Basel and Dodd-Frank capital requirements handily).


By historical standards, Citi had a blockbuster year, reporting $18 billion in earnings and stepping up to a 10% ROE plateau after years in the single digits.  The bank spent much of a decade cleaning up its balance sheet ("good bank" separated from "bad bank"), reducing credit risks and ensuring it had sufficient liquidity to reach tough Basel liquidity standards.

It felt strapped in boosting the loan book while its peers did so eagerly. In 2018, it finally increased the corporate loan book and increased overall loan net-interest earned after years of outright flatness.

Trading securities, currencies and commodities around the globe is still important at Citi. Performance in 2018 ($9 billion trading income) was flat. The bank might accept that--given the volatile markets in the last quarter. (Banks look for customer-flow volume to achieve trading gains. Often volatile markets spark customers to buy and sell assets, which can lead to trading gains at dealer banks.)

What might be overlooked at Citi is how earnings improvements have resulted, too, from cost management. Profit margins and operating efficiencies have gotten better and rank admirably among peers, even if it is hard to imagine where else the bank can cut costs to improve margins in the years to come.

Nonetheless, watch out.  The bank has felt comfortable reducing capital and increasing leverage (okay, to keep shareholders interested and happy for now).


"Too big to fail?" JPMorgan Chase continues to get bigger and bigger.  Its balance sheet now tops $2.6 trillion in assets. On the same balance sheet, its loan portfolio will likely eclipse the $1 trillion mark later this year. Loans are booked in all possible borrower categories--credit cards, mortgages, small-business loans, bridge loans, and large corporate financings. Deposits continue to pour in from domestic and foreign branches (mostly deposits that pay interest) and could reach $1.5 trillion this year. Cheap deposits around the world support the loan portfolio.

But this is a trading behemoth, as well.  Trading-related revenues topped $12 billion in 2018 (Compare with Goldman's $8-9 billion annually).  Trading assets amount to over $400 billion (or about 15% of the balance sheet.) (That includes its big derivatives-dealing role, which, some argue, might be understated on the bank's balance sheet.)

There are substantial (and growing) trading risks at JPMorgan (as measured by the industry's "value at risk" metric). JPMorgan's "VaR" metric ($51 million maximum one-day loss) suggests a marked increase in trading risks the past year--likely due as much to exceptional volatility in 2018 on the same level of trading exposures.

The bank reported handsome upturns in most business lines--even in asset management (11% increase) and investment banking.  The increase in that loan book (with some help with increases in interest rates that contribute to increases in interest income) contributed to the $5 billion increase in net-interest earned.

Increases at JPMorgan at just about every important business area in all parts of the globe led to $33 billion in net income. Yes, the $4 billion tax gift helps, too.  The 2018 performance resulted in the 13% ROE the bank reached for the first time since the combined big bank consisted of separate existences of old Chase, old Chemical, old JPMorgan and even old Manufacturers Hanover.

Like Citi, it has benefitted from cost management and efficiencies.  Operating costs have increased across the board, but as JPMorgan's leaders often specify: "It's not about cost reduction; it's about cost control" (arguing that some costs are necessary to grow and get big around the world).

On the heels of one of its best years ever, the bank has seen its stock bounce way up and then way down.  In September, share prices had touched $120; by December, they had sunk below $95 and have recently hovered about $102.


Bank of America raises the earnings flag to boast, "We, too." The bank's net income leap-frogged up to $28 billion, sufficient for a 11% ROE, a return that tops 10% for the first time in memory. It, too, was blessed by generous tax relief, paying about $5 billion less in taxes than it would have had to do so in 2016.

The bank replicates JPMorgan in many ways--in size, scope, business lines. They certainly compete head-on--in consumer, corporate and investment banking. Like JPMorgan, Bank of America has similar sizes in loan portfolios, deposits and total balance sheet.  Bank of America, a storied, big investment bank in its own way (thanks to the Merrill Lynch lineage), trails JPMorgan in trading assets, trading income, and investment-banking revenues.

Still, like JPMorgan, Bank of America has "contained" and "controlled" costs (steady improvement in operating-efficiency ratios) and has felt satisfied enough to do what its peers have done:  Reduce capital by giving some of it back to shareholders in the way of dividends and buybacks.

Leverage has increased and is as high as it has been since 2013. The bank will be the first to assert that 2013's balance sheet was still stockpiled with market and credit risks, bad loans, illiquid mortgage-related assets and who knows what else.

So in sum, they quietly toot their horns and pat their backs and thank legislators and regulators who have permitted than to boost dividends and buy back stock.

Now if only if stock prices can proceed at a more predictable, tolerable pace.

Tracy Williams

See also:

CFN:  Dodd-Frank Tossing and Turning, 2018
CFN:  A Spike in Bank Stocks? 2017
CFN:  What is CECL to Banks? 2017
CFN:  Wells Fargo's Woes, 2016

Wednesday, December 12, 2018

What Will Be the Trigger?

As financial markets behave erratically, what could be the trigger to push the system into some form of a crisis?

In the financial crisis of a decade ago, economists and historians tend to agree that America's over-dosage on mortgages, mortgage products and securitizations proved to be a trigger that caused global havoc in 2008.

From 2006 into 2007-08, there might have been signals for what was to occur. What eventually occurred was the collapse of Bear Stearns and Lehman Brothers and the disappearance of familiar mortgage banks like Countrywide and Washington Mutual, followed by a debilitating recession.  Scattered mortgage defaults across the country (especially in the sub-prime sectors) led to defaults in mortgage bonds, mortgage securitizations and mortgage structures. Defaults led to losses, not just in the millions, but in billions.

Back then, products (highly rated bonds, securities, and loans) that were popular just a few years before couldn't be traded, sold or touched. What had been modestly liquid turned out to be unbearably illiquid. As the crisis appeared and evolved, risks some financial institutions thought were tolerable or negligible suddenly became overwhelming and insufferable. Losses mounted.  Over time, but firms and banks, one by one, began to fall like a "house of cards," as it so often was later described.

Ten years later, market-watchers and market-forecasters are trying to project the next crisis by trying to identify what might cause it.  What might be the one phenomenon that leads to another that leads to outsize losses that spread like a wildfire around the globe?

Despite low unemployment statistics, increasing job growth, and heretofore glowing prospects for global businesses and the global economy, market players have begun to react as if it's inevitably time for another recession. They speculate whether a slowdown or crisis is imminent, although not in the proportions we endured in 2008-09. 

Check the equity markets the past few months. Or check it one hour and then glance back an hour later. Watch the emotions of the market. Watch how one announcement, one trend, or one hint of how interest rates might behave moves markets by whole-integer percentage points.  

Everybody attempts to figure out the trigger: The Trump presidency, Trump's whims and misguided pronouncements, or a credit and debt bubble (after corporate borrowers have begun to amass almost too much debt). Will it be a economic pause that leads to an aggressive slowdown? Will it be a sudden turnaround in consumer confidence? How about recent-years' mania over crypto-currencies? What about (what we see this month) the bickering over trade policy between China and the White House? 

Economists study inverted yield curves and try to make sense of the implications of short-term interest rates rising above long-term interest rates.

Can market events and uncertain economies in India, Argentina and Turkey lead to mini-crises in Europe and the U.S.? Will a plateau in growth in Silicon Valley result in a collapse of economic activity in Latin America? Will corporates later be haunted by the billions in debt when they struggle to generate cash flow just to meet quarterly interest payments? Or what will happen if a major corporate entity can't roll over what's due within the next six months?

Where are the hotbeds of political and country risk that could seep into financial markets and affect a global economy?

Ten years ago, the crisis was chaotic and evoked angst, stress and widespread concern about the financial system. Some point out the build-up to it was steady, almost methodical, occurring step by step: the euphoria of home ownership, the overflow of mortgage origination, the excess in innovation with newly created mortgage products (CMO's, CDO's, ABX CDS's, synthetic CDO's, re-securitizations, etc.), the mortgage-making and mortgage-securitizing machinery (led by the likes of Lehman and Bear Stearns), the acute demand for more mortgage product, the over-rated AAA ratings on mortgage bonds, the inability to value mortgage securities properly, the collapse of short-term debt markets, and the panic among short-term lenders to financial institutions.

Ten years later, as a rocky, misbehaving stock market suggests something bad is about to happen, what could be the factor, the variable, the phenomenon or the event that sends us back to harsh memories of 2008?

Crude, irrational experts say they know and offer weak conclusions and incomplete warnings. Real experts don't try to predict as much as they remind all that economic downturn and volatile markets are facts of life in finance and market activity. 

Real experts are, too, aware that with interdependent financial markets, one thing can lead to a negative bad thing, which can have detrimental impact on many other things and lead to financial losses of some kind---which leads to diminished confidence and standstills in the marketplace.  Lenders and investors stop lending and investing to other financial institutions and companies.  Traders become hesitant to trade and make markets--at least until confidence turns upward again. And that would be followed by corporations reluctant to spend, hire and invest, followed by consumers too afraid to consume. 

What happens in markets in America surely has impact on markets in Singapore, Brazil, Japan and throughout Europe.  A global bank's loan losses to medium-size enterprises in the Midwest will influence how much risk it's willing to take in Japan or its willingness to make markets in German corporate securities. 

At least this time around, regulators have done their best to ensure that banks big and small can weather the worst cases.  Losses will occur (even big losses), but banks, they project, should be able to absorb them without having to hope the U.S. Treasury will step in and save the day. 

Regulators and supervisors understand how markets and financial institutions are closely interconnected and interdependent.  They have obsessed over how best to manage risks in the financial system, even choosing to implementing stricter capital requirements for financial institutions that appear too powerful or "too important." 

And they, too, perform scenario stress tests on big banks to see how they would fare if, say, equity markets zoomed downward by 30-50%, if real estate values crash, if unemployment surges above 10%, and if the U.S.'s GDP growth rate sags below 2%.

What we do know is that financial markets act in desperate ways and assume the worst when they are engulfed in uncertainty. They calm down when uncertainty is contained. 

Tracy Williams

See also: