Stephanie Link
Chief Investment Strategist & Portfolio Manager at Hightower, Contributor to CNBC
Bank stocks look buyable if systematic selling is reacting to a flatter yield curve: the front end that drives earnings has barely moved. JPMorgan and Citi card spending rose 10% and 13%, and Citi and Wells Fargo reported lower credit losses. Wells expects steady margins and improving interest income as loans grow and old fixed-rate assets roll into higher yields. Funds crowded into banks before results, limiting near-term buyers. x.comÂ
JPMorgan looks remarkably cheap against nearly every other bank despite being the best of them. Its forward P/E looks to be around 13. x.comÂ
JPMorgan's miss on both revenue and earnings strengthens the case for avoiding bank and financial stocks. The earlier bank-index chart rollover had suggested possible profit disappointment, but the observed JPMorgan share weakness is not a near-term price forecast. x.com x.com x.comÂ
These six are attractive because strong businesses trade at fair prices. Constellation Energy is America's only needed nuclear grid player with tech deals; MercadoLibre is Latin America's unstoppable commerce and fintech leader; JPMorgan is a fortress bank at scale. American Express has premium spenders and owns its network and credit risk; Visa takes the smallest cut on the world's largest payment network; Arm's phone chip designs are spreading to PCs and data centers. x.com x.com x.com x.com … Show more
Banks' weak response to earnings despite low expectations warrants caution into the rest of Q3 reporting. JPMorgan, Wells Fargo, Citigroup and Goldman Sachs all fell after mixed results, while the bank ETF also declined. x.comÂ
Bank of America's earnings miss extends beyond its one-time fine, so the selloff may not yet be fully priced. Investment-banking fees fell 11%; wait for fee income to stabilize before treating the drop as merely a fine scare. x.comÂ
Bank of America's Q1 shows a bank making money from market chaos, undercutting the recession pricing on large-cap financials. Revenue of $30.27 billion beat estimates by $1.64 billion, net interest income of $15.75 billion topped the $15.37 billion estimate, and equities trading of $2.83 billion beat $2.51 billion as the bank captured volatility. FICC trading missed at $3.50 billion versus $3.78 billion, the one soft spot. x.com x.comÂ
JPMorgan is buyable on pullbacks to its daily 9-period moving average ahead of an earnings run-up in early July, with financials such as Goldman Sachs, Citigroup, Interactive Brokers and Bank of America doing great. x.comÂ
Citigroup's rally looks overdone. It is not a super-premium franchise, yet the stock has tripled since 2023. CEO Jane Fraser's plan is working and the shares were far cheaper than other money-center banks for the past decade, as @RAMCOCAPITAL notes, but the market seems to be making the wrong call on whether Citi is a credit card issuer or an investment bank and broker, though that view could be mistaken. x.com x.comÂ
Citigroup stands out in a lagging bank sector as the only major bank in an uptrend, the only one within 5% of its 52-week high, and the one with the lowest PEG ratio among the majors. An inverse head-and-shoulders continuation pattern is in play with a $165 target. x.comÂ