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Bank earnings by beating the street JPMorgan -- wells are are trading in negative territory today but my next guest.
Is not negative on financials in fact after a multi you're underweight stance he is running with the bulls Chris Constantine has as a portfolio manager at riverfront.
We have and in joins me now with his change of hearts.
-- to change our stance on banks that they have had quite a -- -- would you pilings here well.
It's good point they have had a great start the year but if you look at how they didn't 2011 they did pretty miserably relative to US and so and if you look at how they've done over the last few years they've really been huge under performers.
It's very similar what we saw in tech.
You know after the bubble burst in and it's in early two thousands it's at the tech sector.
You know 56 years actually bottom out starts it.
You know become -- -- be more interest in again -- that doesn't surprise me at that you know financials have been kind of in a multi year tailspin.
It also seems to -- -- Particularly in the US not so much of the European financials -- -- don't like at all.
But with the US they sort of had their nightmare in 2008.
And they emerged.
Chase and company's -- they've -- Now there's tons a regulation tons of eyeballs watching them they've had to sell off a lot of their their -- you know higher return businesses that were also much more cyclical.
So little bit more like classic banks now which we think long term for shareholders is not a bad thing because the classic banking model -- done correctly can be pretty profitable.
Long term yes although summer is always tough time to trade would you wait until the fall maybe to get into these groups or wait for -- debt.
But if you're -- you're gonna jump right and what's -- it's it's a great question because.
-- my macro view on the market is that you know in keeping with typical election years were probably gonna have some softness in the summer in fact I think we're starting to see it now.
This week we think is kicking off probably somewhat about -- a mild correction -- consolidation the market that's going to be with us throughout the summer.
So you know from a purely.
Tactical trading prospective yeah I I think you can buy risk in general probably a little bit cheaper.
-- but I wouldn't try to get too cute because the exciting thing for the financials is for the first time in years.
And negative -- company like JPMorgan in specific short armed they're starting to return capital back to shareholders some you know JPMorgan up the dividend.
They're talking about a huge share buyback I read somewhere that there you know you're gonna need giving.
That is the amount of capital -- Begin back to shareholders this year.
Is a record for the company even pre crisis yeah so I think that's a very good thing -- that you know -- talk about companies are trading at at at a big discount to the market and are now giving.
The starting to pay some serious dividends.
A lot of positives in the report you highlighted some of them also you know they -- on the top line -- the bottom line if you the weak points you know in the investment bank revenue was down.
11% net interest margins are always a challenge in this cluttering -- none of that bothers you.
-- no not particularly.
And it doesn't really.
It doesn't really concern me too much of -- selling off today doesn't surprise and banks to be selling off a risk off day like today and also they've had as you pointed out earlier -- had such a great start of the year that net -- sell the new uses is not surprising but if you look at the underlying credit quality of the namely JPMorgan.
Or -- Orwell's.
You know -- the underlying credit quality was actually pretty solid we're also seeing.
-- for the first time in the years -- you see really significant growth in loans both commercially.
And for consumer loans -- which you know again going back to that bare bones basic banking model that's a great way to make money and how do you feel about their mortgage situation.
-- you know it.
I think it's a little bit more relevant for wells probably just because.
You know of their past acquisitions.
But in general that you know the macro data -- I'm seeing on the housing market is actually making me cautiously optimistic that we may have -- You know nationwide and particularly in some of the most painful markets we may have actually reached a bottom in housing real quick before we -- JPMorgan is your favorite in the space yes and you would bite here yes thank you so much coming -- --
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