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Robert W. Baird & Co. bank analyst David George on the outlook for J.P. Morgan and whether the bank is a “buy” for investors.
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Under pressure to cold -- -- you down over 8% today but our next guest says that being near term weakness for the stock creates a long term opportunity.
For investors joining us now on the phone is David George senior US Banc analyst.
At RW Baird -- mean that's one of the most essential questions I think as investors go ahead and look what's happening to the stock today they wonder.
Is it possibly an entry point or are you you know catching a falling knife.
I don't -- -- the -- I think that the that the document situations all of the -- gonna require.
Some patients but taking it that's taking a step back Pacific huge credibility head and that's really the main issue today it -- credibility rather than.
The financial impact of the -- it is more than manageable that the question of regain credit credibility and up.
Getting -- focus back on the great businesses that that is that this company has over time.
It's part of regaining that credibility do you think initiating a share buy back I -- -- -- David you point out the JPMorgan has ten point seven billion remaining buy back capacity for this year.
Without -- good move for them to re grow the share price after the decline here.
Yeah we think though that -- there could be some speculation that we've we we don't really believe this but given the uncertainty.
Around.
Closing this.
This -- in this trade that they may not be as aggressive buyback that we we we believe that they it will be in the market this quarter and likely buying back.
Two to three billion dollars with the stock -- and I believe that they would abuse this at today's prices up to buy back stock.
Yes is there any chance and we look at back.
-- -- -- there's a couple of months down the road and say it wasn't that big of a deal that you know he got out in front of it -- it fixed did move Don was what he said on the call yesterday.
And we find out they do you know they're not out of this trade yet that they get out with this is about the sizeable loss and you look back and say what mapping -- back.
I think that's I think that if possible due to likely have in our view.
Unfortunately as did you sit here today we we we end and really no one can really definitively pay the debt -- and -- certain you know we that -- but.
That this company's -- -- a a lot of capital a lot of earnings power.
The very good businesses with with higher return potential it and we haven't talked about share buyback and a stock also has now.
Bullets over 3% dividend yield so I think a longer term basis pretty good risk reward -- Credibility is going to be a little bit of a cloud near term but if for those well but -- time horizon I think it's pretty pretty reasonable.
On the idea.
Sorry intent do you expect at JPMorgan attempt rein in its risk because again looking at your note -- -- -- -- -- -- ratio.
Really only drops to eight point 2% from eight point 4% that's minimal correct so.
What do they do about the risk.
Well.
-- I think that over time you're gonna be -- -- this is just horrible timing for the polish -- -- bank like the Volcker Rule and decrease regulatory.
Reform.
Over the big banks so I would expect that there's gonna be pretty significant drumbeat to war.
Broader risk reduction on the part of all the big banks and quickly JPMorgan -- that but but yeah I think proprietary trading it's gonna go down.
We created so sukuk -- and that's an area the best as you look at the whole banking landscaper this entire -- if you say.
That -- on this we're gonna see a lot of risk coming in whether it's by their own choice or because of more regulation.
If you look at it through that -- what trade would you want to get out in front.
Well -- we if we.
We think that that there's value in a stock like JPMorgan now fundamentally.
This would benefit companies like the US bank work.
But Wells Fargo a PM the -- -- third some of the regional bank that.
Have very strong profitability and -- did not -- -- proprietary trading or capital market businesses that -- that that would be.
Been obvious benefit but I think that I think that JPMorgan and at some of the bigger banks being well over well.
OK -- -- interesting perspective David George thanks so much for joining us.
