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Well the Fed is set to release its first round.
A bank stress test results later this week could these results be a big catalyst.
For bank stocks when that release has the tape on Thursday that's prior -- -- capital markets and equity derivatives strategy think so he joins me now it.
You said -- these names are under alone.
And last year only got the Fed -- results it was somewhat of a disaster for BofA and Citi JP yet you say it's different story this year.
That's right we think so I mean there's there's there's a number of hell wins for the group right now one of them everyone's focused on.
Residential housing it's actually commercial real estate that's a big boon for the for the group right now and our commercial and industrial loan growth is is very strong off fourth quarter alone that that that group was up about -- -- percent solution strong loan growth.
Capital ratios and a group of improved markedly.
Devote the last four years -- -- as I've spent aggressively.
Cleaning up their balance sheets getting rid of some this toxic cop.
Debt at an end loans that they had on the books so.
Liquidity and capital ratios have improved markedly so we think it's different this time.
OK so you mentioned commercial but I -- -- -- to residential look at the last year's special with Bank of America and with city.
The Fed rejected their capital plan for both of those -- the capital plans -- that it cannot next week this week on Thursday.
The Fed's gonna say whether or not they can handle the stress of a bad economy a financial market meltdown that is well that's we're gonna get this week where do you think the big names are gonna play especially -- that -- -- We think -- that the stress tests we'll have much better results this time because those balance sheets have been cleaned up -- to such a large extent so they can with canister with with withstand the stress.
That they may not have been able to withstand that the last round -- it did its bit different.
This time around we think -- the results will be.
Will be improved you know -- every year of American -- up 39% let's talk percentage is now for these names that you're watching that you like Robert do you think.
That they can go in the next month to two months general -- just -- That's a tough what I think from up from a valuation perspective you know this group is still trading if you look at the BKX index for instance still trading around 1010 and a half times earnings.
You know there is room for expansion there so there's definitely room to move to.
1112 times earnings you're talking about eight -- ten to 20% increase at least over the medium to longer term.
When I've talked earlier at the beginning of the segment about kind of the disaster through -- -- remember last year JPMorgan.
Pre released with the result that all they passed before the -- -- and I'm assuming that the Fed and the banks are more on the same page this year in the cycle of those situations happen.
I think you're right -- what one -- the other things were saying which is another sort of tell when the group is more.
Pop capital being returned to shareholders in the form of dividends buybacks.
You've got that tell women the other -- -- expense control.
I'll last week JPMorgan -- to two million dollar cost cutting efforts and you've got.
A bunch of things kind of working in -- for the group right now.
You know one of the things also that we're gonna get again next week is about that stock that dividend but it seems to me that the banks are a lot more prepared this year.
-- -- -- -- That Pacific test with the -- you think that's gonna happen there we do we believe we think there are better positioned this doesn't that tell us about the spider -- the financial fund is or nineteen biggest banks that we're getting the stress tests off.
-- -- -- biggest names but this despite even year to -- up 7%.
Many analysts have come on the show is that financials first part of the year absolutely they're gonna be performing.
-- anybody depend down exactly what happens in the second half of 2013.
For the financial reporting aside bomb.
You don't I think -- I think the second half will be enjoying the same tell when we're joined now which is commercial real estate on an upswing residential real sit on an upswing.
You don't really think that that the medium to longer term outlook for the group is great so hot you don't.
As a volatility strategists.
Note they're really nice way to get exposure to the group is who option.
And Brooklyn you also say it just in general markets is that it emanates -- is going to be picking up you do think inflation.
Might be an issue.
That is the wild card that is -- wild card with the amount of of liquidity being pumped into the systems globally by central banks we -- you don't.
Inflation is the is the sort of 800 pound gorilla in the room we have really seen much signs of them at least on the consumer side it's been pretty -- -- pick up yes and it's obsolete you know this is an unprecedented sort of exercise it in in accommodative policies there is always a risk that we'll see in place.
-- -- Breyer well Thursday the first of the two releases we'll see what happenings of.
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