Earnings season kicks off with JPMorgan, Morgan Stanley, Citigroup and Wells Fargo, along with BlackRock, reporting earnings this week.
If we get some of the negative sentiment out of the way with the banks guidance, it might make it easier for other companies that report in the coming weeks.
Carter discusses the financials sector.
Guy is not sure that the banks will be rewarded by the market, but thinks that Morgan Stanley is best suited for this environment.
#bankearnings
#bankstocks #financials #stockmarket #stocks #stockstobuy
If we get some of the negative sentiment out of the way with the banks guidance, it might make it easier for other companies that report in the coming weeks.
Carter discusses the financials sector.
Guy is not sure that the banks will be rewarded by the market, but thinks that Morgan Stanley is best suited for this environment.
#bankearnings
#bankstocks #financials #stockmarket #stocks #stockstobuy
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NewsTranscript
00:00 here. Let's talk about earning season here because it's upon us if you will and you know this week
00:06 it's just Pepsi you know we get it we're going to have these consumer staples guy well you're
00:11 gone last week we talked about kind of some of the staples and just kind of the impact of the
00:15 dollar and their sales overseas and what that kind of means for them. One of them I think is going to
00:18 be really interesting is this Delta which is coming up we're going to hit that a little bit
00:22 but the banks this is the main story here. Carter talk to us about what you're seeing in the XLF and
00:27 how you kind of think of it relative to the market because oftentimes the first group out of the gate
00:32 the banks the report earnings they kind of set the tone and maybe if we get some of the negative
00:37 sentiment out of the way with their guidance it might make it easier for some of the companies
00:41 over the next couple of weeks as they report. Right so as you say it kicks off this week the
00:47 Russell 3000 only 43 stocks report and 17 of them are financials big ones. Morgan Stanley,
00:53 JP Morgan, Wells Fargo, PNC, US Banker goes on and on. So these charts that we're going to look
00:58 at now they're two panels so the top panel is what it is it says it's the XLF and the bottom panel is
01:04 relative performance. So there are no drawings here it says there are no arrows in the color
01:08 now let's put some arrows on and look at the next the the financials have just like the market
01:15 rallied since their June 15th low. S&P has not made a new low nor in financials but the relative
01:22 performance of the XLF to the market to SBY is making new lows. Let's take this same exact
01:28 sequence and do it longer term. So let's look at that's five six seven years so consider that top
01:35 panel there's the crash the COVID plunge right and then we've recovered all of that we're making
01:41 big new highs but look at the bottom panel no no bueno I mean just down to the right so let's put
01:48 some arrows on this basically you've got unbelievably bad meaning if you're going up
01:54 and you're underperforming and then when you're going down you're underperforming even more
01:59 it's the definition of negative alpha I mean it's like there's no reason to be here
02:04 let's go even further look at the next one this goes back I mean back to 1998 so how shocking
02:11 financials on top making all-time highs back above their 2007 peak look at the relative performance
02:18 we're at the '09 crash lows put the arrows in and and that's a function of dilution right AIG
02:24 Citibank these are just not great operating businesses there's a reason that stocks certain
02:31 broker stocks trade at three and four p right now there's a reason for that because you can
02:36 you can hemorrhage money there's no guarantee you're gonna make money it is amazing how poorly
02:43 um these stocks specifically and Dan has been on this for a while Carter before we let you go I
02:47 mean JP Morgan for example I mean we move we've seen in that stock over the last six months I think
02:52 in a large way has been historic to the downside for a name like that which made I think Dan a 52
02:57 week low the week I was off last week bounced a little bit but not much and now you look at these
03:02 banks you try to figure out what can I play into earnings and I've said this for a while when
03:06 Goldman Sachs was trading around 276 I think ish maybe 280 I thought it was worthy of a trade
03:12 into earnings I thought they'd be able to trade their way into a good quarter what I've said and
03:16 what I'll say here is I'm not certain the market will reward them for that but I think the stock
03:21 can rally in earnings and that was happening for a while but then that gave it back as well so
03:26 you know out of all the names out there I think Morgan Stanley's probably the best suited for
03:30 this environment but I think at a certain point people are gonna look at JP Morgan at levels in
03:35 terms of price the tangible book that we haven't seen in almost a decade and say you know we just
03:39 got to buy it here as just a shot because quite frankly it's just too cheap Dan yeah I would just
03:44 say this that you know again Carter says this all the time gaps are meant to be filled there's one
03:48 unfilled gap in the JP Morgan it's from that kind of 105 to 110 level so I suspect that you know you
03:55 get that gap fill maybe that's kind of interesting at that point at that valuation but you know my
04:00 point is Carter laid out from a technical standpoint of what that underperformance looks
04:04 like over multiple time frames I'm just mentioning this year alone you know down 27 percent down more
04:11 than 30 percent from its highs the bank stocks topped out before the nasdaq topped out what has
04:16 that been saying about what's going on in the just from a fundamental standpoint so to me
04:21 I think that's most interesting