2) Credit Card Check
At the end of January, we wrote that Citigroup analysts liked credit card companies relative to other financial stocks. The firm raised the question of whether signs of stabilization might make room for investing opportunities. The firm picked Capital One Financial (COF) and American Express (AXP) as stocks that may benefit from loan growth.
Now, Citigroup has updated its perspective on credit conditions. The firm says that the senior loan officers' survey from the Federal Reserve suggests that "European banks have pulled back additionally due to internal capital needs and US banks have backed off European lending, dragging down overall conditions."
However, the firm concludes that "recessionary trends seem far off especially as ISM and ECRI leading indices rebound and stock prices are not set to plunge even as some consolidation of gains seems probable."The firm adds that recent data from the Federal Reserve showed "some lessening of eased credit for the small business sector," although it also says "the recent National Federation of Independent Business surveys do not look worrisome on the credit front. Indeed, some pickup in lending activity was noted." The takeaway is that investors should still be fairly confident about credit conditions. The rebound in loans is usually considered a lagging indicator since credit card trends are a "key precursor" to business investment activity. "Arguably some slowdown [in loan growth] is anticipated from the faster pace and easier credit seen in the past two years while comps are more difficult, but U.S. recession calls seem as premature as they did months ago," writes Citigroup.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV