Looking for a Thesis; Day 1 of Big Change: Cramer's Best Blogs
Jun 22, 2013 | 01:34 PM EDT
Now, either the Fed can't keep them down or the Fed's letting them go up. Suddenly, the banks are paying you 0.81% on your 5-year CD, but they are investing it at levels that haven't been seen in ages relative to that CD rate, namely 1.38%. You may think that net interest margin, or NIM, isn't so big. But it is the differential that matters. These banks will now, after years of trying to scrape by, be able to make fortunes just turning the lights on and capturing that spread between the CD and the 5-year Treasury. That Treasury's rate has been going up, up, up, but the 5-year CD is actually flat. It's nirvana. And that spread is all that the buyers really care about. Consider this Day 1 of the big change. Day 1 where investors can invest in banks and feel that they will have terrific year-over-year earnings, which will then lead to big buybacks and higher dividends, without much risk to make it happen. That's why today's amazing. Usually it takes months for the market to figure it out. That's what happened in 1990-91. The investors took ages to understand it. Now it just took 24 hours. These stocks, red-headed stepchildren for ages, are, at last, the place to be. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long KEY.
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