Paring Back on JPM, BAC and C
Originally published at 11:04 A.M. EDT on Thursday, June 18, 2015
- Very bullish investor sentiment surrounding the group (possibly as good as it gets).
- A marked recovery in all three stocks' price since mid-March, both absolutely and relative to the market.
- My expectation of a slower-than-consensus rise in interest rates over the balance of the year and into 2016.
- Somewhat lower-than-projected credit demand (commercial, industrial and housing).
Still, Citigroup, JPMorgan and Bank of America will remain on my Best Ideas List given their superior intermediate-term prospects and relatively low valuations.
In other words, my thesis on the group remains intact.
Takeaways and Observations
- As we used to say in the harness racing business, the markets were up "from flagpole to that's all."
- All of the move was accomplished in the first 2-3 hours.
- Nice catch up in REITs, utilities and other bond-equivalent sectors (as suggested in my morning post). That said, bond yields were a bit higher too!
- It was the Russell's turn to outperform this time, with the biotech/healthcare-laden Nasdaq righ there.
- I was surprised by the magnitude of the market advance, but, again, it appears slow economic growth and dovish policy are the ingredients of this move.
- Biotech en fuego, again.
- Confidence in buying the dips is the outgrowth of today.
- Twitter is already starting to implement changes.
- More activist news after the close, this time Conagra (CAG).
- Volume was still low, but above the recent levels.
- The move will underscore the bull market in complacency. (Perhaps I am the complacent one, complacently short!)
- Input from my Board of Directors meeting I attended today (the company operates globally) underscores a still-slow trajectory in world economic growth. But our company is on top of costs and employees are working very hard and very long hours, so profitability is fine.
- I thought Apple's underperformance today warranted mentioning. Sticking with my short thesis.
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