Financial Stocks Rising in Value Rotation Trading

Financial Stocks Rising in Value Rotation Trading

#banks #financials #value #stocks #reserves #COVID #vaccines


We have upgraded our view on the financials sector to Bullish from Neutral“– Paul Ebeling

US banks and consumer financial stocks are poised for gains on the prospect of Covid vaccines, more lending and a shift to value stocks.

Now is the time for value investing, we have upgraded our view on the financials sector to Bullish from Neutral.

Improved visibility towards a successful coronavirus vaccine, easier lending conditions, little evidence of deflation and a sentiment switch from growth to value will lift US bank shares through Y 2021

Financial stocks climbed in early Wednesday trading, with the KBW Bank Index adding as much as 1.8% to the highest since 5 March.

JPMorgan Chase & Co. rose as much as 2.2%; Bank of America Corp. gained 1.4% and Citigroup rallied 3.8% to the highest since 4 September.

Banks are sensitive to economic growth, and they have set aside more than $110-B for loan losses since the virus chaos began, which means they have a huge safety cushion along with the potential for some of those reserves to be released.

Bank stocks also tend to bottom when revenue expectations run ahead of provisioning costs, with a tipping point that tends to coincide with good economic data, easing deflation fears and negative real interest rates.” economist Bruce WD Barren said in an interview Wednesday

Mr. Barren went on to say, that the recent COVID case spike and absence of stimulus spending is likely to lead to some weaker economic data and potentially higher impairment charges.

Bank stocks have runnit this month, with the KBW Bank Index rising 18%, after being hammered for most of this year by record low interest rates.

They are catching up on post-election and COVID vaccine optimism, along with hopes for surging government spending, more lending and deal-making, along with a steeper yield curve.

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.