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Hot off the presses. Read it and weep shorts.
www.cnbc.com/id/30463033
Bank Upgrade Astonishes Traders
After 5 years at underweight, a widely followed analyst upgraded the entire US banking space.
We're talking Foxx–Pitt Kelton analyst David Trone who rather suddenly changed his outlook on the sector.
Clearly he could have waited until after May 4th, when the stress test results came out, but he didn't. Should you be reading into that?
"Absolutely," replies Trone on Fast Money. In fact it might be because of the stress tests that banks are getting the thumbs up.
Huh? Why on earth would that lead to an upgrade?
Because the stress tests were generating so many rumors Trone and his team decided to run similar tests themselves. And contrary to those early leaks, Foxx-Pitt Kelton's results were quite different. They found none of the top 19 banks needed any money!
"We don't see either Citigroup [C 2.89 -0.18 (-5.86%) ] or Bank of America [BAC 8.15 -0.77 (-8.63%) ] needing capital," he says on Fast Money.
Now it's worth noting in the FXP tests, Trone used a base case scenario, that is the minimal capital standards of 6%. "If higher standards are used then some banks could need some capital, especially the regional banks, but the market's not oblivious to any of this," adds Trone.
In other words it's all priced in.
Now Trone also emphasizes that he's not making a bull call, he's merely going from a bearish point-of-view to neutral. Nonetheless, in the face of all the banking headwinds, it's a pretty big upgrade.
An der Börse sind 2 mal 2 niemals 4, sondern 5 minus 1.
Man muß nur die Nerven haben, das minus 1 auszuhalten.
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