The U.S. banking industry is expected to benefit from the long-awaited interest rate hike. But not all of them could translate it to profit and reward their shareholders.
Banking profits soared nearly seven percent in the first quarter of 2015 compared to the same period of time in 2014. The majority of banks reported higher earnings during the quarter compared to last year. (Source: FDIC, last accessed August 5, 2015.)
I’m not sure if you noticed, but the big banks and bank stocks are back as attractive investments for both income investors and those looking for more conservative capital appreciation potential, as backed up by my stock market analysis.
If you were one of the astute investors who accumulated big banks stocks after the collapse of Lehman Brothers Holdings Inc. in 2008 following the massive subprime financial crisis, then my .
You may remember an article I wrote in June of this year (we got lots of comments on it) about my Dad receiving a letter in the mail telling him that if the cash portion of his stock brokerage balance fell below $125,000, he would be charged a yearly fee of $500.00 to keep his account open. (See “About That Letter My Dad Got in the Mail Friday.”) Now, it .
We all know that interest rates are eventually heading higher. It might be in 2014, but more likely not until 2015, when the unemployment rate can decline to 6.5% as the Federal Reserve believes.
But one thing for sure is that interest rates are headed higher. (Read “Small-Cap Stocks the Place to Be—If Economic Growth Is Real.”)
The best way for an investor to take advantage of the situation is .
The major bank stocks all closed off 2012 near their respective 52-week highs. An upside break appears to be in the works, as the banking industry continues to assume less risky businesses, while shoring up their balance sheets and producing stronger units.
The subprime credit crisis that surfaced in 2008 and drove the U.S. and the global economy into a recession was not what we wanted to see. But in .
The damage done from job losses over the past few years has been quite severe. I think the biggest problem going forward is the realization that the economy, during the past decade, was artificially inflated due to easy monetary policy; therefore, many of the industries were operating far above fundamentally sound levels.
One of these sectors that were running far above optimal levels was the financial services and bank stocks .
The last two years have obviously been extremely difficult for bank stocks. The financial crisis that took hold of not only America but the rest of the world as well has caused extreme strain across the entire financial sector. However, since the financial crisis several years ago, American banks have substantially shifted their risk and investment strategy and are on a much more solid footing now.
While smart investors used .
When it comes to bank stocks, it seems that JPMorgan Chase & Co. (NYSE/JPM) is Public Enemy Number One. It’s unfortunate that so many retail investors have such a negative market sentiment towards JPMorgan since it has the potential for large returns, with a dividend yield of 2.9%.
The latest cheap shot is nothing short of a publicity stunt by a future politician, as the office of New York Attorney .
Bank stocks have been rallying since the lows in October 2011.
The chart of the Philadelphia Bank Index shows the upward move of bank stocks from the 2011 bottom. Banks staged a nice rally, but retrenched in March to May 2012 on the European bank concerns and after Moody’s Investor Services downgraded the sector. The group has since staged a rally back to above the 50-day and 200-day moving averages.
Over the last decade, Internet shopping has changed the retail market sector forever. Whereas once large retail stocks such as Best Buy Co., Inc. (NYSE/BBY) dominated the landscape for electronics, new companies like Amazon.com, Inc. (NASDAQ/AMZN) are taking over with speed, ease of service, and reliability.
Another problem for large retail stocks is beyond the normal hassles for consumers, such as driving to the store with the higher cost of .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 28, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)