00:00 here. Let's talk about earning season here because it's upon us if you will and you know this week
00:06 it's just Pepsi you know we get it we're going to have these consumer staples guy well you're
00:11 gone last week we talked about kind of some of the staples and just kind of the impact of the
00:15 dollar and their sales overseas and what that kind of means for them. One of them I think is going to
00:18 be really interesting is this Delta which is coming up we're going to hit that a little bit
00:22 but the banks this is the main story here. Carter talk to us about what you're seeing in the XLF and
00:27 how you kind of think of it relative to the market because oftentimes the first group out of the gate
00:32 the banks the report earnings they kind of set the tone and maybe if we get some of the negative
00:37 sentiment out of the way with their guidance it might make it easier for some of the companies
00:41 over the next couple of weeks as they report. Right so as you say it kicks off this week the
00:47 Russell 3000 only 43 stocks report and 17 of them are financials big ones. Morgan Stanley,
00:53 JP Morgan, Wells Fargo, PNC, US Banker goes on and on. So these charts that we're going to look
00:58 at now they're two panels so the top panel is what it is it says it's the XLF and the bottom panel is
01:04 relative performance. So there are no drawings here it says there are no arrows in the color
01:08 now let's put some arrows on and look at the next the the financials have just like the market
01:15 rallied since their June 15th low. S&P has not made a new low nor in financials but the relative
01:22 performance of the XLF to the market to SBY is making new lows. Let's take this same exact
01:28 sequence and do it longer term. So let's look at that's five six seven years so consider that top
01:35 panel there's the crash the COVID plunge right and then we've recovered all of that we're making
01:41 big new highs but look at the bottom panel no no bueno I mean just down to the right so let's put
01:48 some arrows on this basically you've got unbelievably bad meaning if you're going up
01:54 and you're underperforming and then when you're going down you're underperforming even more
01:59 it's the definition of negative alpha I mean it's like there's no reason to be here
02:04 let's go even further look at the next one this goes back I mean back to 1998 so how shocking
02:11 financials on top making all-time highs back above their 2007 peak look at the relative performance
02:18 we're at the '09 crash lows put the arrows in and and that's a function of dilution right AIG
02:24 Citibank these are just not great operating businesses there's a reason that stocks certain
02:31 broker stocks trade at three and four p right now there's a reason for that because you can
02:36 you can hemorrhage money there's no guarantee you're gonna make money it is amazing how poorly
02:43 um these stocks specifically and Dan has been on this for a while Carter before we let you go I
02:47 mean JP Morgan for example I mean we move we've seen in that stock over the last six months I think
02:52 in a large way has been historic to the downside for a name like that which made I think Dan a 52
02:57 week low the week I was off last week bounced a little bit but not much and now you look at these
03:02 banks you try to figure out what can I play into earnings and I've said this for a while when
03:06 Goldman Sachs was trading around 276 I think ish maybe 280 I thought it was worthy of a trade
03:12 into earnings I thought they'd be able to trade their way into a good quarter what I've said and
03:16 what I'll say here is I'm not certain the market will reward them for that but I think the stock
03:21 can rally in earnings and that was happening for a while but then that gave it back as well so
03:26 you know out of all the names out there I think Morgan Stanley's probably the best suited for
03:30 this environment but I think at a certain point people are gonna look at JP Morgan at levels in
03:35 terms of price the tangible book that we haven't seen in almost a decade and say you know we just
03:39 got to buy it here as just a shot because quite frankly it's just too cheap Dan yeah I would just
03:44 say this that you know again Carter says this all the time gaps are meant to be filled there's one
03:48 unfilled gap in the JP Morgan it's from that kind of 105 to 110 level so I suspect that you know you
03:55 get that gap fill maybe that's kind of interesting at that point at that valuation but you know my
04:00 point is Carter laid out from a technical standpoint of what that underperformance looks
04:04 like over multiple time frames I'm just mentioning this year alone you know down 27 percent down more
04:11 than 30 percent from its highs the bank stocks topped out before the nasdaq topped out what has
04:16 that been saying about what's going on in the just from a fundamental standpoint so to me
04:21 I think that's most interesting
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