Halftime Pt. 2—Bargains North of the Border
If your American bank bet isn't working out, consider Canadian financial institutions, said Veracruz founder Steve Cortes on Thursday's "Fast Money Halftime Report."
"I think there are bargains north of the border in general," said Cortes. "The Potash bid was emblematic of what's going to be happening in terms of buying Canadian assets."
Canada, said Cortes, is a "cleaner" version of the US because it doesn't have the housing overhang.
To get some northern exposure, he's looking at Canadian banks. Wednesday marked the first time Canadian financial institutions tested the 'flash crash'lows of May 6, he said. Most US banks, including Bank of America , for example, are still trading below those levels. Cortes said the Bank of Montreal and the Toronto-Dominion Bank tested that low, then rallied back and closed above those levels.
Cortes bought BMO on the close Wednesday. He said there's been a $10 pullback on the stock over the past few weeks, but thinks it's been unfairly punished and will push higher.
"Canada is strong," he said. "Resources are strong and I love these banks."
MORGAN STANELY CUTS NASDAQ, CHARLES SCHWAB ON VOLUME RISK
Investors on Wall Street have complained of 'low trading volumes' over the past few weeks and on Wednesday, Morgan Stanley downgraded broker Charles Schwaband the NASDAQ Exchange for that very reason.
Morgan Stanley said it expects near 0 percent interest rate in the foreseen future, which would only hurt Chuck. It also lowered growth forecasts in the Nordic region for the NASDAQ and expects lower trading volumes in both Europe and the US.
Brian Kelly, founder of Kanundrum Capital, is short the iShares Dow Jones US Broker-Dealers exchange-traded fund, which is short all of the brokers.
"You're looking at an environment here where retail investors are not going to be in this market, particularily when its this choppy and your seeing a lot of money go into bonds," said Kelly, adding that he doesn't expect money to return to equities any time soon, which won't help Charles Schwab.
Steve Cortes, founder of Veracruz, doesn't like brokers. He questions Morgan Stanley's call, however, because it had said they were calling for a 10-Year yield at 5%. But now that the rate is at 2.5%, he wonders why they're calling for lower rates. Cortes is confounded and said he's not buying into this research report.
GAMING J. CREW BEFORE EARNINGS AFTER THE BELL THURSDAY
Retail name J. Crew Group is scheduled to report quarterly earnings results after the bell Thursday and one analyst thinks the New York City-based company is a buy.
"J. Crew really does focus on providing high quality for the value," said Erika Maschmeyer of R.W.Baird. "They have a wide range of price points and an amazing merchandizing team."
In the future, the company will face pressures because of higher cotton costs, but Maschmeyer said Wall Street has already factored that in. She said JCG is in a "great position" to negiotiate with vends and mitigate any cost increases. With opportunities on the international and online fronts, Maschmeyer called J. Crew is an "under appreciated growth story."
While Maschmeyer would pull the trigger on JCG, she said Gap has a "rougher road" ahead. She added that JC Penny's comp guidance for the third-quarter is setting them up for disappointment.