Banks Will Go Up, Market Will Follow: Dick Bove
By: Despite fears about the European contagion, the U.S. banks are through the crisis and will lead the market forward, Dick Bove, noted bank analyst and Vice President of Equity Research at Rochdale Securities, told Larry Kudlow Monday. And when you're ready to buy, he's got a few names for you.
“Their earnings are now starting to rise at a faster pace than people expect,” he said, “and once people stop freaking out about Greece and Italy or what have you, they’ll see the value here and buy them.”
And as go the financials , so goes the market, Bove added.
“Once it’s recognized the financial system is solid, that the U.S. banks are moving forward, there’s no reason not to buy common stocks because the U.S. banks will, in fact, lead the market,” he said. “They always have.”
Stocks ended up in a volatile session Monday but investors were still jittery over the ongoing European debt crisis, where the focus shifted towards Italy. Prime Minister Silvio Berlusconi resisted pressure to resign Monday and Italian bond yieldssoared to near 15-year highs, despite scrambling efforts by policymakers to stem the growing contagion.
But Bove isn't concerned about the European crisis affecting U.S. banks. In fact, he thinks they are a real bargain right now. So what are his favorite picks?
He likes JP Morgan , U.S. Bancorp, PNC Financial Services , BB&T and Bank of New York Mellon .
”These are all really sound, solid companies.”
And what about the European banks?
While he agrees they have to substantially write down their debt, he doesn’t think EU banks are in as bad shape as everyone thinks. He pointed to the fact that Jefferies sold $1.1 billionofEuropean debt, the bulk of which was Italian debt.
“The market's there,” he said. “It’s working and the situation isn’t as bad as people represent it to be.”
Questions? Comments, send your emails to: lkudlow@kudlow.com
CNBC.com with wires
