Trader Talk

Financials' Rally In January Under "Scrutiny"

The financials pulled off an amazing V-bottom in January, but that rally is now being aggressively questioned. Keefe Bruyette & Woods has an interesting note out skeptical of the rally. They noted:

--The bank stock run in January was based on speculation about potential benefit to banks from aggressive Fed easing: "We think enthusiasm will be ratcheted back as investors revisit fundamentals."

--Large-cap bank stocks are up 6.5 percent year to date versus a 6.1 percent decline for the S&P 500 (!)

--January was the first month in which large-cap banks outperformed the market since February 2007 (!!)

--Relatively high valuations and a high probability of further estimate cuts do not bode well for performance.

Questions?  Comments?