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Guy Adami: Categorically Banks Are Not a Buy

On Thursday the pros were trying to determine how banks stocks would move after JPMorgan left investors underwhelmed.

There were plenty of negatives in the JPM report:
- Net income fell 4 percent in the July-September period.
- Fees from investment banking dropped 31 percent because of severe turbulence in financial markets this summer.
- The bank said it was concerned about the ability of consumers and businesses to manage their debts.

But there were some positives too.
- Earnings beat estimates.
- Fewer customers were late paying bills.
- The bank wrote off $2.7 billion in consumer loans, compared with $4.7 billion in the same quarter last year.
- The bank also put aside $2.3 billion for losses from consumer credit, which includes mortgage and credit card loans. That's down from $3.2 billion last year.

”It wasn’t a disaster,” says David Trone of JMP Securities, “but it wasn’t inspiring either.”

By mid-day it was clear investors were more disappointed than impressed - JPMorgan traded sharply lower.

But that shouldn’t surprise you, says trader Steve Grasso. “Historically JPMorgan sells off after earnings."

Jon Najarian recommends keeping perspective. ”JPM was trading around $28 last Tuesday. The current pullback to $31 doesn’t get me wringing my hands.”

Trader Guy Adami just can't get behind JPM - or any other bank for that matter.

”Categorically banks are not a buy,” Adami insists. “I’m not saying go short but I don’t see any compelling reason to buy financials. None of them. Banks have had more false starts then in Monday Night Footabll!"

Trader Steve Cortes disagrees.

“I would short Europe banks,” he says. “I’m short Deutsche. As bad as our banks are the European banks are, I expect they will need to write down a lot more related to their Mediterranean debt exposure. And with the monster run in October – I think they’re very vulnerable.”

JPMorgan Chase, seen as one of the strongest banks on Wall Street, is the first major U.S. bank to report earnings and results are often used as a barometer for the group. Citigroup, Bank of America and Goldman Sachs Group report next week.

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One day after Wal-Mart’s analyst day, which many pros found bullish, Deutsche Bank reiterated its ‘Sell’ rating on the stock. Why? Get all the details from Chuck Grom, senior retail equity analyst at Deutsche Bank. Watch the video now!





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Trader disclosure: On Oct 13, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns long call spreads ANF; Najarian owns long call spreads AAPL; Najarian owns long call spreads AKAM; Najarian owns long call spreads WLT; Najarian is long CME; Najarian is long CBOE; Najarian is long CIGX; Adami Owns (AGU); Adami Owns (C);Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Cortes is long WMT; Cortes is long SVU; Cortes is long SO; Cortes is long CAG; Cortes is long Treasury bonds; Cortes is short DIS; Cortes is short AAPL; Cortes is short DB; Cortes is short SI; Cortes is short Aussie dollar; Grasso owns AA; Grasso owns AKS; Grasso owns ASTM; Grasso owns BA; Grasso owns BAC; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Edwards is long XLK

For Patty Edwards
Trutina Financial is long Apple (AAPL)
Trutina Financial is long Citigroup (C)
Trutina Financial is long Disney (DIS)
Trutina Financial is long Google (GOOG)
Trutina Financial is long Oracle (ORCL)
Trutina Financial is long SPDR Gold Trust (GLD)
Trutina Financial is long Utilities SPDR (XLU)
Trutina Financial is long TARGET (TGT)
Trutina Financial is long QCOM
Trutina Financial is long SAFEWAY (SWY)
Trutina Financial is long WALTER ENERGY WLT

For Steve Grasso
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own JPM
Stuart Frankel & Co and it’s partners own MET
Stuart Frankel & Co and it’s partners own MSFT
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own UAL
Stuart Frankel & Co and it’s partners own XRX

For Brian Kelly
Shelter Harbor Capital is short S&P Futures
Shelter Harbor Capital is long GLD

For David Trone
JMP Securities currently makes a market in this security Goldman Sachs (GS)*
JMP Securities currently makes a market in this security Morgan Stanley (MS)*
JMP Securities currently makes a market in this security Bank of America (BAC)*
JMP Securities currently makes a market in this security JP Morgan (JPM)*
JMP Securities currently makes a market in this security Citigroup (C)*
*(1) JMP Securities currently makes a market in this security. (2) JMP Securities has not received compensation for banking or other services rendered to this company in the past 12 months. (3) JMP Securities has not served as a manager or co-manager of a public offering for this company in the past 12 months. (4) JMP Securities has not participated as an underwriting or selling group member of a public offering by this company in the past 12 months. (5) JMP Securities and its affiliates have not have obtained a position of at least 1% in the equity securities of this company during the ordinary course of its/their business/investments. (6) No officer of JMP Securities is a director or officer of this company. (7) Neither the analyst covering this company (as defined in NASD Rule 2711) nor a member of the analyst's household has a financial interest in this company. (8) Neither the analyst covering this company nor a member of the analyst’s household serves as an officer, director, or advisory board member of this company. (9) The analyst covering this company has not had discussions of employment with the company within the past twelve months.

For Jordan Rohan
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from Google Inc. in the next 3 months. Stifel, Nicolaus & Company, Inc. makes a market in the securities of Google Inc.

For Charles Grom
Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees.

Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.

14. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year.

15. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received noninvestment banking securities-related services.


CNBC.com with wires.