Banks' Shares Rise Ahead of Stress Test Results Despite Market Expectations

Strategic Insights -

As the release of the Comprehensive Capital Analysis and Review results approaches later in March, shares of three of the biggest banks - Goldman Sachs (GS), JPMorgan Chase (JPM), and Citigroup (C) - have risen ahead of the announcement, according to Steve Grasso, director of institutional sales at Stuart Frankel. Bank of America (BAC), however, has been lagging due to doubts on whether the company will pass the tests, with Grasso stating that the stock is down 11.5% on the year. Market analysts are divided on the banks' prospects, with some expressing optimism about their performance and others cautioning against investing in Bank of America.

Key Takeaways:

  • Shares of Goldman Sachs, JPMorgan Chase, and Citigroup have risen ahead of the Comprehensive Capital Analysis and Review results, according to Steve Grasso of Stuart Frankel.
  • Bank of America's stock has been lagging due to doubts on whether the company will pass the stress tests, with Grasso stating that the stock is down 11.5% on the year.
  • Dan Nathan of riskreversal.com sees a good buying opportunity in Bank of America if it drops below $15, citing low expectations for the company.
  • Pete Najarian of optionmonster.com and trademonster.com prefers Goldman, JPMorgan, and Citi over Bank of America, citing the bank's miscalculation last year and the pressure on management to perform well.
  • Karen Finerman of Metropolitan Capital Advisors believes that fear of Bank of America's test failure is priced into the stock, given the recent selloff.
  • Marc Chandler of Brown Brothers Harriman expects the euro to fall 20% against the dollar by the end of next year due to uncertainty surrounding the European Central Bank's quantitative easing program.

Statistics:

  • Shares of Ban of America are down 11.5% on the year.
  • The euro could fall 20% against the dollar by the end of next year, according to Marc Chandler.
  • The SPDR Euro Stoxx 50 ETF (FEZ) has rallied some 20% from its January lows.
  • The bad news for the euro already seems to be priced in, with the ETF potentially declining for the next week or so if the ECB disappoints investors.

Sources:

  • Steve Grasso, Stuart Frankel
  • Dan Nathan, riskreversal.com
  • Pete Najarian, optionmonster.com and trademonster.com
  • Karen Finerman, Metropolitan Capital Advisors
  • Marc Chandler, Brown Brothers Harriman