JP Morgan Chase & Co (JPM)

Bought a long time ago as best-in-breed. US banking sector had a downdraft on worries of credit problems. But private credit issues aren't with the banks -- since 2008-2009, banks can't lend to those types of businesses.

Leave some $$ in your technology sleeve to allocate to one of the end users -- an industrial (TT) or big US bank (JPM or Citi) or retail/logistics (WMT or COST).

They report Tuesday. The CEO tends to issue cautious guidance while the street often finds things to quibble over it, even when they're not worth quibbling over. Still, it's a good bank.

There is a correlation with financial institutions in the country and internationally and it shows in the chart. He doesn't see a ton of buying volume. It is a similar situation to Royal Bank and is highly connected to the stock market index. He sees some support but wouldn't put new money into it at this point. Banks are definitely a long term holding even though every ten years they can go through a big drop from their highs.

After doing really well last year plus turmoil from Iran, US banks have seen a lot of profit-taking. Once it rebounds from that, will continue to do quite well.

Likes US large banks -- will continue to benefit from deregulation and a sturdy economy. Owns JPM, but likes both names.

On technicals C is holding above the 200-day MA, making it stronger than JPM which is falling a bit below. C also has a lower price-to-book. JPM probably has more earnings growth ahead.

Regulations are loosening, capital markets is wanting to happen in the US economy, and the yield curve is steepening. A lot of tailwinds are bubbling beneath the surface, but haven't happened yet. The big banks are well-protected from things like the private credit crisis now.

Trades at a premium to everything else, which it's earned. He's not a fan of paying up for past performance, need to see if it can continue to deliver.

Down 15% from highs. Blue-chip bank around the world. Spent $20B on technology this past year. Strong track record of making investments in technology, a frontrunner. Reasonable valuation of 12x PE (cheaper than Canadian banks). 

Credit quality is fantastic. Earnings growth. Hugely over-capitalized. Very well managed. Yield is 2.03%.

He sold GS, but will hold JPM, because it has less exposure to private credit/equity.

Likes a lot of the large US banks. He owns JPM and GS.

Is a core holding, but now in the cycle, he prefers other banks, those more sensitive to loan growth and interest rate cuts.

Last fall, his team started to see the infrastructure transition to an end-user/earnings story. While they were trying to figure out which ones to buy, they just bought the XLF ETF. It did very well.

More recently, they got into BAC and JPM. These ones have actually embraced AI on the fraud side. Initially, AI was meant to do repetitive jobs faster and cheaper. But now with reasoning coming on, it can identify inefficiencies.

CEO is one of the best in banking the world has ever seen. Valuation at the high end, as all banks have done well. Have to see how financials react with new Fed chair. He's bullish on US and Canadian economy, so you have to own financials.

See his Top Picks.

Yesterday, they reported a solid top and bottom line beat, with 7% net interest income growth, 40% stock trading growth though -5% investment banking YOY. Shares sank 5% since then, but rallied 35% over the previous 12 months before the report. This will be fine.