JP Morgan Chase & Co (JPM)

If you are buying it you are positive on capital markets. It is a general play on the US economy also. It is generally well run. She holds another bank in the US.

What is the advantage of purchasing the preferred shares? Generally the advantage is that you get a slightly higher dividend yield, but beyond that most people should be comfortable with purchasing the common. Considers this to be one of the finest banks globally, if not the finest. A fabulously run company.

This is one you can put away in your portfolio for years. The yield curve in the US is rising, we have positive capital market flows and thinks we are going to see that continue for years. You want to buy the financials where the domestic economy is doing well. Dividend yield of 2.54%.

Jamie Diamond has done a spectacular job of working this bank through all of their troubles. Likes the growing of their earnings and a lot of their core competencies. They are making a lot of money in a lot of different ways. They will make more money as US interest rates start to come up. The largest bank in the US.

Banks are going to be more sensitive to the effect of the bond market on long rates, rather than what the Fed does. This is a more senior bank and didn’t get hurt as much as the other banks during the 08-09 experience. Because of this, on a recovery you will probably see less of a recovery. Based on that, Bank of America (BAC-N) and Citigroup (C-N) would be better choices. (See Top Picks.)

Banks have been “not loved” for many years. Thinks their litigation costs was a high water mark in the 1^st quarter which is pretty good. Has a pretty good upside target of around $88. This may be one that you hold just for the short term. Alternatively you could buy the Spider Financial ETF (XLF-N) if you don’t want the specific risk.

Valuation is only 10X forward PE. Earnings showed pretty good and rather robust trading in capital markets activity. If interest rates start going up, this would be a bit of a tailwind for them. Buybacks were authorized to go even higher. Dividend yield of 2.49%.

(A Top Pick April 7/14. Up 4.36%.) There has been a lack of lending in the US that the government would like increased. You are going to see more bank regulation going forward, and at some point there are going to be some spinoffs in areas that are deemed to be non-core that might require more regulations. They have been clobbered and he thinks this is a good place to be.

Likes the US banks. It comes down to how you want to capture that exposure. Some are heavy on the retail consumer and some are quite heavy on the investment banking side. This one is about half retail banking, a quarter investment banking and a quarter wealth, so you are getting somewhat of a balanced approach. He is more bullish on the retail banking side and has played this through regional banks, such as Columbia Banking System (COLB-Q), National Penn (NPBC-Q) and City Holding (CHCO-Q).

This has taken some time to start to move up, but with the US housing recovery in motion, the improving labour market and lower energy prices, these are positive developments for banks. With interest rates eventually moving up, at some point later on this year or next, Net Interest Margins should improve. Legal issues are still there, but the bigger parts are behind us. Trading at 10X forward PE, which is below historical averages.

A great company. He thinks it is not expensive, 9 times earnings, around book value and has a decent dividend yield. The net interest margin has been hurt over the last little while. It has also been hurt by some fixed income business. They did well on equities and M & A. You are not paying a lot and the US economy is doing better, so it should help JPM-N. It is a very large asset management bank as well as having a credit card business. There are a lot of issues with regulation. But he thinks they are good value here.

J.P. Morgan (JPM-N) or Bank of America (BAC-N)? He is more familiar with J.P. Morgan, so that would be the one he would pick. If you are looking out 2-3 years, by all means this would be the one.

Right now is a good time to be in the US financials. They are undervalued and are starting to perform well. Technically it is right at the high that was set back earlier in the year. The seasonal period would run from mid-December into mid April. This looks good.

Wells Fargo (WFC-N) or J.P. Morgan (JPM-N)? A lot of the small mid-cap oil companies have heavy exposure, from a banking point of view, along refined (?) equity issues. Not sure of the concentration for the oil exposure, but given the run-up we have had globally, he would think that everything from the A&P companies to the pipelines, etc. will have impacts. Historically Wells Fargo has been considered to have the best risk management culture. This showed up during the banking blow-up, as they didn’t have to take the money. This bank was considered to be #2. Both are quite good. Wells Fargo is more of a consumer driven story where this one is a banking driven story. He would rather chase the regional trade, because there is still a lot of regulatory glare been exposed to the money centred banks. Of the 2, he would favour Wells Fargo.

This gives you the double edge of a super regional bank exposed to the average person and a pretty good investment bank. Thinks the investment banking cycle is about to start, which involves M&A, new issues and an IPO market as the US market continues to take leadership and the bull market is extended out. When that happens, brokers make a lot of money. Yield of 2.57%.