JP Morgan Chase & Co (JPM)

He is taking advantage of the higher Canadian $. US housing market is just recovering whereas the Canadian market has peaked. Big dividend increase expected in 2013 and a big share buyback.

Great bank. With a 2-3 year view, you will be very happy owning it.

JPM-N is a better run bank but at a higher multiple. Didn’t have all of the issues that BAC-N had. JPM-N has a great retail franchise, a great investment banking franchise and a great asset management business. BAC-N has batter upside over the long term.

She is not in US financials at all right now. Trade at a discount to Canadian banks. If you want US financial exposure then this is one you would go to. She is not interested right now in big US financials. Prefers smaller, regional banks and is looking at them now.

Sell Royal Bank (RY-T) and buying this bank? Royal sits up well here. Just bought Ally Financial so they are going to be the biggest market in auto leasing and this will be a nice powerful driver for growth. Thinks wholesale is going to be where growth comes from. J.P. Morgan is not a bad idea. He also likes Citigroup (C-N) at these prices and is probably the one with the most upside and the most to benefit from a normalizing world.

One of the best in the business. You will slowly get the premium multiple back. Well positioned corporately. Biggest plus for US banks is the turn in the housing market in the US.

Trades at a discount to Book and at 8X earnings. After the whole scandal with the London Whale and J.P. Morgan, the equity price overreacted and presented a buying opportunity. Good management. Have exposure to the US mortgage market.

Bank of America (BAC-N) or J.P. Morgan (JPM-N)? Looked at both in the summer and decided on J.P. Morgan after the “London whale” incident when the stock fell. Also, J.P. Morgan has a dividend and at better balance sheet. Also, they are allowed to raise their dividends. Still buying it today.

(Market Call Minute.) If you own, you should probably hold for a possible US recovery.

Helped by QE. It is making its way to the banks but not getting through to the economy. They are in good shape to win some market share by way of loan growth. They have a strong balance sheet. They can make their dividend. There may be growth in it and they may institute their share repurchase plan. Revisions of earnings continue to go higher. You want to see fundamental characteristics and price characteristics that support the view. In this case you have good fundamentals and positive price performance so the wind is at your back.

(A Top Pick Oct 11/11. Up 37.77%.)

If the FED has shot their last bullet with QE2 to infinity, then what can they do next? This is the best in breed. What happens when we have the inevitable correction? Wait for a pull back. Don't chase strength at this point. The markets are okay for a couple of months yet, however.

He is basically out of all US financials. This has been on a pretty strong run, aided and abetted by all the US policy moves. Feels there is still a number of risks in US financials.

Good indicator of bank valuations is Tangible Book Value. This one, as with all the banks, looks attractive. Trading at about 75% of Book and about 85% of Tangible Book. Probably the best of the breed in US financials. A couple of things to worry about is that banks generally make their money through the steepness of the yield curve i.e. they borrow short and lend long. With such as shallow yield curve, there is not that opportunity. Looks like the yield curve is going to be shallow for some time. Margins are dropping and they are also not really lending money. Not a lot of growth here.

Gaps really do matter because they represent a capitulation. People were outright panicking, an emotional response and it is an over-reaction. The banks are breaking out and do look okay, although it may not last. Stay with it for the time being.