Banking Takes a 'Bullish' Turn

Her interview shenanigans didn't sway Warren Buffett... The CNBC host had more than implied that we might be in for another major financial crisis. She asked the 93-year-old billionaire a series of questions during their April 12 interview... [Chaikin PowerFeed]( Banking Takes a 'Bullish' Turn By Marc Chaikin, founder, Chaikin Analytics Her interview shenanigans didn't sway Warren Buffett... The CNBC host had more than implied that we might be in for another major financial crisis. She asked the 93-year-old billionaire a series of questions during their April 12 interview... Is this a banking crisis? Is this financials in turmoil? Is this Banking Crisis 2.0? What would you call what we've been seeing happen? The host was angling for a "run for the hills" response. But Buffett saw through her tactic... Sure, some West Coast and specialty banks had blown up. However, he didn't see the coming contagion that the media was furiously pushing. As part of his response, he noted... They have mismatched assets and liabilities. And bankers have been tempted to do that forever. And every now and then, it bites them in a big way. Notably, though, Buffett wasn't interested in entertaining any end-of-the-world scenarios. The news cycle runs at warp speed these days. So I'll forgive you if you've moved on. But folks, we witnessed a major financial event this year. I even publicly predicted it... You may recall my messaging around a coming "[run on the banks]( Like Buffett said on CNBC, I saw that many banks had "mismatched assets and liabilities." And in our world of rising interest rates, that made a financial fallout nearly guaranteed. In early March, Signature Bank and Silicon Valley Bank collapsed. First Republic Bank joined them in early May. And the federal government had to step in to help clean up the mess. JPMorgan Chase (JPM) ultimately took over First Republic's deposits. And the Federal Deposit Insurance Corporation untangled the obligations of the other two failed banks. In the end, the banking system absorbed roughly $548 billion in assets from the banks. Not surprisingly, stocks in the banking industry tanked... Recommended Links: [December 6: A Severe Financial Crisis Is Underway]( It doesn't matter if you have money in the markets right now or you're waiting on the sidelines. The short period we're about to enter could have the power to make – or destroy – fortunes. And what you do on December 6 could determine your wealth for the next decade. [Click here to prepare now](. [READ IMMEDIATELY: Huge banking overhaul underway]( The financial community has some big changes planned for your money. The Federal Reserve, U.S. Treasury, and White House are all involved... as are at least 41 American banks and credit unions. This overhaul could change how you cash your paycheck... access your Social Security income... and even how you pay your taxes. That's why it's crucial you understand what's going on before your bank is affected. [Full story here](. At Chaikin Analytics, we use the SPDR S&P Bank Fund (KBE) to track this space. From its most recent high this past February through its low in early May, KBE plunged nearly 37%. And it was even worse than that. KBE had lost roughly 47% from its January 2022 peak. Folks, one of America's most important sectors suffered a historic wipeout earlier this year. And we can clearly see that investors treated it that way. Look at the following chart... [Chaikin PowerFeed] That's what we call "shares outstanding" for KBE. In other words, it's the number of shares of the exchange-traded fund ("ETF") in the market at any given time. You see, the folks who manage ETFs "create" shares by buying the stocks they hold. And they "eliminate" shares by selling the shares of their underlying stocks. Notice that KBE's shares outstanding are at their lowest point in more than a decade. That tells us the banking industry just went through one of the most extreme periods of outflows in recent history. But as we noted earlier, Buffett thought this shift was pretty run-of-the-mill. And I agree... In America, banks take risks. Sometimes, they "mismatch assets and liabilities." That doesn't mean every banking shakedown will evolve into a 2008-style crisis. A 2008-style crisis is the exception – not the norm. And importantly, for investors like us, situations like our current one can lead to incredible opportunities. Look at the next chart... [Chaikin PowerFeed] This chart tracks the price to book value (P/B) of the underlying index behind KBE. As you can see, the ratio is less than 1 right now. That's a critical development. Think about it... Banks make money on their book value. They use their assets to generate profits. That makes the P/B ratio one of the most important measures for this sector. And today, the data shows that this entire group is undervalued. The Power Gauge sees the current upside in this space. It's currently "bullish" on KBE. Plus, [three weeks ago]( my colleague Vic Lederman noted that the Power Gauge had turned "bullish" on the SPDR S&P Regional Banking Fund (KRE) as well. That's still the case. So if you're not already paying attention to this space, I recommend you do so today. Good investing, Marc Chaikin P.S. You're invited to my urgent briefing next week... In short, the Federal Reserve holds the fate of the U.S. stock market (and your retirement) in its hands. And you need to start preparing before the central bank makes its next move. Nothing is more important for your money heading into 2024. That's why I hope you'll set aside some time to join me next Wednesday, December 6, at 8 p.m. Eastern time. And just for tuning in, you'll get four FREE recommendations. [Click here to learn more](. Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.220% 11 16 3 S&P 500 +0.100% 148 264 85 Nasdaq +0.260% 44 44 11 Small Caps -0.400% 516 980 430 Bonds +0.210% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Real Estate +1.61% Staples +1.26% Utilities +1.22% Discretionary +1.14% Materials +0.53% Information Technology +0.43% Financial +0.34% Communication +0.10% Energy +0.04% Health Care -0.13% Industrials -0.34% * * * * Industry Focus Pharmaceuticals Services 3 24 12 Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -13.82%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #16 of 21 subsectors. Indicative Stocks * * * * Top Movers Gainers [rating] NEM +6.26% [rating] SYF +5.10% [rating] TSLA +4.51% [rating] CCI +3.71% [rating] PYPL +3.69% Losers [rating] GWW -4.35% [rating] GEHC -4.23% [rating] ACGL -2.93% [rating] ODFL -2.83% [rating] DIS -2.81% * * * * Earnings Report Reporting Today Rating Before Open After Close CRM, SNPS DLTR, HRL No earnings reporting today. Earnings Surprises [rating] SPLK Splunk Inc. Q3 $1.52 Beat by $0.37 [rating] INTU Intuit Inc. Q1 $2.47 Beat by $0.49 [rating] NTAP NetApp, Inc. Q2 $1.58 Beat by $0.19 [rating] CRWD CrowdStrike Holdings, Inc. Q3 $0.82 Beat by $0.08 [rating] WDAY Workday, Inc. Q3 $1.53 Beat by $0.12 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. 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