A Grim Green Zone Outlook for Banks

It’s rough out there in our ratings system… [Turn Your Images On] [A Grim Green Zone Outlook for Banks]( [Turn Your Images On] [Chad Stone, Managing Editor]( While the rest of the market is seemingly humming along, Big Bank stocks and the broader financial sector have stalled out. We can at least partially thank the Federal Reserve’s rapid interest rate hikes. As Mike said last week, [we’re no longer in the “easy money” era](. And that’s weighing on America’s biggest financial institutions. Year to date, the Financial Select Sector SPDR Fund (NYSE: XLF) — a basket of financial stocks — is trading negative while the S&P 500 has gained nearly 15%. [Turn Your Images On] [(Click here to view larger image.)]( That got me thinking about how Big Bank stocks rate within Adam O’Dell’s proprietary Green Zone Power Ratings system… See, this is what’s so great about Adam’s system. If an investing idea pops in your head, you can knock out initial research on stocks related to that idea within minutes. All you have to do is go to our homepage ([www.MoneyandMarkets.com]( and start typing stock tickers or company names into the search bar. You’ll then get a snapshot of how a stock is set to perform over the next 12 months — from “High-Risk” laggards (rated 0 to 20 on Adam’s 100-point scale) all the way up to “Strong Bullish” market crushers (rated 81 to 100). Let’s go ahead and do that today using Big Banks as our focus… --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [The Forever Battery: Making Gas Guzzlers Obsolete]( Only 2% of cars sold in the U.S. today are electric vehicles… but that’s about to change — FAST. A new battery breakthrough is ready to hit the market. It could revolutionize the $2 trillion automotive industry … and could soon make gas guzzlers obsolete. This technology is predicted to cause a 1,500% surge in electric vehicle sales over the next four years. The company pioneering this new battery could be the investment of a lifetime. [Click here for details.]( --------------------------------------------------------------- Wells Fargo Can’t Keep Up There’s been some recent shake-up amongst America’s financial system. Fitch Ratings, an agency responsible for assessing the industry’s health, is now threatening a downgrade on dozens of banks after lowering the U.S. long-term credit rating earlier this month. And Wells Fargo & Co. (NYSE: WFC) is one institution that could be affected in a major way. By following Green Zone Power Ratings, you can see that WFC stock is in a tough spot. [Turn Your Images On] [(Click here to view larger image.)]( Wells Fargo stock rates a “Bearish” 32 out of 100 in Adam’s system. That means it’s expected to underperform the broader market over the next year or so. To be clear, this doesn’t mean that Wells Fargo’s stock price will crash and the bank is going to fail like Lehman Brothers in 2008. Green Zone Power Ratings is just showing you that WFC is a stock to avoid if you’re looking for healthy profits in your investment portfolio. That’s reflected in its Momentum rating of 44. While the S&P 500 has gained 15% this year, WFC has lagged behind with measly 3% gains over the same span of time. That means you’re much better off just throwing your money in an index fund. On top of that, it’s been a rocky ride for Wells Fargo stock since January 1. The stock rose from around $42 to $48.50 in mid-February before crashing to $36 amid the banking crisis earlier this year. Then it rose to $47 at the end of last month, before sinking back to its current level around $42.50. Talk about a swingy stock! That’s why it carries a 42 rating on the Volatility factor. Why buy a volatile stock that can’t even keep up with the broader bull rally? --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [U.S. Air Force Vet and Leading Economist Team Up to Warn Americans]( About 68% of Americans fear a severe recession will strike within the next three months. The majority of which worry the devastation will surpass what we witnessed in 2008. But what if the bigger threat is coming from outside our borders where we can do nothing to stop it? As a decorated Air Force vet and leading economist warn: “The threat of mutually assured economic destruction is very real.” And time is running out to protect yourself. [Go here for details.]( --------------------------------------------------------------- The King of Big Bank Stocks? I was determined to find one Big Bank that was rated an A- or higher on Fitch’s long-term scale. For reference, the firm’s scale of investment grade banks goes like this: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-. Anything BB+ and lower is considered “below investment grade.” After plugging 11 tickers into Green Zone Power Ratings, I came up with one that rated above 50. And I wrote about it when I first started showing you how easy Adam’s system is to use [in May](. I’m talking about JPMorgan Chase & Co. (NYSE: JPM), which now rates a “Strong Bullish” 84 out of 100. Strong Bullish stocks are set to outperform the broader market by 3X over the next 12 months. [Turn Your Images On] [(Click here to view larger image.)]( JPM boasts “Bullish” or better ratings on five of Adam’s six factors. It gets dinged on Size due to its $436 billion market cap (we generally expect smaller stocks to have a better shake at beating the market). JPMorgan crushed earnings expectations last month. It brought in $42.4 billion in revenue, a 34% increase from the previous quarter, when analysts expected $38.9 billion. Earnings per share were reported at $4.37 versus $4 expected. That’s contributed to its solid 83 rating on the Growth factor. It’s clear that JPM is thriving amid this higher interest rate environment as it brings in more lending revenue. And that’s why Green Zone Power Ratings shows this stock should outperform from here. Overall though, it’s clear that the financial sector isn’t chock full of JPMorgans. Major ratings agencies are sounding the alarm, and we’ve already watched four banks fail earlier this year. And this is something Adam [has warned]( about for months now. He’s even targeting a broader fallout with one trade because he’s found 282 institutions that could join the likes of Silicon Valley Bank, First Republic Bank and Signature Bank in the coming months and years. If you want to know more about this “off Wall Street trade,” [click here.]( Until next time, [Chad Stone signature] Chad Stone Managing Editor, Money & Markets --------------------------------------------------------------- Check Out More From Stock Power Daily: - [WE NEED MORE OIL, SIMPLE AS THAT]( - [WHY SPEND $6 BILLION ON THE COMMANDERS?]( - [FOLLOW THE ROLODEX]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. 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