🏦 The Tide Could Turn This Week

Make sure you're ready... [Wealthy Retirement]( SPONSORED [Let's "Make Americans RICH Again!" - Bill O'Reilly]( [Bill O'Reilly]( the highest-rated news host of all time... And the bestselling nonfiction author of all time... And today, he's revealing the secret way he's "made a lotta money." (Hint: It's NOT from his TV show.) Join Bill O'Reilly on his EXCLUSIVE new project to help Americans get rich. [Go HERE now.]( Editor's Note: For months, Contributing Analyst Jody Chudley has pounded the table saying that banks present a one-of-a-kind value investing opportunity during the COVID-19 pandemic. Now investors' patience may finally start to be rewarded... This month marks the start of what Chief Income Strategist Marc Lichtenfeld has repeatedly called "the most important earnings season of our lives." Jody believes it could be a critical time for banks in particular. So if you haven't registered for Marc's free virtual [Blockbuster Earnings Season Kickoff]( on October 21 at 1 p.m. ET, you should know... Marc is pulling back the curtain on his favorite strategy for playing just this kind of unprecedented market event. [Click here to save your spot.]( - Mable Buchanan, Assistant Managing Editor [MARKET TRENDS]( Why the Tide Could Turn for Banks Jody Chudley, Contributing Analyst, The Oxford Club [Jody Chudley] Since the market crashed in March, [I've been telling you]( that American banks are one of the greatest value opportunities in the market today. On every valuation metric, the banks are historically cheap. And yet, by all accounts, the banks went into the pandemic with the strongest balance sheets they have ever had. The only caveat in my bank value story is that an investment in the banks will require some patience. [Value investing]( almost always does. I have repeatedly cautioned that I do not expect share prices of banks to turn higher until we start seeing some improvement in their earnings. It has now been a full six months since I started pounding the table on banks, and I believe that this week could be the inflection point where our patience finally starts to be rewarded. The catalyst? Earnings season. I'm not suggesting that we are going to see great bank earnings. Instead, I'm suggesting that this will be the first quarter that bank earnings start getting better - which is all we need. SPONSORED [Attention: Have you heard about this audacious new movement?!]( Starting with an announcement late in the day on November 5, 2020, American investors may be in for a nasty surprise. That's when one of the most popular assets in America could suddenly be made illegal. Learn the five (easy) steps to prepare yourself now. [Click here to continue reading.]( Why This Week? As you would expect, bank earnings from the first and second quarter this year were terrible. With so many people out of work and so many businesses struggling, the banks have had to make massive loss provisions for future bad loans. In the first quarter of 2020, the six largest banks in the United States reported massive combined loan-loss reserves of $24.8 billion. For the second quarter, the number was even larger at $34.6 billion. [Chart - Quarterly Loan-Loss Provisions for the Big Banks]( For the entirety of 2019, the "big six" banks - JPMorgan Chase (NYSE: [JPM]( Bank of America (NYSE: [BAC]( Citigroup (NYSE: [C]( Wells Fargo (NYSE: [WFC]( Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) - reported $20 billion of combined loan-loss provisions. After the first six months of this year, they had already hit $60 billion. That isn't good. However, it hasn't even dented the banks' balance sheets. Capital positions are still incredibly strong, and I believe that the worst of the reserve-taking took place in the second quarter. This is a cyclical business, and every time we have a recession, bank earnings temporarily take a hit. Unlike in the recession of 2008 and 2009, this time bank balance sheets are more than up for the challenge. Banks' long-term value hasn't changed as a result of the big loss provisions of 2020. They are just having one bad year of earnings. The big banks started reporting third quarter earnings this week. I don't expect terrific numbers from all of them because the pandemic is still in full swing. However, if more banks release numbers that beat expectations and show loan-loss provisions trending lower (as I expect), I believe that will be a [positive catalyst]( for the entire sector. The upside here is significant. Wells Fargo, for example, trades at half the valuation relative to book value that it traded at in the years leading up to the COVID-19 outbreak. [Chart - Wells Fargo: Price-to-Book Value]( The other banks all also trade at sizable discounts to how they are normally valued. Soon, I think the majority of these stocks could finally start catching a bid. I'll be watching closely and will report back on what I see. I'm hopeful that this week will be the start of a nice long run of outperformance for the entire banking sector. And the banks won't be the only ones to profit... With the one-of-a-kind plays Marc's revealing after his [Blockbuster Earnings Season Kickoff]( you could triple your investment in three months. The banks are going into this special earnings season more prepared than ever before. Make sure you are too. Good investing, Jody [Leave a Comment]( MORE FROM WEALTHY RETIREMENT [How to Play the Earnings Game]( [Profit No Matter Who Wins the Election]( [What to Do When Insiders Say "Buy"]( [Facebook]( [Facebook]( [Twitter]( [Twitter]( [Email Share](mailto:?subject=A%20great%20piece%20from%20Wealthy%20Retirement...&body=From%20Wealthy%20Retirement:%0D%0A%0D%0A Make%20sure%20you're%20ready... %0D%0A%0D [Email Share](mailto:?subject=A%20great%20piece%20from%20Wealthy%20Retirement...&body=From%20Wealthy%20Retirement:%0D%0A%0D%0A Make%20sure%20you're%20ready... %0D%0A%0D SPONSORED [Hot IPO Stock Gets Business From 25 Fortune 100 Companies]( [60 Minutes]( Walk outside an Ikea, Walmart, Home Depot or Macy's and you might just see an unusual set of boxes. People wonder what in the heck they are - after all, the technology was developed for Mars. [Find out what's going on here.]( [The Oxford Club]( You are receiving this email because you subscribed to Wealthy Retirement. 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