00:00So we are heading into the second half of the year, and you are bullish on regional banks.
00:05Tell us why now is the time to buy regional banks.
00:07Well, there are a few reasons why I like regional banks.
00:10One, they've been a laggard.
00:11They've been beaten down for quite some time, and technically, they're starting to come back.
00:15We're starting to see the KRE and the BKX, the two indexes that follow regional banks closely,
00:22start to come back above its 200-day moving average.
00:24So as a technician, that's a barometer of health.
00:27And then when you talk about the story of the regional banks, they haven't done anything in a long time.
00:31But one thing we're starting to see, one, we're trading at all-time new highs.
00:35That's usually very bullish.
00:36Two, what's leading us, J.P. Morgan, Goldman Sachs, the big banks, the big financials.
00:41We just got through the stress test on Friday before we taped this.
00:4422 banks now are able to pay more dividend.
00:49And they basically passed the test that said, in the worst-case scenario, do you have enough capital in control to survive these situations?
00:58And they did.
00:59So this gives them a little more freedom.
01:01What could that freedom do?
01:02It could actually look to M&A.
01:04So we got a little whisper, rumor, not truth, but Bank of New York was talking to Northern Trust of Chicago, a regional bank, about a potential merger.
01:13So what I went back and I did is I looked, when's the last time we had a clean merger?
01:18When I say clean, I mean a bank that didn't need to be saved.
01:22Like when you look at the Signature Bank and the regional banking crisis we had in the early 2020s, or going back to like an old-timer like me, the regional banking crisis, when we had Lehman and Bayer go under and people merge out of necessity.
01:34We've only had one, and that was 2019.
01:37That was Truist, which was formed by SunTrust and BB&T.
01:41And that was a $60 billion deal.
01:44And since then, nothing.
01:46We didn't have a clean merger since 2006.
01:49Ironically, BNY involved in that.
01:51They took over Mellon, BNY Mellon, Pittsburgh Bank.
01:54So to me, when you talked about this administration coming to power, there are going to be more M&A activities.
02:00Well, where has there been no M&A activity?
02:03It's in the regional banks.
02:04And then I look at one of the fintechs in the regional banks, SoFi, SoFi breaking out.
02:09So that one looks good technically.
02:11The others are just coming back above their 200-day moving average, have room to run to highs, like a PNC, an M&T bank.
02:17So I just am excited about this sector, especially from a risk-reward point of view, because I think the worst is behind them as far as we go.
02:27And then what else has happened?
02:28Rates.
02:29Rates have been stable.
02:30Okay, that's great.
02:31We may cut rates.
02:32That's a good tailwind as well.
02:34Tell us some names, regional bank names that you would buy right now.
02:37All right, PNC Bank, M&T Bank, SoFi, those are my top three.
02:42Think about the ballparks, you know, the Comericas of the world, Truist, where the Braves play.
02:47These are solid names, and these are names that I think will continue to do well over the coming term.
02:53Would you buy any of the big banks?
02:54Because those are trading at or near all-time highs.
02:57That's what I like to do, is I like to buy the strength.
02:59And, of course, JPMorgan, Goldman Sachs, they've gone on tremendous runs.
03:03Now, here's the thing.
03:04You're not going to time them well.
03:06I would rather wait for a pullback than the chase of Goldman and JPMorgan after the runs they've had over the last six weeks, you know, to end the quarter.
03:14And there are levels as a technician where I think any pullback in one of these names is good.
03:19But these are great long-term names, and I think that the road for the next two years is set for them to continue to be the leaders in this market.
