I need the quick rundown on Dick Bove. I’ve been talking shit about him for well over a decade. I always remembered him to be the guy who told everyone to buy banks while the credit collapse was in full swing. This guy was like the devil in 2008, hemming and hawing, talking about Bear Stearns being a great company and how Lehman could never go bust. Everything he said was wrong and he’s always been bullish. But now he’s a bear. What the hell happened to him?
He’s talking greasy, comparing this market to the one in the 90s that nearly killed me when emerging market debt shit the bed, sending stocks down 30%.
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“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.” “I think that the risk in these stocks is very high at the present time.”
Bove’s latest thoughts come just days before bank earnings season begins. JPMorgan Chase and Citigroup kick it off on Thursday when they report third-quarter numbers. Bank of America and Wells Fargo results are scheduled for Friday.
The big banks index, the SPDR S&P Bank ETF, has surged 12 percent in just the last four weeks.
Bove argues the rally isn’t justified by the latest numbers.
“If you go through the different products that the banks sell, just about every one of them are flat to lower in growth than they’ve been for at least a couple of years,” he said.
Despite his qualms, Bove is keeping his buy ratings on several of the largest banks — JPMorgan Chase, Bank of America, Citigroup, PNC Financial and First Republic. He advises investors to Wells Fargo and hold Goldman Sachs.
He predicts the newest results for financial firms will likely be “mediocre” at best. CEO comments on benefits of potential tax cuts out of Washington could create near-term positive buzz, according to Bove.
Bove’s conundrum? He said there’s no indication when a deep sell-off could happen.
“I think you just have to go with the flow at the moment,” Bove said. “The outlook again from the fundamental standpoint is not exciting, not positive, but the market doesn’t care.”