‘Money Explosion’ Drives Dick Bove to Upgrade JPMorgan to Buy
‘Money Explosion’ Drives Dick Bove to Upgrade JPMorgan to Buy
(Bloomberg) -- Odeon Capital’s Dick Bove upgraded JPMorgan Chase & Co. to buy from hold, citing a “money explosion” in the past few months thanks to aggressive moves by the U.S. Federal Reserve and the government, including new loan programs and the $2.2 trillion pandemic relief law called the Cares Act.
Those steps have led to an “incredible amount of money around,” with “money-making opportunities for bankers,” Bove wrote in a note Wednesday. That contrasts with the likelihood of rising loan losses, capital issues and potential dividend cuts across banks, and makes JPMorgan an attractive investment, he said.
Bove also flagged the bank’s “startlingly strong” operating numbers in the past 60 days, with deposits data at the end of the first quarter indicating JPMorgan has 11% of the nation’s money supply deposited in its bank, while loans industrywide grew by $825 billion, or 8.2%, with about 89.7% of the new loans in the commercial and industrial sector, he said.
“The vast majority of the other banks in the country lack JPMorgan’s strengths and diversity and we remain cautious concerning their results,” Bove added.
JPMorgan rose as much as 4.2% Wednesday in New York. Other big banks climbed as well, with Bank of America Corp. advancing as much as 3.5% and Citigroup Inc. as much as 4.2%. Stocks gained across the board as investors keyed in on signals the American economy will continue to reopen and retail earnings showed signs of resiliency.
JPMorgan and other banks have underperformed the broader market since Feb. 20, when concern about Covid-19 began accelerating. JPMorgan has tumbled 33% since then, versus a 12% decline for the S&P 500.
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