Still, Mayo said the stocks have further to go. He cited last week's jobs report, which saw the economy addinstead of shedding more like many expected, and increasing consumer loans as reasons to be bullish, among other data points. The early signs of a possible economic recovery make it less likely that the banks will face a serious crisis of their own, Mayo said.
"There's less chance of that extreme tail risk, and at the same time anyway banks are resilient and are able to absorb the body and still grow book value and still support the economy," he said. Wells Fargo increased its price targets on all the banks it covers last week, with Mayo telling CNBC that larger banks were in aOn Monday, he said the economic restrictions and stay-at-home orders implemented to slow the spread of the coronavirus have forced customers to use digital banking tools, which is an advantage for larger banks that have been able to invest heavily in that area.
"Retail customers have been jolted out of the bank branches and forced to use digital banking ... that's going exactly where banks' strategic plans have been going. So in the last two months, you've accelerated the digital acceleration of the banks by two to five years," he said. In a note released Monday, Mayo wrote that investor feedback to Wells Fargo since last week's call to raise price targets indicated a willingness by clients to take larger positions in bank stocks.
They are at full valuation for the most part at 1.6-1.9X book value. Loan loss reserves are rising, corporate defaults are increasing and the stress tests due out later this month put many dividends at risk. And oh wait, there’s COVID - which is blooming in states that reopened
Key graph in story, a.k.a “burying the lede: “In a note released Monday, Mayo wrote that investor feedback to Wells Fargo since last week’s call to raise price targets indicated a willingness by clients to take larger positions in bank stocks.”
First Housing , now it's auto loans ! What next ?
that's crap. their barely suriving even with all the Fed. stimulus money.
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