AAII survey, often a good contrarian indicator, finds just 17.16% are bearish. That's an unusually low figure often associated with tops and almost never associated with the early stages of a bull run. (See results at aaii dot com on the home page.)
The banks are masters at figuring out how to make money. That is their jobs. The other thing that is in their favor is that they are not held to the same degree of balance sheet disclosure that other public companies are held to. When it comes right down to it...they can post a profit any time that they desire by manipulating their off-sheet balance, delaying losses, and any other of a dozen ways of balance sheet manipulation.
34? I've been patiently waiting on a pullback this past month to buy some WFC.
The banking industry is changing, including the way banks make money. If they aren't making money in the typical fashion we're used to seeing, they nickel and dime customers with various fees. Our division has been increasing fees and commissions for selling shares. We've also instituted a few other fees that never used to exist. This is in addition to company wide cost cutting measures which continue to be a priority. I'm not saying that banks will move forward with high growth, but they will still make good profits. Even with the recent jump of stock prices for financials, I still think the better banks are a buy. My price target for WFC is 34. That's where I will be looking to sell all of my shares.
From what I'm seeing it isn't a matter of not being able to finance their lives anymore, they aren't even trying to. They don't want to. They want to get out of debt, not deeper into it.
I'm not sure I agree with your logic on the banks. For years they have borrowed money from depositors at 0% and lent it back to them at more than 10% on their credit cards, but now the depositors are taking their savings and using them to pay off their credit cards thus earning themselves 10% or more while the banks get zip.
The banks are still borrowing from the Fed and lending to the US Treasury, but I can't help but wonder how much longer their regulators and/or boards allow that after seeing what is going to happen to the European banks.
Quite frankly I'm not sure how any of these banks will make any money at all between the new regulatory environment, depositors pulling savings out to pay off debt, and the recognition that sovereign debt isn't risk free. Banking doesn't look like a great business going forward to me.
A year ago we talked about this exact occurrence involving the housing market. This circumstance will most probably mean that we will see another QE blast this year. In the meantime, the stock mutual funds continue to show a large withdrawal of $ from the market. Probably for the same reasons that MJ has quoted...a combination of risk aversion as well as folks trying to support an unsupportable lifestyle formerly supported by refinancing homes. Either way we are seeing lower demand for equities and lower multiples for now.
I don't know how the Fed would justify another round of QE to boost the housing market when the first couple of rounds did absolutely nothing to help it. There are lots of problems for housing, but rates being too high isn't one of them, so unless the Fed intends to print money to actually buy houses and then burn them down to eliminate the glut I don't see another round of QE helping.