Not All Banks Are Created Equal

Alexis Glick and company on Fox Business Network’s Money for Breakfast remarked at the fact that banks stocks which generally trending higher these days were not moving together in the premarket. Bank of America (BAC) and Citigroup (C) continued on their tear as BofA was actually above $15 per share, up 11% prior to the market open, while Morgan Stanley (MS) and Wells Fargo (WFC) stocks were pointing toward a negative open.

“Markets now are to the upside both here and overseas. It is worth pointing out that all banking stocks are not created equal however if you look at what might be up and might be down today. Look for big gains for example out of Bank of America. Look at that, above $15 in premarket trading for BofA. This stock had been running up ahead of the stress test, Citigroup same deal, up to $4.25 a share. Some other banks that need to raise more capital the likes of Wells Fargo have not been trading quite as positively this wells to the down side, down from $24.76 close. Morgan Stanley also been trading lower than $27 and change that it closed at. Not an across the board move higher but we do see very big moves in the likes of Bank of America we are on top of it all day long here on Fox Business.” Fox Business’s Money For Breakfast 5/8/2009.

Now that the market has opened and is off from its highs just after opening, so too are all of these stocks. The fact remains that Bank of America and Citi continue to head higher while Morgan Stanley and Wells Fargo are not. Certainly some of this is due to the fact that MS and WFC announced secondary offerings, but Citi and Bank of America will soon need to do the same and in BofA’s case on a much bigger scale. The argument could be made that both BofA and Citi were extraordinarily oversold coming into this rally and they are benefiting from a return to more normal valuations. It is also plausible that these two stocks were some of the most shorted in the market and we are seeing a massive short covering rally at the moment.

Interestingly, Bank of America has been in the headlines more than pretty much any other stock recently, and they are outpacing Citi, hugely over the last 13 weeks (3 months). BofA in the time is up 125%, while Citi is just about even.

Money for Breakfast: Not All Banks Are Created Equal

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