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Bullish, Despite Rough (Oil) Patch

12/19/2014
By Charles Payne, CEO & Principal Analyst

Despite a rough two-week patch, Wall Street is feeling bullish, too. In fact, according to Barron's, there is not a single Wall Street strategist that is not bullish. Talk about the herd mentality; look at the estimates for the S&P 500, S&P Earnings, and the Gross Domestic Product (GDP) Growth. The eyes of most needles have wider spaces... these guys and women are on the same page.

Wall Street Forecast  2015

S&P 500

S&P Earnings

GDP Growth

Federated Investors

2350

$130

3.5%

JP Morgan

2250

$127

3.0%

Barclays

2100

$125

2.9%

Citi

2200

$128

2.95%

Columbia Management

2200

$127

3.0%

Morgan Stanley

2275

$126

2.9%

Blackrock

2160

$132

3.0%

Prudential

2250

$127

3.0%

Goldman Sachs

2100

$122

3.0%

Bank of America

2200

$124

3.3%

For the record, I think the Federated strategist is probably going to be the closest -I'm at 2380- after a year that sees an increased capex spending, higher wages, and the benefits of stable fuel prices.

Oil Impact & Contagion

With oil down 50% in a flash, it is easy to say in hindsight that it was in a bubble all that time; how can any bubble burst and not have any implications throughout the investing world? What if there are “Good” and “Bad” bubbles?

Banks with the greatest exposure to energy loans as a percentage of total assets have taken it on the chin big time since November 10th.

However, it looks like the bank stocks that were hit the hardest are those where energy loans are 3% of total assets or greater. Many of these are regional hot spots and until a few weeks ago, they were riding a heck of a wave... now they are drowning.

Banks Hit By Energy 

Nov 10

Dec 15

HBHC

$35.23

-16.5

BOKF

$68.64

-18.5

CFR

$81.44

-14.6

CMA

$48.41

-7.2

ZION

$29.67

-10.6

PB

$60.68

-12.3

We are working on a breakdown of the energy patch for those names that should be bought first when crude hits a bottom -or appears to be hitting a bottom. In fact, it may drift for some time and it could be acceptable, but the wild gyrations are adding excessive pressure on producers and on all names in the food chain.

Charles Payne
Wall Street Strategies


 

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