What if the banks are really back? What if they begin to get revenue growth? What if they can control expenses? What if they are actually able to raise some fees? What if some of the big black eyes are now vanishing?
Do you know that every single one of those traits have been on display today? It was a show of firepower for this beleaguered group that shows there's some hope for a next leg of rally based on these well-behind-the-market stocks.
When was the last time you heard that you can rein in the expenses at these places beyond firing people? But the bonuses are down across the board, down 14% last year alone and there is such a surfeit of talent out there that I don't see bonuses roaring back any time soon.
How about Bank of America (BAC) putting through some new fees to recoup the cost of the modern-day customer who wants more and wants it now? The last time Bank of America tried to raise fees, it was an ignominious failure, and it made us feel that it just can't happen. We then chose not to even think it could happen because of what amounted to a social media uprising. Now it looks like Bank of America has figured out a way to get away with it.
If the fees stick, I can't even imagine how much money the company can make or how much Wells Fargo (WFC), JPMorgan Chase and U.S. Bancorp (USB) could take in with a fee jump. I thought fees would have been raised already to offset all of the new demands and costs tacked on for banks. Now it seems to be happening.
How about the fact that Goldman Sachs (GS) got a notice from the government about a civil investigation of the way that the firm sold mortgage bonds? There was a time when we would have seen Goldman Sachs open sharply lower and stay lower. Not this time, the stock's rallying. It's now trading above tangible book value and is breaking out.
Or consider that there's loan growth for the first time in ages, particularly commercial real estate loan growth. That's been a real weakness in this economy but now it seems to be happening. That's where a lot of money can be made for banks -- particularly the regionals such as SunTrust (STI), which Action Alerts PLUS started buying for my charitable trust, First Horizon National (FHN) and BB&T (BBT), franchises that need the revenue growth that comes from commercial loans to power their stocks higher.
Finally there's the prospect (at last) of homes no longer sinking in value. We got some data today that show foreclosure sales starting to drop as a percentage of sales. Foreclosure sales have kept a lid on prices. You clear them up, then the vast inventory of homes that this group owns can finally be marked up, not down, and the vast resources that have been devoted to foreclosures might actually diminish.
This group is underowned. It is hated. The time may be coming when both trends reverse and you can make more than just the tiny incremental gains we have had so far. In short: Stop selling the banks; start buying them.