Mar 20, 2012|
Jeff Reeves from InvestorPlace.com discusses AIG and JPM.
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Well you know highly tuned in charge of the stock markets out of it and sell enough I wish I wasn't charged that this guy Smart and it. Like a little piece of each trader at. All right well have a Dow down 87 points the NASDAQ it's two pounds when he -- -- -- and 500 down eight. Gold is down seventeen dollars sixty cents oil down a dollar 91210618. Well building permits were up than you think that would have felt yeah now -- in. You need you would think a let's go to our next guest is name's Jeff reads from investors placed dot com Jeff how's it on. Program -- relative good I wish I'd bought this stock before the market opened the market's down. Yet actually I guess rarity old some of the stock it's AIG and as a taxpayer don't I own part of AIG. Yeah pat I yeah I we all of bit edgy actually get that -- treasury Agrigento unchecked without actually had daily -- updates. And you can figure out in actual dollars and cents while we know. A lot these companies go out to what we've paid out. It's so far out that 68 billion dollars that we. Just -- -- about 44 billion remain outstanding so yeah yeah I'll be today actually. 44 billion is what the the taxpayers own of AIG or is that just -- that would remain outstanding and on yeah according to tracker. Still it's at 52 billion dollar company they're making money right nine dollars and 44 cents how much longer does this is one of the banks. That's did not pass the stress test so how much longer does this company need to rehabilitate itself. Well I think I'm. I'm I'm glad we're back on the docket I think it's a big lift for vouchers -- content up almost 20% year to date. I think people people been -- -- gadget of the woods and there's some big strategic problems with the company I think that. I got a -- gravelly develop -- -- -- -- to try to pay back some of the government so far some of the China operations which were growing. But you can only about how much your business for -- -- -- with a company and its channel. But I'm I'm most concerned with the fact that the recent earnings report. It kind of looked good the people fourth quarter fiscal fourth quarter with nineteen point eight billion dollars in profits but if you look at the details. Seventeen point seven billion those profits. Executive particular spreadsheet -- it's actually -- tax break for -- losses that they incurred so. All the money you think that -- political making black and not making money at all I mean there are profitable -- -- -- in the -- but you know roughly you know 80% of their profits was just from a tax break itself. I don't believe that stocks rallied 20% on their -- to people really need to. You know be aware of what's going on at Yankee they're selling not a business in many respects there's been -- -- last week. The most volatile parts of the business continues to get a good price for being backed government in -- earnings partly also. Yeah let's go back and -- are. Yeah let's go back -- I would -- while wanna go back slowed down just a minute here you said the price to earnings ratio is really artificial because it showing up on my screen. As being 31 but you're saying the EU the earnings -- artificial due to a tax break is that correct. Yet those those are not I mean they're gonna last for a little while because it's strangely enough but 11 of our rather pleasant legislators wrote in TP. The bailout package that they're gonna get out and tax breaks in the next couple years so some of that. You know political pocket it's going to be there but the bottom line is that funny money doesn't -- that means if you get a tax return that's. You know 151000 dollars you can tell your friends that counts -- your earnings for the year -- -- -- earned that money to attract the tax code and all legislators if you know they're getting more and more upset with the fact that we had its yawning deficit companies -- -- You know -- away actually shouldn't be -- AIG we irrigate for the bailout giving them seventy billion dollars and I'm sure. And actually I'm gonna close this loophole that it's going to be very painful for AIG -- do. All right -- your bearish on AIG do you feel the same way. About JPMorgan JPM. No actually the threat I think -- pretty telling I think that for awhile financial stocks kind of -- locked up together but I think increasingly we're seeing if there's good bank bad bank obviously Citigroup. Not a good bank JPMorgan I think it's probably the best example a company that's done things right. -- -- it's still had some problems like off financial stocks student regulations you know low rates cannot let the spread between what -- deposits and interest they charge on loans split apart from that. I mean. In America and actually -- some really really true five in about the financial crisis on you know they actually were more conservative -- have it appears they could make a buyout of Bear Stearns and Washington. Individuals to really -- operations. You know and I believe over the long term there is gonna be economical to actually -- -- the next six to twelve months but. When it turns around JPMorgan gonna be buried in the meantime you can -- two point 8% dividend yield on Cochran magistrate David and they're gonna do fifteen billion dollar buyback stock up on -- -- -- -- kind of -- in the short term obviously due to regulations since -- just the general risks to financial -- I think in the long term. JPMorgan's -- about the financial packed up and I think investors can really be happy with that level a couple of years. What do you think it's worth two years from now if you pay 45 dollars a share for today you get to two point 7% dividend. Couple years out Jeff what do you think the stocks worth. Well you know if you look back at JPMorgan it would actually valued at around 45 baucus. Spot in 2007 before I actually pulled in Washington Mutual Bear Stearns and -- -- and a double from here. But I definitely think you can get up into the seventy dollar range and stock that you're you're you're you're geologic intact America and commercial retail that the retail banking operations and once the economy comes back I think it is very likely that JPMorgan is gonna shoot out. I think seventy is an outsider there a possibility but again gap that helped out in the broader economic terms what happens. All right now you like JPMorgan better than AI GD also like it better than Bank of America. Yeah I mean it's not funny -- Citigroup has. There's probably liking the group right now because so long time. Bank of America it's kind of gently tapped out of the of the financial sector but figured -- not helping strap I think they're being kicked around recently. We both of those banks there are serious trouble. What accounts to their turbulent capital requirements and you know all these regulations that way. On finding the financial industry as a whole but you don't have pleasurable it's necessary to kind of proves that you have a cushion in case of crisis. And let's be honest I mean. -- the prospect of war with Iran crisis may happen. You know whether or not you believe that it's gonna hit the spot he's next ailing -- -- The bottom line is if you have a big enough cushion back in America or Citigroup -- going to be in dire straits I think investors should take at the heart of what side of the gonna go under tomorrow. But they don't have the -- they don't really kind of perform well. Sorry Jeff thank you very much for your time appreciated as always. Now we're back -- Jeffries from investors placed dot com joining us today he doesn't like AIG but he does like JPMorgan Chase.