Richard Bove is the bank equity analyst at Rafferty Capital Markets (http://raffertycapitalmarkets.com). He is a longtime friend and is as distinguished and seasoned a bank analyst as anyone I know.
This morning, he put out a research note that gave me pause. We thank Dick for permission to share this with our readers:
The United States banking regulators believe that they are operating in an environment whereby nothing they do will be criticized and there will be no negative reaction from any source. This is clearly correct for actions they take in the United States against U.S. banks.
It is not true when the regulators attack foreign banks as they did BNP Paribas. One reaction is that France is now about to charge a division of JPMorgan Chase with criminal activities. This could be the beginning of a wave of attacks by foreign governments against U.S. banks in a “tit-for-tat” atmosphere.
The broader reaction of course was when these foreign governments specifically ignored a request by this government to not join the AIIB, China’s new World Bank. Every major government in the West joined; Japan was the only country that heeded the U.S. request.
The “Ugly American” is back and s/he is part of the bank regulatory authority. U.S. banks could pay additional heavy penalties for this.
At Cumberland, we are currently over weight the financial sector, including banks. We shall see how this warning by Dick Bove plays out. That said, I have followed Dick Bove’s research work for decades and respect this warning. It is coming from a very seasoned and experienced professional.
About The Author
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About the Author
David R. Kotok cofounded Cumberland Advisors in 1973 and has been its Chief Investment Officer since inception. He holds a B.S. in economics from The Wharton School of the University of Pennsylvania, an M.S. in organizational dynamics from The School of Arts and Sciences at the University of Pennsylvania, and a masters in philosophy from the University of Pennsylvania.
Mr. Kotok’s articles and financial market commentary have appeared in The New York Times, The Wall Street Journal, Barron’s, and other publications. He is a participant in Bloomberg radio programs. He is a frequent contributor to CNBC programs, including Morning Call, Power Lunch, Kudlow & Company, Squawk on the Street, Squawk Box Asia, and Worldwide Exchange. He co-authored the book Invest in Europe Now!
Mr. Kotok currently serves as a Director and Program Chairman of the Global Interdependence Center (GIC) (www.interdependence.org), whose mission is to encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards. Mr. Kotok chairs its Central Banking Series, and organized a five-continent dialogue held in Philadelphia, Paris, Zambia (Livingstone), Hanoi, Singapore, Prague, Capetown, Shanghai, Hong Kong, Rome, Milan, Tallinn, and Santiago, Chile. He has received the Global Citizen Award from GIC for his efforts.
Mr. Kotok is a member of the National Business Economics Issues Council (NBEIC), the National Association for Business Economics (NABE), serves on the Research Advisory Board of BCA Research, and is also a member of the Philadelphia Council for Business Economics (PCBE).
Mr. Kotok has served as a Commissioner of the Delaware River Port Authority (DRPA) and on the Treasury Transition Teams for New Jersey Governors Kean and Whitman. He has also served as a board member of the New Jersey Economic Development Authority and as Chairman of the New Jersey Casino Reinvestment Development Authority.
Mr. Kotok hosts an annual Maine fishing trip, where, it is rumored, most of the nation’s important financial and economic decisions are actually made.