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Steven Kiel
Steven Kiel
Articles (136)  | Author's Website |

Friday's Daily Value Overview: TRV, T, BAC, C, JPM, WFC, GS, TX

The week has come to an end, mercifully so if you're a long and fully invested. If you had some cash on the sidelines, hopefully you're using this drop to find some bargains out there. In today's edition I'll be touching on Travelers (NYSE:TRV), ATT&T (NYSE:T), Bank of America (NYSE:BAC), JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Citi (NYSE:C), Goldman Sach (NYSE:GS), and Ternium (NYSE:TX). The market flipped again after yesterday's bounce, but there were some pockets of strength, especially in the financials this afternoon.

OPEC is under pressure a day after what was described as one of the worst meetings in its history. In a growing split between Iran and Saudi Arabia,the Kingdom gives a show of strength by deciding to openly announce their intentions to pump 10 million barrels per day. Usually when they have a disagreement, Saudi Arabia quietly raises output. Saudi Arabia may have capacity, for now, but Iran is well on its way to having the bomb. Along with a strong alliance with Venezuela, Iran must be feeling heady these days.

What does this mean for the price of oil? If drilling will ever be allowed to increase in the Gulf of Mexico, lower prices (and more U.S. jobs in the oil and gas industry) may finally be the jolt that will put the economy on firm footing.

Travelers (NYSE:TRV) could be portending a harder insurance market by announcing a reduction in their share buybacks to less than $250 million. Take a look at the article at Property Casualty 360. Travelers has been hit hard by the tornadoes and other storms in the U.S. over the past two months. Couple that with the disasters throughout the world going back to last fall, and capacity may finally be leaving the market. Travelers has cut their EPS guidance for 2011, as would be expected. If insurance rates show a sustained rise, we could start to see expanding valuations for property casualty insurers. It would be about time.

Politico reports some interesting news out of the AT&T (NYSE:T) merger. Apparently some non-profits who have received a substantial amount of money from AT&T through the years have come out in support of the merger with T-Mobile. While that in and of itself wouldn't be unduly suspicious, these backers seem to have no vested interest in the merger. Of course all parties deny anything untoward, but how about some of these organizations? The NAACP wrote to the FCC in support, as well as GLAAD and the Columbia Urban League. The NEA has also come out in support. The common link is that all of these are liberal organizations and appear to be putting pressure on Democrats. A local NAACP Chapter president had this to say, “One of the unique things about the NAACP is that financial support does not determine our civil rights positions." My response? Yeah right. What does this merger have to do with civil rights?

Well-known bank analyst Richard Bove came out yesterday to say that he believes Goldman Sachs (NYSE:GS) is being set up as a fall guy for the entire financial crisis. Certain influential members of Congress and the administration certainly are looking for a boogeyman, and they seem to believe Goldman is the perfect character.

Unfortunately, the story isn't playing out as intended. Goldman didn't make a killing on shorting housing and, even if they did, they wouldn't have known it at the time they made the bet.

Anyway, don't let facts get in the way of a good story. Goldman ain't perfect, and I'm not here to defend them, but the more vilifying we do of banks, the longer it will take for the economy to recover. Along those lines, check out the data on credit card charge-offs. It continues to improve and is now at the best level in nearly two years. That should be a silver liner to to this miserable day in the market. Bank of America (NYSE:BAC), JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citi (NYSE:C) should be recipients of this positive news, but this morning they were leading the market down. Only did they all turn around after reports came out that the Fed is now looking at lower capital leaves for the major banks. At any rate, Goldman shares have been doing fine all day, and led all the major banks in the afternoon.

If you haven't had the chance to check out the other articles on GuruFocus today, I recommend CanadianValue's article about Mohnish Pabrai. He talks about Pabrai's investment in Ternium (NYSE:TX). It's always interesting to read an analysis of a closed position.

I hope you enjoyed the daily updates this week. If you like what you've read, please consider following my RSS feed or the GuruFocus follow by hitting the buttons on the upper left hand corner of the screen, under my name. Until Monday, enjoy your weekend.

Disclosure: Long BAC

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GuruFocus has detected 4 Warning Signs with The Travelers Companies Inc $TRV.
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