Weak jobs report kills rate-hike fears just as JPMorgan launches a record $50B b
Thesis
June's jobs report came in at roughly half the expected number, which immediately cooled fears of further Fed rate hikes. When rate-hike fears ease, financial stocks tend to rally because a steeper yield curve and stable economy support their lending margins. Layering on JPMorgan's massive new $50 billion buyback authorization, the bank has both macro tailwinds and an unprecedented amount of share-repurchase firepower to push its stock higher. This combination of a weak jobs report (good for stocks) and a massive capital return program creates a strong setup for the biggest US bank.
Strategy approach
Build a rule-based strategy that enters long JPM on D1 when the 10-Year Treasury Yield (TNX) drops >3% in 2 days and JPM is within 5% of its 52-week high. Exit if JPM closes below its 50-day moving average, or hold for 45 days.