Public trading strategy
Banks unleash $50B buyback as tech crumbles — rotate into financials
Thesis
The Fed's annual stress test cleared all 32 large banks, unlocking billions in buybacks (JPM's $50B) and dividend hikes (GS). Meanwhile, the AI-driven tech rally is unraveling, with the Nasdaq sliding on a global semiconductor sell-off. Add in Trump's calls for rate cuts despite 4% inflation — which steepens the yield curve and boosts bank profits — and you have a powerful rotation setup. Investors fleeing volatile tech are likely to pile into the safety, yield, and capital returns of major banks.
Strategy approach
Build a rotation strategy that enters long KRE when the XLF:XLK ratio crosses above its 20-day moving average and JPM is within 3% of its 10-day high. Exit if the ratio falls below its 10-day MA or after a 30-day max hold.