Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How JPMorgan and Bank of America Are Outperforming Big Tech in June 2026
Transcript
- Lucas: So the Nasdaq dropped over five percent this week, the S&P 500 down nearly three — and yet JPMorgan is up more than five percent. Bank of America up five. Berkshire Hathaway up nearly four. It's a strange market. Luna: Strange but not unprecedented. We've seen this rotation narrative before — growth gets too expensive, money flows into value. But the magnitude this week is striking. Lucas: Right. And the catalyst seems pretty clear: Friday's jobs report. The economy added way more jobs than expected, wages ticked up, and suddenly the idea of a Fed rate cut this summer evaporated. Luna: Chair Warsh basically said as much. Higher for longer is back in the conversation. Lucas: Exactly. And for banks, higher for longer is actually a tailwind. JPMorgan's net interest income — the money they make on the spread between what they pay depositors and what they charge borrowers — that number has been expanding. When rates stay high, that spread widens, assuming deposit costs don't rise too fast. Luna: And so far, deposits have been sticky. People aren't demanding 5% on their checking accounts. The big banks have been able to keep their cost of funding relatively low. Lucas: That's the key. JPMorgan reported first-quarter net interest income of something like twenty-three billion dollars, up eleven percent year-over-year. Bank of America was similar. Meanwhile, Microsoft's cloud growth is slowing, Nvidia's facing export restrictions, and Amazon's margins are getting squeezed by AI infrastructure spending. Luna: So the market is punishing the high-expectation stocks and rewarding the steady earners. It's almost like a return to fundamentals. Lucas: If our money conversations have helped you think about a decision differently — maybe you rebalanced your portfolio, or you started paying attention to net interest income — we'd love for you to consider supporting the show. Luna: We deliberately don't run ads. That's a choice. And listener support is what keeps it that way. Lucas: If that matters to you, the link is buy me a coffee dot com slash fexingo. No pressure. And back to the banks. Luna: So is this a genuine rotation or just a one-week fluke? I mean, the S&P 500 is still up for the year. Tech has had an incredible run. Lucas: I think it's too early to call it a full rotation. But the data is worth watching. The value ETF, VTV, is actually up this week while the S&P is down. That's not nothing. Luna: And the Russell 2000 — small caps — also down less than the big indexes. So there is some broadening out. Lucas: Let's look at JPMorgan specifically. They're trading at around twelve times forward earnings. That's cheap relative to the market, which is at twenty-one times. And they're generating massive free cash flow. They're buying back stock, raising the dividend. Luna: Bank of America is even cheaper — around eleven times earnings. And they have a huge deposit base, so their funding advantage is real. Lucas: Now, the risk is if the economy slows and loan losses spike. But the jobs report suggests we're not there yet. Consumer balance sheets are still pretty healthy. Luna: And if rates eventually do come down, banks could benefit from increased loan demand. So it's not a bad place to be either way. Lucas: The big tech selloff has been brutal this week. Microsoft down nine and a half percent. Nvidia down eight and a half. Tesla down six. Amazon down nearly six. Some of that is profit-taking after a huge run, but some of it is genuine concern about valuation and growth sustainability. Luna: Nvidia's drop — eight and a half percent — that's notable because they've been the poster child for AI. But there's talk of export controls tightening, and competition from custom chips like Broadcom's. Lucas: And Microsoft's cloud growth is slowing as enterprises digest their AI investments. So the market is punishing any sign of deceleration. Luna: Meanwhile, banks are showing steady growth, low volatility, and they're returning capital to shareholders. It's almost boring, but boring can be beautiful. Lucas: I want to put a number on it. JPMorgan's return on equity is around seventeen percent. That's best-in-class. Bank of America is around twelve. Both are well above their cost of equity. So they're creating value. Luna: And Berkshire Hathaway — up nearly four percent this week — that's partly because they own big stakes in both banks. So when banks rally, Berkshire rallies. Lucas: Berkshire is also buying back its own stock aggressively. They've spent over ten billion this year. That signals that Buffett thinks the stock is undervalued. Luna: So the question for listeners is: do you chase the momentum in banks, or wait for a pullback? They've already had a good run this week. Lucas: I'd say look at the dividend yields. JPMorgan yields about two and a half percent. Bank of America yields about two point three. Not huge, but growing. And with buybacks, total shareholder yield is closer to five or six percent. Luna: That's competitive with bonds. Especially if you think rates stay higher. Lucas: Right. The ten-year Treasury is yielding around four point three percent. But that yield is fixed. Bank dividends grow over time. Luna: So what's your takeaway for someone building a concentrated portfolio? Should they consider adding a bank? Lucas: I think it depends on your timeframe. If you're a long-term investor, banks are cheap, they're well-capitalized, and they benefit from a strong economy. But they're not growth stocks. You're buying stability and income. Luna: And if you're worried about a recession, you might want to wait. But the data right now doesn't suggest a recession is imminent. Lucas: Exactly. So maybe the takeaway is: don't ignore the old economy. The market is reminding us that there's value outside of big tech. Luna: It's a healthy reminder. Diversification still works. Lucas: Alright, that's our show. Next time we'll look at another corner of the market that's quietly working. Luna: Until then, keep picking stocks.