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While hedge funds may be front-running earnings reports , it’s not a great idea for the retail investor — especially not when it comes to bank earnings, David Katz, chief investment officer for Matrix Asset Advisors, warned. After Citigroup and Wells Fargo earnings came in better-than-expected, investors are wondering whether other big-name banks will follow suit.
Even if they do, investors shouldn’t bet on a share price pop, Katz said. “The market has been schizophrenic. For the last two to three quarters, regardless of earnings beats, bank stocks have either traded lower, or not really had an uptick,” Katz told CNBC’s “Squawk on the Street.”
The latest examples of this “schizo” market came in just last Friday: Wells Fargo reported a 17 percent profit increase in the second quarter on strong mortgage banking income — but shares wavered on the news and edged down in Monday morning trading.
Separately, JPMorgan Chase’s earnings report — losing $4.4 billion in the second quarter, followed immediately by a 6 percent share price jump on Friday — almost defied logic. Whether the cause was short-covering, or other factors, the move surprised the Street.
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