Strategist: Low Rates, Strong M&A Good For Brokerages
By: Jason Trennert says that people looking at the past week's whipsaw market are looking at the wrong things -- at least, when it comes to the health of big brokerage houses. The chief investment strategist of Strategas Research Partners joined "Closing Bell" to weigh in on the Wall Street giants.
Trennert told CNBC's Maria Bartiromo that fears of a "contagion effect" from factors such as the subprime credit crunch are "premature."
He took on CNBC's Ron Insana, who mused that many analysts think subprime is too small to hurt the overall market -- "but they said the same thing about the Thai baht." Trennert maintained that the size of the subprime subsector is beside the point: The three factors that drive brokerages are interest rates -- similar to housing -- trading volume, and mergers and acquisitions. And Trennert declared that long-term rates are low, M&A has been "very strong," and trading volume "pretty good."
The strategist is overweight on financial stocks, and calls private equity also "very favorable" for brokers. He told Bartiromo, "I'd be a buyer on weakness."
