Money-center banks appear to be outperforming the brokers. Is there a trade here?
Jeffery Harte, Managing Director at Sandler O'Neill joins the panel for this conversation. Following is a summary of his main points.
Are big money center banks the greatest beneficiaries of cheap money and will that drive their performance over time?
I think expanding the interest margin is a good thing for them however the rising credit costs will off-set that benefit, explains Harte. If you want to dip your toe in the water I would advise caution because there are sharks in that water.
I think investment banks offer more attractive opportunities, says Harte, because they probably have a lot of pain behind them, simply due to the accounting techniques they use.
Quality of management is something to consider too, adds Harte. Check out U.S.Bancorp and JP Morgan . (Harte has a buy on JP Morgan.)