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Veteran banking analyst Richard Bove recommended taking short-term profits in US banking stocks as he expects a pullback in share prices, and said fundamentals for the sector had not yet improved.
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These stocks are trading on "fumes" and not reality, the Rochdale Securities analyst said referring to the recent rise in banks' share prices.
The recent rise in the stocks does not appear to be driven by a change in the near-term earnings outlook, but by a change in psychology, he said.
"The rational investor would step away from psychology at this point and take some profits," he said.
Bove said bank earnings will not improve in the third or even fourth quarter this year. "Many of these companies will show losses," he said.
However, he maintained his view that the banking industry is attractive in the long-term.
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