Also, he sees some tailwinds in the way of low interest rates which Kass calls, “a silver lining for the banking industry.” And he says franchise values are enormous relative to the current stock prices.
And despite all the headwinds such as the flat yield curve and weakness in real estate, he thinks there’s still plenty of money to be made in lending, plain and simple.
”If investors begin to focus on pre-tax income and recognize how strong and sustainable the numbers are they’re soon realize bank stocks are at absurd levels relative to their earnings power one to 3 years out.”
And Kass’s enthusiasm for stocks isn’t limited to the banking sector. He says it extends to the entire stock market.
”I said on Fast Money that the August lows will hold and I still believe they will,” he says. “I see no evidence of a double dip.”
Kass explains that a lot his ‘tells’ or gauges of real time activity are holding up just fine.
The Conference Board’s Leading Economic Indicator is up 6.2% year over year, and “usually we don’t have a recession until it’s negative.” Kass says the same holds true for retail sales. “The Johnson Redbook Index was up 4.7% - and that’s through last Friday. And the 4-week moving average on initial jobless claims is now at its lowest levels since April.”
All told, “things just aren’t as bad as the market suggests. I just don’t think we’re falling off a cliff.”
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Trader disclosure: On Aug 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman owns (AAPL); Finerman owns (BAC); Finerman owns (JPM); Terranova owns (XOM); Terranova owns (CVI); Terranova owns (CAT); Terranova owns (OXY); Terranova owns (AAPL); Terranova owns (DAR); Terranova owns (FCX); Terranova owns (CACI); Terranova owns (ARUN); Terranova owns (ORCL)’ Terranova owns (EMC); Terranova owns (NCR); Terranova owns (VMW); Terranova owns (IBM); Terranova owns (AMZN); Terranova owns (LULU); Terranova owns (LTD); Terranova owns (WFM); Terranova owns (JPM); Terranova owns (AXP); Terranova owns (FXA); Terranova owns (VRTS); Terranova owns (LQD); Najarian owns (GLD) covered calls; Najarian owns (VIX) call spreads; Stutland Owns (DBA) and short (DBA) calls; Stutland Owns (GLD) calls
For Karen Finerman
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Finerman’s firm own (BAC) leaps
Finerman’s firm owns (CAT) calls
Finerman’s firm owns (WAL)
Finerman’s firm owns (MSFT)
Finerman’s firm owns (IBM)
Finerman’s firm owns (HPQ) and (HPQ) puts
Finerman’s firm owns (JPM) stock and (JPM) leaps
Finerman's Firm Is Short (IWR)
Finerman's Firm Is Short (MDY)
Finerman's Firm Is Short (XRT)
Finerman's Firm Is Short (SPY)
Finerman's Firm Is Long S&P 500 Puts
Finerman's Firm Is Long Russell 2000 Puts
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Accounts managed by Brian Kelly Capital own the Euro
Accounts managed by Brian Kelly Capital own (JJG)
For Brian Stutland
Stutland's Firm Is A Market Maker Holding Positions In VIX Futures And Options, SPX options and futures, SPY stock and options, and VXX Stock And Options
CNBC.com with wires.