The big banks have rebounded very strongly since the early March lows and investors are trying to see if the trend will continue into 2010. Fred Cannon, co-director of research and chief equity strategist at KBW shared his outlook on the sector.
“Once they get past these TARP repayments, there’s some good possibility that we’ll see a continued growth next year in those shares,” Cannon told CNBC. “We’ve concentrated in this industry in a few designated winners and those winners are underscored once they repay the TARP.”
Cannon said he expects the Fed to start raising interest rates in the second half of 2010.
“We think the first step for the Fed is to reduce some of that quantitative easing that purchases the long-dated stuff—that will happen first,” he said. “It won’t be until the back half of next year when they’re sure that the economy’s growing strong that they’ll be willing to raise interest rates.”
- Watch Canon's Previous Appearance on CNBC (Dec. 8, 2009)
Cannon's Picks for 2010:
JPMorgan
Goldman Sachs
Morgan Stanley
Bank of America
Canon also sees growth in Visa and MasterCard .
More Market Intelligence:
- How to Prep Your Portfolio for 2010: Credit Suisse's Weissenstein
- 6 Big TARP Banks We Like: Equity Pros
- BofA, Citi and Big Bank Plays Now: Strategists
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Track the DJ Financial Services Index Here
- Where's the US Dollar Today?
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CNBC Slideshows:
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Disclosures:
KBW either expects to receive or intends to seek compensation for investment banking services from Visa and GS during the next 3 months.
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