Big bank stocks: Unless we get shocking news in the next day or so, it's already clear what's going on.
The good news:
1) credit is better;
2) there's higher capital, higher reserves.
The bad news:
1) very little loan growth;
2) they do not know what financial regulatory reform or Basel III will require them to do;
3) rates are lower, so you have excess capital being invested at lower rates (net interest margins getting squeezed).
If you're a cynic, you can say that banks look like utilities: excess capital, no growth.
What does it mean for bank stocks? More M&A is one of the only ways to grow in this environment. If you are worried about a double dip, however, that dampens the likelihood of more M&A.
Pray for an economic expansion, higher rates and an expansion of loan demand.
Big Financials Now:
Bank of America
Berkshire Hathaway-A shares
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