Morgan Stanley , which reports Wednesday, has a much smaller private equity investment business, but a larger presence in retail brokerage, "which looks like it’s having a tough quarter, too, but not as tough a quarter as private equity has," Harte said. "The difference here is businss mix. I'm not seeing anything in Goldman’s numbers that make me think Morgan [Stanley]’s numbers are going to be any weaker or better than we are expecting."
Bank of America , which also reported earnings Tuesday on accounting gains, has a different problem. Although the 56 cents in earnings exceeded Street expectations, Harte said people are still "really scared of" the bank's mortgage exposure.
"This quarter suggests they may not be getting as bad as the stock price indicates," said Harte, who expected 31 cents a share in earnings, compared with Street expectations of 19 cents a share.
"I look at BofA and think longer term the stock works quite well," he said. "The value of the largest deposit franchise in the country is being completely discounted."
But if there is bad data on weekly mortgage applications Wednesday, "BofA is the one that’s gonna bear the brunt of it," he said.
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Jeffrey Harte does not own shares of the banks but Sandler O'Neill has provided investment banking services.