Bank stocks may be taking a “breather” but there are a lot of positive drivers going into 2018, analyst Ken Leon told CNBC on Thursday.
Those catalysts include “rising rates for net interest income, the Federal Reserve with a new bank supervisor, more pragmatic regulation and then, of course, tax reform, which would feed into the economy and feed into lending growth,” the global director of industry and equity research at CFRA said in an interview with “Closing Bell.”
“This is going to be a good time to get into banks,” he added.
JPMorgan posted third-quarter earnings and revenue that beat analyst expectations. However, the bank reported a 27 percent year-over-year decline in fixed-income trading revenue. The stock closed down nearly 1 percent but is still up 11 percent this year.
Citigroup also reported results that beat expectations. However, concerns about rising credit card costs drove the stock lower by more than 3 percent.
Michael Block, chief strategist at Rhino Trading Partners, is bearish on the banks in the near- to intermediate-term.
While a steepening yield curve and higher rates are good for the sector, he doesn’t see that catalyst playing out.
“I don’t think bond yields are going a lot higher. The Fed will probably raise in December and that’s about it. They’re worried about low inflation being more than transitory,” he told “Closing Bell.”
He is also concerned about what’s happening in credit cards. Bank write-offs on credit card debt had been getting better and then leveled off, he said. Now, for the first time it is getting worse, he noted.
“Something is happening here,” Block said. “We used to worry about mortgages. We used to worry about home equity loans, student loans. This is the next phase. Consumers are getting pinched a little bit in certain demographics, and it’s going to be an issue.”
However, if he takes a longer-term view, or “Warren Buffett approach,” to the sector, he is bullish. But he wouldn’t buy just yet.
“If you are bullish you’re going to get a better chance to buy these things later this year, early next year,” said Block.
— CNBC’s Fred Imbert contributed to this report.
Source: Investment Cnbc
'This is going to be a good time to get into banks,' says CFRA analyst