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Legendary Bank Analyst Dick Bove Says This Will Be The 'Best Quarter in the History of the Banks'

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Dick Bove dropped into Squawk Box Tuesday morning to speak with Andrew Ross Sorkin and company about financial sector earnings and the stock performance for the year to come.

Here are some highlights:

On the Goldman Sachs (NYSE: GS) Earnings

  • All core businesses did pretty well quarter over quarter
  • The only core business that didn't do well was M&A, but we didn't expect that to do well
  • Peripheral businesses did poorly

Why Bank Stocks Will Continue to Gain

  • Every central bank increasing money supply dramatically
  • If money supply grows this rapidly, it HAS to go somewhere, so it will go to financial instruments
  • Any company in the money business will benefit from the current central bank policy

Where the Doubt in Banks Comes From:

  • "The potential for macroeconomic instability was felt this quarter" Lloyd Blankfein

The Rise in the Stock Market will Benefit the Banks

  • The stock market is behind itself
  • If stock market is rising, ultimately you will see an increase in M&A, which will also benefit the banks further

Why Bank Stocks are a Buy

  • Big banks still selling at discounts to book value
  • In many cases BV is 100 percent cash, they're selling at discounts to this, Goldman Sachs is an example of this

The Housing Market's Effect on the Banks

  • If housing prices rises, is that the assets on the books of the banks are understated
  • This would lead them to be priced even further below book value

On U.S. vs. Chinese Banks

  • We see a lot of pro chinese congressmen who want to see chinese banks to take control of the banking industry
  • Congress wants to rip them (U.S. Banks) apart and let the Chinese takeover
  • The People's Bank of China has 3.5T in assets, bigger than any US bank, and growing at enormous rates

Posted-In: Analyst Color CNBC Earnings News Guidance Analyst Ratings Movers Media Best of Benzinga

 

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