JPMorgan will “lead the pack again”: Chris Whalen

Major banks open third quarter earnings season. JPMorgan (JPM) reported quarterly results that showed a surprise increase in net interest income. Chris Whalen, Chairman of Whalen Global Advisors, joins Morning Brief hosts Seana Smith and Brad Smith to take a look at the bank's results and what they mean for large-cap financials.

Whalen says the net interest income “is an example of JP being well managed.” Jamie Dimon has managed its maturity, if you will, much better than the other big banks. However, sales fell significantly compared to the second quarter, which was an unusual quarter. In terms of sales, they are roughly at the level of the first quarter.”

“Going forward, managers will reinvest in the stock because a lot of managers had pulled out of large caps at the start of the year because they thought we were headed for a recession, (but) that's not happening. Even though JP has built up reserves (and these are up over 100% year-on-year), they are still not at a level where there is much to worry about,” he says.

“Overall, JP will be back at the top as large caps are back in favor with managers,” Whalen says, pointing out that in the second quarter, “the smaller names American Express, Axos (and) Ameriprise, “All of them have risen to the top…I think managers liked the large caps in the first quarter (and certainly last year too), but not so much now.”

He adds that the big risk for the banking sector is “if we don't get further rate cuts from the Fed, which I think is a likely scenario.”

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This post was written by Naomi Buchanan.