Why RBC Analyst Gerard Cassidy Thinks You Should Own Bank Stocks

The transcript discusses the outcomes of recent bank stress tests, highlighting that most banks passed except for Morgan Stanley, Goldman Sachs, and State Street. The impact of tax reform on these banks' payouts is examined, along with the implications for future regulatory reform. The analysis shifts to the yield curve's influence on bank profits, noting recent changes in government bond yields. The discussion also covers the effect of market volatility on trading businesses, with expectations for upcoming earnings. Finally, investor sentiment and economic concerns, including trade issues, are explored in relation to financial stocks.

Which banks were exceptions in passing the recent stress test?

• Bank of America and Citigroup

• Morgan Stanley and Goldman Sachs

• Wells Fargo and State Street

• JP Morgan and State Street

What was the primary reason for Goldman Sachs and Morgan Stanley's performance in the stress test?

• Increased competition

• High operational costs

• Poor management decisions

• Impact of tax reform

How does the yield curve affect bank stock prices?

• It inversely correlates with stock prices

• It directly correlates with stock prices

• It only affects short-term stock prices

• It has no effect

What was the trend in volatility from the first to the second quarter?

• Volatility increased significantly

• Volatility was unpredictable

• Volatility decreased

• Volatility remained the same

What is a potential reason for investors repositioning themselves recently?

• New banking regulations

• Concerns about economic slowdown

• Increased interest rates

• High inflation rates

What is the expected performance trend for bank stocks in the second half of the year?

• Unpredictable performance

• No change in performance

• Outperformance compared to the first half

• Underperformance compared to the first half

What was a significant factor in the banks' trading business performance in the first quarter?

• High market volatility

• New banking regulations

• Low market volatility

• Stable interest rates