Some Favorite Picks and an ETF
Longtime investor and trader Jim Lebenthal said he favors big banks over smaller lenders as earnings season approaches. “The big banks should have benefited from what happened last month with Silicon Valley Bank and Signature Bank, which meant they got deposit inflows from the smaller banks,” Lebenthal said. “I think we should favor big banks over small banks simply because of their overall strength.” Watch the video above for Lebenthal’s full view of the sector and his favorite picks. First-quarter earnings season kicks off Friday with quarterly numbers from JPMorgan, Citigroup, Wells Fargo and PNC Financial. From these reports, Lebenthal said he will assess the health of the banking system as well as the macroeconomic health of the consumer. He is a partner at Cerity Partners, manages US equity portfolios for clients and advises them on asset allocation. “I would love to hear from both the big banks and PNC…how they all feel about the health of the banking system,” Lebenthal said. “Is there additional pressure on balance sheets? Are there further outflows of deposits not just from small banks to large banks, but from all banks to money market funds?” The collapses of Silicon Valley Bank and Signature Bank last month – the second and third largest bank failures in US history, respectively – have investors worried about the overall health of banking systems and to whether more institutions are at risk. Lebenthal said there is an overlooked silver lining for the banking sector, which is falling bond yields. Lower rates would increase the value of Treasury securities on the bank’s balance sheets, Lebenthal said. The investor called JPMorgan the “crème de la crème” in the banking system and said he owned Citigroup as a value and turnaround player. He said he had no individual exposure to regional bank stocks, but held a small position in the SPDR S&P Regional Banking ETF.