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Tangent Capital Partners senior managing director Chris Whalen gives his outlook for the financial sector.
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Don't hate you.
All right thanks -- recovering from the selloff sparked by Tuesday's election but which winner has the banks more concern -- President Obama.
All -- now -- sits there she is newly elected senator.
Elizabeth Warren joining me now is Christopher Whalen tangent capital partners senior managing director and well -- is a bad day for the banks.
-- was so we were kind of good news to lose shouldn't have said that the Romney would win.
And it would all be okay we would roll back Basel III in repeal Dodd-Frank and none of these things.
No exactly Donahoe.
Whole lot worse than me not only is President Obama in office which is not great for the banks they were looking for that sort of legislative change but you happy -- Elizabeth Warren.
Gaining power so all together it seems like what what is your outlook.
Well Liz Warren is only one of -- hundred senators thank god.
She's kind of an angry Calvin list.
Yeah -- yeah fight again you know again I think she's wonderful -- a lover of books very I don't know that her prescription for regulation is what we need right now.
-- could cut reminds me when Sheila Bair SP about capital -- we need more capital Chris my answers no.
You know we're deleveraging our financial system the -- market is disappearing doesn't exist anymore piece of point five trillion dollars -- -- -- market financing.
Outside the traditional banking industry so we need to be focused on this I'll tell you get jobs yeah.
It still realistically what does this mean for practical point of view I mean are there us -- stocks that are better positioned than others would you avoid the group as a whole lighten up -- -- what do you think.
Well I think if you go down list Wells Fargo they are pretty much withdrawing from mortgage market there were -- man standing 40% market sure they're gonna shrink.
While the rest of the banks like was a lot of visibility on revenue or earnings so I think what happened with the election was we had the political.
Come to Jesus and and everybody looked at the forward revenue and earnings estimates -- -- a little optimistic I think if you could.
The street consensus and the two were not positive factors.
Well also wanna have -- point four times book I think it's fully valued.
So if anything I would expect a larger name stood gave back little.
Remember this whole sector has run incredibly.
Yeah even the preferred stocks that I like for the banks -- income producing assets moved 1516.
Points since January.
That is the point that's not normal it's not like people are going to stop making it sound like they're not gonna need financial advice about -- yeah they'll gonna be trading they're still gonna -- mortgages it was I didn't write another kind of growth we saw 456 years ago -- -- points or they also fairly priced at this point -- -- nothing -- I think so let me distracted.
-- price you could argue Citi and Bank of America are speculative deals -- -- book.
But nobody really wants to go there the -- have issues they haven't dealt with and I think the key thing is remember they're gonna barely be doing double digit return on equity.
So when you factor that in your valuation adjustment one times book value is about right is there anything that can come along and changer -- Well if we suddenly got a huge amount of investment banking revenue for Citi JPMorgan.
Stanley Citi.
If housing suddenly came back but of course one reason.
Dip whose -- offer Curtis that the street understands that Barack Obama and the current -- Washington -- nothing to do anything.
About residential housing and the things they are doing -- negative.
-- settlement.
Dodd-Frank has -- the -- out of the non bank.
Mortgage origination sectoral we have left for the bank step.
Yeah so I don't know I think discouraging lending -- absolutely I think it it -- -- six months or so.
The congress is going to be here such screams.
Of unhappiness from -- realtors and everybody else.
In the housing industry that they're gonna have to revisit some of these issues and forget about partisan at that point.
And a I don't know -- recently delivered via our pride may have to reconsider our now are now you'll never happened and what happened then we're gonna have sub par growth you know could expect multiples for large cap financials turned out that.
Chris Whalen thanks so much thank you.
