NEW YORK (TheStreet) -- With earnings season underway, many investors will be watching the financial sector for clues on the economy.
Stephanie Link, the co-portfolio manager of Action Alerts Plus, told TheStreet's Lindsey Bell that while Alcoa (AA) kicked off earnings on Monday afternoon, Wells Fargo (WFC) and JPMorgan (JPM) will really be the earnings to watch when they report Friday morning.
Investors will be waiting to hear what the firms expect from the economy in the second half of 2013, Link said. While investor optimism appears high, Link thinks it will be a "sell-the-news" type of event, citing limited top-line growth.
The banks will also continue doing well with cutting costs and releasing some of its reserves, but loan growth will likely remain stagnant, she added.However, while there is limited potential right now, more positive catalysts should begin to propel the bank stocks higher going into 2014, including higher net interest margins, an improving housing market and a growing economy -- albeit, slowly. But will the new capital requirements be a negative for the banks going forward? "Not at all," according to Link. With the 2018 deadline, the banks should be able to exceed these amounts well before then. However, investors will continue to worry about the banks being allowed to payout dividends and buy back outstanding shares. Aside from JPM and WFC, both of which are holdings in the Action Alerts Plus portfolio, Link likes regional banks M&T Bank (MTB) and Hudson City Bancorp (HCBK) for their potential going into the next year. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV