Wells Fargo has outperformed JPMorgan, not to mention Citigroup (C), Bank of America (BAC), Goldman Sachs (GS) and Morgan Stanley (MS) because it is perceived as having less exposure to Europe and is less dependent on investment banking.
As a result, shares of Wells are down about 16% over the past 100 days, versus more than 28% for JPMorgan, 33% for Goldman, 42% for Citigroup and 51% for Bank of America.
There is no question investment banking revenues have been weak. A report Tuesday from Barclays Capital projects investment banking revenues will drop by more than 35% from the fourth quarter of 2010 to the fourth quarter of 2012.Still, the debate about whether the drop off in investment banking revenues is cyclical or secular is a long way from resolved. Atlantic Equities analyst Richard Staite argues the weak environment will end up benefitting JPMorgan. He notes global competitors like Credit Suisse (CS)and Nomura have been shedding staff and reducing capital deployed in investment banking divisions. He also believes investors are paying increasing attention to counterparty risk and may shift trading to the safest banks such as JPMorgan. "It is an environment where the strongest banks will get stronger.
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV