"The big global banks -- the JPMorgans, the Goldmans, they're all in that camp where they look dirt cheap, like they're easy doubles, but they've got still a lot of unknown exposure on their balance sheets. Exposure to Europe, exposure to a lot of things," said James Kee, president and chief economist of San Antonio's South Texas Money Management. "The larger banks have run up a lot and so valuations are not as attractive as they were say a year or two years ago," said Leo Kelly, managing director at Hightower. "However, when we look at these larger banks, as spreads contract, as you get a better housing picture -- that's favorable to banks overall because if we get a better credit picture in the U.S. and if housing prices start to recover, then estimates for foreclosures and write-downs for foreclosures and bad credit go down. When those go down, these companies can release reserves. And that goes right down to the bottom line." "The minus is that there are significant revenue streams that they no longer have. Regulation has increased dramatically here in the U.S.," said Kelly. "I don't think anyone really has their hands around what that means yet." Wells Fargo, facing a lawsuit for its mortgage practices related to the financial crisis, posted third-quarter adjusted earnings of 88 cents a share, beating estimates by a penny. Revenue came in at $21.2 billion, below the consensus call for $21.47 billion. The stock lost 2.6%. "All of these companies are much stronger than they were prior to the crash," said Kee. "The key to some of the bigger the banks is what their economic profile is going forward. I mean in the last 20 years financials basically was a group that had very high return on equity. But with the financial regulation going forward, a lot of their ability to generate revenue is going to be changed and altered because some of the products that they sell are going to be more regulated. So we do think that the profiles going forward are going to be different. The question is, how different?" The early returns on third-quarter earnings season have been discouraging despite Wall Street's low expectations. According to Thomson Reuters, the blended estimate for the S&P 500, which includes reported results and analyst views, is now for a year-over-year decline in profits of 3%. The firm noted that there have been 94 negative pre-announcements by S&P 500 vs. only 23 positives ones. "By dividing 94 by 23, one arrives at an N/P negative to positive ratio of 4.1 for the S&P 500 Index," Thomson said. "This 4.1 ratio is the weakest showing since Q3 2001." Thirty-two S&P 500 companies have reported so far with 56% beating earnings expectations and 50% topping revenue views. Both those percentages are below long-term averages of 62% on both counts.