So what can we expect next week?
TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, looked at Morgan Stanley (MS) , which had a number of businesses falling under heavy government scrutiny at one time. However, the company sold off those businesses, which was seen as a good move at the time, Cramer said from the floor of the New York Stock Exchange.
Morgan Stanley will now benefit from higher interest rates, as will other banks, Cramer predicted. However, he doesn't view Morgan Stanley as a "Trump stock," because it no longer owns the businesses that would have come under government scrutiny. If regulations loosen under President-elect Trump, those businesses will fare better.
That's why a company like Goldman Sachs (GS) looks more exciting, Cramer said -- even though he expects Morgan Stanley's CEO James Gorman to eventually lead his company's stock price to $70.
Investors arguing that the banks are now a short thanks to the sector's multi-month rally are being shortsighted, Cramer declared. What's the plan? he asked -- sell the stocks here hoping for a slight pullback to get long again? That doesn't make any sense, Cramer said.
Investors have to get comfortable with the fact that the banking sector has underperformed for many years, and it now has catalysts to drive the stock prices higher following multiple rallies, Cramer said.
Even Wells Fargo (WFC) -- a bank mired in controversy -- saw its deposits grow 6%, Cramer noted.
The banks have less competition and several catalysts to take them higher over time, Cramer argued.
Morgan Stanley is scheduled to report earnings on Tuesday, Jan. 17. Analysts expect the company to earn 65 cents per share on $8.47 billion in sales.