Surprise! Bank stocks could be the best bet heading into the Fed's likely decision to cut rates.
, have warned of the effect on profits if the Fed cut rates this month. A cut can narrow the spread between how much banks pay to borrow money and their profits from loans.
"There's this misguided notion that low interest rates are generally bad for banks and high interest rates are generally good for banks. And we keep trying to remind people that actually what matters is the spread between the long end and the short end," said Sanchez. "You have coupled with that the idea that if interest rates start to go down again, the fee side of their business, which is the other side of their revenue stream, should also experience a boost, because you're going to see more deal-making in an accommodative environment," said Sanchez.
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