Dick Bove even more bullish on banks

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Star bank analyst Dick Bove, newly ensconced at Rafferty Capital, sees a virtuous 14-year cycle opening up for banks. He's bullish on the entire industry, a point of view he made clear in a lunch with journalists this week.

"What I'm suggesting is for the next 14 years — you'll have some setbacks, some recessions — (but) bank earnings will do what they did from 1992 to 2006," according to a quote in CNBC. "They're going to go straight up."

There will of course be some setbacks along the way, but he fully expects bank stocks to end much higher. Right now, he's especially bullish on Goldman Sachs, with Bank of America, JPMorgan Chase and Citigroup not far behind. He also likes regional banks PNC Financial, Comerica and Fifth Third, as well as boutiques such as Lazard Capital, Greenhill and Evercore among advisory firms. He's less bullish on Wells Fargo and State Street, given their lofty current valuations.

His long-term bull view is predicated on a rebound in economic growth, which he expects to be evident in the second half of 2013. He thinks that QE3, unlike QE1 and QE2, will be a stunning success, as the money targeted at mortgages will boost the economy. Combined with bank cost controls now in place, the results will be record earnings.

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