Options Trading News

January 17, 2013  Thu 8:11 AM CT

The days of the radical revaluation of banks is now upon us. The days when we sit there and say "they are awful because of the net interest margins" are behind us. The days when we worried about the government every minute are behind us too.

Now it is just time to make money. And it is important to recognize that because of the difficulties of the previous era and how hard it is now to run the new gauntlet of regulations, there will be only a handful of companies that can dominate in each space.

Yesterday's earnings results showed that the traditional investment banking business is alive and well at Goldman Sachs and JP Morgan.

Goldman dazzled not just in that department. I was truly shocked at how much money the company made in equities, fixed income, and commodities. Goldman showed a return on equity of 15 percent, much, much higher than people thought.

It also reported a remarkable decline in compensation costs. The shareholders are getting the incremental gains now, not the people who work at Goldman, as the ratio of compensation and benefits to net revenues was 37.9 percent compared with 42 percent for 2012. That's shocking.

TheStreet.com logoRemember this is a real story now, not a jury-rigged one. These gains are NOT about a hedge fund that's in drag. They are about regular business lines making a huge amount of money.

Plus the place is brimming with cash. Tangible book value is now $134, and this company now deserves to sell at a 20 percent premium to tangible book like the old days.

You can see it going to the $160s on this quarter.

JPM? What can you say about a company that did $100 billion in revenue and yet cut the compensation of the CEO in half because of the Whale issue, which is now put behind them for good?

The whale's back in the Natural History Museum. We don't need to relive the "Star Trek" save-the-whales movie.

Here's what's incredible about JPM's numbers: Almost every single line but one, the net interest margin, was blow-away good. You know what that means?

To me it says that people are overly focused on that one line, which is going to change as business gets better in America and around the world.

The fixation on the government? It has passed. The fixation on the net interest margin? It's about to pass.

The focus on earnings and return of capital? That is 2013's emphasis. And it is starting now.

Get big or go home.

Cramer's charitable trust is long GS.
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