Bank stocks show more signs of life after a tumultuous year. Here's what's causing the run and why we're optimistic on these financial names

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Club names Morgan Stanley (MS) and Wells Fargo (WFC), in particular, have perked up recently.

, too, with Swiss bank UBS taking over its ailing rival Credit Suisse. Big banks, like Morgan Stanley and Wells Fargo, were never in any trouble but were painted with a broad brush of industry distrust.

Still, Wells Fargo and Morgan Stanley are both well capitalized and haven't been at risk of a run on deposits, according to the Fed's. These new rules shouldn't hit their bottom lines either, but there's an argument to be made that an increase in capital requirements may weigh on revenue streams from net interest income as lending conditions tighten.

During last week's Barclays Financial Conference, management at Morgan Stanley said that capital markets are set to improve next year, with 2024 likely being a much better year for the economy as well. This could boost investment banking more broadly because companies will feel less inclined to preserve capital and more confident in going public or making acquisitions.

Wells Fargo doesn't stand to benefit quite as much as Morgan Stanley on a pickup in investment banking. However, management's remarks at last week's Barclays conference are showing signs of continued recovery. Wells Fargo Chief Financial Officer Michael Santomassimo said the macroeconomic picture is"much better than people would have expected at this point."

 

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