“He wants to significantly reduce unnecessary regulations, where the cost of the regulations is greater than the benefits. He wants to grow the economy at least at 3 percent, if not 4 percent. He wants to significantly reduce taxes,” Kovacevich said.
He believes if those things occur, there will be at least three increases in the fed funds rate this year and the Federal Reserve will stop buying long-term securities.
“All of those things are very, very favorable to the earnings of financial institutions and because the P/E ratios of financial institutions are about 30 percent below that of the market, there’s lots of room for that to increase,” Kovacevich explained.