Of the dip in trading revenue report from Citi which hit the banks yesterday, Mayo says it's old news - fixed income trading has been going down for years and a continued fall is already in Mayo's models. Any revisions lower are little more than "noise," and will be a blip on the screen a few months from now. Morgan Stanley gets just 15% of revenue from fixed-income trading - sluggishness in this area is no excuse not to own the stock, says Mayo.
"Revenues stink in the banking industry," he allows, and that's why he likes Morgan Stanley (and Citigroup C as well) - "the restructuring story can cut through the revenue weakness."
What about Bank of America (BAC) which has moved nearly tick for tick with Morgan Stanley this year? Morgan has more levers, says Mayo, particularly in Wealth Management after its purchase of Smith Barney from Citigroup.