Salient to Investors:

Analysts expect earnings to fall this year at Goldman Sachs, JPMorgan Chase et al, but rise  20 percent or more at discount brokers.

Chad Morganlander at Stifel, Nicolaus said household investors are getting more confident as their fear thaws out – volatility terrifies retail investors.

James Gaul at Boston Advisors said retail confidence tends to come later in an economic cycle than institutional confidence – optimism is very high now.

Client trades at E*Trade, Schwab and Ameritrade have averaged 390,838 a day in 2014 versus 108,835 at the peak of the dot-com bubble in 1999.

When the VIX hovered above 13 from 2004 to 2006, Schwab’s earnings increased at an annual average of 31 percent and E*Trade’s at 41 percent. The measure, known as the VIX, is below 12, compared with its two-decade average of about 20.

Charles Peabody at Portales Partners said smaller firms are not as driven by turnover as they are by asset level values, whereas the big firms need turnover of volume.

This rally is over 5 years old versus the average 4.1 years for bull markets since WWII.

The S&P 500 is at 17.9 times earnings.

Matt McCormick at Bahl & Gaynor said the firm has no plans to own any large money-center banks.

Dan Veru at Palisade Capital Mgmt said despite the risk of a correction and expected decline in profits at bigger financial firms, bank stocks will be a go-to group for investment once the Fed raises interest rates.

James Bullard at FRB St Louis said the Fed will raise interest rates in Q1 2015.

John Carey at Pioneer Investment Mgmt said the benefit to big banks from higher rates will be more muted than for the brokers, where there is a clear relationship between higher rates and better earnings.

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