Big Banks kick off the third-quarter earnings season. JPMorgan Chase & Co. (JPM) reported quarterly results showing a surprise gain in net interest income. Whalen Global Advisors chairman Chris Whalen joins Morning Brief Hosts Seana Smith and Brad Smith to take a look at the bank’s results and what it means for large-cap financials.

Whalen says the net interest income “is an illustration of the fact that JP is well managed. Jamie Dimon has managed to his duration, if you will, much better than the other large banks. Having said that, the revenues are down substantially from the second quarter, which was an unusual quarter. They're kind of in line with the first quarter in terms of the top line.”

“Going forward, you're going to see managers go back into the stock because a lot of managers earlier in the year had withdrawn from the large caps, thinking we were headed for a recession, [but] it's not happening. Even though JP has built reserves, [and] reserves are up over 100% year over year, they're still not at a level where you're going to be terribly worried,” he says.

“Overall, JP is going to lead the pack back up as the large caps come back into favor with the managers,” Whalen says, noting that in the second quarter, “smaller names American Express, Axos, [and] Ameriprise, they all rose to the top… I think managers liked the large caps in the first quarter [and] certainly last year, but now, not so much.”

He adds the big risk to the banking sectors “is if we don't get more rate cuts from the Fed, which I think is a likely scenario.”

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This post was written by Naomi Buchanan.