Former Barclays CEO Bob Diamond: The Clarity Act is really good for banks over time

Summary

Bob Diamond expects the Fed to raise rates further given strong economic data and above-target inflation, dismissing forward guidance as unnecessary. He argues that financial services benefit from higher rates and that the Clarity Act will drive digital innovation, making large banks like JPMorgan, Morgan Stanley, Goldman Sachs, and Bank of New York big winners. Middle market companies are also doing well, though no specific trades are named.

• Diamond expects interest rates to go higher, reflecting strong economy and above-target inflation.
• He dismisses the need for detailed Fed forward guidance, citing historical practice from Volcker/Greenspan.
• Financial services is highlighted as a sector that benefits from higher interest rates.
• Middle market companies are showing strong profitability amid less regulation.
• The Clarity Act, supporting digital asset rules, is very positive for banks over time.
• The act would enable 24/7 trading, instant settlement, blockchain records, and deeper liquidity at lower cost.
• Large banks like JPMorgan, Morgan Stanley, Goldman Sachs, and Bank of New York are heavily investing in innovation and will be major winners.
• Diamond sees tensions between traditional banks and crypto over stablecoin yields but believes banks ultimately benefit.