An Argus Research analyst says investors can still find opportunities in the financial sector despite interest rate volatility, regional bank weakness and regulatory uncertainty. His top picks include firms balancing yield, growth and innovation.
BNN Bloomberg spoke with Kevin Heal, fixed income strategist and senior analyst at Argus Research, about his top three financial picks and why he believes select companies in exchanges, regional banking and asset management can still perform in a turbulent market.
Key Takeaways
- CME Group is expanding into prediction and crypto markets as interest rate volatility drives trading activity.
- Huntington Bancshares is growing through acquisitions in high-growth U.S. regions and diversifying into wealth management.
- Regional bank stocks have been hit by contagion from recent fraud cases, creating selective value opportunities.
- Rithm Capital is broadening its asset management business after major acquisitions while maintaining a 9 per cent dividend.
- Analysts see financials offering a mix of yield and innovation despite commercial real estate and regulatory headwinds.
Read the full transcript below:
ANDREW: On Hot Picks today, we’re focusing on three plays in the financial sector. Our guest says CME Group is expanding its crypto contracts, and it’s his top pick. We’re joined by Kevin Heal, fixed income strategist and senior analyst at Argus Research. Thanks very much for joining us, Kevin.
KEVIN: Thank you, Andrew. Good morning.
ANDREW: Just remind us, what does CME do? How does it make money? And we’ll hear in a sec, I hope, about the crypto connection — but what’s the core business?
KEVIN: Basically, it’s one of the largest exchanges in the world, with 24/7 access. They’ve purchased several exchanges globally and facilitate transactions in interest rates, equities, foreign exchange, energy, agriculture and metals.
ANDREW: They’re not so big in equity trading, then?
KEVIN: Correct. It’s more on the index side where they do most of their trading, not necessarily individual stocks.
ANDREW: And what’s the crypto connection? I didn’t realize there was a big futures or derivatives market in crypto. Yes, I know there are ETFs.
KEVIN: Yes, over the past year and a half, they’ve launched several indices that allow investors to place futures bets on various cryptocurrencies — obviously Bitcoin and Ethereum being the largest — offering 24/7 index access for crypto investors.
ANDREW: One interesting trend has been the convergence of gambling and investing — companies like Robinhood and FanDuel getting aggressive in that space. CME has teamed up with FanDuel. Can you tell us how that deal will work?
KEVIN: It’s still in the works, with some legal aspects to be resolved by both CME and FanDuel. It’s not necessarily for sports betting, but more for prediction markets involving political events or where a commodity might trade at the end of the day. Everyone’s getting into prediction markets, looking for ways to make money.
ANDREW: But there’s been some pushback from regulators — particularly the SEC. I think in Robinhood’s case, they didn’t like some of those offerings.
KEVIN: Yes, that’s still being worked out. I imagine the SEC will set rules and regulations, and the companies will work around them.
ANDREW: Huntington Bancshares — HBAN — what attracts you here?
KEVIN: There was a recent event in the U.S. with two regional banks out west that had fraudulent loans, and all the regional banks got hit — they were grouped together and heavily shorted through the KRE index. When that happens, everything goes down. But Huntington’s been expanding into high-growth areas like Dallas, Houston and other southern states. They recently purchased a bank called Cadence, and now they’re among the top five for deposits in Texas.
They’re also expanding into Minneapolis and Denver. Larger regional banks need to scale up to compete, and Huntington’s been broadening its product base with wealth management and investment banking.
ANDREW: And then finally, Rithm Capital Corp. — RITM — a big mortgage originator with a pretty fat dividend yield.
KEVIN: Yes, they’re one of the largest mortgage originators in the U.S., with one of the largest servicing books, which generates fee income from retained payments. They’ve been expanding into asset management — they recently purchased Sculptor Capital, which has about $35 billion in assets, and another firm, bringing their total to more than $50 billion in recurring asset management revenue.
They’ve also launched funds focused on commercial real estate but have no legacy exposure in that space, which has been a drag in the U.S. lending market. The dividend yield is about nine per cent, and earnings have more than covered it.
ANDREW: That’s interesting. There are concerns over credit in the United States right now, especially in private credit markets. But you say the bigger cloud is over commercial real estate?
KEVIN: Yes, especially in the banking sector. It’s been more of an issue on the commercial side, but now it’s extending into private credit. You see it all over the news — U.S. regulators are allowing individuals to invest in private credit. But lately, some of the problems in that space have been related more to fraud than to declining business.
ANDREW: Thank you very much, Kevin.
KEVIN: Thank you.
ANDREW: Kevin Heal, fixed income strategist and senior analyst at Argus Research.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CME NASDAQ | N | N | Y |
| HBAN NASDAQ | N | N | Y |
| RITM NYSE | N | N | Y |
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This BNN Bloomberg summary and transcript of the Nov. 7, 2025 interview with Kevin Heal are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
