US Banks with funding cost advantage may be the place to be

Investors are focusing on Euro crisis. Quietly, US economy may be gathering steam, despite all sorts of political problems. Consumers are saving more, but they've not stopped spending. Manufacturing is still expanding.

Housing is soft, which is adding a big drag on the recovery.

Employment situation may be slowly improving. Economists are expecting 150,000 jobs being added in Nov. Most of them should be in the private sector, especially services. This Friday's report will be a key event.

The Fed will maintain low rates and east money stance, at least for the first half of 2011. Bonds are expensive. Stocks are relatively cheap.

US banks that are not exposed to the European problems may be a relatively safe place to park cash, to pick up some nice gains as we move into 2011.

Low funding cost will be a key advantage.

Credit default rate is coming down as consumers repair their balance sheets. Capital requirement is less of an issue now. The yield curve is fairly steep so the interest differential is healthy (10-year Treasury is yielding close 3% while the funding cost for banks could be zero.). The Fed will be slow to raise short term rates even when the economy starts to pick up.

Banks such as Wells Fargo that are focused on building the coast-to-coast distribution network and executing its time-tested business model are well-positioned for earnings growth.