By Mark Skousen, Hedge Fund Trader Alert

Big winners under a second Obama administration are financial stocks. In the past two years, Federal Reserve policy has been a gift to the big banks, which have recovered sharply.

And Fed Chairman Ben Bernanke has made it clear that the Fed's zero interest rate policy will continue indefinitely until the economy gets back to normal. That's good news for JPMorgan Chase (JPM), the largest banking institution in the United States since 2011.

The bank still is selling below its book value of $50 a share, but it has shown dramatic improvement.

With profit margins exceeding 21%, earnings jumped 34% to $18 billion in the most recent year. And at a time when other big banks have struggled, JPMorgan's revenues rose 5% to $88 billion.

CEO Jamie Dimon is a banker's banker, and is well respected. Warren Buffett wants him to replace Tim Geithner as U.S. Treasury Secretary. Dimon has been critical of Dodd-Frank and other overt regulations of the financial system, and with good reason.

But if anyone has the inside track on how to manipulate the system, it's Dimon. As J.P. Morgan himself once said, "You can't pick cherries with your back to the tree."

How will the fiscal cliff affect banking stocks? If lawmakers do nothing, undoubtedly financial stocks will suffer. But if Congress takes a moderate approach -- extending most tax cuts and mortgage interest deductions through 2012 -- the impact on banking and financials will be positive.

JP Morgan Chase has risen nicely this year, but still looks cheap, since it is selling below book and at only seven times expected earnings in 2013. We're adding JPMorgan Chase to our buy list.

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