- JPM
- SPCX
Major banks JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C) are all set to report their third quarter earnings results on Tuesday, kicking off earnings season on Wall Street.
The 8:30 Hosts Julie Hyman, Jake Conley, and Pras Subramanian discuss how upcoming bank earnings can shed light on the strength of the market.
They come into this earnings on a bit of an interesting footing because over the past year or so, we have seen a lot of good performance from the financials, but they are coming off a tough run where we’ve seen we’ve seen that sector really struggle. I want to pull a stat from uh Yahoo Finance’s David Hollerth writing this up over the weekend. If you take JP Morgan, Goldman Sachs, City, uh, uh Bank of America and Morgan Stanley, from their respective summer highs, that group of five banks has shed $270 billion in market cap. It has been a period of deep red for the banks. The amount of institutional investors expecting the banks to outperform has gone from 82% in last December to 68% in July to just 35% now. That’s from Truest. Yes, there has been some green light. The SpaceX IPO was obviously a banner item for these banks. That’s not going to be rolling into this quarter. So the question now is, look, you’ve had a good run but you’re really struggling. How does that reflect into the beginning of earning season? Because the banks not only give a read on themselves, they really set the tone for the whole season going forward.
Right. Well, so there are a lot of questions, right? There is the question of IPOs. Those banks that make their, make a lot of IPO fees, you know, this was not the year that was expected in terms of IPOs after SpaceX. So what effect is that going to have? Um, interest rates for the banks cut both ways.
Mhm. That’s right.
What effect is that going to have on the banks? Um, as we know, the consumer relatively has held up well, but what is going to be happening going forward um when it comes to that. You were talking about the individual banks collectively, I like to look at the KBW Bank index, BKX is a ticker on that. Um it peaked on uh August 14th since then it’s down 12%. And it’s been the big banks and the regional banks alike have suffered since then.
It’s also interesting within the financial we talk about the big sort of consumer banks like JP Morgan, City, Wells Fargo. Maybe I want to hear how much how much are they tied to the consumer weakening right? they are they going to feel any effect from that? Obviously JP Morgan, big investment bank operations too. So they have a lot going on. But you still have more like more lever to that consumer whereas the Goldmans of the world and Morgan Stanley of the world are doing more in the financial services of the higher end stuff. Uh now Solomon started to talk about how thick trading was sort of lower, maybe a little soft potentially uh this quarter so compared to a year ago. So maybe there’s some uh some issues there. but uh it’s it’s not they’re not this all one bank is created equal. They’re all different banks, all different things. We’re going to hear different things from different banks the next two or three days. It should be really interesting uh going forward as to what it means for the rest of the industries that are they’re going to be coming out stuff. Um but yeah, I mean I’m I’m curious to hear what they have to say really. And I mean particularly about the about the consumer.
That’s right.
