6 Things on My Mind into Earnings

Heading into a big few weeks in bank land.

TLDR:

Not seeing any big CRE cracks but seeing a positive earnings season overall but focused on the guide. Flows for pros? Vibes have shifted and shorts are noticing. Interest rate guesses are useless. And there are a few factors that should lead to bank winners in 2025.

Vibes Check?

KRE was up 3.46% on Friday beating the S&Ps 0.9% as JPM and WFC. This was all a sentiment, or vibes check as the kids like to call it. Heading into earnings Pinto at JPM had gone on record saying estimates were too high, Jamie had said we’re not buying back stock because it’s too expensive, and the whole world realized they’re asset sensitive in a world where everyone knows (sarcasm) rates are going down.

JPM and WFC both beat but underneath the hood not all was great. Investment banking beat, provisions were up but in line, and in general loan demand was still soft. The consumer though is not dead at all, at least for these two banks and this positive outlook kind of jolted the market out of its complacent negative bias towards cyclicals and banks in general.

The big trend here is despite interest rate uncertainty, your focus as a bank investor should be on non-interest income verticals. Sometimes it is “that obvious”.

JPMorgan Chase (JPM)

• Earnings Per Share (EPS): JPMorgan reported an EPS of $4.37, beating analysts' consensus estimates of $4.061.

• Revenue: The bank reported revenue of $41.63 billion, which was in line with expectations.

• Net Interest Income (NII): Reported NII rose to $23.41 billion from $22.73 billion.

• Profit: Profit fell slightly to $12.9 billion from $13.15 billion but edged higher to $4.37 from $4.33 on a per-share basis.

Wells Fargo (WFC)

• Earnings Per Share (EPS): Wells Fargo reported an EPS of $1.42, beating analysts' consensus estimates of $1.284.

• Revenue: The bank reported revenue of $20.37 billion, slightly below the expected $20.42 billion.

• Net Income: Net income fell to $5.11 billion, or $1.42 per share, from $5.77 billion, or $1.48 per share, during the same quarter a year ago.

The Shorts Noticed the Vibe Check

Price action on Friday tells a fairly straightforward story. This was brought to my attention by an underfollowed friend Ken King - Follow Ken on X. Tremendous human. Unbelievably knowledgeable. And most of the time I barely understand what he’s talking about when he talks to me about things like Iron Condors.

But I digress, here is a look at the big winners from Friday in bank land.

And surprising to no one, some of the biggest winners were ones with high amounts of short interest. First sorted by greatest one day change percentage, and second by SI as a % of float (and yes Bloomberg is not perfect).