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Let's take a look now add some stocks making news in the week ahead. I'm Nathan Hager, joined by Bloomberg Intelligence senior US Banks analyst Herman Chan, and it is all about the banks this week, with three heavyweights kicking off earning season on Tuesday, JP Morgan, Chase Wells Fargo and City Group. Herman, let's start with the big guy. What are you watching for from Jamie Diamond in company?
Yeah, it's going to be a great and interesting quarter for Jamie Diamond, JP Morgan and the rest of the banks. We're an interesting setup heading into earnings with heightened Jipoo concerns, stackflation, potential, private credit worries. That's all been weighing on the group. On the other hand, one cre is looking to be pretty solid, with JP Morgan expecting fifteen percent growth in trading revenues and also investment banking could be up that
same level as well. We're also seeing a pickup in commercial lending activity, which is helpful across the group, and some margin stability and really good performance across the credit quality as well, so macro concerns, but the underlying fundamentals still look really strong.
What has you thinking those underlying fundamentals still look strong given you know so much of the concern we have in the market right now around all the uncertainties and the economic impact from the war Iran.
That's right. I would characterize the economy right now as really resilient. So we're seeing that resiliency flow through into the bank's earnings and profitability. On the other hand, really what we're focused on going forward is what's going to happen next and guidance will be key for across the banks that we cover. Are we seeing any sort of cracks and credit due to higher energy costs that consumers are facing today. Are we seeing any cracks and credit
on the commercial side as well? And is the market volatility affecting some of the backlogs for areas like investment making and ipo? So those are questions that the bank man teams will need to answer on the first quarter earnings calls.
And when it comes to Wells Fargo Herman, how are they doing now that they're not under that asset cap restriction anymore.
That's right.
So that's going to be one of the growth stories for the banking group. And in the first quarter reporting where another quarter outside of the asset cat we're going to see some strong balance sheet growth for Wells Fargo, continuation of what they were reporting in the fourth quarter. That's really going to be reflected in areas like trading assets within the bank and also in areas like lending in the markets business lending to these non bank financial
institutions that I alluded to earlier. So it's one other thing that we're looking for is maybe a rebound in the capital markets results relative to its peers. I would mention in the fourth quarter they lagged a little bit, so hoping for a rebound there in the first quarter.
And when it comes to a city group, we had some recent reporting from Bloomberg News that they might be thinking about buying a regional bank to grow their business further. How real is that? Do you expect that to come up in the call?
I do?
I think analysts will probe on that. I think in the near term probably Jane Frasier, their CEO, pauses that potential. In the near term, I think that's really reflected due to the fact that their evaluation is relatively weaker than peers. They're going to need to improve in order to make
an M and A deal work financially. That being said, they have a investor day coming up in May, so we'll hear more about that in the first quarter reporting, and we think first quarter results really lays the groundwork for some positive news heading into the investor Day.
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