00:00 Speaker A
JP Morgan Chief Executive Jamie Diamond said the US economy faces increasingly complex risks amid the effects of conflict in the Middle East. Diamond’s comments came as the bank reported its second-best quarterly results ever. Citi and Wells Fargo also followed suit as both banks reported Q1 profits. Wells Fargo’s stock is seeing its biggest drop in a year today.
00:20 Speaker B
Uh, you know, AI risk kind of heading this year and and the volatility that’s gone on in the market. Um, so the private credit dynamic, which I think overall I think is a good story through earnings. But then Iran is also trying to ease the volatility it creates in the market, but even with high oil there is some ripple effect on consumers? Um, so it’s complicated, but I think what you’re seeing is the banks are navigating it relatively well.
00:54 Speaker B
And um and I also want to say that the approaches you’re getting on the calls are very constructive on all of those points. And so, you know, stocks are reacting. I would say mixed, but I think part of it is because the bar to earnings was relatively high. People knew these results would be decent.
01:10 Speaker B
So, Um II thinks they’re navigating the complexity well and really around the edges, I’d say some of the forward commentary has been a little better.
01:15 Speaker A
When you think about Wells Fargo seeing its biggest decline in a year, primarily due to its net interest income results. What do you make of that? What does that tell you? What kind of insight do you get from that?
01:25 Speaker B
Yeah, I think II won’t respond much. I know the market is, you know, it’s today and the earnings, you know, were a little bit of a miss and so there’s not a lot of room to miss in this market especially for some of these stocks that are more resilient. So I think that’s part of it.
01:42 Speaker B
We’re coming out of a really good investment banking quarter for a lot of these companies. Goldman reported yesterday. M&A advisory fees were up more than 80% and all of them are backfilling backlogs. So, uh, there’s a little bit of a timing effect primarily from the war, but uh companies are getting on the other side of it. So I would say, you know, Wells’ response today is that point is just a little bit of a high bar, a little bit of a soft, you know, forward guide on net interest income, but the broader non-um, non-interest income lines are actually doing well.
02:08 Speaker A
When you think about JP Morgan Citi reporting these record quarterly revenues, we saw Citi profits jump nearly 40%. yes I mean, how much does it have to do with this war and how does this momentum keep up?
02:18 Speaker B
Yeah, well, I think what it shows is the benefits of diversity. So, uh investment banking is doing well based on a number of deals announced late last year, so it’s not necessarily forward-looking, but these companies are benefiting from the volatility in the business. And so the business uh results, you know, we feel like every year uh there are some events, right? Last year was going on Mukti Day and that helped the business early last year and then this year the bar is very high. It can be difficult to get through and certainly here we are this year where in the first quarter we had all these events that we just talked about and business was very good.
02:46 Speaker B
The positive data point I would say on this is that Goldman said after yesterday, you know, a really good trading quarter in the early days of the second quarter, it continues. So, at least there’s a read that this wasn’t just a blip from volatility, that they’re still seeing customers really engage. And then on the corporate side, the corporate clients, they’re getting used to this volatility. Something is happening every year. So they have to make strategic decisions. There are some very large deals on the IPO calendar that we all know are still progressing and then on the M&A side, um they have to make these strategic decisions with AI risks and everything else. You can’t sit still. So that’s, you know, the catalyst to make decisions effectively.
