Catalyst Watch
As Good As It Gets
Welcome to Catalyst Watch at The Transcript, a report for paid subscribers that highlights investment themes from this week’s newsletter.
1. Banks Reported Strong Numbers and Had Positive Things to Say About the Economy
It’s been pretty clear that capital markets have been strong, so it’s not surprising that banks reported record earnings last week. Almost all of the bank CEOs had positive things to say about the economic environment, and most cited AI as a driver of capital markets activity. Comments like this one from Brian Moynihan at Bank of America were typical:
“Overall, the US economy has proved more durable than expected, supported by the strong consumer, ongoing AI-driven investments across the board, and easing energy costs, though inflation, tighter monetary policy remain key risks.” - Bank of America (BAC -1.40%↓) CEO Brian Moynihan
Still, there were some voices of caution on bank earnings calls. Wells Fargo and Jamie Dimon both reminded us that strong environments don’t last forever.
“The market is clearly extremely risk-on. We are kind of takers of that, and we are trying to strike the right balance between supporting all our clients and being appropriately cautious in an environment that has some complicated dynamics in it…It’s getting close to as good as it gets. We just don’t know how long it’s going to last.” - JPMorgan Chase (JPM -1.37%↓) CFO Jeremy Barnum
“Strong environments like this don’t last forever, and we see large amounts of capital being deployed by both banks and nonbanks across a broad range of risk assets. Often, when times like this continue, leverage and risks develop that are sometimes hard to see.” - Wells Fargo (WFC -2.04%↓) CEO Charles Scharf
