00:00So it's a little bit of an unusual situation to have five of the six biggest banks reporting all
00:05within, you know, a span of a couple of hours of each other. And, you know, before we get into
00:10the
00:10specific names, we'd just love to hear overall, what is your expectation for Wall Street this
00:15quarter? Because consensus on the street seems to say that trading looks particularly bright.
00:20Well, I'd say overall earnings look very good. I'd look for earnings to be up 15 to 20 percent
00:27year over year. And if I had a tagline, it would be banks and barbells and the barbells for strength.
00:34But it's not just overall strength and earnings and revenues and efficiency. It's a combination on
00:40one part of the barbell is Wall Street, where we think the industry is poised to have record revenues
00:46this year for a variety of reasons, certainly fixed income trading, equity trading. Now you're seeing
00:51IPOs and acceleration of mergers, but also Main Street. And I think that's the newer emerging
00:58story with this acceleration in middle America commercial loan growth. So some of that might
01:03be trickled down from AI, but also companies are saying, you know, enough waiting. The geopolitical
01:12situation is the new normal. Let's build that new factory. Let's build that new plant. Let's have
01:17capital expenditures. And I think you're going to see that in the commercial loan growth at the
01:23largest banks and then the regional banks when they report to. So the two parts of the barbell,
01:27Wall Street and Main Street. Right. And I think that's a very good setup. So banks and barbells,
01:33I mean, when you think about sort of the setup here and then you go through your roster of coverage,
01:39which bank, if you had to pinpoint one of them, are you most interested to hear from at this juncture?
01:44Well, J.P. Morgan is the biggest bank. They're first. We have Jamie Dimon, who is a generational
01:50CEO, and he just lost the person I thought was going to be his successor. So this is the first
01:57earnings call, I believe, when we have somebody new who will be overseeing the consumer business.
02:04So I want to hear his take on the economy, the financial system, the competition, and their
02:11positioning specifically as relates to the consumer now that they've shuffled management around a
02:18little bit. But he's always very authentic about what he thinks. He's very independent.
02:24And so will it be the sky is falling or things are OK? So that's always a big question when
02:29it
02:29comes to Jamie Dimon and J.P. Morgan's earnings. But I do think their earnings will be quite strong
02:34tomorrow. I am curious, though, too, about the stock. And it's done relatively well. But
02:38is that also the diamond premium? And what does that premium or lack thereof look like if he's not
02:44there? Well, the stock has underperformed this year. Yeah. Over the last three, four years,
02:49it's been fantastic. Right. And under Jamie Dimon, since he became CEO, it's best in class. So but this
02:55year, things have slowed down because they're spending more than they're generating revenues. And
03:01this is simply a timing mismatch. They invest for the three to five year horizon. And so you have
03:07confidence in them being the growth stock among banks. But there is a Jamie Dimon premium. And I
03:12think the bottom line with the eggs of Marianne Lake is that investors want Jamie Dimon to stay.
03:18I think he'll probably stay another three years. Yeah. Investors did not want Marianne Lake to leave.
03:23She was the ex-head of consumer. But if that's the price to pay, that's the price you pay.
03:28Talk to me a little bit about Citigroup. I was just reading a great story today in the Financial
03:32Times about a lot of the changes that Jane Frazier has made since taking over. In your view, have those
03:38changes been for the better? Do you look at Citigroup as a long term growth story? Come on, it's been
03:43my
03:43number one pick for the last two years. And as you know, I had the big sell rating on it
03:49back in the
03:49financial crisis. So and I testified to Congress partly about Citigroup. So over three decades, I say
03:56Citigroup is undergoing a multi-decade cultural transformation. And cultural changes take time.
04:04It could take five to 10 years. But Jane Frazier has put this company on the right trajectory. Now
04:10they've changed from 50 years of a global matrix structure to five lines of business. So it's easy
04:17to talk about it now. It's abbreviated by payments, banking, markets, cards and wealth. That's it.
04:24And there's a CEO for each one of those five lines of businesses with targeted returns and CEOs that
04:29are responsible for achieving those returns. And there's nowhere to hide. Those five CEOs report
04:34directly to Jane Frazier. There's none of these co-presidents or dual heads or anything like that.
04:39And that is night and day different from Citigroup of the past. And frankly, it's better than,
04:44you know, some of their peers, too. Yeah, absolutely. And we're seeing that, you know,
04:48co-structure really emerge at a lot of the other places. I know that Goldman is particularly fond of it.
04:53I do want to talk about the other end of the barbell because we're talking about Wall Street,
04:57of course. But when you think about the regionals, and we have a little bit to wait here,
05:01how are you expecting, you know, some of those smaller size, those midsize banks to perform?
05:07Well, the stars of this quarter will be, you know, Goliath is winning the largest bank. That's been our
05:11theme. So that's going to be the big five that report it. You're going to see some strong results.
05:17Citigroup, JP Morgan, Bank of America, and especially Goldman Sachs and Morgan Stanley. So they're going
05:22to be the standouts. But, you know, surprise, not surprise, regional banks have some capital markets
05:27also. They benefit from record high stock markets. Their fee revenues can do quite well. But also that
05:34commercial loan growth coming back. And it's been a long way, decade to date, commercial loans,
05:40the traditional commercial loans. I'm not talking about hyperscalers or data centers or the AI stuff.
05:45I'm talking about plain old middle America commercial borrowing. I think this is an inflection point.
05:50And I think the regional banks will be talking a lot more about that. And I'll be digging into that,
05:55what regions, what industries, how sustainable. I think this is quite sustainable for the next
05:59few years. So I'm ringing the bell on traditional commercial loan growth coming back. And that should
06:05help the regionals disproportionately more. Only have about 30 seconds left. Is there anything that
06:12could surprise you this earnings season out of the banks? I would say, and that's one of the
06:17questions, you know, like Goldman and Morgan Stanley, what can make those stocks go even higher?
06:22Absent, if they conducted, if those two firms conducted due diligence for the big IPO and actually
06:27went to Mars and found gold, then maybe that would be extra upside. But no, if the sponsors came back
06:35with more activity, we've been waiting for that for a while. Or if there's any credit issues, the talk of
06:40cockroaches, Jamie Dimon's term for credit losses. We haven't seen that for a couple of quarters.
06:45If that were to come back, the market's not priced for that.
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