The Institutional Risk Analyst

Large universal banks that ply the capital markets and use essentially infinite leverage in the derivatives markets face challenges

Rising interest rates are not good for bank earnings or bank equity valuations.

Bank earnings can be best described as cautiously mediocre, but as usual the Street proclaimed that three banks "beat the estimates"

GS has the weakest position in terms of funding of the top-ten banks and no real narrative for the business post-Marcus.

The US banking industry has seen now two consecutive down quarters for net income caused by the Fed’s massive open market operations

When you are in a big crowd, nothing else matters.

Sadly for the bears in the audience, nothing would make the banks happier than if consumers would use more credit....

If a bank has 6% debt to assets, what is the equity of the parent BHC worth?

We continue to believe that combining Citi and GS may make sense in terms of consolidating two capital markets businesses

Our view is that China has been caught in a debt deflation for the past five years.

With industry losses on every loan closed well north of 200 bp, you might ask yourself why WAL would still be buying conventional loans.

TCBI needs to keep efficiency in the 50s if they want to survive the coming drought in mortgage lending.

S&P was the first to call out the growing lack of fiscal discipline in Washington, downgrading Uncle Sam in 2011

The last Treasury Secretary that tried to extend the maturities of US government debt was Jack Lew (2013-2017). Yellen missed an opportunity

So when we ask why large banks are so big, the answer is that the Federal Reserve Board allows large BHCs to use more leverage

We expect to see USB trading at a discount to JPM and Peer Group 1 until the bank improves its operating leverage to pre-COVID levels.

We all dodged a bullet in Q2 2023 because the repricing of assets and deposits slowed from the crazy levels seen at the end of March.

JPM has an impressive lead in earnings and growth over WFC and C, neither one of which is positioned to catch up with Jamie Dimon in 2023.

The sad fact is that even with another 2% capital, most US banks are arguably insolvent thanks to the Fed “going big.”

The “winners” in the mortgage sector will be those larger players with equally large servicing books that can access bank funding