he is the research analyst at kbw.e really count on top-notch analysis of the bank from kbw so thank you for your time. what can you tell us about the big banks reporting today overall? what is the common thread in terms of strength we saw? >> thanks for having me. it was definitely a mixed quarter. what we saw was better than expected earnings, revenue beats were across the board. i think the issue is the sustainability ofnii. the sustainability into 2024 is a little bit challenging and that's the rising deposit costs. the quarters beat does this year because deposit costs in this quarter didn't rise much as we anticipated. it sounds i for management, it's a man -- it's a matter of winding up in the same place. i think people are questioning sustainability today. matt: as we get rising deposit costs, don't consumers get used to higher rates and borrowing more money at those rates? doesn't that help to boost the top side of the net interest margin? >> maybe a little bit. i think we are seeing a lot of growth in credit

it's interesting because you are at comerica, one of the worst five performers on the kbw bank index.n these banks and the industry at large even with interest income rising. you are seeing american express also take a hit. this is spending growing. the reason we have american express and capital one net connect is interesting. american express tends to have a consumer base that is wealthier and therefore they have been expected to hold up well through the storm expected in the market. however, you are seeing revenue rise less than expected and therefore they are taking a hit to their stock price today as well. i will point out that capital 1 -- the reason i am pointing out as they have been the best performer in the kbw bank index and they are coming in better-than-expected and maintaining their gains. a messy week all in all but the good thing you have seen -- the good thing all in all is you have seen a rise in the banking system overall. so is now going to be a matter moving forward of watching at what pace growth happens at because the consensus here is that things are slowing do

much of this is already priced into bank stocks with valuations well below historical averages kbw sayshis is what the trough looks like so, if that's true, maybe any hints of green shoots from the reports and conference calls may help generate renewed investor interest in the group. we'll see you tomorrow when three of the big money center banks, jpmorgan, citi and wells fargo report i'll be sitting down with citi's cfo mark mason tomorrow afternoon. >> lt, thanks. for more on what to expect as earnings kick off tomorrow, we are joined by tom michaud. set the table. what is the most important thing to look for this round >> i think the first thing is profits are declining. we're looking at 7% decline year over year. we're resetting the earnings estimate because of the historic change in interest rates i think that's going to be on the table and that's probably going to play out in the next couple of quarters the market's watching very closely on credit. we think credit costs on the first and second quarter will be up 20% up 20% from zero so, still, very benign i think the market wants

we saw the kbw up 7%. these evaluations are cheap, the banks have turned a page since march. shery: vonnie quinn with the latest in bank earnings, let's see how the markets in asia >> >>. we are focusing in on the boj, had a survey coming out, telling us what investors are expecting in terms of the timeline for any sort of change in policies. that has been pushed once again. it is more than 80% of respondents saying they are not expecting any changes in the upcoming meeting in july. compare that to the last meeting, one in three or expecting a pivot. the reaction we are seeing coming through in the japanese yen, we saw strength. partly down to a softer dollar, that trend is resuming, heading back 140 level. we are counting down to the inflation data due out tomorrow in japan. or on that survey ahead. let's take a look at the markets, futures are looking mixed. what is going to be happening in china, we have seen the slide. that could look to be reversed, we saw the golden dragon index in the u.s. session moving higher. another vow coming through from policy in china to suppor

redoesdeposits rebou after the silicon valley bank collapse zions is releasing more with christopher from kbw >> good morning, frank. >> a number of banks beating expectations admittedly lower in expe expectations deposit levels are something to watch with people concerned about the regionals. arestabilize >> we are not four months removed from the silicon valley bank collapse and we hhave stab stabilized in terms of the quarter, we are seeing expectations brought down into the quarter and the bar has been lowered banks are jumping over a low bar. that is part of the rally this week. >> i want to go back to rising rates. that caused trouble for regionals with the bond holdings is that an issue for the balance sheet? are you surprised to see m&t with the tailwind with the boost in rates >> higher rates means wider margins. that is only to a point. given the pace the fed moved in the last year, at some point, the liability has caught up. you are seeing margins peak and roll over. that is what we are seeing into the quarter. that is what we see with the back half of the year. loan growth remains

in the regular session we actually had the kbw index at the highest since march since we got earnings from the likes of other banks like wells fargo and goldman sachs. we had real estate and utilities leading the way and a little more optimism when it came to the strategy from apple. u.s. treasuries joined given that we saw those price pressures in the u.k. drop until the lowest -- dropping to the lowest in 15 months, but crude is down almost .2%. this of course as we had seen traders ignoring the stockpile report that saw downside pressure which would have shown them a better market picture. tesla is down, netflix is down, pressure in the after-hours session, you can see that profitability shrinking in the second quarter or tesla, not sitting well, it flicks also falling after sales and forecasts fell short of estimates. let's get into tesla first with su keenan. investors are not liking what they see so far. >> they don't like the lower profitability, and on the earnings call, muska said that he will price cards -- cut prices even further if economic conditions worsen. and he is qui

sonali: in this bank earnings season, kbw bank index, every stock back in the green after steep selloffs. even with the jump today, u.s. bancorp is still down 12% on the year, bank of america negative on the year. do they deserve that? mike: i think these are ridiculous valuations. these are some of the least expensive valuations aside from a crisis or recession that i've seen in my over 30 years of doing this. matt: repeat that. in your 30 years of covering these banks, these are the worst valuations, the furthest away from reality? mike: these are the worst noncrisis, non-recession valuations i've seen. during the global financial crisis, during the pandemic, they were cheaper than, but right now you don't have an impending hard landing recession, you don't have a crisis happening right now. you have resiliency of balance sheets. you have estimate revisions lower, but relative to the stock market, price ratios that are a or nine times versus 20 times. there are three discounts. one is the bank crisis discount. the crisis is over if it ever started. the second is the bank recession disc

dani: the kbw index was up slightly about .6%. thank you for joining.ali basak and michael mckee. this is mont berg. ♪ -- this is bloomberg. ♪ kailey: we have talked a lot about the macro, but we need to note some micro stories. a lot of earnings are coming down the line. meta is one that we discussed but is worth mentioning again because it is the biggest points contributor to the s&p 500 today. we have an ad recovery and reels doing incredibly well. that stock is up 7% in its highest level since february of last year. rule caribbean used in their outlook and are seeing accelerated demand for cruises. the story is in a strong for southwest airlines. they are warning about higher costs. business travel isn't back to pre-pandemic levels. it's down by 9.4%. chipotle is down to the better part of 9%. sales falling short in the third quarter outlook suggesting that momentum is slowing. not as many people showing up for guac and chips. dani: when it comes to the europe story, a lot of earnings. they are supportive of the market. the large-cap index is up, as

sonali: i wish i could give you a blanket answer but if you take a look at the kbw bank index, you have some banks that have sold out 40% or more and that is a regional banking system that has a different set of pressures and costs. bank of america was trading below its book value. does it deserve that? there are pressures on cost on the banking system above and outside the idea on how much money they are bringing but what brian moynihan is telling you is a good example of the banks that can -- and are up almost more than 3.5%. they are telling you they will make more money than they are putting out -- out the door and at a greater rate and they are willing to spend money because they are positive about their ability to earn. are they a good way to play the idea of a soft landing? many banks have sold off with the bathwater. it will be a matter of parsing through those costs and partially those costs side to credit. kailey: the bathwater is the multiple bank failures in 2023, a lot of concern of whether or not the system was stable and concern about deposit flight. that's something we h

per ticket early for these banks that are of the few that are up on the year in the kbw inc.ully, you get to enjoy the weekend before the banking numbers. later today, the banking conversation continues. the wells fargo cfo will be joining the bloomberg markets team at 2:00 p.m. new york time. hollywood goes dark as actors join writers in a tandem strike, not seen since 1960. we will have the details, next. this is bloomberg. ♪ [laughter] [applause] >> sag-aftra -- i am completely fascinated by this story, one i will be watching in the next few weeks because it could effectively shut down the industry in new york, across the u.s. and california. kriti gupta is joining us for now. what led to this tipping moment? >> this has been in the works for a while. a lot of actors have openly supported the writers guild. they said, we understand where they are question -- they are coming from. this is a question of pay, a minimum amount of work you can charge a proper fifa for. things like 13 weeks of pay per show and getting some of that paid back if you create a hit show and it goes v

look at the performance year to date of jp morgan versus the rest of the kbw banking index. divergence happens in march during the svb regional banking crisis. there is the thing. jp morgan's gain is still less than the entirety of the s&p 500, so there is concern about the industry. are we reaching peak net interest income, are deposit datas going to pick up, is the consumer under pressure? regardless, analysts expect jp morgan to shine. i want to show you what a banking analyst at wells fargo had to say of jp morgan. this might be the best court of all time. he wrote jp morgan is like the lebron james of banking. they are good not only at defense, they are good at offense. this quarter showed how they are able to put a lot of points on the board, while maintaining balance sheet strength. that is the most stretched best of paul manafort you will ever get about jp morgan. which goes to show the excitement you will get. i mentioned other earnings in europe. this morning, we had novartis hitting the tape 25 minutes ago. they are planning to buy back up to $15 billion worth of

what we look at in purple, the kbw bank index, the regional banks in there on the year at 17%. xls is slightly higher 1.3%. jp morgan probably helping out there. the s&p 500 up nearly 18%. 14%. and -- the nasdaq 100 up 14%. and he asked the question we you see this rotation into the bank? it is hard to say. finally, if we go cross asset, look at the bloomberg dollar index. we have a bid after a five-day slide. we will see if it holds any importance. the two year yield helping the dire -- dollar go higher. the vix at 20. that of course is the nasdaq 100 mix and it is a good .6 point -- good six points higher. some investors are concerned about what could be ahead for big tech. dani: the two-year getting pummeled by those numbers. thank you, abigail doolittle. what she was talking about, earnings gets into the question of the day. combining with the economic outlook will earnings confirm a goldilocks economy? let's take a look at it from the view of the real economy. we are diving into this. >> one way to look at the economy is to look at the industrials and the freight market to

u.s., li, zion, one of the worst performers in the kbw bank index, zions has a huge commercial real indexwednesday i think is even more interesting than tomorrow. thursday interesting even more with capital one and the credit card companies. you get such a robust amount of data this week on the credit quality and what it looks like across the united states. guy: the banks so far are always doing too well. the market knows there are bad things coming and at some point those bad things will arrive. will it be better if they arrive earlier or later? sonali: earlier. always earlier. the difficulty in modeling here just how bad provisioning really gets over a long period of time. and just how bad the conversion is into delinquencies and worsening credit metrics across different types of loans. it is a credit cards, auto loans, hard-core consumer business that is -- people are more worried about when we get the recessionary views. jamie dimon out there saying it is anyone's guess of whether it is a hard or soft landing. that is not we hear from others with janet yellen taking a more optimistic

when it comes to earnings, the bkw bank index -- the kbw bank index seeing its best day in more than six weeks. that is to do with results from morgan stanley and bank of america as well. looking out of the treasury's place, the 10-year yield falling below the 3.8 level. oil prices extending the gains we saw in the new york session. we had risk-on sentiment in the regular session also russian seaborne crude flows degrading to the lowest in six months. haidi: after more than a year in the dealmaking doldrums, wall street big banks are finally seeing lives in their capital markets businesses. bloomberg's su keenan joins us now. we are seeing encouraging signs in the results, bank of america and morgan stanley among them. su: these latest results are really a shot in the arm four stocks. court wall street results for bank of america beat expectations. morgan stanley gate on equities trading that they really blew the street away with the surprised strength in investment banking. in fact, with these latest two results, bank of america and j.p. morgan standing joint bank of -- bank of amer

if you zoom up to the kbw index, it dropped and is near march lows. does that seem like a buying opportunity? cameron: when you see a big earnings reset happen and there is uncertainty about the power going forward, it is understandable he would see things bounce along the bottom. they were cheap but you don't know the degree of regulation and the margin compression. even though they are cheap, that may be very well warranted it. katie: so not crisis mode but long-lasting impact of the grind of what happened in march. cameron: exactly. what will be watch is if we see loan growth. it has been flashing tightening standards for well over a year, almost 18 months but we seek healthy loan both. it has moderated but not falling off a cliff. that is the big watch in the second half. tom: it is going to be interesting to see how this plays out. i want to talk about fear of missing out. i am fascinated what you are seeing in conversation with adults in the market living single digit and they are scared to get to 1231. what will their behavior be? cameron: ther

i think kbw for our 2024 estimates for banks, we have cut estimates 20% in the last six months.t to know when is that going to stop? when is the reset to profitability going to stop? jonathan: can you help us understand the size of the banks? tom m.: it is all the way through the industry. jonathan: up and down? tom m.: if i were to talk about dynamics, if you are a spread income lender view of more pressure. don't forget we think the second quarter will be a difficult quarter for investment banking. they did a smidgen better than we thought but let's say down 20% year-over-year. we are seeing green shoots and investment banking. only half a dozen or so companies were that matters. the other companies are feeling the brunt of the spread compression which impacts the bigger banks, even though the biggest banks are faring better. jonathan: have you been surprised at how quickly we have left behind the events of march and april? lisa: i am -- tom m.: i am, which is good and bad. it is good because the american banking industry is resilient and these were idiosyncratic risks. at the

to point out, though, that banks have not been a bellwether for the stock market in a long time the kbwanks index, which is a very long dated thing, treats it basically the same level as 1998 that was the implosion of value and the global financial crisis but it shows you you didn't need them to take the market higher >> jpm, not an all-time high certainly, but right at a 52-week high that is jpmorgan chase >>> riding the mega cap rally into the second half will be our next subject wedbush's dan ives is going to join us to discuss that. take a look at futures lot more "squawk on the street" rahthe f you your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. at stores everywhere without a prescription. you know doug, ever since switching to workday you've been a real