Bank earnings season is here once again. Third-quarter results begin rolling out on Tuesday of this week , with JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, and BlackRock all set to report before the market opens. Together, those five firms represent around $1.5 trillion in market value, or the core of the publicly traded U.S. financial sector. The deluge will continue through mid-week, with Bank of America and Morgan Stanley headlining on Wednesday. Thursday’s slate is heavy, too, including Ch ...

You can find original article here WealthManagement. Subscribe to our free daily WealthManagement newsletters. A father-son duo has left Wells Fargo to launch their own registered investment advisory firm in Mission Viejo, California. Ticino Wealth was founded by former Wells advisors Michael Masciorini and his son Jordan. The firm is staying with Wells for clearing and custody services in a move founder Michael Masciorini calls a “structural change,” not a “shift in philosophy or service.” “This move w ...

Core Viewpoint - Major banks on Wall Street are poised for a strong third-quarter earnings season, with analysts expecting a 6% profit increase compared to the same period last year [3][4]. Group 1: Earnings Expectations - Analysts predict that the core loan, trading, and investment banking revenues of major banks will see comprehensive growth, marking the seventh consecutive quarter of growth for investment banking and trading revenues, excluding Wells Fargo [4]. - The stock prices of Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley have risen between 23% and 40% this year, outperforming the S&P 500 index by at least 9 percentage points [4]. Group 2: Market Conditions - The current market environment is characterized by high activity levels due to geopolitical dynamics, interest rate, and exchange rate fluctuations, contributing to a favorable outlook for banks [4]. - Despite earlier uncertainties caused by regulatory policies, global corporate merger and acquisition activity has surpassed $1 trillion, with a rebound in IPOs, corporate bond issuances, and syndicated loans [5]. Group 3: Management Insights - Bank executives expressed optimism regarding investment banking progress and the resilience of the U.S. economy during a Barclays conference, indicating that they are actively engaging with clients about the impacts of regulatory policies [5]. - Increased compensation costs across banks are seen as a reflection of heightened investment banking and trading activities, termed as "benign spending" by JPMorgan's co-head of commercial and investment banking [5]. Group 4: Concerns and Risks - JPMorgan CEO Jamie Dimon and Goldman Sachs CEO David Solomon warned of potential stock market corrections in the next two years, citing concerns over trade, tax, and immigration issues [6]. - Recent bankruptcies in the U.S. automotive sector have raised concerns about the credit environment, particularly regarding high-yield bonds and opaque markets [6][7]. Group 5: Credit Exposure - Documents reveal that JPMorgan and Fifth Third Bank have credit exposure to Tricolor, while larger creditors in the First Brands bankruptcy include Jefferies, UBS, and First Citizens Bank [7]. - Jefferies has reported $715 million in receivables related to the bankrupt First Brands Group, leading to a 20% drop in its stock price since being identified as a creditor [8].

Core Viewpoint - The third-quarter earnings season is commencing, with significant attention on major banks and retail favorites, as investors anticipate earnings reports from various companies [1]. Group 1: Earnings Reports Overview - Fastenal Company (NASDAQ:FAST) is expected to report earnings of 30 cents per share on revenue of $2.13 billion [2]. - ASML Holding N.V. (NASDAQ:ASML) is forecasted to report earnings per share of $6.36 and revenue of $8.81 billion, indicating year-over-year growth [6]. - Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is projected to report earnings per share of $2.59 and quarterly revenue of $31.5 billion, driven by advanced chip demand for AI applications [10]. Group 2: Key Companies Reporting - Major banks such as JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C), and The Goldman Sachs Group, Inc. (NYSE:GS) will report earnings before the market opens on Tuesday [4]. - Other notable companies reporting include Johnson & Johnson (NYSE:JNJ), Domino's Pizza, Inc. (NYSE:DPZ), and BlackRock, Inc. (NYSE:BLK) [5]. - On Wednesday, additional bank earnings will come from Morgan Stanley (NYSE:MS), Bank of America Corp (NYSE:BAC), and Synchrony Financial (NYSE:SYF) [7]. Group 3: Market Expectations - Investors are particularly interested in Fastenal's sales growth from digital initiatives and expanded customer contracts, alongside improved margins due to cost controls [3]. - TSMC's strong year-to-date stock performance and leadership in chip fabrication are highlighted, with analysts maintaining a Positive rating and raising the price target from $300 to $400 [11].

Core Viewpoint - The earnings season is commencing with significant reports from major banks and tech companies, indicating a pivotal week for stock performance [1]. Earnings Reports - Key companies reporting this week include Bank of America (BAC), Taiwan Semiconductor (TSM), JP Morgan (JPM), Wells Fargo (WFC), Citigroup (C), Morgan Stanley (MS), Goldman Sachs (GS), Johnson & Johnson (JNJ), and ASML Holdings (ASML) [1]. Implied Volatility - Prior to earnings announcements, implied volatility tends to be high due to market uncertainty, leading to increased demand for options [2]. - After earnings announcements, implied volatility typically decreases to normal levels [3]. Expected Price Movements - The expected price range for stocks can be estimated by summing the prices of at-the-money put and call options [3]. - Expected price movements for specific stocks are as follows: - Monday: FAST – 5.6% - Tuesday: C – 5.6%, GS – 5.6%, JNJ – 3.3%, JPM – 5.0%, WFC – 5.3% - Wednesday: ASML – 7.9%, BAC – 5.0%, MS – 5.1% - Thursday: IBKR – 6.5%, ISRG – 8.7%, SCHW – 5.7%, TSM – 6.8% - Friday: AXP – 5.3%, SLB – 5.5% [4]. Trading Strategies - Traders can utilize expected price movements to structure their trades, with bearish traders selling bear call spreads and bullish traders selling bull put spreads or using naked puts [5]. - Neutral traders may consider iron condors, ensuring short strikes remain outside the expected range [5]. Risk Management - It is advisable to employ risk-defined strategies and maintain small position sizes when trading options over earnings [6]. - A full loss from a trade should ideally not impact the portfolio by more than 1-3% [6]. High Implied Volatility Stocks - A stock screener can identify stocks with high implied volatility, using filters such as total call volume greater than 5,000, market cap over 40 billion, and IV rank above 60% [7].

Economic and Market Overview - The U.S.-China trade tensions continue to impact market sentiment, with President Trump downplaying the situation while China asserts it will not back down from a tariff war [5][6] - The ongoing government shutdown is expected to last over 30 days, with significant layoffs affecting federal workers, particularly in the Treasury and Health and Human Services departments [5] Earnings Reports - Major banks are set to report Q3 earnings, including JPMorgan, Goldman Sachs, Wells Fargo, BlackRock, Citigroup, Bank of America, and Morgan Stanley [5] - Analysts expect JPMorgan to report EPS of $4.87 on revenue of $45.57 billion, driven by credit card growth and investment banking momentum [5] - Goldman Sachs is forecasted to report EPS of $10.62 on revenue of $14.13 billion, with strong growth in investment banking and asset management [5] Corporate Developments - Warner Bros. Discovery has reportedly rejected an acquisition offer from Paramount Skydance, which was deemed too low at around $20 per share [5] - Paramount is considering options to enhance its bid, including raising the offer price or seeking financial backing [5] Dividend Announcements - AbbVie and Abbott Labs will go ex-dividend on Wednesday, with payout dates on November 14 and November 17, respectively [5] - Delta Air Lines will go ex-dividend on Thursday, with a payout date of November 6 [5] - Colgate-Palmolive will go ex-dividend on Friday, with a payout date of November 14 [5] Investment Insights - Analysts have highlighted vulnerabilities in companies such as SiriusXM and Bumble, citing issues like subscriber losses and shrinking margins [5] - Travelers has a cautious outlook for the commercial lines market, while T. Rowe Price is noted for its high valuation relative to its business focus [5] Brand and Retail Developments - The Jordan Brand, part of Nike, is valued at over $10 billion following a successful marketing strategy initiated in 1984 [6] - Nike has opened a new flagship store in Philadelphia as part of its U.S. expansion plan for the Jordan Brand [6]

Financial Earnings - BlackRock is expected to report Q3 earnings per share (EPS) of $11.26 on revenues of $6.2 billion, with a focus on organic base fee growth projected at 7% for the quarter [1] - Wells Fargo is projected to earn $1.55 per share on revenues of $21.15 billion, with particular attention on buyback activity and future capital return plans [1] - Goldman Sachs is expected to report EPS of $11 on revenue of $14.1 billion, with a consensus for a 15.4% year-over-year increase in investment banking fees [1] Healthcare Sector - Abbott Laboratories is expected to earn $1.30 per share on revenue of $11.4 billion, with a critical focus on the impact of China's volume-based procurement policy on its diagnostics segment [1] - Abbott's medical devices segment has consistently beaten Wall Street expectations for 10 consecutive quarters, particularly in its continuous glucose monitor business [1] Washington Updates - The market is closely monitoring the ongoing government shutdown and its potential impact on economic growth, with the Bureau of Labor Statistics calling back employees for the consumer price index report [2] - President Trump's announcement of a 100% additional tariff on Chinese imports starting Nov. 1 has heightened trade tensions, affecting market sentiment [2] Salesforce and AI Tools - Salesforce's annual Dreamforce conference is anticipated to provide insights into the value of its AI tools, with a focus on whether these tools can drive revenue growth amid concerns about AI's impact on traditional software models [2]

The country's biggest Wall Street banks are riding high into the third quarter reporting season. Analysts expect profits among six major banks to climb 6% from the third quarter of last year, according to Bloomberg data. "It's been a good environment," Barclays analyst Jason Goldberg said. Expectations will be put to the test starting Tuesday morning, when JPMorgan Chase (JPM), Citigroup (C), Goldman Sachs (GS), and Wells Fargo (WFC) kick off the ritual. Bank of America (BAC) and Morgan Stanley (MS) get ...

Core Insights - The market is closely monitoring trade policy developments following President Trump's response to China's rare earth export curbs with higher tariffs [1] - A federal government shutdown may delay the release of key economic reports, but corporate earnings from major banks and semiconductor companies are anticipated [1][3] Corporate Earnings - Major financial firms such as JPMorgan Chase, Wells Fargo, Goldman Sachs, and American Express are set to report earnings this week [2][5] - TSMC, the world's largest chip manufacturer, is expected to report a 40% revenue growth in the first half of 2025 due to strong AI chip sales [7] - Other financial institutions reporting include BlackRock, CitiGroup, Bank of America, and Morgan Stanley throughout the week [6] Economic Data and Federal Reserve - The ongoing government shutdown is likely to extend the blackout on economic data releases, affecting reports on retail sales, jobless claims, and housing starts [3][8] - Federal Reserve officials, including Chair Jerome Powell, are scheduled to speak, coinciding with the release of the Beige Book economic update [9] Key Events and Conferences - Oracle's AI World conference begins on Monday, while Salesforce's Dreamforce event starts on Tuesday [7] - The bond market will be closed on Monday for Columbus Day, but major stock exchanges will remain open [4]

Core Insights - Major banks in the U.S. are set to report their earnings for Q3, with JPMorgan Chase, Wells Fargo, and Citi leading the announcements [1] - The government shutdown has limited economic data availability, making these earnings calls crucial for understanding the health of consumers and businesses [2] Group 1: Credit Quality - Credit quality is a key indicator of whether customers are fulfilling their loan obligations or facing payment difficulties due to financial constraints [3] - There is a divide on Wall Street regarding credit quality predictions, with some analysts expecting deterioration while others foresee continued strength [4] - Last quarter, banks indicated that the economy appeared stable, with JPMorgan's CFO noting that consumers seemed to be doing well [5] Group 2: Loan Growth - Bank loan growth reflects consumer and business confidence in future earnings, influencing borrowing for homes and business expansions [6] - Analysts suggest that new loan demand may have softened in Q3, potentially due to increased competition from non-bank lenders [11][12] - A significant portion of loan growth (60% year-over-year) is attributed to loans made to non-depository financial institutions, including private equity and credit firms [13] Group 3: AI Investment - The AI sector is becoming a major economic driver, with banks like JPMorgan Chase and Goldman Sachs providing substantial financing to AI firms [14] - Investors are keen to understand how much of the banking industry's business will be linked to the AI sector, which presents both potential and risks [15] - There is a belief that aggressive investment in AI is necessary for banks to remain competitive, despite the uncertainty of returns on some projects [16]