Investors believe credit issues are idiosyncratic, says Trivariate's Adam Parker

Market Outlook - Institutional investors generally believe current credit concerns are temporary and focus will shift back to earnings [2] - The market may soon refocus on Mag 7 earnings, Visa, Mastercard, and AI, potentially overshadowing credit concerns [8] - Credit is viewed as a leading indicator, but strong earnings season could alleviate fears [9] Banking Sector Analysis - The firm favors large-cap, high-quality banks over regional banks due to their greater ability to absorb losses [4] - Larger banks are less likely to be significantly affected by losses, such as $50 million, making them a safer investment [4] - Big bank earnings prior to recent credit concerns were generally solid, with upward revisions and manageable provisioning [5][6] Investment Strategy & Risk Assessment - Earnings season is expected to be positively skewed, with the biggest risk being increased capital expenditure (capex) due to high returns on hyperscale investments [10] - There are cycle trading signals, with some stocks experiencing massive gains, reminiscent of the late 1990s [14] - The firm believes the lending cycle is still in an earlier phase compared to the valuation trading cycle [15][16]