Core Viewpoint - Morgan Stanley has raised target prices for several major banks ahead of the upcoming Q2 earnings season, indicating a positive outlook for investment banking revenues and stock trading activity [1] Group 1: Earnings Expectations - Morgan Stanley expects Goldman Sachs to report Q2 earnings per share of $10, exceeding market expectations of $9.62, driven by increased investment banking, asset management, and stock market revenues [2] - For JPMorgan Chase, Morgan Stanley anticipates Q2 earnings per share of $4.85, surpassing market expectations of $4.46, attributed to higher fee income and reduced provisions [3] Group 2: Investment Banking Activity - The investment banking business is projected to see a 20% year-over-year increase in fees for Goldman Sachs, significantly higher than the market's expectation of a 4% increase, driven by a 60% rise in merger and acquisition activity [2] - Morgan Stanley notes a 30% year-over-year increase in global announced merger activity in Q2, with North American stock capital market trading volume rising by 49% [3] Group 3: Capital Management - Following stress tests, Morgan Stanley estimates that large banks' excess capital has increased by 26%, from $156 billion to $197 billion, allowing for more flexibility in capital management [5] - The focus for investors is on how quickly banks can optimize their balance sheets and identify capital allocation opportunities, with discussions expected on capital priorities and return speeds during earnings calls [6]

Core View - The upcoming earnings season for major U.S. banks is expected to show strong performance, with Morgan Stanley raising price targets for several banks due to increased activity in capital markets and investment banking revenues exceeding management expectations [1][3]. Group 1: Price Target Adjustments - Morgan Stanley raised the price target for Goldman Sachs from $592 to $680 [2] - The price target for JPMorgan Chase was increased from $240 to $296 [2] - Citigroup's price target was adjusted from $94 to $103 [2] - Regions Financial's price target was raised from $22 to $27 [2] - PNC Financial's price target was slightly increased from $178 to $179 [2] - U.S. Bancorp's price target was raised from $50 to $51 [2] - Truist Financial's price target was adjusted from $43 to $47 [2] Group 2: Earnings Expectations - Goldman Sachs is expected to report Q2 earnings per share of $10, surpassing market expectations of $9.62, driven by increased revenues in investment banking, asset and wealth management, and stock market activities [3] - JPMorgan Chase is projected to have Q2 earnings per share of $4.85, exceeding market expectations of $4.46, due to increased fee income and reduced provisions [4] Group 3: Capital Market Activity - After a brief pause in early April, M&A and IPO activities accelerated significantly in May and June, with global announced M&A transaction volume increasing by 30% year-over-year in Q2 [5] - North American stock capital market trading volume grew by 49% year-over-year by the end of Q2 [5] - The trading volume in over-the-counter markets saw substantial increases, with April rising by 83%, May by 45%, and June by 80% [5] Group 4: Capital Optimization Plans - Morgan Stanley estimates that excess capital among large banks increased by 26% post-stress tests, rising from $156 billion to $197 billion [6] - The reduction in capital requirements is expected to lead banks to optimize their balance sheets and identify capital allocation opportunities [6] - Upcoming earnings calls are anticipated to discuss capital priorities and the pace of capital returns to shareholders [6]