Shares of Wells Fargo and JPMorgan slide after earnings

Right now with more reaction to JP Morgan and Wells Fargo earnings, David George joins us, he is Baird Senior Research Analyst. And what did you think looking through these numbers because even though both of those banks beat on both the bottom and the top line, you are looking at both the stock selling off. Yeah, that’s right. Good morning. From our perspective in terms of the stocks, keep in mind that that both of these names have had big moves so far in 2024 and and I think there was an expectation that both companies were going to guide up Becky with respect to net interest income. So I think that there was some hopes particularly out of JP Morgan that where we’re going to see a little more upside as it relates to net to net interest income and and unfortunately we didn’t get that. But again, the quarter was fine, credit quality was good, markets businesses were good. They did beat QQ one on both top and bottom line. So I think it’s important to have that perspective that the quarter was good. But at 2.4 times tangible, Becky, from a valuation standpoint, the market simply wanted more. David, is that ridiculously high expectations? I mean we just got the CPI numbers on Wednesday that showed consumer inflation was hotter than expected. You got PPI yesterday that showed producer prices not hotter than expected. If you’re going to raise your net interest income, it’s going to be on the idea that you are much more convinced that the feds not going to raise rates anytime soon. That may just be a step too far for any of these banks to jump to that. And by not saying it, maybe they’re just being conservative and playing it smart. Yeah, I think that’s right. I was just going to say that that I do think they’re being conservative. But but again that that the hope springs eternal, particularly with forward expectations with the Fed. And as you mentioned, expectations have been incredibly volatile. So I think in both cases that there is some conservatism in place, but this is simply a situation of of some profit taking after very strong moves in both of these stocks from our standpoint, both of them are very crowded in the investment community. So a little bit of softness today is, is not particularly surprising given again those guys were just a little light I think relative to maybe what market participants were hoping for. We haven’t heard from Citi just yet. We will be hearing from them later today. JP Morgan Chase, Wells Fargo City which is your favorite of these three, we’re neutral on both JP Morgan and Wells Fargo. Wells Fargo we were big bulls on for the last couple of years and we downgraded earlier in the first quarter simply on valuation. And JP Morgan we’ve been neutral on over the near term for the same reason. Our preference, Becky, has really been in that regional bank group, the valuation and risk reward trade-offs and from our standpoint at least is much more attractive. Stocks like Comerica, Truest Key, Huntington look much more attractive on a valuation basis relative to the mega caps, which from our standpoint are much more crowded and and a lot more expensive. You didn’t mention city. Yeah, we don’t cover City. So I can’t really give you anything there, My apologies. But again, that’s, that’s good to know. I wasn’t sure why it was left out. Just wanted to make sure it wasn’t like, oh, they really stink or oh, they’re really great. So, David, thank you for clarifying and thank you for talking through these results so quickly with us. Sure. Thanks. Good morning.