To The Moon

1. Are the Cuts in Q2 Estimates Offering Chances for Earnings Beats?

Yes, they potentially are.

At the beginning of Q2, analysts trimmed earnings forecasts for many sectors—including financials—due to macroeconomic uncertainty (e.g. slower loan growth, consumer delinquencies, and continued pressure on net interest margins). However, lowered expectations increase the likelihood of earnings beats, especially if:

Trading revenues from volatile markets (AI, tech rotation, rate cuts) were strong.

Investment banking activity picked up, especially in equity capital markets and M&A.

Credit quality remained stable despite consumer headwinds.

Banks that show resilience in fee-based businesses and trading will be better positioned to outperform these cautious expectations.

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2. Can Big Banks Beat and Benefit from Volatile Markets as Usual?

Yes, and this remains a core competitive advantage—especially for the universal banks with strong trading and investment banking arms:

JPMorgan Chase and Goldman Sachs are well-positioned to capitalise on market volatility. If equity and fixed-income trading volumes surged during Q2, their trading desks will likely show robust results.

Morgan Stanley may also benefit, particularly via its wealth management and investment banking franchises.

Volatility in Q2 (especially from rate speculation and AI-related equities) likely benefited trading revenues.

Key catalysts:

Increased M&A, IPO, and debt issuance activity—after a long lull—could lift advisory and underwriting fees.

Higher volatility can widen bid-ask spreads, benefitting trading desks.

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3. Which Big Banks Are You Most Bullish On?

Given current market conditions and structural advantages, here is a bullish-to-cautious ranking among the major banks:

🔵 1. JPMorgan Chase (JPM) – Most Bullish

Diversified across retail, commercial, investment banking, and trading.

Consistent earnings delivery and strong capital position.

CEO Jamie Dimon's conservative capital strategy positions JPM well for uncertainty.

Beneficiary of deposit flight from smaller banks and strength in both loans and deposits.

🟢 2. Goldman Sachs (GS)

Heavy exposure to trading and investment banking.

Beneficiary of improved M&A and capital market activity.

Recent repositioning towards asset and wealth management offers a more stable earnings base.

🟢 3. Morgan Stanley (MS)

Less dependent on traditional banking.

Leading position in wealth management gives it stability during interest rate transitions.

Likely to benefit from better performance in advisory and asset management.

🟠 4. Bank of America (BAC)

Sensitive to interest rate movements—flat yield curve could pressure NII.

However, broad retail footprint and deposit base are long-term strengths.

🟠 5. Citigroup (C)

Undervalued but with execution risks and lagging profitability.

Restructuring and simplification efforts remain a key story.

May surprise to the upside on trading revenues but remains a “show-me” stock.

🟠 6. Wells Fargo (WFC)

More exposed to US consumer and mortgage markets.

Benefit from cost-cutting and buybacks, but less trading upside.

Regulatory overhang and efficiency ratio improvements remain critical.

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Conclusion

The Q2 earnings season could see positive surprises from the big banks, particularly those with strong trading and advisory arms. If volatility and capital markets activity were elevated in Q2—as the data suggests—then JPMorgan, Goldman Sachs, and Morgan Stanley are well-positioned to beat expectations.

Markets may reward not just earnings beats but guidance upgrades, commentary on capital returns, and insight into credit quality and consumer health.