To The Moon

The first major bank results are in, and the market reaction is surprisingly useful.

JPMorgan, Goldman Sachs, Citigroup and Wells Fargo collectively showed that high rates are still producing substantial earnings power. Net interest income remains strong, loan growth has not collapsed, and broad credit deterioration is not yet evident.

Yet bank stocks sold off after the results.

That tells me the market is no longer asking whether banks can make money at high rates.

It is asking:

How much of today's profitability is sustainable if rates stay high long enough to hurt borrowers, dealmaking and credit quality?

That distinction determines what I would buy.

NIM Is Strong, But Credit Is the Real Test

Higher rates initially help banks because assets reprice and lending yields rise.

JPMorgan generated roughly $27 billion of net interest income, up strongly year on year. Citi also produced strong NII growth, while Wells Fargo remained comparatively softer.

But high rates have two phases.

Phase one:

Higher rates → better lending income.

Phase two:

Higher rates → expensive mortgages → weaker borrowers → slower lending → higher credit losses.

The question is whether we are beginning the transition from phase one to phase two.

So I am actually less interested in one quarter of NIM than in provisions, charge-offs and loan growth.

And so far, I do not see a broad credit accident.

JPM: My Quality Pick

JPMorgan is still the bank I would most comfortably own through an uncertain macro environment.

Its Q3 headline result was not perfect. Reported EPS came in at $5.57, and investment-banking momentum softened.

But underneath that, several numbers remain powerful.

Average loans grew around 10% year on year.

Net interest income remained extremely strong.

Consumer banking remained resilient.

JPM also expects NII to continue growing into 2027.

That last point matters.

If rates remain higher for longer but credit quality stays reasonably healthy, JPM can continue earning enormous amounts from its balance sheet.

The risk is valuation.

At roughly $330, I like JPM.

I just do not love chasing it.

JPM Pick Levels

$325-$335: First Pick

We are essentially here.

$305-$320: Preferred Pick

This is my favourite risk/reward zone.

$285-$300: Strong Pick

If JPM reaches here because the entire market is correcting rather than because credit quality is collapsing, I would become considerably more interested.

$345-$350: First Recovery

$360-$365: Breakout Test

A clean break above the previous high would reopen the bullish trend.

$385-$400: Next Target

Below $285: Thesis Check

Goldman Sachs: Best Earnings, Different Trade

Goldman arguably delivered the strongest headline result.

EPS reached about $17.01, comfortably above expectations, while revenue rose strongly to approximately $18.7 billion.

The strength came from global banking and markets.

That tells us something important.

GS is not really my NIM trade.

It is my capital-markets recovery trade.

If IPOs, M&A, underwriting and trading activity accelerate, Goldman has tremendous operating leverage.

But that also makes the stock more sensitive to financial-market conditions.

At around the high $800s, my map is:

$850-$880: First Pick

$800-$840: Preferred Pick

$750-$790: Strong Pick

$915-$930: First Recovery

Above $950: Momentum Confirmation

$1,000+: Bull Target

Below $750, I would reassess the capital-markets thesis.

GS probably offers greater upside torque than JPM if markets remain strong.

JPM offers me greater resilience if they do not.

That is why JPM remains my first choice.

Citi: Cheap for a Reason, But Improving

Citi may actually be the most interesting contrarian setup.

Its Q3 revenue reached roughly $23.8 billion, its strongest third-quarter revenue in about a decade, while earnings substantially improved.

Yet C sold off sharply.

Part of that reflects expectations.

Part reflects continued scepticism around execution.

And part reflects concern about consumer credit and higher provisions.

For Citi, the question is not whether one quarter was good.

It is whether Jane Fraser can produce multiple quarters of improving returns without another restructuring surprise.

My levels:

$118-$123: First Pick

$108-$115: Preferred Pick

$98-$105: Strong Pick

$128-$130: Recovery

Above $135: Breakout

$145-$155: Bull Target

Below $98 would force a deeper thesis review.

For investors willing to accept execution risk, Citi may have greater rerating potential than JPM.

But greater potential does not mean greater probability.

Wells Fargo Is the One I Would Be More Patient With

Wells Fargo is more difficult.

Its NII of roughly $12.5 billion came in slightly below expectations, while credit-loss provisions increased.

That does not mean something is broken.

But when the entire Tiger topic is asking whether NIM can justify bank valuations, I would rather own the bank showing stronger NII momentum.

WFC still has a potentially attractive longer-term story following removal of its asset cap, which gives it more freedom to grow.

But that freedom only creates value if new assets generate attractive returns.

I therefore want a better entry.

$78-$82: First Pick

$72-$77: Preferred Pick

$65-$70: Strong Pick

Above roughly $90-$92, I would want stronger fundamental confirmation before chasing.

The Macro Variable Nobody Should Ignore

The 10-year Treasury yield is now doing two contradictory things to banks.

Higher yields support asset yields and potentially NIM.

But excessively high yields can suppress:

Housing.

Commercial real estate.

Loan demand.

M&A.

IPO activity.

Consumer borrowing.

And eventually credit quality.

So there is probably a sweet spot.

I do not necessarily want rates collapsing.

That could signal recession.

But I also do not want yields surging uncontrollably.

For banks, high but stable rates may actually be the best environment.

That allows NII to remain healthy without creating progressively more stress for borrowers.

What I Am Watching Next

Bank of America and Morgan Stanley now give us another important read.

If their results confirm resilient credit, decent loan demand and healthy capital-markets activity, I become more confident that Tuesday's weakness was primarily an expectations reset.

If they show sharply rising provisions, weakening borrowers or deteriorating loan demand, I become more defensive.

That is why I would not buy every bank simply because prices dropped after earnings.

The next phase will separate the banks with genuine earnings durability from those simply benefiting from high rates.

My Ranking

1. JPM: Highest conviction

Best combination of NII, diversification, balance-sheet strength and resilience.

Preferred Pick: $305-$320

2. GS: Best capital-markets upside

More sensitive to trading, IPO and M&A recovery.

Preferred Pick: $800-$840

3. C: Best rerating potential

Cheaper and improving, but still requires execution.

Preferred Pick: $108-$115

4. WFC: Wait for a better price

The story is improving, but I want more evidence that balance-sheet expansion translates into stronger profitability.

Preferred Pick: $72-$77

My 2-4 Week View

I assign roughly 50% probability to bank stocks consolidating after earnings as investors digest strong current profitability against higher-rate risks.

I give 30% probability to another leg higher if upcoming bank results confirm resilient credit and Treasury yields stabilise.

And I assign 20% probability to a deeper correction if inflation pushes yields higher and banks begin signalling greater borrower stress.

That final scenario is important.

If JPM falls toward $305-$320 while credit remains healthy, I see opportunity.

If JPM falls there because provisions are exploding and management is warning about deterioration, the same price means something completely different.

My Pick

If I had to buy only one:

JPM.

But the key metric I am watching is not simply NIM.

It is the relationship between:

NII + loan growth + provisions + charge-offs.

Strong NII with controlled credit costs is bullish.

Strong NII with rapidly rising credit losses is a warning.

Weak NII plus rising credit losses is where I leave.

Right now, the first major bank results still look much closer to the first scenario than the third.

That is why I see the post-earnings weakness as something to investigate for entries, not a reason to abandon banks.

The market is asking whether high rates can hold up bank valuations.

I think the better question is:

Can banks keep collecting the benefit of high rates before borrowers start paying the price?

For JPM, so far, my answer remains yes.

I am not a financial advisor. Trade wisely, Comrades!

Which would you pick after earnings: JPM, GS, C or WFC?

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