Earnings season began this week with the largest banks reporting first.
While revenue and earnings per share for the majority beat market expectations and consensus (as seen from graphic below), digging a little deeper we can see these results reflect strong growth in investment-banking fees and trading revenues.
However, the financial institutions debt business is in destruction, their prime brokerages have been exposed and commercial mortgages are imploding… In preparation for an increase in bad loans, financial institution such as Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) have set aside massive cash reserves.
We can shout about the injustices and what happened in the 2008 financial crisis from the rooftops all we want, but it just doesn’t matter… All that matters is the price action, momentum and opportunities in the market to make money.
Watch the full interview to see what we have been trading this week, what to avoid and what we think are the most important earnings yet to come (ahem… Netflix (NASDAQ:NFLX)).
P.S. We interviewed the real Danny Moses from the movie “The Big Short” back in 2018. For those interested in his investing views, click here to watch the video.