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A complicated start to earnings season for the banks, shares of JP Morgan, Wells Fargo, and Citi Group are all under pressure after their numbers. Wells Fargo's second quarter profit declining from a year ago, while JP Morgan and city beat estimates, concerns over net interest income has been weighing on those stocks. And joining us now, Jason Goldberg, Barclay's senior equity analyst, Jason, thanks a lot for being here, um, to help us make sense of what we heard from the banks. I want to mention a comment from the Wells Fargo CFO, um, because it seems to be specifically not just a Wells Fargo, but what we're seeing in the bigger picture and he said, when you really dig into what's happening across different consumers, the folks on the lower end of the wealth or income spectrum are struggling more. How much of a problem is that for the banks now and will continue to be?

You know, it's certainly something to be mindful of when you think about the lower end consumer, they benefited the most from all the stimulus activity we saw coming, you know, out of the pandemic and that has certainly, um, kind of gone away. And at the same time, you have elevated inflation, so things like, you know, food energy prices are more. And then that cohort tends to rent more and, you know, doesn't have the benefit of low yielding fixed rate mortgages locked in from a couple years ago. So there is, you know, some pressure there. As it relates to the banks, um, you know, it's just not a huge contributor, um, to revenues. Now, the big banks tend to big, big, big in credit card, which is an area to be mindful of. Um, you know, they tend to focus more on the higher cost customer base. So it's, it's certainly something that, you know, weighs a little bit in overall results, but I think not something that overly concerns us in here.

Jason, let's stick with city. Um, you know, CEO Jane Fraser of course pursuing a big turnaround there. Um, you're on the sidelines though, uh, Jason, equal weight. How come?

Listen, it just takes a long time to turn a big ship and that's a very big ship. And I think, you know, you got the news, um, you know, earlier in the week that they had, you know, didn't fully resolve one of their consent orders way back from 2020 and under kind of increased scrutiny from the OCC now. And you know, listen, there's going to be some bumps in the road, so they've made a lot of progress, particularly under James leadership, um, just more work to do. And it's going to, it'll take um, it'll take some time, you know, for them to get even back to a low teens ROTCE. I think they're targeting 2026, where earlier today at names like a JP Morgan put up a, you know, 20% plus ROTCE already.

So when you look across the banks, both who we've heard from thus far and who is yet to report, who do you think is best positioned right now? What seems like sort of a muddling along environment in some ways.

Yeah, know, if you look at kind of the trends that we've seen, you know, today, we saw particularly strong trading and investment banking results. Um, so early next week we hear from Goldman Sachs and Morgan Stanley and we think they'll benefit from those trends. On the flip side, you know, loan growth continues to be subdued while you're seeing upward pressure for both, you know, non-performing assets and and and loan losses, um, which kind of the regional banks are overexposed too. So those are kind of I think the themes that I will be paying particular attention to as more and more banks report over the next couple weeks.