Dougie Kass
Hedge Fund Manager, President of Seabreeze Partners
Bank of America's earnings miss extends beyond its one-time fine, so the selloff may not yet be fully priced. Investment-banking fees fell 11%; wait for fee income to stabilize before treating the drop as merely a fine scare. x.comÂ
Bank of America looks set to go bust from losses on its US Treasury holdings if yields climb high enough. Porter says that when yields hit 7-10%, its equity won't survive, and a bank run is a matter of when, not if. A quoted post says it holds $700B of bonds bought at about 1% yields in 2020, down roughly 40% and hiding about $100B of losses, while the Treasury must refinance $9T and foreign buyers shift to gold. x.comÂ
Bank negativity may be priced in for Goldman Sachs, Morgan Stanley and Bank of America; stable credit and an active deal pipeline could bring relief. Goldman and Morgan Stanley are down about 14% in three months and sit 22% and 17% below their highs, respectively; Bank of America lost 13% in a month. x.comÂ
Big banks' negative earnings reactions leave regional banks looking likely to continue lower. Regionals were a leading bear sector in many previous negative markets, including the 2025 bear market and the early-2023 regional banking crisis. x.comÂ
Banks' weak response to earnings despite low expectations warrants caution into the rest of Q3 reporting. JPMorgan, Wells Fargo, Citigroup and Goldman Sachs all fell after mixed results, while the bank ETF also declined. x.comÂ
Bank of America's Q1 shows a bank making money from market chaos, undercutting the recession pricing on large-cap financials. Revenue of $30.27 billion beat estimates by $1.64 billion, net interest income of $15.75 billion topped the $15.37 billion estimate, and equities trading of $2.83 billion beat $2.51 billion as the bank captured volatility. FICC trading missed at $3.50 billion versus $3.78 billion, the one soft spot. x.com x.comÂ
Bank of America risks losing its near-free checking deposits if cash agents move idle balances out between paydays. If software forecasts bills and refills checking before they're due, a fat cushion at the bank stops making sense; the bank keeps the customer but loses the cheap deposit. BAC averaged $957B of consumer deposits last quarter, 59% in checking, and paying more to keep cash hurts the spread. Broader transfer authority would speed outflows; for now, watch deposit costs. x.comÂ
Bank stocks look buyable if systematic selling is reacting to a flatter yield curve: the front end that drives earnings has barely moved. JPMorgan and Citi card spending rose 10% and 13%, and Citi and Wells Fargo reported lower credit losses. Wells expects steady margins and improving interest income as loans grow and old fixed-rate assets roll into higher yields. Funds crowded into banks before results, limiting near-term buyers. x.comÂ
Bank of America screens attractive at 12.3x on Wide Moat Intelligence, backed by an impressive dividend history. x.comÂ
Citigroup's Q1 shows the trading side of bank income statements is running hot, which bears had not priced in. Equities trading revenue was $2.08B against a $1.73B estimate, and Citi is not historically the strongest desk, which bodes well for Goldman Sachs and Morgan Stanley. Every tariff scare, Fed headline and geopolitical shock fed trading flow. Credit quality and loan loss reserves remain real concerns, but banks beaten up on macro fear are running stronger underneath. x.com x.comÂ