Are Bank Earnings a Warning Sign of the Next “Big Short”?

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.