Bank earnings: Expect a strong first quarter, but more questions lie ahead
By Andrea Riquier
What should investors expect from first-quarter bank earnings? The answer, from multiple industry veterans, is a decided “it depends.” The macro business environment should be good for banks: the economy is strong, taxes have just been cut, and regulations are likely to be rolled back. But a peek under the hood reveals that not only is the devil in the details, but that even the broad themes may not boost market views of bank stocks, especially if management only sees more of the same on the horizon. As Karen Petrou, managing partner for Federal Financial Analytics, put it, “This is a period of enormous policy volatility. This is a government of, by, and for tweets. It’s extremely hard to discern the direction of policy and that makes stable markets and corporate forward-looking strategic judgements based on policy very difficult.” Normal uncertainties about policy are amplified even more now, Petrou said. It’s possible for investors to spend time analyzing the winners and losers from a trade war, for example—but even that’s not a given right now. One positive from the uncertainty, Petrou said, is that in coming months, market choppiness will be a boon for banks: “Volatility is their lifeblood. They can’t make money when nothing changes.”
https://www.marketwatch.com/story/bank-earnings-expect-a-strong-first-quarter-but-more-questions-lie-ahead-2018-04-10
