Challenges Stack Up For Big Banks Ahead Of JP Morgan, Wells Fargo, Citigroup

Making things even more challenging, many U.S. big banks enter Q1 reporting time facing tough comparisons to a year ago and with less support from the 2017 U.S. tax reform legislation that gave many firms a boost early last year.

A common investor misconception is to think of the big U.S. banks as one entity responding to the same cues. While sometimes the bank stocks move in sync on news developments, it’s also important to distinguish them, because they’re not a solid bloc. For instance, falling mortgage levels probably mean more for Wells Fargo than the other banks reporting Friday and Monday, because WFC has a huge retail mortgage business.

Also, Briefing.com said, the market closed last year in a tailspin, which might have sent some traders and investors to the sidelines. With the Securities & Exchange Commission closed for part of Q1 due to the government shutdown, that might have hurt the underwriting business for banks, though initial public offerings did start to pick up by the end of Q1.

Speaking of WFC executives, the company recently announced the retirement of CEO Tim Sloan. There’s a lot of debate right now in the financial world about who WFC should consider as a replacement, especially since the bank said it wants to hire an outsider. Sometimes that can cause uncertainty, because historically the big banks have tended to elevate insiders to the top position. Perhaps we can get more clarity about the situation on WFC’s earnings call tomorrow.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time., vs. $0.96 in the prior-year quarter, on, according to third-party consensus analyst estimates. Revenue is expected to be down 4.3% year-over-year.

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