The tone of big bank earnings calls will likely reveal more about the economy than any single earnings number
Al Drago/Bloomberg via Getty Images
Bank earnings season is kicking off next week. JPMorgan $JPM Chase, Citigroup $C, Wells Fargo $WFC, and BlackRock $BLK are among the financial heavyweights reporting results Tuesday, followed by Bank of America $BAC, Goldman Sachs $GS, and Morgan Stanley $MS on Wednesday.
Analysts and investors will be watching the numbers. But the general public — and even the White House — may be listening more closely to what the banks’ powerful CEOs say about the macroeconomic landscape.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
The last round of bank earnings landed just after President Donald Trump’s “Liberation Day” in early April, when he announced sweeping tariffs that triggered a market panic. Over the following days, major indexes dropped more than 10%, and some bank stocks were hit even harder.
It was a prime moment for macro commentary, and CEOs ran with it — dominating headlines for weeks with warnings of “considerable turbulence” (JPMorgan CEO Jamie Dimon) and “increased” recession risk (Goldman’s David Solomon).
Few minced words. Morgan Stanley Chairman James Gorman called the environment “unprecedented.” Citi CEO Jane Fraser spoke of a widening gap between fundamentals and sentiment.
Between just JPMorgan, Morgan Stanley, and Wells Fargo, Bloomberg counted 40 references to “uncertainty” on first-quarter earnings calls — quadruple the number from the prior quarter.
“Maybe when we do this call next quarter, we won’t be guessing,” Dimon said at the time.
So much for that. Trump has since doubled down, posting letters to 14 countries — including Japan, South Korea, and smaller economies like Tunisia, Serbia, and Bangladesh — threatening new tariffs unless deals are reached by Aug. 1.
Axios’ Neil Irwin calls it a “liminal state” — one in which tariffs are always just about to happen, but rarely do. Trump insists the new levies will begin Aug. 1 “with no extensions.” But markets, so far, aren’t buying it.
Call the moment “Schrodinger’s tariffs”: simultaneously alive and dead.
In any case, all the ambiguity puts big banks back in the spotlight. On one hand, volatility has driven a trading boom which could’ve tapered off since. Goldman, JPMorgan, and Morgan Stanley pulled in over $12 billion in equities trading revenue last quarter, outpacing even the pandemic frenzy. “In times of great uncertainty, clients turn to Goldman Sachs,” Solomon said last quarter, while noting that Q2 could bring “a markedly different operating environment.”
And he’s probably right. Trading volumes are likely down, leading estimates down slightly, too. And pressure may have started showing in credit quality, loan demand, or consumer spending. Those pressures hadn’t yet had time to filter through the system and show in Q1 results.
So, this quarter, key questions should include: What do trading volumes look like now that markets seem to be mostly shrugging off even the most bombastic tariff pronouncements? Are CEOs getting bolder or more cautious on U.S. policy? Is corporate borrowing holding up? Are consumers slowing down, fearing a recession, or is spending still strong?
Broadly speaking, Q2 estimates come in modestly below Q1 actuals.
JPMorgan Chase is forecast to post EPS of $4.48, according to FactSet, down from $5.07 in Q1. Revenue is expected around $43.9 billion, with consumer banking contributing $18.25 billion.
Bank of America is expected to report $0.87 EPS, down from $0.90, with trading and consumer banking remaining strong. Revenue estimate: $26.8 billion.
BlackRock is expected to deliver $10.70 EPS, down from $11.30. Flows into iShares ETFs should remain a bright spot.
Goldman Sachs is forecast to post $9.69 EPS, down from an unusually strong $14.12 in Q1. Investment banking and trading will be key points to watch.
Citigroup is projected to report $1.63 EPS, down from $1.96. Institutional Clients Group and card spending trends will likely drive results.
Morgan Stanley is expected to post $1.99 EPS, down from $2.60. Trading looks solid, but investment banking could show strain.
Wells Fargo is expected to edge up to $1.41 EPS from $1.39. Investors are likely to focus on net interest margins and consumer credit trends.
That’s the multi-billion-dollar question.
The earnings calls next week won’t just set the tone for markets. They’ll reveal how much conviction, or concern, remains in the financial sector’s top ranks. If the CEOs hedge, soften, or even totally recalibrate their tone, it could signal hope that tariff chaos stays rhetorical. But if they escalate warnings, expect investors to take note — and perhaps brace for round two.
