The Noisiest Day Ever

🏦 Ignore the noise. Earnings szn continues to roll right along and banks have been the big winners so far. Find out why that’s good for you and your wallet.

January 22, 2025

Silver banana goes to…




In this issue of the peel:

  • 🏦 Ignore the noise. Earnings szn continues to roll right along, and banks have been the big winners so far. Find out why that’s good for you and your wallet. 

  • 🍎 The White House announced a joint venture for AI, the size of the Interstate Highway System. Charles Schwab showed us that firms named after old guys still got it. Rivian suffered from the pain Musk created, and Apple got bullied.

  • 🪙 Presidential Meme Coins, a new SEC Chair, the next SEC Chair, and Bank of America using stablecoins—come see what’s going on in the digital asset market.

Market Snapshot

Banana Bits

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  • How to automate your work in PowerPoint and Excel to impress your MD

Save the date:
📆 January 30th
⌚ 10:30 am EST
⌛ 45 minutes

Macro Monkey Says

Behind the Billions

Wow. Yesterday was one of—if not the—single busiest days for news since we launched The Daily Peel back in June of 2021. 

Executive orders, regulatory changes, cabinet hearings and appointments, DOGE’s start, other new ideas, and the World Economic Forum just scratches the surface.

And get this—we’re not gonna talk about any of it. Not just because I’m lazy and can’t read, but because on noisy days like yesterday, most of the news you hear is exactly that—noise. We’re focusing on signal, and with that…

Let’s get into it.

What Happened?

Earnings szn is well underway. 

Fortunes have been made, employees have been fired, and options trading volume is spiking as the most degenerate Americans from sea to shining sea wait to meet their fate.

May the tapes be in your favor over the next few weeks. We’ve already gotten arguably the most important reports regarding underlying macro dynamics, so let’s check out some bank earnings.

The Numbers

Usually, when talking about bank earnings, we waste everyone’s time by sizing up all 6 of the largest U.S. banks. Despite how much my paycheck likes the added hours, this time, we’re only gonna focus on 4—hopefully a little less redundant.

JPMorgan: The world’s most valuable bank proved why it wore the crown last quarter, rising 1.97% on Wednesday of last week after delivering Q4 earnings that surpassed analyst expectations.

Net income surged 50% to $14.0bn, or $0.82/sh, beating estimates for $0.77/sh. Net reported revenue grew 11% annually to $42.77bn, also beating expectations.

The firm was able to deliver that success despite a 3% decline in net interest income, largely triggered by lower rates on its loan portfolio, driving deposit margin compression.

The Wall Street-side of JPMorgan’s business was on fire, with Commercial & Investment Banking income up 59% to $6.6bn, driven by 15% growth in Banking & Payments and, I guess, slightly assisted by a small 46% jump in IB revenue. IB fees were up 49%.

JPMorgan’s Markets & Securities segment was on fire, too, with total revenue up 20% to $8.3bn. Equity trading was the biggest gainer, up 22%.

But, the Main Street-side of the biz wasn’t so hot. Consumer & Community Banking income was down 6%, driven by a 4% jump in noninterest expense, a 7% decline in Banking & Wealth Management revenue, and a 20% jump in this segment’s credit loss provisions.

Speaking of which, the firm’s total provisions for credit losses were $2.6bn, down 5% quarterly and 15% annually.

Bank of America: The United State’s second-largest bank by assets and market cap, Bank of America, wasn’t quite as thrilled as JPMorgan despite reporting similarly solid results.

Shares fell 0.98% last Thursday after BofA delivered a beat on the top and bottom line, too, reporting net income of $6.7bn on $25.3bn in revenue.

Much to Jamie Dimon’s envy, Bank of America’s net interest income moved 3% in the right direction, up to $14.4bn. Higher global market activity and favorable repricing of fixed-rate assets drove this expansion.

Main Street looked better at Bank of America, with revenue up 3% and net income growth slightly positive, too. Most of this was driven by “record consumer investment assets,” but 1% growth in average loans and leases was a big help, too.

Wealth & Investment Management revenue grew 15% on a 23% jump in AUM fees, driven by both rising market prices and positive flows.

Less substantial than JPMorgan’s, BofA’s investment banking fees grew 44% to $1.7bn, gaining 1.16% of the total market share. Global Markets revenue jumped 18%, driven by 13% growth in sales and trading.

Firm-wide average deposits grew to $1.96tn, a much faster growth than prior quarters, while provisions for credit losses totaled $1.5bn, up from Q3 but down from Q4’23.

Morgan Stanley: Clearly watching JPMorgan and Bank of America lose money by dealing with poor people, Morgan Stanley enjoyed the fruits of its Wall Street labor, up 4.03% after reporting last Thursday.

Net income exploded 156% annually, primarily supported by 27% net revenue growth to $61.8bn and the lack of certain one-time charges present in 2023. 

Still, it was an impressive quarter. Margins grew across almost every segment, and net interest income expanded by 16%.

Investment banking revenues grew 25% to $7.2bn on growth in number of transactions. Equity underwriting revenue grew 102%, underscoring the return of M&A and IPOs throughout 2024. 

Meanwhile, equity trading revenue boomed 51% to $3.3bn in one of the firm’s best-ever quarters since coming out of the GFC. 

Wealth Management revenues joined BofA and JPM, up 13% to $7.5bn. Transactional revenue grew 18% as AUM grew 15% on market performance and positive flows. 

Morgan Stanley decreased credit loss provisions by almost half compared to FY’23.

Goldman Sachs: Like Morgan Stanley, Goldman has learned a lot from the trauma of dealing with poor people. Only Goldman actually did it firsthand with its consumer banking platform, Marcus.

Now that the firm is slowly selling off Marcus’ body parts, they seem much happier. Goldman’s part-time CEO/part-time DJ, David “DJ D-Sol” Solomon, was quite pleased with the firm’s doubling of its net income from last year.

Last Wednesday, Goldman shares jumped 6.02% after reporting $11.95/sh on $13.9bn in revenue vs estimates for $8.07/sh on $12.3bn. Net interest income surged 27% to $8.05bn.

Total revenues, meanwhile, grew 16% to $53.51bn. Asset & Wealth Management led, with revenue up 26% from Q3. Equity investments screamed higher by 528% on a quarterly basis but still managed to fall 13% from last year.

Investment banking revenues also performed strongly, which should be no surprise by now. Fees grew 10% as equity underwriting grew 30% from Q3 but boomed 98% from Q4’23.

The firm jacked its provision for credit losses by 31% from last year to $1.4bn.

The Takeaway?

Having rich people as clients is good for business. I’ll take my $60k tuition fee in cash, thank you.

U.S. banks performed well in Q4, mostly driven by Wall Street activities and exposure to rising liquidity levels via interest rate cuts. Main Street didn’t perform terribly but wasn’t a growth driver outside of retail investing, which itself was mostly driven by rising market prices.

Although Q4 was strong, uncertainty appeared to be on the rise, with common increases in provisions for credit losses. Despite that, most CEOs and other executives sounded ecstatic on their earnings calls, especially with regard to the coming regulatory landscape.

If that 0.01% deposit rate ain’t doing it, maybe just deposit your cash into their shares next time (not financial advice).

Career Corner

Question

Someone reached out to me on LinkedIn and invited me to an in-person Private Equity networking event. I've already finished applying for the site visit. Should I reply to the person who reached out to me, and how?

Answer

“Thank you for the invitation, I have applied. It looks like a great event, and I’m excited to attend. Will you be there?” That way, you can walk in and know you have someone to talk to.

Head Mentor, WSO Academy

What's Ripe

Oracle (ORCL) 7.2%

  • The AI version of the 1992 U.S. Men’s Basketball Olympic “Dream Team” is forming as Oracle teams up with Softbank, OpenAI, and President Trump.

  • On Tuesday, the White House announced “Stargate,” a joint venture in which the above firms allegedly plan to invest $100bn in U.S. AI infrastructure, potentially scaling that to $500bn over the next four years. 

  • You read that right. For context, global corporate investment in AI from 2013-2022 was $934bn. $500bn is the estimated cost of the Interstate Highway System in 2025 dollars—and we just got that for AI.

Charles Schwab (SCHW) 5.9%

  • You don’t see many firms named after elderly men these days. But, as we can see here—and above—it sure seems to work out phenomenally when you do.

  • Charles Schwab danced on earnings estimates, reporting 10% growth in net revenue to $5.3bn and profits of $1.7bn. Management maintained guidance, expecting 13-15% revenue growth in FY’25.

  • Net interest income growth was supported by a $35bn increase in cheap sweep deposits, partially sheltering net interest margins from declining with interest rates.

What's Rotten

Rivian (RIVN) 6.5%

  • There’s not liking Elon Musk, there’s hating Elon Musk, and then there’s Rivian. How much do you wanna bet they have a dartboard with the guy’s face on it in their HQ?

  • Anyway, the hatred reached an all-time high this week as President Trump, in his inaugural address, vowed to “end the EV mandate” he sees across the U.S.

  • The market interpreted this and other comments as a threat to the federal EV credits firms like Rivian, Tesla, and others receive.

  • According to Barron’s, Tesla has received ~$10bn in EV credits since the end of 2018, making up ~25% of the firm’s operating income (pure margin). Rivian expects ~10% of 2024 revenue will come from EV credits that may now go away.

Apple (AAPL) 3.2%

  • After a rough Monday as the poorest tech CEO at Trump’s inauguration, Tim Cook’s week didn’t get much better when he ended Tuesday 3.2% poorer.

  • Apple got swirled all over Wall Street yesterday, with Jefferies downgrading the tech giant from “Hold” to “Underperform” while Loop downgraded shares from “Buy” to “Hold.”

  • Although JPMorgan cut its price target only by $5 to $260/sh, it still implies a 16.7% upside. Worst of all, GOAT trader Nancy Pelosi sold 31k shares.

  • The bad vibes were primarily triggered by a report from Counterpoint Research, which alleged that Q4 iPhone sales in China fell 18% annually.

Thought Banana

The State of the Blockchain

I’d ask if anyone has whiplash from the last few days, but to cr*pto heads, recent volatility has felt about as risky as a 3-month Treasury.

The only thing more unstable than the price action in this asset class in the last ~100hrs has been the news flow. Let’s dive in.

What Happened?

When the digital asset community said they were glad to hear that President Trump is largely pro-cr*pto, I don’t think this is exactly what they meant.

Three days before then, President-elect Trump dropped the “elect” from his name, and the incoming President decided to launch the Trump Meme Coin. The token quickly ran to a $21bn market cap and now sits around $8bn, or $44.40/TRUMP.

Don’t worry—Melania launched one, too.

Anyway, without getting political over it, the digital asset community saw this as a bit of a “Wtf bro, no one was asking you to do that” kind of move, causing concern over the perceived legitimacy of the “asset” class and its use cases.

Largely in reaction to the perceived hype—and the President’s known cozying up to the cr*pto vote (if such a voting bloc exists)—BTC reached its all-time on of $108.228k around 4am EST on Monday, January 20th.

More serious news, President Trump took time on Monday to name a new acting SEC Chair, Mark Uyeda.

Cr*ptobros love this guy like he’s Satoshi’s son. The acting Chair spoke out against the SEC’s previous regulation-by-enforcement strategy, advocating for clear regulation and calling Gensler’s tactics a “disaster for the whole industry.”

On his first job day, Uyeda tapped fellow pro-cr*pto Commissioner Hester Peirce to create a task force dedicated to creating a “comprehensive regulatory framework” for digital assets.

President Trump’s actual nomination for SEC Chair, Paul Atkins, still has to get approved by the Senate. Not much resistance is expected there, given that he, too, was an SEC Commissioner from 2002-2008.

Finally, Bank of America CEO Brian Moynihan created some non-Trump related (not directly, at least) digital assets news, stating in an interview with Andrew Ross Sorkin that big banks would “embrace cr*tpo if regulators allow it” as a key aspect of payment networks.

That means even quicker and even cheaper money transfers could be on the horizon. For stablecoin providers like Circle and Tether, that’s music to their ears.

The Takeaway?

The days of blindly hoping not to get hit with a Wells notice are over in the digital asset space.

While digital asset regulation wasn’t a huge issue for most voters, it was the issue for an easily swingable voting base. Seeing the new administration deliver on those promises is constructive for those who want to see the industry flourish.

The Big Question: What’s next for the digital asset space? How will the regulatory framework function? Is BTC, ETH, XRP, etc., a security?

Banana Brain Teaser

Previous

If k is a positive, what is the remainder when (k + 2)(K^ 3 - k) is divided by 6?

Answer: 0

Today

If the range of the six numbers 4, 3, 14, 7, 10, and x is 12, what is the difference between the greatest possible value of x and the least possible value of x?

Send your guesses to [email protected]

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If you want to be a millionaire, start with a billion dollars and launch a new airline.

Richard Branson

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Happy Investing,
David, Vyom, Ankit & Patrick