Tomorrow Q4 earnings season officially starts with the big banks - JPM, BofA, Citi and Wells - all reporting (as well as BNY, Blackrock, Delta and UNH).
And, as discussed earlier, after what has been the best bank stock rally in years, the setup is somewhat challenging even if, as UBS fins analyst Rob O'Dwyer writes, "valuations are not very extended, despite the 20% rally since November." Still, O'Dwyer concedes that earnings challenges are due to US bank EPS being positively correlated with rising rates over the next 12 months, which suggests pressure on net interest income guidance for 2024. Indeed, given credit metrics remain clean, "there is more downside than upside risk to credit here." Some more details from the UBS bank analyst:
