Jp Morgan Bank America discussed on Bloomberg Daybreak

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Jp morgan bank america wells and today all four banks has been the payoff of the technology investment that they've been making and i think that's true across their businesses i would not have expected in the stress tests of well fargo to come out looking so good is that just in stress tests or does it go forward from here wells fargo in my opinion is clearly the big winner and the stress tests both from qualitative and quantitative perspective so going into the test they clearly had the most capacity to return capital to shareholders and their ability to make those patents especially with constrained balance sheet growth i think is really key to them improving their return on equity which is a key metric that investors focus on on the qualitative side of things it sort of refreshing to get some some good news on the regulatory front related to laos fargo as you know they've been under scrutiny sort of intensifying ever since september two thousand sixteen when they first announced a fine for sales misconduct that's made me wonder do they have to worry more than any of the other institutions about litigation and regulatory costs well the key risk for wells fargo versus it's us peers related to regulation and let a gatien really relates to the department of justice residential mortgage backed securities issues so all of the other five big us peers have settled these issues and wells fargo is really the one remaining we have seen them take charges related to this issue late last year some of the recent settlements that have come in from the european peer sort of under this new administration have been less than feared and so perhaps that bodes well for wells fargo but i think to the extent that they can get that behind them that will be an important step let me take a step back in s you a broader question as it relates to the banks that are really concerned about trading results what's the impact of the yield curve going forward the yield curve impacts the banks i guess in a few different ways that the trading results i think that is sort of where the yield curve most immediately feeds into some of the results and say you do see some of the more immediate impact at companies like jp morgan bank of america and citigroup that have relatively larger trading operations from the core net interest margin standpoint the flatter yield curve does take a little bit of time to to work its way through the portfolio and in this period when we've been coming out of a period of extended very low rates it's really been the level of short term rates that is more important to the banks in terms of their overall profitability so the lift that we've gone from your rate has more important than any flattening that we've gotten from the yield curve however going forward i think that that will increasingly become a focus the other part of the equation four net interest income growth is loan growth and so i think some of the concerns around the yield curve have been muted by the fact that you know some of these banks might get better loan growth than the mix of their portfolio will improve which can help support the margin loan growth the outlook was very optimistic coming into this quarter it sort of has petered out a little bit in some areas and so i think that is something that again investors are going to be focusing on what are the opportunities there and could there be an interactive risks to the us economy from some of the global macro eventually leading into risks to the yield curve via pressing down on that long term side of things and any impacts along growth when you look overall at the banking industry the fundamentals are still improving all the time the fundamentals are solid economy is good for banks and strong banks are good for the economy allison williams thank you very much for.

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