Do tariffs and pricing matter?
Trivariate used NLP to analyse 2,488 earnings calls since Mar 25, finding that 37% of companies mentioned both tariffs and pricing - most notably in Materials, Consumer Discretionary and Consumer Staples sectors. Lower-quality and value stocks were more likely to raise the issue. The most cited terms were “uncertainty” and “indirect impacts”, flagged by 584 companies including Microsoft, JPMorgan and Coca-Cola. From a performance lens, firms discussing tariff benefits or direct price pass-throughs outperformed by over 3% vs. those referencing absorption or uncertainty. "Price increases" and "surcharges" were associated with weaker performance, while "wait and see" commentary outperformed.
Edition: 213
- 13 June, 2025
Financials
After earnings beats from JPMorgan, Wells Fargo, Goldman Sachs, Bank of America, PNC as well as Citi why were all the other banks up significantly and Citi was down 5%? Charles Peabody discusses asset caps (Citi is already shrinking itself by shedding its global consumer bank, so an asset cap makes no sense whatsoever) and a probable delay in the Banamex IPO. He argues Citi is one of the best stories in large cap financials and is the only company able to repurchase large amounts of its common stock at a substantial discount to TBV. Expectations are low, the regulatory pressure is high and management is doing all the right things.
Edition: 197
- 18 October, 2024
Banks are still attractive
Financials
Charles Peabody provides a comprehensive analysis of recent 4Q23 results and his revised outlook for 2024-25. No bank sharply exceeded expectations, but NII was generally better than anticipated, while credit trends were generally worse. The revenue outlook for 2024 is mixed with high hopes for capital markets revenues and expectations that NII will bottom by mid-year setting up for a robust 2025. Charles favours 1) Citi - epic valuation discount to TBV but is mistakenly ignored by many as a value trap. 2) Wells Fargo - saddled by excessive CRE exposure, but investors forget this company has survived every CRE cycle of our lifetimes. 3) JPMorgan - "over owned" but still benefiting from the First Republic deal.
Edition: 178
- 26 January, 2024
Financials
While many are trumpeting the fact that GS is returning to its roots, investors should remember what those roots were and why investors and (GS itself) wanted to transform this organisation into something different. Charles Peabody loves a turnaround story and has been alongside Bank of America in the past, Wells Fargo, and more recently Citigroup, emphasising that it generally takes 5 years to transform a company. GS is no different. He would exit the shares and favours Citi as a turnaround, WFC as a work in progress about to exit a regulatory yoke, BAC as a play on rates, and JPMorgan as a defensive fortress.
Edition: 175
- 08 December, 2023
Banks confront interest rates, regulators and credit entering earnings season
Financials
Bank stocks sold off on multi-decade highs in long term interest rates last week, while investors prepare for a host of key events over the coming months. Charles Peabody believes banks could rally on 3Q23 earnings results as investors see some relief from regulatory rulings and deposit betas while AOCI and credit deterioration remain front of mind. However, the fundamental trends for banks will continue to deteriorate into 1H24. Markets are differentiating between banks with the capital, liquidity and funding to take advantage of opportunities - and those without. Charles favours JPMorgan, Wells Fargo and PNC, while shunning US Bancorp and Truist Financial.
Edition: 171
- 13 October, 2023
Banks announce capital plans after passing Fed stress test
Financials
Charles Peabody believes the banks conducted themselves well in fairly harsh stress tests that indicate an excess of capital in the sector. If regulators don’t panic, the path from crisis to normalisation can proceed even if we confront a mild recession. Charles favours the fundamental strength of JPMorgan but notes the underappreciated capital power of PNC and Wells Fargo. He is attracted to the adjusted yields of Citizens Financial and M&T while commenting that Morgan Stanley and Goldman Sachs also fare well in this category.
Edition: 164
- 07 July, 2023
Financials
It is well known that JPM got a good deal in its takeover of First Republic. Simply put, the bank acquired a market yielding asset with considerable funding benefits and significant cost cutting opportunities. While most analysts are plugging $500m ($0.17 a share) of added net income into their earnings models for the next 12 months, Charles Peabody is keen to highlight other dynamics of the deal that suggest that there are a lot more benefits to JPM of which many may be unaware.
Edition: 160
- 12 May, 2023
Betaville smokes out £1.5bn Wood Group takeover bid
On Feb 22nd Betaville broke the news that the FTSE 250 company was at the centre of a takeover rumour. Later that day management confirmed they had received an approach from Apollo. The PE firm has recently made a final offer at 240p a share; a 60% premium from when Betaville first broke the story. Since then, Betaville has published several other alerts about UK, European and US-listed companies. These stories include takeover rumours surrounding INWIT - where Reuters subsequently followed up that story, suggesting PE firm Ardian has appointed bankers from JPMorgan to work on an offer. Other alerts include One Swiss Bank and US-listed Paratek Pharmaceuticals.
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Edition: 158
- 14 April, 2023
SVB failure triggers historic sell-off: A buying opportunity for Bank stocks
Financials
Charles Peabody provides a post-mortem on Silicon Valley Bank and points out that historically when banks perform so badly, they turn out to be good buys. Charles thinks rates have peaked on an interim basis, and bank earnings should be a calming influence. Revenues are strong and credit issues remain benign (albeit “normalising”). Most banks have sensible deposit beta assumptions, few are exposed to crypto, and few banks took on interest rate risk like SVB. As these fundamental facts become apparent during previews and actual results in April, bank stocks should snap back. Top Buys include JPMorgan, Citigroup, and Wells Fargo.
Edition: 156
- 17 March, 2023
Bank stocks continue to roar in January, defying “the recession”
Financials
Charles Peabody recommends fading capital markets names as the outlook is based on hope but continues to be bullish banks (as he has done since the summer lows) as NII forecasts are restrained by fear. The most predicted recession in history is being pushed out and bank prices are responding to the powerful revenues and stable asset quality on display, buttressed by the resumption of stock buybacks. Charles continues to favour Wells Fargo, JPMorgan, PNC and Truist Financial Corp.
Edition: 152
- 20 January, 2023
Financials
Has been one of the best performing large cap bank stocks in recent years, but at current prices, the stock is not discounting potential capital constraints, a reduced buyback (Charles Peabody expects it to be cut in half), and near-term risks that include capital markets challenges and the Twitter ‘hung loan’. At 2x TBV the stock is more expensive than JPMorgan yet offers discounted returns. For dividend yield support there are other sources of high yields among other banks with less risk.
Edition: 146
- 14 October, 2022
Bank Stocks: PPNR is accelerating!
Pretax, pre-provision net revenues, the most powerful dynamic driving bank stocks, are projected to grow 7% in Q3’22, 15% in Q4’22, and 31% in Q1’23. These revenue and net income comparisons improve from near last in early 2022 to near best in 2023 for all S&P sectors. Obviously, top line revenue growth is almost assured given the shift in the yield curve, yet not so obvious is that credit quality appears quite stable through year end. When markets conclude that a recession is not inevitable, or that credit costs are manageable, Charles Peabody believes that bank stocks should respond quite favourably. Top picks include PNC, Wells Fargo, JPMorgan and Truist.
Edition: 143
- 02 September, 2022
Financials
2Q22 results mask $1bn in additional earnings power as fortress balance sheet is strengthened - JPM reported $2.76 EPS but core earnings power was closer to Charles Peabody’s $3.00 estimate after backing out marks and other adjustments. While the market was disappointed by the suspension of stock buybacks, Charles’ analysis suggests JPM can raise the dividend and resume buybacks very soon while still building CET1 to 13% levels by 1Q23. The stock is very attractive at current levels.
Edition: 140
- 22 July, 2022
Financials
Quality on sale - Charles Peabody sees positive operating leverage emerging, capital being rebuilt, and management earning its spurs as the culture of SunTrust blends with that of BB&T. As cost cuts meet the impact of higher interest rates, TFC will generate some very impressive returns with premium valuations to follow. Re. the wider banking sector, Charles has urged caution over the past half year having officially turned bearish last October. However, he has recently been selectively upgrading names with TFC joining JPMorgan and Wells Fargo as Buy recommendations.
Edition: 135
- 13 May, 2022
Financials
Quality on sale - Charles Peabody sees 25-30% return over the next 12 months. He expects Q4’22 to be the transition quarter that ushers in a shift from negative to positive operating leverage and growth YoY in PPNR. 2023 EPS could come in closer to $13.50 a share (~$1 a share above Street expectations). This earnings power should support a 17% RoTCE. Charles expects TBV to grow toward $77 a share by year-end and $82 by year-end 2023. In addition, JPM has been unique in how it has managed its liquidity, not willing to extend duration; this will prove to be a competitive advantage in the current stress periods.
Edition: 131
- 18 March, 2022