Three banks. Three completely different stories. All from the same quarter.
Citi: profits up 42%. Markets revenue $7 billion. Fixed income +13%. Equities +39%. EPS $3.06 crushed the $2.63 estimate.
Goldman: record banking revenue. FICC missed. Stock down 3%.
Wells Fargo: EPS beat. Revenue missed. NII missed. Stock down 3%.
The pattern is clear. Banks that can TRADE the vol are printing money. Banks dependent on net interest income are stuck because the Fed is frozen at 3.50-3.75%.
Why is the Fed frozen? Because oil is above $90. CPI is at 3.3%. Consumer sentiment is at 47.6, the lowest ever recorded. The Fed cannot cut into supply-driven inflation. They also can't hike because sentiment and growth are already decelerating.
The rate path doesn't change until oil normalizes. Oil doesn't normalize until Hormuz reopens. Hormuz doesn't reopen until there's a deal. The deal doesn't exist yet.
So the vol regime continues. Citi's trading desk prints. Goldman's FICC desk struggles with the binary, politically-driven price action. WFC's NII-dependent model stagnates.
If you're trading bank earnings this week, the question is: which desks outperform in a regime where rates are frozen, oil is volatile, and every move is driven by Truth Social posts? The answer is equity trading desks (Citi model) and investment banking (Goldman model). Not NII (WFC model).
BofA and Morgan Stanley report tomorrow. Watch their trading vs NII mix.
Bank earnings just told you which business models work in this vol regime and which don't.
byu/thinq-81 inoptions
Posted by thinq-81
2 Comments
I track macro regime, rate path, cross-asset transmission, and how they flow into sector-level positioning at https://marketontology.com. The platform showed the Fed freeze, the NII stagnation, and the trading vol opportunity as a unified picture before the earnings hit.
This is not a “vol regime”, that doesn’t even exist. I think you mean sticky delta.