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Bank earnings: Expect another meh quarter of weak trading revenue

Reuters

A Wells Fargo branch is seen in the Chicago suburb of Evanston,. on February 10, 2015.

Bank investors had good reason to cheer the results of the most recent Federal Reserve stress tests – but second-quarter earnings may be more sobering. Citigroup C, -0.38% J.P. Morgan JPM, -0.70% and Wells Fargo WFC, -0.27%   will report their earnings before the market opens on Friday, kicking off what could be just the latest in a long string of disappointing earnings seasons stretching back to the financial crisis. Read: Fed stress tests show banks could withstand a deep downturn “We see more misses than beats,” wrote Jefferies analysts in a July 5 note. J.P. Morgan analysts agreed, writing last week “We expect moderate 2Q earnings.” Chris Whalen, a long-time bank analyst, expects earnings to come in soft enough that the stocks will trade off. “There’s no real growth on the top line,” he told MarketWatch. After several lean years, banks have run out of expenses to cut to boost the bottom line. And most investors are finally starting to acknowledge that the hoped-for “reflation trade” isn’t coming, Whalen said. “The Trump Bump is dead.”

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