Goldman Sachs earnings prove bank still very cyclical

Among the Big Bank stocks, JPMorgan Chase & Co. (JPM), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS), and BlackRock (BLK) have been the first to report second-quarter results this earnings season.

Portales Partners founder and Wall Street Beats partner Charlie Peabody comes on Market Domination to talk about the prevalent themes emerging in bank earnings, such as net interest income figures

"Short term, there's momentum in the capital markets. And so Goldman is a good momentum play, but we argue that their earnings stream remains much more cyclical than the market is valuing them at," Peabody states. "And that's the big debate out there in management as they moved away from their failed consumer banking strategy back to their roots as an investment bank, have been trying to convince the street that there is a core underlying earnings power that's sustainable and stable. And I don't believe them."

Peabody also looks ahead to the bank earnings due out this week, such as Morgan Stanley (MS): "I think it's going to be more of the same — strong, investment banking with an eye towards a pick up in M&A and IPOs in the second half of the year. And then trading will be driven more by equity trading and less so by fixed income trading."

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This post was written by Luke Carberry Mogan.