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July 4, 2026 • Independence Day • No hype, just perspective. |
What Bank Earnings Will Tell You That the Jobs Report Didn’t On July 14, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley open their books. JPMorgan follows the next morning. The headlines will be about revenue and earnings per share. But the numbers that matter most will be buried in the footnotes: how much money banks are setting aside for loans they expect to go bad, and how quickly Americans are falling behind on their credit cards. Those two lines tell you more about the next six months than any single government report. Here is how to read them. |
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What to Watch |
• The calendar: Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley report July 14. JPMorgan follows July 15. FactSet expects bank-sector earnings growth of 10.4% on 10.7% higher revenues. JPMorgan’s consensus is $5.44 per share, up roughly 10% year over year.
• Credit card stress: 13.1% of credit card balances were 90 or more days past due in Q1 2026, per the New York Fed. That is a 15-year high. Total credit card debt stands at $1.25 trillion. The charge-off rate is 3.8%, still above the pre-pandemic baseline of 3.7%. Small-bank delinquency is running at 6.4%, roughly double the all-bank average.
• What JPMorgan guided: In Q1, JPMorgan reported net income of $16.5 billion, EPS of $5.94, and a return on tangible equity of 23%. It guided full-year NII of roughly $95 billion excluding markets, adjusted expenses of about $105 billion, and a card charge-off rate of approximately 3.4%.
• The big tech dates: Alphabet reports July 22. Microsoft and Meta report July 29. Apple reports July 30. FactSet expects overall S&P 500 Q2 earnings growth of 22%, the second straight quarter above 20%.
• Where the market sits: The Dow closed Thursday at a record 52,900. The S&P 500 finished the first half up 9.6%. The Nasdaq rose 12.8%. Markets reopen Monday, July 6.
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The Four Lines That Tell You Where the Economy Is Going
Every quarter, roughly two weeks after the quarter ends, the four largest banks in America open their books. The headlines cover revenue and profit. The analyst calls cover trading desks and investment banking fees. But the four numbers that matter most to an ordinary investor are almost never in the headline, and they tell you something the GDP report, the jobs number, and even the Fed cannot: whether American households are keeping up with their bills, and whether the banks expect that to continue.
Line 1: The loan-loss provision. This is the amount of money a bank sets aside in a given quarter because it expects some of its loans to go bad. It is not a loss that has already happened. It is a bet on what is coming. When banks raise their provision, they are telling you they see trouble forming. When they lower it, they see clear skies. The provision is the single most volatile line on a bank income statement. It can swing from near zero in good times to billions in a downturn, and it moves before the economy does. In Q1 2026, JPMorgan reported credit costs of $2.5 billion, including a net reserve build of $191 million. That reserve build was small. If it grows meaningfully in Q2, the bank is seeing something in its loan book that the macro data has not yet captured.
Line 2: The credit card charge-off rate. A charge-off is a loan the bank has given up on collecting, typically after 180 days of non-payment. The national charge-off rate across all banks was 3.8% in Q1 2026, just above the pre-pandemic baseline of 3.7%. But the number that tells you the real story is the split. At the hundred largest banks, the delinquency rate is roughly 2.9%. At smaller banks, where subprime borrowers concentrate, it is running at 6.4%. JPMorgan guided a full-year card charge-off rate of about 3.4%. If that number moves higher in Q2, the consumer side of the economy is deteriorating faster than expected.
Line 3: Net interest income. This is the difference between what a bank earns on loans and what it pays on deposits. When rates are high, banks make more on loans. When the yield curve is steep, meaning long rates are well above short rates, the spread widens further. JPMorgan guided $95 billion in NII for the full year, excluding its markets business. That number tells you how much the bank is earning from the basic act of lending. If NII guidance rises, the bank expects credit demand to hold. If it falls, the bank sees borrowers pulling back or rates compressing. Either way, NII is the clearest measure of whether the real economy is borrowing and investing or pulling in.
Line 4: The forward guidance. After the numbers come the words. Every major bank CEO takes questions from analysts for roughly an hour. What Jamie Dimon says about consumer spending, what Jane Fraser says about corporate deal flow, what David Solomon says about IPO pipelines, these tell you what the next quarter looks like from inside the largest financial institutions in the country. Banks see the money move before anyone else does. They see the paycheck deposits thinning, the mortgage applications slowing, the credit lines being drawn down. If the tone shifts cautious on July 14, that is a signal that the soft jobs number and the shrinking labor force are not anomalies.
Why this quarter’s numbers carry extra weight. Americans owe $1.25 trillion on their credit cards. The 90-day delinquency rate is 13.1%, a 15-year high. Auto loan delinquency has hit its highest level on record, per the New York Fed. Student loan delinquency reached 10.3% after the pandemic-era pause ended. These are not hypothetical. They are in the data already. The question bank earnings will answer is whether these delinquencies are stabilizing, meaning the worst has passed, or accelerating, meaning the consumer stress visible in confidence surveys is now showing up in actual unpaid bills.
The market closed the first half near records. The Dow sits at 52,900. The S&P 500 finished up 9.6%. But the household economy, the one we described earlier this week, is telling a different story through credit data that predates the June jobs miss. If bank earnings confirm that the consumer is holding, the rally has room to extend. If they show the cracks are widening, the market will need to recalculate how much of that 22% expected earnings growth survives into the back half of the year.
Ten days from now, four banks will tell you what 720,000 people leaving the labor force actually means for the bills they left behind. The provision line will tell you whether banks see it coming. The charge-off line will tell you whether it is already here. Those are the two numbers worth circling before you read the headline. Enjoy the holiday. The second half starts Monday.
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Harold Winston Thirty years advising individual investors. Now reads markets for a living. Happy Independence Day. |
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