Bank Earnings Are In: Here’s What They’re REALLY Saying About the U.S. Economy | The Weekly Wrap

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**Steve Eisman** (0:58)
Over the weekend, talks between the US and Iran fell apart. The US is blocking the straight-up Hormuz to put economic pressure on Iran. The market went up this week as there is still hope that a settlement will be reached. We will have to see. We've had 17 years of amazingly benign credit quality, and investors are wondering if the good times are over. The banks kicked off earnings season, and I'm going to share some thoughts on a bunch of the large banks that reported because they provide great insights into the state of the current credit cycle. We can get a closer understanding of whether the problems in the private credit sector are broadening into a larger credit cycle. As the banks go, so goes the economy.
Hi, this is Steve Eisman, and welcome to another episode of The Weekly Wrap. This is for the week ending Friday, April 17th, but recorded Thursday night, April 16th. I'm excited to share that in a few weeks, we'll be announcing an additional feature to The Real Eisman Playbook alongside our existing Monday and Friday episodes. This is something we've been building behind the scenes, and it's going to take things in a really exciting new direction, and we'll be revealing more soon. Make sure you're signed up for our mailing list on our website, realeismanplaybook.com, so you're the first to know. Before we get to the wrap, I want to comment on something. I often get requests from viewers to provide more trading ideas, and that's not something I tend to do for two reasons. First, I'm not a trader. I've always taken a long-term perspective. Trades do not come naturally to me. That's just me. However, there is another reason, taxes. After all, it is tax season. For most investors, if they are going to do a trade, it also means selling something to make room for it. Then, however, you have to pay taxes, and today, those taxes can be high, often 30% plus. The trade better be really good if you have to pay those taxes. In my view, it's just easier for most investors to invest long-term. And now, let's go to the wrap. In this week's wrap, we will discuss three things. One, the war in Iran. Two, banks reported, and their credit data provides an important window into the health of the US economy. And three, mailbag, where I answer questions from three viewers. First, the war. Over the weekend, talks between the US and Iran fell apart. The US did not resume bombing Iran, however. Instead, the US is blocking the straight-up moves to put economic pressure on Iran. Monday morning, oil prices jumped above $100, but quickly went back below $100.
And the market went up this week, as there is still hope that a settlement will be reached. Markets will continue to trade headlines. Now we dropped an extra episode on Tuesday, April 14th, this week, with John Spencer, chair of War Studies, Madison Policy Forum, and we did a deep dive into the conflict and the likely outcomes. We did this episode specifically to shed as much light as possible on how and when this conflict will end and how long the consequences will continue impacting the economy and markets. Now at the end of the first quarter, the S&P was down 4% for the year and NASDAQ was down 7%.
Both are now up on the year and are at record highs. I think the market is assuming the war will be over very soon. Whether that's true or not, we will have to see. Moving on to stocks, the banks kicked off earning season, and I'm going to share some thoughts on a bunch of the large banks that reported and then show you how to think about valuation given the results. But before I do that, I first want to focus on how the large bank results are of particular importance because they provide great insights into the state of the current credit cycle. The four large banks that reported, JP Morgan, Citi Wells, and Bank of America, have large and broad based lending businesses.