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Big banks kicking off another earnings season this morning. J.P. Morgan and Morgan Stanley headlining the reports with solid beats against the backdrop of looming economic uncertainty. For more bringing in Ken Leon, director of equity research at CFRA covering the banking sector. Ken, it's always great to get some time with you. And there was a really fascinating disconnect today because indeed, most of the numbers from the big banks writ large were pretty decent, especially things like equity trading revenue. But what we were hearing in terms of the commentary from the banks, maybe is leading us to buckle up a little bit for the rest of the year. Is that is that how you read it?

You know, I've been covering these large banks for 20 years. I by far the rock star was Ted Peck, Chairman CEO Morgan Stanley. Uh he did not buckle down. Uh he was confident about uh the opportunities Morgan Stanley has and the business and even if they have 75% of their revenue coming from the US, uh they're going to continue to enrich and expand uh outside the US including Asia. So that that to me was by far five stars. Uh Jamie Diamond uh was a little bit more cautious. Um mostly because I think, you know, there is some concerns from the geopolitical risk that we all know about.

What what about the macro though, Ken? Uh you know, to the extent that you know, we see a slowing US economy, maybe even a contraction, that that means what for your coverage universe?

Yeah, so we we look at all the dials and you know, the one would be main Street, whether it be the consumer or small business. Uh the consumer, um we are seeing a slight uptick in terms of loan balances for credit cards, uh but nothing in terms of delinquencies that is alarming. Uh and we look at all the banks every quarter. Uh secondly, for small business, uh we're not seeing anything that would at this point suggest that uh the businesses are not viable. And uh as it relates to corporates, they're on the sidelines as is financial sponsors or private equity. They're both needed for the capital markets. Uh CEO confidence probably is lower. Uh they're not really sure how much they want to commit for capital and go to the markets. Um I I think the consensus of analysts is it's a second half story. It it reminds me when we were in COVID at the beginning uh with the capital markets and investment banking. And by the way, the only thing that was down a lot was equity underwriting. Uh M&A and debt underwriting was still uh double digits and positives. But when I reminds me of of that time with COVID, whether an analyst would say, in this case second half 25, is it going to be V-shaped or U-shaped? And that's really what we're playing around. If you're really bearish on the geopolitical scenario, you're saying that uh things are not going to be good for all this year and I'm going to be conservative, maybe there's an uptick next year. I I don't think that's the case. What we got in the results, I think is um certainly that these are durable great franchises uh for investors, they represent core holdings. Um and the other aspect, we're overweight on the financial sector is that many of these banks have more durable recurring revenue from uh wealth management and asset management and some principle investments. So yeah, are we concerned? Of course. Uh but these are some of the best franchises we have in the United States.