Big-bank earnings drop in days, and the setup is messier than usual. Office loans are defaulting faster than 2008, the 10-year has sat above 4% almost all year, and banks are pouring into AI data center financing — long-dated, concentrated, and untested at scale.
Historically, $BAC $JPM $WFC outrun the S&P 500 from October earnings to January earnings 14 of the last 16 years. Classic pattern: they print, sentiment lifts, the trade works.
This cycle has friction:
• Office CMBS delinquency hit 12%, higher than the 2008 peak
• $875B of commercial mortgages mature this year, roughly half sitting on bank balance sheets
• The 10-year pushed above 5% — higher than any October print in the dataset
• $WFC and $BAC both flagged risk in long-dated AI infrastructure lending
The read: the pattern likely holds, but at half strength. Expect +3% to +5% vs. the S&P 500, not the usual +7% to +8%. Office exposure is real, rate pressure is real, and AI buildout financing is a multi-year bet with no stress-test history. The trade still works, but the margin thins.
$C $GS $MS also in the mix.
Historically, $BAC $JPM $WFC outrun the S&P 500 from October earnings to January earnings 14 of the last 16 years. Classic pattern: they print, sentiment lifts, the trade works.
This cycle has friction:
• Office CMBS delinquency hit 12%, higher than the 2008 peak
• $875B of commercial mortgages mature this year, roughly half sitting on bank balance sheets
• The 10-year pushed above 5% — higher than any October print in the dataset
• $WFC and $BAC both flagged risk in long-dated AI infrastructure lending
The read: the pattern likely holds, but at half strength. Expect +3% to +5% vs. the S&P 500, not the usual +7% to +8%. Office exposure is real, rate pressure is real, and AI buildout financing is a multi-year bet with no stress-test history. The trade still works, but the margin thins.
$C $GS $MS also in the mix.