Morgan Stanley and BofA report robust Q4 earnings

Let's turn to big bank earnings. We got Morgan Stanley and Bank of America out this morning, both delivering another bout of robust results for Wall Street. Profits for both banks more than doubling in the fourth quarter, fueled by a resurgence in deal making and financing demand. Joining us now for a bit more, we want to bring in Mac Sykes. He's Gabelli Fund's portfolio manager. Mac, it's great to have you here on set with us. So these two results this morning falling on the heels of very robust results that we got yesterday morning. I'm curious what your big takeaway here from this earnings season and maybe what we are learning from big banks. Yeah, I think when we go to 30,000 feet for a second, you know, think about the backdrop for investing in banks today. It's pretty extraordinary. We now have a normalized curve. So instead of the inversion, so pretty normalized real rate, we have regulations that are going to be easier. So that boosts M&A. We already year to date, we have 100 billion of announced deals. And then the last, you know, the consumer activity has been very good as well. So when you put it all together, you know, it's a really good environment for investing in banks. And we've seen that in terms of the reporting results. JP Morgan, 20 percent return on equity. Very strong. Wells Fargo, very strong results. And then this morning, both from Bank of America and Morgan Stanley delivering on those results as well. What are you extrapolating about the state of the consumer right now for these banks? So, you know, you kind of have to look at the different segments that they operate. You know, if you think about America Express, it's sort of the upper tier in small business. But, you know, Bank of America is a pretty good slice of America. And, you know, but also in terms of their credits, a little higher end as well. And I think that's consistent with the economic activity, which is good household balance sheets, you know, sort of normal retail spending, as we just heard. And just continuation of the good trends that we've that have been in place for over a year. I'm curious, when you take a look at Bank of America's trading operations, didn't didn't as maybe as much significantly exceed expectations if you compare it to a Goldman Sachs or something like that. Is that something to be worrisome about? I guess what is the read through there? Well, I think there's a little bit of segmentation, too, in terms of the products that they serve and the risk that they're taking in terms of the activity. And if you look at Morgan Stanley, 50 percent trading, you know, and equities really driving that, you know, I think Bank of America more fixed income component there for them. So, you know, it depends really on the comparables. It depends on the concentration of that capital as well. How when you take a look at the net interest income, at least for Bank of America, are they more exposed or I guess more at risk if we don't see the Fed cut? And I guess what are the implications there? So it's a giant work in progress. But what I will say is that, you know, if you just look at the static NIM today, it's one ninety seven for Bank of America compared to JP Morgan at 260. And so you can see there's a discrepancy in terms of that yield that they're earning off their major asset bases in terms of their balance sheets. And so, you know, Bank of America has been hindered by some of these legacy investments they've made a years ago, whether it's in the HTM, AFS. And so that's nine hundred billion in total that will continue to roll off and reprice. And so as they reprice, that's one hundred and fifty plus basis points that will go into the contribution of NII. And so even though they're under earning relative to their balance sheet to some other banks, you're going to get a tailwind in terms of the repricing going forward over the next several years.