Bank Earnings Have Entered the Upside Down

Bank earnings week reveals a divergence between trading-focused institutions and rate-sensitive franchises, with JP Morgan’s earnings miss serving as a notable bellwether. While credit card spending remains resilient, indicating consumer health, business loan growth shows signs of strain. The conversation shifts to the complexities of warehouse automation, where Amazon maintains a significant lead over legacy retailers like Walmart due to early infrastructure investments and purpose-built facilities. Despite the potential for automation, high capital expenditures and power grid limitations pose significant hurdles to widespread implementation. Finally, the discussion addresses the underperformance of Empire State Realty Trust, attributing its struggles to a decline in observatory revenue from international tourism and broader real estate market pressures, leading to a cautious hold outlook despite the company's profitable office portfolio.