Asks about biggest risk to bull case for banks given strong recent performance.
Leslie
Gerard Cassidy
Biggest risk is re-emergence of inflation in second half of 2026 running at 4-5%, forcing Fed to reverse from easing to tightening and raising short-term rates.
Asks if this risk is due to flatter yield curve and potential credit quality headwinds, particularly regarding interconnectedness with non-banking sector.
Leslie
Gerard Cassidy
Rising short-term rates would flatten yield curve, reducing net interest income benefit, and could lead to recession and credit cycle.
Asks if strong year-to-date bank gains leave room for further upside or if tailwinds are already priced in.
Leslie
Gerard Cassidy
Some upside remains; key drivers include potential Basel III Endgame deregulation in early 2026 and economic growth supporting loan growth tied to nominal GDP.