Banks Will Bask in a Bullish Glow This Week

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Barring any unexpected developments, this holiday-abbreviated week shouldn't see a great deal of hot news for the banking sector. As a whole, it'll continue to soak up applause following its fine earnings season performance last week. Most of the giants did quite nicely, delivering fourth quarters that topped expectations -- take a bow, Bank of America (NYSE: BAC  ) , Wells Fargo (NYSE: WFC  ) , and especially weakened-but-still-dominating-the-stage JPMorgan Chase (NYSE: JPM  ) , which beat analyst estimates despite being weighed down by billions of dollars in legal settlements and associated costs.

The only fresh figures scheduled for any of the big guys are the ones behind Citigroup's (NYSE: C  ) crucial fixed-income business for full-year fiscal 2013, slated to come down the pipe on Thursday. Citi has always, and probably will always, make a great deal of its coin from the activity, which is why the 15% year-over-year drop in fourth-quarter fixed-income trading revenue (to $2.3 billion) was dispiriting.

Outside of that, with earnings season in full swing, any news related to banks will likely be overshadowed by results from top-name stocks in other sectors. Smaller financials are slated to turn in quarterly figures, and they'll be worth investors' attention to determine if the good numbers posted by the big guys are part of a broader improving trend. U.S. Bancorp (NYSE: USB  ) , one of the nation's major regional lenders, reports its latest and greatest on Wednesday. Analysts are projecting $0.75 in per-share earnings and nearly $4.9 billion for revenue.

Meanwhile, a new financial will make its market debut on Thursday. Spanish lender Banco Santander (NYSE: SAN  ) is slated to launch the IPO of its car-finance operation, Santander Consumer USA Holdings. The bank says it's floating slightly more than 65 million shares somewhere in the $22-$24 per-share range, potentially raising close to $1.6 billion. That's a nice, chunky issue, and it'll put a few bills in the pockets of Bank of America's Merrill Lynch unit, Citigroup, JPMorgan Chase's JPMorgan, and Wells Fargo's securities arm. All are book runners of the the IPO, along with nine other banking heavyweights. 

Bank investors will also be keeping an eye on developments in the macroeconomic sphere. Financials with big mortgage operations -- hello, Wells Fargo, JPMorgan Chase, and to a lesser degree Bank of America -- are going to be concerned about the December figure for existing home sales, scheduled to be released Thursday by the National Association of Realtors.

Further afield, the International Monetary Fund is to publish its latest World Economic Outlook this morning, with Managing Director Christine Lagarde hinting last week that it might forecast higher-than-previously estimated world growth. And later today, the World Economic Forum will convene for its annual event in Davos, Switzerland, to schmooze and blow out expense accounts... er, we mean, discuss matters of great import to the global economy. 

All in all, though, even if mildly disappointing, this week's developments shouldn't put too much of a damper on the fine results from (most of) the major financials. Those fourth-quarter numbers were robust and encouraging, after all, and the players that did best are still basking in the happy glow of the spotlight.

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Eric Volkman

Eric has been writing about stocks and finance since the mid-1990s, when he lived in Prague, Czech Republic. Over the course of a varied career, he has also been a radio newscaster, an investment banker, and a bass player in a selection of rock and roll bands. A native New Yorker, he currently lives in Los Angeles.

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