CNBC's "Fast Money" Strong Bank Earnings Fuel Markets… And Impact Of China’s Rare Earth Crackdown 10/15/25
Oct 15, 2025
Tom Michaud, CEO of KBW, shared insights on the strong start to bank earnings season, emphasizing why he believes the financial outperformance will continue. He discussed credit risks and valuation metrics, particularly the importance of return on tangible common equity. The conversation also delved into China's rare earth crackdown and its implications for the U.S. supply chain, highlighting the need for alternative materials. Michaud's predictions on M&A activity and the future of bank consolidation provided a compelling look at the financial industry's landscape.
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Banks Showing Strong Earnings Momentum
- Bank earnings and revenue trends point to materially higher EPS next year, driven by investment banking and trading strength.
- Tom Michaud says credit has been benign so far but warned industry is "over-earning" on credit and costs will rise eventually.
Consider Timing For Bank M&A
- Act now on bank consolidation if you favor pro-growth policy, because regulatory timelines are shortening.
- Tom Michaud recommends banks pursue M&A sooner while the current administration's stance accelerates approvals.
ROTCE Drives Bank Re-Rating
- Return on tangible common equity (ROTCE) is the key driver for bank re-rating relative to book value.
- Michaud says investor days and reset targets often signal management confidence and support higher valuations.
