Fourth-quarter results from JPMorgan are kicking off earnings season for U.S. banks, offering early insight into trading activity, credit conditions and how financial institutions are positioning for a more volatile environment. While headline profits rose, softer investment banking fees and cautious guidance are shaping market reaction.
BNN Bloomberg spoke with Lorne Steinberg, president of Lorne Steinberg Wealth Management, about what JPMorgan’s results signal for the broader banking sector, key risks facing equity markets and where selective opportunities are emerging.
Key Takeaways
- JPMorgan’s results highlight the importance of trading and asset management strength as investment banking revenues remain volatile quarter to quarter.
- Markets are increasingly focused on 2026 earnings guidance, with expectations pointing to slower but still positive growth for large U.S. banks.
- Key risks include potential political interference with the Federal Reserve, efforts to cap credit card interest rates and rising geopolitical uncertainty.
- Despite market highs, resilient consumer spending and strong corporate balance sheets continue to support a constructive backdrop for equities.
- In technology, disciplined capital allocation and sustainable cash flow matter more than AI hype, favouring established companies with reasonable valuations.
Read the full transcript below:
ANDREW: We’re getting earnings from the giant U.S. banks. JPMorgan’s profits rose in the fourth quarter, but investment banking fees fell, missing the firm’s own guidance. Let’s get more from Lorne Steinberg, president of Lorne Steinberg Wealth Management. Lorne, great to see you here in the studio. What, if anything, jumped out for you in these JPMorgan numbers?
LORNE: Certainly. I think the investment banking numbers are overblown, Andy. This is an incredibly choppy business, and quarter to quarter it’s hard to draw conclusions. JPMorgan remains number one in that business. What does stand out in a serious way is that market volatility led to a huge increase in trading revenues, and that augurs well for 2026, where we expect to see continued volatility. We’re also seeing incredible strength in the asset management business as well.
JPMorgan is forecasting improvement in net interest margins going forward into 2026. So listen, you’re not going to get the same boost in earnings that you had in 2025, but we’re still bullish on the stock and are a shareholder.
ANDREW: Let’s put up the stock. It’s doing not much in the premarket. Maybe we can pull up a 10-year chart. It’s been a thing of beauty to own for years. Is this almost a stock you can just own and forget about?
LORNE: I have to say Jamie Dimon has managed to avoid every bucket of manure, if one could say that, that other banks have gotten themselves into. Clearly, their internal controls are astoundingly strong for a bank of this size. There will always be a question mark — the day Jamie Dimon decides to resign, the new person will be under pressure — but it’s certainly been that way for a long time, and it’s a core holding in our firm.
ANDREW: What risks do you see right now for equity investors, with markets at record highs?
LORNE: Certainly one of the risks is any interference with the Fed. It brings back to mind the 1980s, when the term “bond vigilantes” was coined by Ed Yardeni, when the bond market got worried that inflation was going to get out of control and drove up interest rates. We’re already seeing signs of investors being skittish in that way.
Another risk is if the U.S. government gets involved in capping interest rates or interfering in other industries. That would be a serious issue for investors. And then, of course, there are geopolitical risks, which I usually don’t worry about, but which are a bigger issue today.
ANDREW: Although on the credit card issue, it seems tricky for U.S. President Donald Trump. He’d need Congress to back him. Maybe he gets the best of both worlds — he won’t really have to antagonize the banks, but he’ll be able to say, “Well, I tried.”
LORNE: Absolutely. And the risk of capping credit card interest rates, as high as they are — and they are astoundingly high — is that it pushes borrowers who are desperate to go to places they probably shouldn’t go and spend even more money.
ANDREW: Broadly, how do you feel about U.S. stocks? Are you seeing opportunities, or is the market a bit inflated?
LORNE: Some sectors are a bit inflated, but we’re seeing plenty of opportunities. The economy is resilient. One area where we see opportunities is in a couple of technology companies with AI exposure.
The first is Adobe, which for some reason is trading at about 14 times earnings, with double-digit revenue, earnings and free cash flow growth, and huge profit margins. They bought back about four per cent of their shares last year, and the fears that AI may hurt their business are misplaced. It’s actually the opposite — AI should help their business. These shares are massively undervalued.
The other technology company is Cisco. For years it was more or less a flatlining revenue company, but Cisco has returned to growth. They’re huge in security. They bought Splunk, which is giving them significant AI exposure. This company has returned to growth, remains incredibly cheap, and is a consistent dividend payer and buyer of its own shares.
ANDREW: It’s interesting — those are two tech companies that have been around for a long time.
LORNE: Absolutely, and they’re at the top of their game, number one in their fields. They’ve remained at the top after so many years.
ANDREW: Are you worried that “tech value stock” can sometimes be a contradiction in terms?
LORNE: It can be. It can be a value trap. But in this case, both companies are growing. These are not flatlining businesses. They have huge margins, strong free cash flow, and they’ve both been great capital allocators.
ANDREW: And aggressive buybacks by Adobe. What’s your feeling — are we in an AI bubble when it comes to some other stocks? Is there going to be pain?
LORNE: I certainly think there’s going to be pain for some companies. There are hundreds of billions of dollars being spent on data centres and related infrastructure, and some of that money undoubtedly will not be spent well. Even the companies themselves are struggling to project what revenues will look like and what kind of returns they’ll get on those investments.
The majors — Alphabet, Amazon, Microsoft, Meta — they’ll be the survivors. They’ll be at the top. But some of the other companies that have raised billions of dollars with no revenues, that’s where we have big question marks.
ANDREW: Even though, if we put up Alphabet — Google — on a 10-year chart, it actually languished earlier last year, then came roaring back.
LORNE: Fears of AI.
ANDREW: People thought search would get hollowed out. I don’t use AI that much, but I do find it has a tendency to pretend it knows things when it doesn’t. I wish it would more often say, “No, I don’t know.”
LORNE: It’s not 100 per cent accurate, and it can be dangerous. We’re in the earliest days of people figuring out how to use it, what it means and where the value really is.
ANDREW: If a company like OpenAI were to get over its skis with massive debt and spending, would that cast a shadow over other internet or AI stocks?
LORNE: It may or may not. What I think will happen is that we’ll end up with fewer competitors, and the competitors that remain will be the winners. Every major bank in Canada and elsewhere is already rolling out AI across their institutions to make people more efficient and reduce headcount. AI is real. The real question is whether the amount of money being spent is going to generate acceptable returns.
ANDREW: Lorne, thank you very much.
LORNE: Great to be here, Andy.
ANDREW: Lorne Steinberg, president of Lorne Steinberg Wealth Management.
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This BNN Bloomberg summary and transcript of the Jan. 13, 2026 interview with Lorne Steinberg are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
