Reminder that bank stress tests results are after the close tomorrow. Could be some volatility if GS Research is correct on this, but who knows how politics will play into the Fed's decision:
Over the past three months, the options market has priced in 40% lower average 2021 dividends across large cap banks, and consensus is forecasting 11% lower dividends for the top 7 banks relative to the beginning of the year, which we believe is related to investor concerns for higher capital requirements in 2020 CCAR that could force banks to cut dividends (Exhibit 8, Exhibit 10). In our view, bank capital levels remain sufficient, especially in light of higher near-term earnings guidance, and should reassure investors that, aside from at WFC, bank dividends are likely not at risk.