J.P. Morgan (JPM) - Get Reporthas been the stalwart of the banking industry, and following CEO Jamie Dimon's annual shareholder letter about the state of the U.S. economy, investors will be looking to hear about how his business and industry look as the Trump administration marches on.
Keefe Bruyette & Woods analyst Frederick Cannon noted that Dimon's 2016 annual letter -- released earlier this month -- said that "too big to fail" has been solved, that taxpayers would not pay if a bank were to fail. While this may seem like a something of a shock to most people, Cannon said that the safeguards that have been enacted should help prevent another financial crisis like the one of 2008.
"Overall, we believe the plans make rational sense, but we have doubts as to whether they would be effective in an irrational world of systemic failure," Cannon wrote in a note to investors. "We believe maintaining safeguards of higher levels of capital and liquidity are dominant factors that will prevent another financial crisis for the current generation."
(To read the entire letter from Dimon, click here.)
"This letter was really about how the government has in some ways made costs go up and has ruined the liquidity and yet at the same time has made it so that Dimon developed a fortress balance sheet," TheStreet's Jim Cramer recently said.
While the notion of whether "too big to fail" is likely to be bandied about among investors and the press, investors will be looking to hear what the company has to say about loan growth, mortgage production and other financial instruments in the first quarter.
Analysts surveyed by Yahoo! Finance expect the company to earn $1.52 a share on $24.88 billion in revenue for the period.
Over the past 12 months, shares of J.P. Morgan have gained nearly 48% excluding dividends, compared to the near 15% gain in the S&P 500.
Here are five ETFs that may benefit if investors like J.P. Morgan's first-quarter results.
iShares U.S. Financial Services ETF
Morgan Stanley analyst Betsy Gracek believes there is likely to be some headwinds headed into the first quarter.
"We see 4 headwinds into earnings: slower loan growth, lower mortgage production, weaker trading volumes and volatility, and higher consumer NCOs," Gracek wrote in an investor note discussing the banking sector. "We are median 2% below consensus; most above for GS (11%) and C (8%) and most below for SC (-8%). Yes, 1Q will likely be tough, but we would buy the dip."
Financial Select Sector SPDR Fund
Gracek echoed Cannon's sentiments, that there is the potential for looser regulation under the new Presidential administration than there was under President Obama, as put forth by Dimon's letter, which would help "higher capital return, stronger loan growth and more trading efficiency."
Vanguard Financials ETF
FIDELITY MSCI FINANCIALS INDEX ETF
iShares Edge MSCI Multifactor Financials ETF
The $3.1 million iShares Edge MSCI Multifactor Financials ETF (FNCF) has J.P. Morgan make up 8.23% of its portfolio, charging investors an expense ratio of 0.35%.