Here’s what you’ll find in today’s edition:

• Big banks are off to the races on earnings season. Here’s what results could mean for the economy.

• Milestone crypto ETFs are once again set to hit the Canada market first.   

• Fed speak has investors walking back rate cut expectations.

Big banks report big loans in Q1

US equities were relatively stable Tuesday as investors enjoyed a break from back-to-back tariff headlines and digested a batch of positive bank earnings. 

Goldman Sachs, Citibank and Bank of America reported this week. A couple data points of note: 

Banks don’t seem worried about potential loan and lease losses 

In some cases, they’re actually holding less — like Goldman Sachs, which set aside $287 million in credit loss provisions during Q1, compared to $351 million in Q4 2024. The Bank of New York Mellon also decreased its provisions from $20 million in Q4 to $18 million in Q1. 

Citigroup increased its credit loss allowance by 1% from the last quarter of 2024. Bank of America also posted a mild increase in Q1, allotting $13.26 billion for defaults vs. $13.21 billion at the end of last year. 

Why does this matter? Banks are not expecting a huge increase in loan defaults, meaning they imagine consumers will be healthy and/or they see their risk controls working. All good news. 

Of course, defaults lag economic stress, so grain of salt. What I mean is that should tariffs, market volatility and/or generally worse economic conditions lead to an increase in loan defaults, it might take a while before we see this materialize — both in losses and in increased loss allowances. 

Lending is up 

Big banks’ loan balances are increasing. 

Goldman Sachs reported $210 billion in loans during Q1, up from $196 billion in Q4 2024. 

Bank of America’s Q1 loans came in at $1.1 trillion, up almost 6% year over year. The bank reported quarter-over-quarter increases in both consumer and commercial lending. 

Citibank’s lending was up as well, coming in at $702 billion (a 4% increase from the first quarter of 2024). But net credit losses in Q1 were up too, showing a 7% increase year over year.

Why does this matter? Again, it speaks to the health of consumers and businesses. When things are good, businesses want to expand and consumer spending increases given confidence they can pay back what they borrow. 

Again, grain of salt here. A rise in defaults is bad. Plus, increased commercial lending last quarter could be a reflection of businesses looking to get ahead of tariffs by increasing working capital or taking out loans to make supply chain changes. 

All in all, though, big bank earnings are off to a pretty solid start. Looking ahead at earnings season more broadly, there’s one other thing we are keeping an eye on, thanks to DataTrek Research’s Nicholas Colas. 

Colas made an excellent point on quarterly cost accruals in a note yesterday: Many companies have some leeway in how and when they report cost accruals. 

Intentionally increasing reported expenses (accruals) in a quarter where profits were especially high could be advantageous in times where the market is down and expectations for exceptional earnings are low (times like right now). These extra earnings can be “saved,” if you will, for a later quarter when investors will reward better performance. 

Colas says looking at how much companies beat on expectations will give us clues into profitability and management confidence. We’ll be watching.

— Casey Wagner

No Tariffs on Builders

The Fed won’t refactor your contracts. Rates won’t fix UX. Policy won’t push code to prod.

Builders. Founders. Devs. Not waiting for the cycle — writing the next one.

• $100K+ in hackathon bounties

• Developer tickets available

• Speaker lineup live

📅 June 22–26 | Brooklyn, NY

The increase in corporate bitcoin holdings from the fourth quarter of 2024 to the first three months of this year, according to Bitwise data. 

Roughly 80 public companies now hold bitcoin, with 12 buying BTC for the first time in Q1.

Strategy’s holdings accounted for roughly three-quarters of the 688,000 BTC held by these firms. The company owned about 11 times more bitcoin than second-place Marathon Digital, as of March 31 — 528,185 BTC to 47,531 BTC.

Canada is leading the way again — this time on spot solana ETFs. 

Such products from Purpose Investments, Evolve, 3iQ and CI Global Asset Management are set to debut Wednesday on the Toronto Stock Exchange.

Crypto ETF milestones in Canada are not new. In case you forgot, Purpose launched the world’s first bitcoin ETF backed by physically settled bitcoin in February 2021. Other issuers in the country brought their own products to market shortly after.

Canadian securities regulators cleared spot ether ETFs just two months after the first bitcoin funds hit the market.

As you probably know, the SEC didn’t greenlight spot bitcoin and ether ETFs until 2024.   

Fast forward to today, and despite a crypto-friendly president, Congress and SEC helping the US catch up to the rest of the world, Canada has won the race to wrap yet another crypto asset into a familiar financial vehicle.

I spoke with 3iQ when the firm filed for a solana fund last summer; VanEck proposed a spot solana ETF in the US around the same time. While other US issuers have since followed, the SEC may be patient as CME SOL futures contracts just went live last month. 

It’s also worth mentioning that ether ETFs in Canada and elsewhere stake a portion of the ETH they hold. The US ether funds do not, and the SEC continues mulling proposals to allow those ETFs to start doing so.

SEC Commissioner Hester Peirce noted in a February statement that “the commission may have to make progress on custody and other issues” before allowing these changes to existing ETFs. 

Back to the solana funds, Evolve said in a Monday release that it intends to initially stake up to half of the portfolio’s SOL. As we mentioned yesterday, the firm touted its initial 0% management fee (through the end of 2025).

Purpose noted that staking would be powered by its in-house validator infrastructure, eliminating third-party costs. CI’s fund is subadvised by Galaxy Asset Management, a spokesperson told me. Galaxy is set to facilitate staking arrangements for the fund.

A 3iQ spokesperson confirmed that the company anticipates the launch of its solana ETF this week, but declined to comment further.

Let the race for assets begin.

— Ben Strack

In the wake of recent tariff turmoil in markets, investors have walked back their expectations for an interest rate cut from the Federal Reserve come May. 

Fed funds futures markets are now pricing in a 16% chance of a 25bps cut next month. That’s down from 45% just a week ago. 

What changed? FOMC members started talking. 

Fed Gov. Chris Waller said yesterday that the inflationary impact of tariffs could be “temporary.” He’s said that before, but he added that should the economy slow too much, he expects the FOMC will cut “sooner.” 

Chair Powell said earlier this month that the central bank plans to take a “wait-and-see” approach to Trump’s trade policies. Given the runaround the administration has given markets these past two weeks, this isn’t surprising. It’s hard to speculate too much on the inflationary impacts when the tariff rates change on an almost daily basis. 

“We are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said days after Trump’s so-called Liberation Day tariff announcement. 

Trump has argued that the Fed needs to act now in lowering rates, writing in a Truth Social post that Powell is “always late” in reacting. 

Up ahead, Governor Lisa Cook is slated to speak this evening at an event in Washington. Chair Powell will speak Wednesday, followed by Governor Michael Barr on Thursday.

— Casey Wagner

• The SEC yesterday delayed its decision to rule on in-kind creations/redemptions for crypto ETFs by WisdomTree and VanEck. 

• BTC and ETH prices are essentially flat over the last 24 hours despite being up about 7% and 4%, respectively, over the past seven days. 

• US spot bitcoin ETFs on Monday saw their first day of net inflows since April 2 — albeit just $1.5 million, according to Farside Investors data.