Capital One is about to issue earnings results. Ponder the Black Swan Scenario and how it may affect Capital One in the future.
Most banks do well in rising interest rate economies. It’s hard to see how Capital One can increase rates on one of the priciest set of credit cards going. But their cost of deposits and funding can increase which means margins will shrink.
In any downturn credit quality takes a hit and Capital One is no stranger to risky bets.
Regulators will continue to swarm creating more overheads and burdensome processes.
George Gutowski writes from a caveat emptor perspective.