Search
EN Down
Language
Hi, user_no_name
Live Chat

US earnings season gets underway Wednesday April 13th with JPMorgan Chase & Co (JPM), the first of the big banks to report. So what to expect from this quarter? 

Amid increased geopolitical uncertainty and rising inflation pressures, this season’s reporting may reflect a lot more pessimism than was evident three months ago. Moreover, whilst markets entered Q1 pricing in at most 3 rate hikes in 2022, fed funds futures signal the market expects 8 hikes of 25bps this year. Among the most obvious changes over the quarter was the Russian invasion of Ukraine, which has upended assumptions about the future path of global growth, whilst heaping more inflation fuel on the fire. 

Meanwhile the yield curve has inverted with the yield on the US 2yr Treasury rising above that for the 10yr. Whilst this tends to foretaste a recession, it doesn’t usually lead to stocks blowing up. However, yield curve inversion of this nature plus inflation – which is running wild – is another matter, says Goldman’s U.S. equity strategist David J. Kostin. 

“The 2s10s yield curve inverted in 1973, a more comparable period of high inflation [to today],” Kostin said. “The S&P 500 return was negative during the subsequent three, six, and 12 months [back then in the 1970s], and ultimately entered a bear market, falling by 48% in nominal terms and 57% in real terms.” 

In his widely read letter to investors, JPM CEO Jamie Dimon warned participants to expect “very volatile markets” as the Federal Reserve tightens monetary policy.  

 “If the Fed gets it just right, we can have years of growth, and inflation will eventually start to recede. In any event, this process will cause lots of consternation and very volatile markets,” Dimon wrote. He also warned the bank faces a loss of up to $1bn from its exposure to Russia over time. 

JPM leads the financials on Wednesday, followed by Citigroup Inc (C), Goldman Sachs Group Inc (GS), Morgan Stanley (MS) and Wells Fargo & Co (WFC) all on Thursday. Click here for our full US earnings season calendar.

According to FactSet, analysts decreased earnings estimates for companies in the S&P 500 over the course of the first quarter. The Q1 bottom-up EPS estimate decreased by 0.7% to $51.83 from $52.21 during this period. 

For full-year 2022, Zacks Investment Research says earnings expectations are set at +7.3% on +6.2% revenue growth. This would follow +50% earnings growth in 2021. 

FactSet also notes that while analysts were decreasing EPS estimates for the first quarter, which is quite normal, they were simultaneously increasing EPS estimates for the next three quarters. The bottom-up EPS estimate for Q2 increased by 1.6% (to $56.07 from $55.16). 

Latest news

Repeated warnings from Tokyo appear to support Japanese yen vs. strong USD

Friday, 12 April 2024

Indices

Japanese yen gains vs. USD as authorities repeat warnings

Dollar index soars to 5-month highs as investors eye ECB cuts in June

Friday, 12 April 2024

Indices

Dollar index soars on June ECB cut expectations, euro sinks

Gold prices are rallying on geopolitical concerns as the dollar

Friday, 12 April 2024

Indices

Uncertainty pushes gold price, dollar up on CB divergence

Copper prices scale 15-month highs as Citi points to bull market

Friday, 12 April 2024

Indices

Copper prices climb to 2024 high as Citi signals bull market

Live Chat