US earnings season

[MongiIG]

US earnings season starts officially this week and, as ever, the banking sector gets the ball rolling.

JPMorgan and Morgan Stanley will publish their quarterly report on Thursday, and Citigroup , Wells Fargo, BNY Mellon on Friday.

Bank of America and Goldman Sachs then pick up the baton on Monday next week.

Outside the banking sector, PepsiCo will report on Tuesday 12th. Later this week the market expects publications from Delta Air Lines, ConAgra Brands and UnitedHealth .

Earnings in the US are expected to rise 4.1%, which would be the lowest rate of growth since the fourth quarter (Q4) of 2020. Revenues are expected to rise 10.1% compared to a year earlier. As for negative guidance, they should be on the rise. With soaring inflation and the pressure it puts on profit margins, bleak expectations about economic growth and consumer spending, 71 firms are expected to announce negative earnings guidance.

Twitter will gather a lot of attention today. On Friday, Tesla CEO, Elon Musk, said he planned to walk away from his deal to buy the social media platform, arguing that it had failed to provide enough information to prove that the number of fake and spam accounts on its platform stands at less than 5%, as it has long estimated.

Over the weekend, Twitter announced it had hired law firm Wachtell, Lipton, Rosen & Katz as it prepares for a legal battle either to force Musk to proceed with the $44 billion deal or pay the $1bln break fee.

 

Jeremy Naylor | Writer, London | Publication date: Monday 11 July 2022 

[MongiIG]

US Earnings Season Preview

 

US second quarter earnings expected to see worst growth in six quarters 

Jeremy Naylor look ahead to a fascinating earnings season... 

 

 

 

 

[MongiIG]

JUL 11, 2022

Bank Stock Earnings Preview: What to Expect?

BY:RYAN SULLIVAN | Tastytrade

Market Outlook Through the First Half of 2022

The S&P 500 E-mini is currently trading at $3,914, remaining under $4,000 since June 12^th, 2022. Since mid-June the S&P 500 has shown us constructive price action. Based on recent price action, it is likely that the S&P 500 will move toward testing the $4,000 price level by the end of July.

Taking a broader view, the S&P 500 is currently down 17.97% from its opening price of 2022. At this point in 2022, with economic growth hurdles, supply chain constraints, rate hikes, and global conflicts known, it is becoming more likely that that market is currently trading at a price that has factored in most of the elements that have created the current bear market.

Benefits of Trading Bank Stocks Going Into Earnings

Placing trades right before earnings reports gives us the opportunity to sell increased volatility going into an event that contains uncertainty. Ideally, for these events, earnings are reported, they match the consensus estimates, and the stock does not make a large move, remaining where the market has already priced the stock. Then, volatility diminishes, allowing us to buy our position back for a profit in a short period of time.

The upside to using this strategy for the banking sector is that bank stocks are often among the easiest to estimate earnings. Due to the nature of banking and the regulatory requirements that surround the banking industry, analysts often have access to much of the information that will affect earnings reports prior to the actual report. This allows for more accurate projections and accurate estimates per share. We can use this to our advantage.

However, it is always important to remember that earnings reports can come in as you expected them to, and the resulting price action can move exactly opposite to what you were looking for. It is common for larger market participants to exit large positions on positive earnings reports. Defining your risk going into earnings can alleviate some uncertainty.