Hello,
Following the Easter break, market attention will begin to focus on the Q1 earnings season which kicks off on Friday with the big US banks reporting first, as is now customary. It will be interesting to hear the views of the financial sector following the swift demise of several regional US names in March. JP Morgan, Citibank, and Wells Fargo all report.
The consensus is that earnings are likely to fall as margins get squeezed and the recession threat looms large overspending habits. Consumers have been resilient so far, as excess savings built up through the pandemic have soften the blow of various types of ‘flation’ (‘greed’, ‘shrink’, ‘in’). With wages and funding costs both increasing in recent times there is a growing expectation that individual company fortunes will diverge as earnings are reported. The Central Bank ‘backstop’ is no longer present and companies with strong margins and robust balance sheets look set to fair best. Essentially, decent results and guidance will be rewarded with the opposite being punished.
As always, if you wish to discuss anything further detail, please do get in touch.
