Good morning,


Last week closed out in a negative fashion as US inflation (more info below) once again dominated much of the market narrative. However, late on Friday we saw the start of the Q3 earnings season in the US. It has traditionally kicked off with the big US financials and we saw JP Morgan, Wells Fargo, and Citigroup all report on Friday, with big names like Bank of America and Goldman Sachs to follow early this week.


Headline figures were down significantly, but importantly broadly managed to beat market expectations. Banks in general do better in a higher rate environment (aided by the spread between loans and deposits) and they did. However, they are also a bellwether for the economy. With that in mind the forward guidance, which was negative, gives us a decent insight into where banks think the US economy is going. But this isn’t necessarily a bad thing. If a recession does in fact materialise, it is likely to be the most expected and forecast recession in history. As always, stock markets remain forward looking instruments and certainty for the future (even with a negative outlook) could well help equities find their feet at the bottom of this market trough.


As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.