Inventory week ahead: Big banks are booming. Now here are the winnings

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Bank stocks got off to a strong start in 2022, extending gains from the second half of last year.

the Invesco KBW Bank ETF (KBWB)who has Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM), American bank (USB) and Citigroup (VS) as its top holdings, has already risen more than 8% this year and gained more than 19% in the past six months. It’s better than the whole market.

JPMorgan Chase, Citi and Wells Fargo will tell investors how they fared in the fourth quarter and what to expect in 2022 when they report results on Friday.

US Bancorp and Bank of America release their results on Wednesday, January 19. The same goes for the powerhouse of the investment bank Morgan Stanley (MRS). Goldman Sachs (GS) is due to publish its results on Tuesday, January 18.
Banks will benefit from higher rates, provided they don’t rise too quickly and hurt demand for mortgages, credit cards and other loans. Although higher rates make lending more profitable for banks, there is a limit to rising rates before they cool the scorching real estate market.

Financial companies are also prospering on the strength of the stock market, which has helped boost business activity. The stock surge also fueled increased demand for mergers and initial public offerings, and led to higher lucrative fees from investment banks.

Together, these trends could boost bank profits. Analysts expect JPMorgan Chase’s earnings per share to climb nearly 70% in 2021.

Wall Street is also forecasting substantial profit increases for Citi, which is now under new CEO Jane Fraser and Wells Fargo is finally starting to recover after years of underperformance due to its fake accounts scandal.
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But investors want to hear what these banks have to say about the rapid spread of the Omicron variant of the coronavirus and how it could impact markets and the economy for the rest of the year.

Several major Wall Street firms, including JPMorgan Chase, Goldman Sachs and BlackRock, have delayed returning their employees to their trading floors, despite pressure from Eric Adams, New York’s new mayor, to bring people back to the Big Apple offices. .

Investors will also be curious to hear what Jamie Dimon, CEO of JPMorgan Chase, and other top bank executives have to say about the recent surge in long-term bond yields.

There are fears that the Federal Reserve will raise rates more aggressively than expected this year to curb inflation. If that happens, it could chill both the real estate and stock markets.

All eyes on the economy

Speaking of inflation, the US government will release its December Consumer Price Index figures on Wednesday.

The CPI rose 6.8% in the 12 months to November to hit a nearly four-decade high. Even after excluding volatile energy and food prices, core inflation rose 4.9% over the past year to its highest level since June 1991.
The market fears that inflationary pressures will ease anytime soon. The Fed now seems to share this nervousness. The central bank raised its forecast for headline and core price increases for 2022 at its meeting last month.
Minutes from the Fed’s December meeting showed the central bank was concerned about “surprisingly high inflation” due to “persistent supply bottlenecks.”
Still, US consumers have continued to spend, even as higher prices may start to squeeze some budgets. The government will release retail sales figures for the crucial holiday month of December on Friday.
Retail sales soared more than 16% in the 12 months to November, but growth slowed from October to November.

following

Monday: wholesale in the United States; Tilray (TLRY) earnings; Tokyo Stock Exchange closed for public holidays
Tuesday: Consumer inflation in Brazil; Albertson earnings
Wednesday: US CPI; Jefferies (I F) and Knowledge base home (KBH) earnings
Thusday: US unemployment insurance claims and producer prices; Delta Airlines (DAL) and Taiwan semiconductor (TSM) earnings

Friday: US Retail Sales, Industrial Production and Consumer Sentiment (U. of Michigan); Results from JPMorgan Chase, Citigroup, Wells Fargo and BlackRock

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