Lots of bank earnings the past few days. I don’t see many surprises so far in what has been released: M&A activity down A LOT because the Fed is in hiking mode and deal flow is temporarily nonexistent, loss reserve up some, as the banks start to front-run an early 2023 recession (thanks to Fed chair Powell), and the US consumer is actually ok (there’s no crisis that the US consumer can’t spend their way out of).
This week 15% of the SP500 reports quarterly earnings. It really ramps up next week when 45% of SP500 reports 3Q2022 numbers (dominated by technology names). The broad direction of earnings translates into the broad direction for the market, not day-to-day but over time. In a market that has been dominated so far in 2022 by a slow-moving Fed and a market willing and able to punish a slow-moving Fed, earnings do matter. With sentiment already at multi-generational lows and the Fed on hold until November with regards to additional rate hikes, the near-term path for the market will be determined by one thing: earnings.
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