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The Zacks Analyst Blog Highlights JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley
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For Immediate Release
Chicago, IL – April 12, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Wells Fargo (WFC - Free Report) , Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Worry AND Earnings Estimates Up: Global Week Ahead
This Global Week Ahead offers stock traders the start of Q1-22 S&P500 earnings season.
On Tuesday morning, just as the NYSE opens, traders will get the latest March U.S. Consumer Price Inflation (CPI) data from the U.S. Bureau of Labor Statistics.
On Wednesday, U.S. stock and bond markets will digest the first of the big bank Q1-22 S&P500 earnings.
Also on offer, on Wednesday, two central bank (CB) meetings conclude (The Bank of Canada and New Zealand). The two CBs likely deliver the 1st 50 bps policy rate hikes in any developed nation this cycle. In May, expect the U.S. Fed to follow suit with 50 bps.
On Thursday, the latest European Central Bank (ECB) meeting wraps. This Euro Area monetary group faces pressure from hawkish factions to start tightening policy rates too.
Adding to the building tumult in Europe, that continent's leaders have woken up to a real risk of a French Presidential election upset.
Next are Reuters' five world market themes, reordered for equity traders.
(1) On Wednesday, Big U.S. Banks Kick Off Q1-22 S&P500 Earnings Season
As rising bond yields, labor shortages and sky-high commodity prices buffer stock markets, first-quarter U.S. earnings will give investors a chance to gauge balance sheet resilience, cost pressures on companies and share buyback plans.
Overall, S&P 500 earnings growth is expected at 6.8% in the Jan-March quarter, versus the 53% bounce-back seen a year ago from COVID-time doldrums, according to Refinitiv IBES.
Big banks kick off the season with JPMorgan reporting on Wednesday, followed a day later by Citigroup,Wells Fargo, Goldman Sachs and Morgan Stanley.
Bank shares have fared badly this year, with -11% losses, versus the S&P500's -6%.
The six biggest lenders are projected to show a -35% decline in net income versus a year earlier. Investment bank revenues may have declined, especially after the Russian invasion of Ukraine, while some banks must make provisions for Russia-linked losses.
Finally, watch whether banks may curb share buybacks after seeing excess capital dented by Q1 losses on their bond holdings.
(2) On Tuesday Morning Stateside, We Get U.S. Consumer Price Inflation Data
Minutes from the Fed's March policy meeting showed meatier rate hikes and an aggressive balance sheet runoff are likely in coming months as the central bank battles inflation.
All that puts a spotlight on consumer price inflation (CPI) data. February's +7.9% print was the largest annual increase in 40 years.
In March, consumer prices grew +8.3% year-on-year, economists polled by Reuters predict, as the Ukraine-Russia war sent commodity prices spiraling higher.
And as Americans dig deeper for rent, gasoline and food, wage gains are eroding -- inflation adjusted average hourly earnings fell -2.6% year-on-year in February.
A chunky inflation print will bolster the case for more dramatic policy tightening.
(3) On Wednesday, Canada and New Zealand CBs Poised for Big Policy Hikes
Canada and New Zealand appear poised for their biggest interest rate hikes in 20 years, underscoring the worldwide scramble to contain inflation.
Both banks meet on Wednesday. Swaps price a 90%-plus chance of a 50 basis-point hike from the Reserve Bank of New Zealand and a better-than-80% likelihood of the Bank of Canada does the same.
With Canadian inflation seen above target until 2024, another 50 bps move may come in June. New Zealand delivered a 25 bps hike in February -- its third -- and flagged the possibility of bigger rises ahead.
These would be the most drastic G10 hikes this cycle... until May, when the Federal Reserve is tipped to lift rates 50 bps.
(4) On Thursday, European Central Bank Meets
With Euro area inflation running at 7.5%, the European Central Bank's meeting on Thursday will see the hawks out in force.
They have become increasingly vocal, while markets are now gunning for a July rate rise, having ramped up their bets since the March meeting.
ECB Chief Economist Philip Lane warns against reacting to short-term, energy-driven price surges. And the Ukraine war is taking a toll on the economy and consumer confidence.
The ECB knows well the price of making a policy mistake. It has raised rates in the past, only to make a speedy U-turn.
Yet inflation shows no signs of peaking, let alone returning to the 2% target. The hawks' clamor may get louder.
(5) The French Presidential Election Closer than Anticipated
Far-right French politician Marine Le Pen, who sowed panic in the run up to 2017 presidential elections, was enjoying a resurgence in the opinion polls and markets were running scared.
In the end results, Macron did better than expected. After the first round of voting in presidential elections on Sunday, Le Pen collected 23.4% versus incumbent Emmanuel Macron with 27.6%.
Macron is now expected to win the presidency. But the possibility of an upset has sunk in. A Le Pen win would hamper European cohesion, while her big-spending, tax-cutting agenda would blow out France's spending bill.
The premium investors demand to hold French debt versus Germany has risen, while shares in companies targeted by Le Pen for nationalization have fallen.
Unlike in 2017, Le Pen does not advocate ditching the euro. A weak Le Pen showing on Sunday held off market turbulence before the April 24th decider -- and possibly after.
Key Global Macro
On Monday, Mainland China's Producer Price Index (PPI) for March should rise to +10.4% y/y from +8.8% in the prior month.
This is the upstream source of global price pressure.
On Tuesday, out at 8:30 am EST, the U.S. Consumer Price Index (CPI) for March should get to +8.3% y/y, after showing +7.9% y/y in the prior month.
In comparison, Germany's Consumer Price Index (CPI) for March should be +7.3% y/y, the same as the prior +7.3% y/y rate.
The U.S. and Germany CPI readings look similar.
On Wednesday, the U.S. PPI for March should be up +9.4% y/y, shifting down from +10% y/y in the prior month.
The RBNZ (Reserves Bank of New Zealand) and BoC (Bank of Canada) should deliver 50 basis point policy rate hikes.
On Thursday, traders get a set of ECB decisions on deposit and interest rates, and a monetary policy statement.
On Friday, it is a Good Friday holiday in the USA (there will be a Good Friday bank holiday in Europe on Thursday).
The U.S. capacity utilization rate for March should climb to 77.8% from 77.6% in the prior month.
Conclusion
From the coming S&P500 operating earnings reports, Zacks looks for +3.2% EPS growth and +10.0% revenue growth in Q1-22.
Here is what Zacks Research Director Sheraz Mian wrote on April 6th, 2022:
"Looking at the revisions trend in the aggregate, [S&P500] estimates are still going up, though only modestly so.
"There are plenty of cross-currents once we look at the revisions trend at the granular level, with rising estimates in a few sectors offsetting estimate cuts in others.
"In fact, estimates have been going down for 9 of the 16 Zacks sectors since the start of the year, with the biggest declines in the:
· Consumer Discretionary,
· Utilities,
· Transportation, and
· Conglomerates sectors.
"Offsetting these negative estimate revisions to full-year 2022 estimates, are rising for the:
· Energy,
· Construction, and
· Autos sectors.
"The big banks that will be kicking off the reporting cycle for the Finance sector next week have been suffering estimate cuts, with Q1 EPS estimates for:
· JPMorgan
· Bank of America and
· Citigroup all going down in recent days.
"Though Citi's estimates have been cut the most given its pronounced Russia exposure.
"Energy sector estimates had been going up as a result of rising oil prices, even before the Ukraine situation, and we can see this within all of the major players in the sector. The significant estimate cuts to the Transportation sector, like air carriers and truckers, represent the flip side of what's happening to the Energy sector estimates.
"There is a rising degree of uncertainty about the outlook, being driven by a lack of macroeconomy visibility and reflected in the Treasury yield curve that is at risk of inversion.
"The Ukraine situation appears to be exacerbating pre-existing supply-chain issues, which combined with its impact on oil prices, is weighing on the inflation situation in hard-to-predict ways. The evolving earnings revisions trend will reflect this macro backdrop."
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley
For Immediate Release
Chicago, IL – April 12, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Wells Fargo (WFC - Free Report) , Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Worry AND Earnings Estimates Up: Global Week Ahead
This Global Week Ahead offers stock traders the start of Q1-22 S&P500 earnings season.
On Tuesday morning, just as the NYSE opens, traders will get the latest March U.S. Consumer Price Inflation (CPI) data from the U.S. Bureau of Labor Statistics.
On Wednesday, U.S. stock and bond markets will digest the first of the big bank Q1-22 S&P500 earnings.
Also on offer, on Wednesday, two central bank (CB) meetings conclude (The Bank of Canada and New Zealand). The two CBs likely deliver the 1st 50 bps policy rate hikes in any developed nation this cycle. In May, expect the U.S. Fed to follow suit with 50 bps.
On Thursday, the latest European Central Bank (ECB) meeting wraps. This Euro Area monetary group faces pressure from hawkish factions to start tightening policy rates too.
Adding to the building tumult in Europe, that continent's leaders have woken up to a real risk of a French Presidential election upset.
Next are Reuters' five world market themes, reordered for equity traders.
(1) On Wednesday, Big U.S. Banks Kick Off Q1-22 S&P500 Earnings Season
As rising bond yields, labor shortages and sky-high commodity prices buffer stock markets, first-quarter U.S. earnings will give investors a chance to gauge balance sheet resilience, cost pressures on companies and share buyback plans.
Overall, S&P 500 earnings growth is expected at 6.8% in the Jan-March quarter, versus the 53% bounce-back seen a year ago from COVID-time doldrums, according to Refinitiv IBES.
Big banks kick off the season with JPMorgan reporting on Wednesday, followed a day later by Citigroup,Wells Fargo, Goldman Sachs and Morgan Stanley.
Bank shares have fared badly this year, with -11% losses, versus the S&P500's -6%.
The six biggest lenders are projected to show a -35% decline in net income versus a year earlier. Investment bank revenues may have declined, especially after the Russian invasion of Ukraine, while some banks must make provisions for Russia-linked losses.
Finally, watch whether banks may curb share buybacks after seeing excess capital dented by Q1 losses on their bond holdings.
(2) On Tuesday Morning Stateside, We Get U.S. Consumer Price Inflation Data
Minutes from the Fed's March policy meeting showed meatier rate hikes and an aggressive balance sheet runoff are likely in coming months as the central bank battles inflation.
All that puts a spotlight on consumer price inflation (CPI) data. February's +7.9% print was the largest annual increase in 40 years.
In March, consumer prices grew +8.3% year-on-year, economists polled by Reuters predict, as the Ukraine-Russia war sent commodity prices spiraling higher.
And as Americans dig deeper for rent, gasoline and food, wage gains are eroding -- inflation adjusted average hourly earnings fell -2.6% year-on-year in February.
A chunky inflation print will bolster the case for more dramatic policy tightening.
(3) On Wednesday, Canada and New Zealand CBs Poised for Big Policy Hikes
Canada and New Zealand appear poised for their biggest interest rate hikes in 20 years, underscoring the worldwide scramble to contain inflation.
Both banks meet on Wednesday. Swaps price a 90%-plus chance of a 50 basis-point hike from the Reserve Bank of New Zealand and a better-than-80% likelihood of the Bank of Canada does the same.
With Canadian inflation seen above target until 2024, another 50 bps move may come in June. New Zealand delivered a 25 bps hike in February -- its third -- and flagged the possibility of bigger rises ahead.
These would be the most drastic G10 hikes this cycle... until May, when the Federal Reserve is tipped to lift rates 50 bps.
(4) On Thursday, European Central Bank Meets
With Euro area inflation running at 7.5%, the European Central Bank's meeting on Thursday will see the hawks out in force.
They have become increasingly vocal, while markets are now gunning for a July rate rise, having ramped up their bets since the March meeting.
ECB Chief Economist Philip Lane warns against reacting to short-term, energy-driven price surges. And the Ukraine war is taking a toll on the economy and consumer confidence.
The ECB knows well the price of making a policy mistake. It has raised rates in the past, only to make a speedy U-turn.
Yet inflation shows no signs of peaking, let alone returning to the 2% target. The hawks' clamor may get louder.
(5) The French Presidential Election Closer than Anticipated
Far-right French politician Marine Le Pen, who sowed panic in the run up to 2017 presidential elections, was enjoying a resurgence in the opinion polls and markets were running scared.
In the end results, Macron did better than expected. After the first round of voting in presidential elections on Sunday, Le Pen collected 23.4% versus incumbent Emmanuel Macron with 27.6%.
Macron is now expected to win the presidency. But the possibility of an upset has sunk in. A Le Pen win would hamper European cohesion, while her big-spending, tax-cutting agenda would blow out France's spending bill.
The premium investors demand to hold French debt versus Germany has risen, while shares in companies targeted by Le Pen for nationalization have fallen.
Unlike in 2017, Le Pen does not advocate ditching the euro. A weak Le Pen showing on Sunday held off market turbulence before the April 24th decider -- and possibly after.
Key Global Macro
On Monday, Mainland China's Producer Price Index (PPI) for March should rise to +10.4% y/y from +8.8% in the prior month.
This is the upstream source of global price pressure.
On Tuesday, out at 8:30 am EST, the U.S. Consumer Price Index (CPI) for March should get to +8.3% y/y, after showing +7.9% y/y in the prior month.
In comparison, Germany's Consumer Price Index (CPI) for March should be +7.3% y/y, the same as the prior +7.3% y/y rate.
The U.S. and Germany CPI readings look similar.
On Wednesday, the U.S. PPI for March should be up +9.4% y/y, shifting down from +10% y/y in the prior month.
The RBNZ (Reserves Bank of New Zealand) and BoC (Bank of Canada) should deliver 50 basis point policy rate hikes.
On Thursday, traders get a set of ECB decisions on deposit and interest rates, and a monetary policy statement.
On Friday, it is a Good Friday holiday in the USA (there will be a Good Friday bank holiday in Europe on Thursday).
The U.S. capacity utilization rate for March should climb to 77.8% from 77.6% in the prior month.
Conclusion
From the coming S&P500 operating earnings reports, Zacks looks for +3.2% EPS growth and +10.0% revenue growth in Q1-22.
Here is what Zacks Research Director Sheraz Mian wrote on April 6th, 2022:
"Looking at the revisions trend in the aggregate, [S&P500] estimates are still going up, though only modestly so.
"There are plenty of cross-currents once we look at the revisions trend at the granular level, with rising estimates in a few sectors offsetting estimate cuts in others.
"In fact, estimates have been going down for 9 of the 16 Zacks sectors since the start of the year, with the biggest declines in the:
· Consumer Discretionary,
· Utilities,
· Transportation, and
· Conglomerates sectors.
"Offsetting these negative estimate revisions to full-year 2022 estimates, are rising for the:
· Energy,
· Construction, and
· Autos sectors.
"The big banks that will be kicking off the reporting cycle for the Finance sector next week have been suffering estimate cuts, with Q1 EPS estimates for:
· JPMorgan
· Bank of America and
· Citigroup all going down in recent days.
"Though Citi's estimates have been cut the most given its pronounced Russia exposure.
"Energy sector estimates had been going up as a result of rising oil prices, even before the Ukraine situation, and we can see this within all of the major players in the sector. The significant estimate cuts to the Transportation sector, like air carriers and truckers, represent the flip side of what's happening to the Energy sector estimates.
"There is a rising degree of uncertainty about the outlook, being driven by a lack of macroeconomy visibility and reflected in the Treasury yield curve that is at risk of inversion.
"The Ukraine situation appears to be exacerbating pre-existing supply-chain issues, which combined with its impact on oil prices, is weighing on the inflation situation in hard-to-predict ways. The evolving earnings revisions trend will reflect this macro backdrop."
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.