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Banks usher in Q4 earnings with JPMorgan setting the tone. (0:17) December CPI puts shutdown distortions to the test. (1:14) Trump floats a 10% cap on credit card interest rates. (1:53)
The following is an abridged transcript:
And just like that, it’s earnings season again.
The big banks kick off Q4 this week: JPMorgan (JPM) reports before the bell Tuesday, BofA (BAC), Wells Fargo (WFC) and Citi (C) follow on Wednesday, and Goldman Sachs (GS), Morgan Stanley (MS) and BlackRock (BLK) tee up Thursday.
SA analyst Luca Socci says JPMorgan could set the tone for the rest of the month. If the report and call point to earnings dispersion, he sees room for sector rotation, with equal-weighted indexes like RSP doing well. But if JPM signals it’s time to de-risk, that could trigger a sell-off that doesn’t spare “good companies as well as bad ones.”
Analysts expect Q4 EPS of $4.98 on $46.25B in revenue, including $25B of net interest income.
Beneath the headline numbers, Socci says to watch headcount management and productivity — and whether JPMorgan can point to tangible benefits from AI, which he says could be “another major catalyst in favor of this revolution.”
Also on the earnings calendar:
Delta Air Lines (DAL) reports Tuesday and Taiwan Semiconductor (TSM) is due Wednesday.
Looking to the economy, the big report hits early this week, with the December Consumer Price Index out Tuesday morning. Economists are looking for both headline and core CPI to rise 0.3% month-on-month, with headline inflation holding at 2.7% year-on-year and core ticking up to 2.7% from 2.6%.
Wells Fargo economists say the shutdown distortions in the November report should unwind this time around.
“Under the hood, we expect core goods to rise sharply in December as more holiday-related product markdowns than usual were likely captured in the November survey,” they said. “Meantime, primary shelter is poised to resume its pre-shutdown trend and is unlikely to bounce back until the spring.”
In the news this weekend, President Donald Trump called for a one-year cap on credit card interest rates at 10%, effective Jan. 20, saying he will not allow Americans to be “ripped off” by companies charging 20%–30% or more.
The proposal drew immediate opposition from major banking groups.
“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” read a joint statement from the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and Independent Community Bankers of America. “We look forward to working with the administration to ensure Americans have access to the credit they need.”
And Michael Burry said he has put options on Oracle (ORCL) — his latest bearish bet on the AI trade — citing uncertainty around Oracle’s cloud strategy and its rising debt load.
For income investors, dividend heavyweights AT&T (T) and Verizon (VZ) go ex-dividend on Monday, with both paying out on Groundhog Day, February 2. Yes, both paying out on Groundhog Day. (Did I say that twice?)
Comcast (CMCSA) goes ex-dividend on Wednesday, with a February 4 payout date.
Abbott Labs (ABT) goes ex-dividend on Thursday, paying out on February 13.
And in the Wall Street Research Corner, S3 Partners is out with its scorecard on how equity short-sellers fared last year — and it’s not pretty.
U.S. short sellers were down about $217B in year-to-date mark-to-market losses, a return of -14.75% versus a gain of more than 16% for the S&P 500, with roughly 70% of every dollar shorted in the red.
Among the least profitable shorts: Nvidia (NVDA), Alphabet (GOOG) (GOOGL), Tesla (TSLA), Palantir (PLTR) and Micron (MU).
But there were some winners, including MicroStrategy (MSTR), The Trade Desk (TTD), Charter Communications (CHTR), Circle Internet (CRCL) and UnitedHealth (UNH).
