Week Ahead: Banks get Q3 earnings season underway, US presidential election watch
The start of Q3 earnings season is sure to bring heightened volatility this week, but what about the second showdown between Trump and Biden? The President’s coronavirus diagnosis seems to have pushed more undecided voters into Biden’s camp – it doesn’t like there will be a debate but we are looking at ongoing developments in the campaign.
US presidential election
Catching Covid-19 hasn’t done Trump any favours in the US election polls, with Biden almost 10 points ahead in our election poll tracker at the time of writing. His lead in the top battlegrounds has come down to 4.6pts. Trump trailed Hilary Clinton by 5.1pts in the key battleground states at this stage in 2016, but we should note there are fewer undecided voters this time. Latest betting odds imply 65% chance of a Biden win.
Banks get Q3 earnings season underway
The start of Q3 earnings season will add even more volatility to the mix this week. Banks are the first in focus: Citigroup and JPMorgan get things going on October 13th, while Bank of America, Goldman Sachs and Wells Fargo are due to report on the 14th. Morgan Stanley reports on Oct 15th.
In Q2 banks saw a surge in trading revenue that helped to offset large increases in provisions for loan losses. JPM, Goldman Sachs, Citi, Morgan Stanley and Bank of America posted their best combined revenue – $33 billion – in a decade.
At the time, we argued that investors need to ask whether the exceptional trading revenues are all that sustainable, and whether there needs to be a much larger increase for bad debt provisions.
There are some doubts over whether the jump in trading revenue continued in Q3 – Jamie Dimon expected it to halve. Bad loan provisions, on the other hand, could go much higher.
Chief market analyst Neil Wilson has outlined some key questions for banks this earnings season.
Bank Q3 earnings expectations
|Bank||Forecast Revenues (no of estimates)
|Forecast EPS (no of estimates)
|BOA||$20.8bn (8)||$0.5 (23)|
|GS||$9.1bn (15)||$5 (21)|
|WFG||$17.9bn (17)||$0.4 (24)|
|JPM||$28bn (19)||$2.1 (23)|
|MS||$10.4bn (15)||$1.2 (20)|
|C||$18.5bn (17)||$2 (21)|
Economic data overshadowed by earnings and election focus?
This week’s economic data may be overlooked given the focus on corporate America and the second Presidential Debate.
We’ll be watching labour market updates from the UK, Australia and the US this week, along with sentiment and production data from the Eurozone.
US inflation, retail sales and the University of Michigan Consumer Sentiment index will also be in focus, although these would have to do a lot to make waves, given how far inflation has to rise to prompt the Fed to act now it has adopted AIT.
Highlights on XRay this Week
Read the full schedule of financial market analysis and training.
Top Earnings Reports this Week
|Pre-Market||13-Oct||Johnson & Johnson – Q3 2020|
|Pre-Market||13-Oct||JPMorgan Chase & Co – Q3 2020|
|Pre-Market||13-Oct||Citigroup – Q3 2020|
|Pre-Market||13-Oct||BlackRock – Q3 2020|
|Pre-Market||14-Oct||UnitedHealth – Q3 2020|
|Pre-Market||14-Oct||Bank of America – Q3 2020|
|Tentative||14-Oct||Goldman Sachs – Q3 2020|
|Pre-Market||15-Oct||Morgan Stanley – Q3 2020|
|Pre-Market||15-Oct||Walgreens Boots Alliance – Q4 2020|
Key Events this Week
Watch out for the biggest events on the economic calendar this week. A full economic and corporate events calendar is available in the platform.
|06.00 UTC||13-Oct||UK Unemployment Rate / Claimant Count Change|
|09.00 UTC||13-Oct||Eurozone / German ZEW Economic Sentiment|
|12.30 UTC||13-Oct||US CPI|
|09.00 UTC||14-Oct||Eurozone Industrial Production|
|00.30 UTC||15-Oct||AU Employment Change / Unemployment Rate|
|12.30 UTC||15-Oct||US Weekly Jobless Claims|
|14.30 UTC||15-Oct||US EIA Natural Gas Storage Report|
|15.00 UTC||15-Oct||US EIA Crude Oil Inventories Report|
|12.30 UTC||16-Oct||US Retail Sales|
|14.00 UTC||16-Oct||US Michigan Consumer Sentiment|