JPMorgan (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C) are expected to report strong earnings on Tuesday, driven by an uptick in mergers and acquisitions (M&A), trading, and IPO activity. However, Raymond James analyst Michael Rose believes that some indicators “flashing yellow,” such as higher loan delinquencies and corporate bankruptcies, could rain on the party.
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“While the consumer looks broadly healthy, we’re watching areas like student- and auto-loan delinquencies closely,” Rose said. “These trends aren’t alarming yet, but they could weigh on earnings if they worsen.”
Rising Costs and Government Shutdown Weigh on Banks and Consumers
Rose is still cautiously optimistic on bank earnings during the third quarter, although he added that an extended government shutdown could deter IPOs. In addition, lower-income households face increased pressure from costs rising higher than wages.
In another sign of a weakening consumer, Tim Cadogan, the CEO of GoFundMe, said that crowdfunding for rent, utility bills, and car payments has risen significantly during the past three years “because affordability is an issue in essentially all Organization for Economic Co-operation and Development (OECD) economies.”
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