God Bless America and Please bless Earnings Season

Tomorrow JPMorgan (JPM) and Wells Fargo (WFC) are the first in the banking sector to report quarterly earnings. Whisper numbers across the street are expecting good results from both. But while EPS may match and or beat analyst estimates, I’m more concerned with the increase (or lack there of) in revenue numbers. Last time around, expectations regarding earnings per share were for the most part met and or exceeded, but revenue numbers disappointed on the whole.

Given that most of the recent economic reports have been flat at best, I’m not holding my breath for a huge surprise. As such, I tightened my belt a little bit in anticipation of a letdown on the revenue numbers. In my trading portfolio I closed any open positions I had in financials and moved into cash. In my buy and hold (aka investment) portfolio I sold OTM covered calls on the financials I hold. If financials on the whole surprise to the upside, I’ll be leaving money on the table in one portfolio and capping my upside in another, but either way I will live to fight another day. If earnings are a flop or even mediocre, I’ll be able to play the pullback and put the profit taken to work.

Something that has been irking me a bit is Apple’s price action. What does that have to do with earnings, especially the financials? Probably not much, but last time its price began to swoon like it is now, the whole market came crashing down pretty soon after. Maybe it was coincidence, maybe it was profit taking by institutional investors, either way the divergence from the market action was pretty acute. So seeing its price do a swan dive into earning season doesn’t make me feel great about the market in general, let alone the financial sector which has been shit on by politicians and the media alike all year. With all the new regulations passed or pending, most of the bulge brackets that we grew up wanting to sell our souls to, just don’t have the grey area necessary to rake in the profits that makes the grind o so worth it.

I guess we’ll find out what this earning season has in store starting tomorrow. A surprise to the upside would be a welcome though, as not only do the markets need the encouragement but more importantly so does the retail investor. And as I watch Biden continue to laugh in Ryan’s face, I will leave you with a God Bless Amurica and I'll see you on the other side.