Earnings season begins this week, with major banks such as $Citigroup(C)$ $Bank of America(BAC)$ and U.S. Bancorp reporting, along with $Netflix(NFLX)$ $3M(MMM)$ $ASML Holding NV(ASML)$. By the end of the week, we should have a feel for how the season will trend from a macro perspective.
Guidance
In Q1 2025, the trend was guidance uncertainty. Tariffs had just been announced, and no one knew what was next. We’ve had three months to digest potential tariffs and the up and down policies at play, so what do companies see for the rest of 2025?
I’m expecting many companies to reinstate guidance, potentially at lower levels than we came into the year. And if that’s the case, is it because they’re conservative or because they see lower earnings because of tariffs or weakening consumer spending?
The guidance numbers will be important, but so will reading between the lines.
Lending Trends
Are banks lending more aggressively because they see a bright economy ahead?
Or are they worried about riding default rates?
What’s the latest on auto defaults and credit scores?
Big banks will have a feel for how the overall lending environment is performing, and I’ll be listening closely to that this week.
Consumer Spending
Let’s be honest, we’ve been hearing about a weak consumer for over a year now, but the market keeps ripping higher. Who is right?
I keep seeing some weak signs, but not enough to force a recession or companies to pull back. But I’ll be listening to results from companies like Target and Walmart closely because they give us a broad look at whether consumers are spending freely or looking for deals.
Any AI Pullback?
AI companies have been tripping over themselves to increase capex in recent years, but the trend will slow down eventually. Is now the time?
Big tech starts to report results next week, and we will find out if anyone is increasing or reducing capex guidance.
AI is going to be fascinating because we have both seen startups be gobbled up, indicating less disruption to big tech, and massive pay packages for top talent, indicating high competition among incumbents. So, we will learn a lot about the lay of the land starting next week.
Tariffs…
Are we worried or over it?
I honestly don’t know what to think about tariffs because the market seems to have forgotten…but not a lot has changed since April 2.
We had a few companies project the tariff impact in Q1, and I’ll be looking for updates and hard numbers about tariffs and inventory levels this quarter.
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