Week Ahead: Banks get Q3 earnings season underway, US presidential election watch

Week Ahead

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 AmericaGoldman 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 

(source: Markets.com) 

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.

17.00 UTC 12-Oct Blonde Markets
18.00 UTC 13-Oct Webinar: Technical Indicators
09.00 UTC 13-Oct Earnings Season Daily
14.00 UTC 14-Oct Asset in Focus: Weekly Gold Forecast
17.00 UTC 15⁠-⁠Oct Election2020 Weekly

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