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This week, it's all about "TBTF" banks – as in, "too big to fizzle."
There's a lot riding on the financials, but I'm looking at pharma and healthcare, too, and I'll tell you why in a minute.
Fact is, this is one of the most important earnings seasons in recent memory, and investors are flat-out worried that it'll be one of the worst earnings seasons in recent memory.
JPMorgan Chase & Co. (NYSE: JPM) officially kicked off Q1 earnings season on Friday with a welcome revenue beat that nudged stocks gently upward for the day.
On the other hand, Bank of America Corp. (NYSE: BAC) reported a bumper crop of profits on Monday, but the shares slumped anyway because CFO Paul Donofrio voiced concerns about the slowing pace of interest rates – a big driver of bank profits.
Same deal with Goldman Sachs Group Inc. (NYSE: GS): It had a convincing earnings beat and a tasty dividend hike, but a drop in trading revenue sent the shares lower.
That shares didn't necessarily take off is a pretty good indicator of the worry out there in the streets. Freaked-out investors are punishing stocks for "sins" they might've forgiven two or three quarters back.
Me? I'm not sure it'll be the worst earnings season in years, but it's certainly going to be the one of most eventful.
Because, remember, it doesn't matter if a stock goes up or down on good or bad earnings. It just has to move…
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Strikepoint Trader and contributes to Money Morning as the Quant Analysis Specialist.