Equity Futures: It Begins

“We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine. – Jamie Dimon

Earnings season basically kicked off this morning as JPMorgan Chase (JPM) reported first-quarter results and is trading down 2% in reaction to the release. While top-line numbers were basically in line with forecasts, bottom-line EPS missed consensus forecasts ending a streak of seven straight quarters where the company topped EPS results. While this may sound like an ominous signal, we would note that despite topping EPS forecasts, the stock has traded lower on its earnings reaction day for six straight quarters.

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The quote above is from this morning’s earnings release from JPM, and you better get used to it as we think it is likely to be a major theme of the Q1 earnings season. Consumer balance sheets remain strong coming out of COVID (for now) due to increased savings and a flood of stimulus payments but faced with higher costs and geopolitical uncertainty, there is a major disconnect between how consumers feel and the current health of their checking accounts.

Equity futures are basically flat this morning after a much stronger than expected PPI and some relatively hawkish FOMC commentary from Bullard and Barkin, but they were much higher overnight and have been drifting lower all morning as investors simply can’t find much in the way of positive news to grasp lately.