022: Earnings Season Kickoff 07-17-23

This riveting episode features the keen insights of Megan Horneman, Chief Investment Officer for Verdence Capital Advisors. Brace yourselves as we dive headfirst into the rollercoaster ride known as the earnings season. Sure, the financial sector has outperformed expectations, but Megan cautions us that there's more lurking beneath the surface. 

Ever wondered what Citigroup's alarming trend of increased credit card debt and delinquencies signals about the health of the economy? Well, it's time to pull back the curtain and reveal the hidden truths in the financial sector. With higher interest rates benefiting banks' net interest margins, the challenges faced by consumers in the wake of rising inflation are coming to the forefront. Stay tuned as we continue to decode the economic landscape through more earnings reports in the weeks ahead. Questions or comments? Don't be shy, reach out!

Hello, this is Megan Horniman, the Chief Investment Officer for Verdin's Capital Advisors and coming to you today with our Markets. With Megan, we've seen the earnings season kick off this week. This morning we got some of the big banks that kicked off, which typically is how we start our earnings season. The estimates for S&P 500 earnings for this quarter are for them to decline at the fastest pace we've seen since the pandemic. The headlines you're going to see today are that the financials which came out this morning were better than expected, and, yes, that is the case. We had some decent earnings from the financials.

But what we want to do is delve into what those financial companies telling us about the health of the consumer, and one of the companies, specifically Citigroup, made several comments about the increase that we're seeing in credit card debt and the usage from consumers, and then, specifically, the amount of money they're having to absorb for an increase in delinquencies for these credit cards.

So this is the while you're going to read that the reports were good from an earnings perspective. Yes, interest rates are higher, so banks are making more money off of what we call net interest margins, where they can pay lower rates and then lend out and get higher rates in return. But we're looking at the underlying trends that we're seeing from what banks are telling us about the economy and the consumer. So consumer still is in a very difficult situation with high inflation, so we're going to continue to watch this. We'll get a bunch more earnings in the next couple of weeks where we can get a better gauge of what's going on with the economy, but at this point the earnings season has started off pretty strong and that's a positive, and we've seen that in the equity markets today. That's all I have. If you have any questions or comments, please feel free to reach out to podcastadverdencecom.