Wall Street Brunch: All Aboard The Earnings Train

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JPMorgan, Citi, BofA, Wells Fargo, Goldman and more on the calendar. (0:17) Hot CPI could slash odds of rate cuts further. (1:49) L.A. wildfires could be most costly ever. (3:27)

The following is an abridged transcript:

The earnings express is leaving the station. The big banks kick off Q4 reporting season in earnest this week.

On Wednesday, JPMorgan Chase (JPM), Wells Fargo (NYSE:WFC), BlackRock (BLK), Citigroup (NYSE:C), Goldman Sachs (GS) and Bank of New York Mellon (BK) will report.

Bank of America (NYSE:BAC), Morgan Stanley (MS), U.S. Bancorp (USB) and M&T Bank (MTB) are due to issue numbers on Thursday. State Street (STT) reports Friday.

Recently, HSBC upgraded BofA to Buy, noting the rate backdrop, investment banking landscape and regulatory easing. BofA was also a top pick for 2025 at Wolfe Research, along with Wells Fargo on strong tailwinds for money centers. And Barclays boosted Citi to Overweight, expecting accelerated earnings growth.

Also on the earnings calendar, Applied Digital (APLD) weighs in on Tuesday.

Kinder Morgan (KMI) joins the banks on Wednesday and UnitedHealth (UNH) is due on Thursday.

On Friday, Truist Financial (TFC), Schlumberger (SLB), Fastenal (FAST) and Regions Financial (RF) issue numbers.

Goldman Sachs equity strategist David Kostin says among this season’s numbers he’ll be looking for three things that will inform the outlook for 2025:

“The outlook for sales growth against a backdrop of slowing nominal GDP growth and a strengthening US dollar.”

“How companies are adjusting their behavior ahead of the incoming presidential administration, including preparation for potential tariffs.”

“The sustainability of the mega-cap tech stocks’ superior earnings growth and returns relative to the rest of the index.”

“Our current 2025 S&P 500 EPS growth forecast is +11% ($268), roughly in line with the top-down strategist consensus,” Kostin said.

Looking to the economy, the week is all about inflation. The December consumer price index is due Wednesday and a hot report will have Fed implications – not so much for the January 29 meeting, but for the entire year.

Following Friday’s strong jobs report – with payrolls beating the consensus by about 100,000 and the unemployment rate dropping to 4.1%, — traders pushed pricing of the first cut this year to September. Bank of America argued that the Fed won’t cut at all for 2025.

More signs of sticky inflation could shift those odds further. The consensus is for the CPI to have risen 0.3%, with the core CPI, excluding food and energy, rising 0.2%.

Wells Fargo economists say: “We are approaching another speed bump on the road to 2% inflation. The December CPI report should indicate that the underlying trend in inflation is not re-accelerating, but it is unlikely to allay the FOMC’s increased concerns that inflation has become stuck uncomfortably above its target.”

“While Fed officials have not completely lost faith in further disinflation ahead, the slow progress over the past year has underscored that the last leg of inflation’s journey back to target will be the most arduous. The path ahead looks even more challenging now with economic policies under the incoming administration likely to be inflationary,” they said.

Businesses “remain more willing to raise prices than before the pandemic as consumers have not fully gone into hiding and increases in tariffs are likely to leave them little choice. As a result, we look for the pace of inflation to be little changed this year, leaving it stuck above the FOMC’s target for a fifth consecutive year.”

Also on the calendar, the December producer price index is due Tuesday and December retail sales arrive Thursday.

In the news this weekend, the wildfires that have razed parts of Los Angeles are estimated to be one of the costliest in U.S. history, according to the Associated Press.

It’s still too early to assess the eventual financial cost, but a preliminary estimate by AccuWeather indicated on that the damage and economic toll was in the range of $135 billion to $150 billion.

J.P. Morgan estimated that Allstate (ALL), Chubb (CB) and Travelers (TRV) are the most exposed to insured losses from the fires. Chubb may have a high exposure to high-net-worth properties.

Analyst Jimmy Bhullar says: “We estimate that insured losses from the event could exceed $20 billion (and even more if the fires are not controlled), This would make this event significantly more severe than the 2018 Butte County Camp fires, the highest insured loss wildfires in California’s history previously (with insured losses of roughly $10 billion).”

And as he continued on his revamped image tour, Meta Platforms (META) CEO Mark Zuckerberg criticized Apple (AAPL) in an interview with Joe Rogan. The Facebook founder said Apple is no longer innovative and is “squeezing people” to make money.

“They haven’t really invented anything great in a while. It’s like Steve Jobs invented the iPhone, and now they’re just kind of sitting on it 20 years later,” Zuckerberg said. He added that Apple’s annual iPhone sales have become generally “flat to declining.”

“So how are they making more money as a company? Well, they do it by basically squeezing people, and… having this 30% tax on developers. By getting you to buy more peripherals and things that plug into it,” he added.

For income investors, companies with an ex-dividend date coming next week include AbbVie (ABBV), Abbott Laboratories (ABT), Accenture (ACN), GE Healthcare Technologies (GEHC) and PNC Financial Services (PNC).

Among those forecast to increase quarterly dividends are Fastenal, to $0.43 from $0.39, NRG Energy (NRG) to $0.4375 from $0.4075 and Alliant Energy (LNT) to $0.51 from $0.48.

And in the Wall Street Research Corner, Bank of America takes a technical look at global stock markets and which are the most overbought (indicating potential for near-term declines) and oversold (potential near-term bounce).

Analysts measured the distance of major indexes from their 200-day moving averages.

At the top of the oversold list are Korean equities (EWY), 17.7% below their 200-day MA. That’s followed by Brazil (EWZ), down 16.6%, Portugal (NQPT), down 15.4%, Mexico (EWW), 14.6% below and Turkey (TUR), 6.5% below.

Singapore stocks (EWS) are the most overbought, 12.8% above their 200-day MA, followed by China (FXI), up 7.7%. Taiwan, 6.7% above, U.S. stocks (SPY) (QQQ), 6.5% above and Canada (EWC), 3.8% above, round out the top five.