Earnings kick off Tuesday with the big banks - JPM, WFC, C, BK, STT, and BLK - reporting. Banks have been one of the brighter spots in the market in recent weeks, with the usual focal points centering around Net Interest Income outlooks, capital markets activity/pipelines, and capital return plans (all banks passed the stress test as usual unlocking even more buybacks). Goldman's team recently published a handy financials preview (available here for pro subs).
What matters: According to Goldman's trading desk, the expectations bar is low, and it’ll be cleared (analysts forecast S&P 500 EPS YoY growth will decelerate to just 4% in 2Q from 12% in 1Q). At a high level, the focus will be on the impact of tariff policies on margins, sales, and investment spending. The current expectation is for consumers to take the brunt of the tariff cost burden (economists think they will absorb 70% of the cost) but if not, it’ll have an impact on margins. Of course, with inflation not budging, the implication is that consumers haen't borne the brunt of the tariff cost burden, as in any of it, and since corporations aren't issuing profit warnings, the conclusion is simple: foreigners are paying the tariffs, just as Trump said they would.
Crowded Names: We list the 5 most crowded longs/shorts for each sector according to Goldman's trading desk, to help monitor positioning into earnings
