We had a positive catalyst for stocks on Thursday, with the weak inflation report. And we had another positive catalyst today, as the big banks kicked off Q4 earnings season with solid performance.
Three of the four big banks beat earnings estimates. But each also set aside more reserves for potential loan losses — to the tune of $2.25 billion (between the four). And that is added to what is already a war chest of capital that remains in the coffers from the worst of the pandemic period.
If we add back these new Q4 allowances for potential loan losses, all four of the biggest four banks in the country would have beat earnings estimates, AND improved on the earnings from the same period a year ago.
So, as we discussed yesterday, Wall Street has been wrong on Q4 economic growth, and based on the bank reports today, it’s a safe bet that they have undershot on earnings growth in Q4.
Let’s take a look at gold …