January 13, 2023

Markets:

The stock market was set to end a winning week on a sour note as JPMorgan Chase led a decline in bank shares after it warned a recession was its base case for the year.

JPMorgan Chase posted revenue that beat expectations, but the bank warned it was setting aside more money to cover credit losses because a “mild recession” is its “central case.” The bank posted a $2.3 billion provision for credit losses in the quarter, a 49% increase from the third quarter. The stock fell more than 2%.

Wells Fargo shares fell 2% after the bank reported its quarterly figures. Bank of America also fell 2% premarket despite reporting better-than-expected earnings for the fourth quarter.

The moves followed a positive day for the three major indexes. The Nasdaq Composite snatched its fifth day of gains — a first since July. Stocks rose broadly as December’s CPI report showed prices declined 0.1% over November. While prices rose at a 6.5% pace compared to the previous year, the results heightened hopes that the Federal Reserve may soon slow its hiking.

Portfolio:

We enter the last trading session holding positions in SHOP, MTTR, PINS, and UMC.  Bank earnings kicked off today and the headwind warning from JPM is spooking investors early on.  However, do not rush to a position or judgement here as we would not be surprised to see the market fight throughout the session.  Price activity has been super positive this week – have not seen this in a long time – and we are intrigued to see how we respond today to JPM.  Stay patient and allow this to work through.  With earnings season beginning and CPI in place, I hope you see the potential for what this market has in front of us over the next few months.  Let's have a great session.