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(Repetition of the item originally transmitted on Friday, April 5) By Stephen Culp NEW YORK, April 7 (Reuters) - Investors will focus on lower profits, a more conciliatory Federal Reserve and less interest rate as major US banks launch what badysts expect be the first quarter of corporate earnings contraction since 2016 Friday, April 12, JPMorgan Chase & Co and Wells Fargo & Co will show results to start revenue serious season. Citigroup Inc. and Goldman Sachs Group Inc will report on the following Monday, followed by the Bank of America Corp and Morgan Stanley on Tuesday. Following the cautious shift of the Federal Reserve due to signs of weakness in the US economy and the subsequent decline in 10-year Treasury yields, S & P 500 banks are in the process of publishing first-quarter earnings growth of 2.3% YoY 8.2% expected six months ago, according to Refinitiv data. (For an interactive chart on the evolution of banks' incomes estimates: tmsnrt.rs/2HOVt1D) "The Fed has rotated so abruptly, giving a pause about what they say about the economy, "said Chuck Carlson, Managing Director at Horizon Investment Services in Hammond, Indiana. "The decline in interest rates is not good news on bank interest margins. It's no wonder that badysts make profit estimates. " The tilt of the central bank has slowed down what had been has been a trend of quarterly rate increases, among the signs of slowdown economic growth. The slowdown also affected 10-year Treasury yields. the Reference bond yield hit its lowest level in 15 months in the first quarter , flattening of the yield curve and reduction of the gap interests banks pay the depositors and the interest they to charge consumers, which is bad news for profits. "It's for this reason that estimates are down," added Carlson. "(Analysts are scared) interest margins for banks and there is an underlying concern about loan growth. " In the first three months of the year, the S & P 500 rebound after a sale in December, gaining 13.1%, its largest quarterly increase since 2009. But financial data underperforming the overall market, gaining 7.9% during the quarter, the new low rate normality that has stimulated other sectors has been a headwind for the banks. Since October, badysts have significantly reduced their forecast for the S & P 500 earnings in 2019, with a first quarter estimates go from a growth of 8.1% to a decline from one year to the next 2.2%. This would mark the first quarter of negative growth since the "recession" of profits that ended in 2016. The partial closure of the federal government in January and a The expected decline in trading revenue has provided an additional boost badysts to reduce estimates of bank profits in the first quarter. In a KBW memo dated April 3, Chief Analyst Brian Kleinhanzl sees annual median earnings of stocks and fixed securities revenues, currencies and commodities (FICC) to have decreased by 15% during the quarter. "In financial services, the hardest hit industry is capital markets, "said Tajinder Dhillon, Senior Research Analyst at Refinitiv in London. "These downward revisions have intensified in the last 90 days. Among the 6 big banks, Goldman Sachs, Morgan Stanley and JPMorgan have seen the biggest decline "in the first quarter earnings estimates. But some badysts believe that the effects on banks of a more The accommodating Fed and the flat yield curve are overestimated. Oppenheimer Senior Analyst Chris Kotowski wrote on March 25 note "to be sure, the rates and yield curve had an effect on the banks' income. "But he called the impact of the Fed decision "a minor", and wrote that apart from these impacts, "The fundamentals of banks are remarkably stable." Recent history shows that major US financial institutions beat badysts' estimates at a higher rate than the broadest market. In the last eight quarters, the six banks have beat the revenue estimates 83.3% of the time on average, compared to with an average hit rate of 75.4% for the S & P 500. In addition, the bank Revenue surprised up 79.2% of the time, while S & P The revenues of 500 companies exceeded badysts' estimates, 68.3% of time, by Refinitiv data. In the current reality of the end of the cycle, however, it is not clear that banks can beat even lowered expectations. In any case they should setting the tone for what badysts predict will be a rocky profit period. "Psychologically, these are leading companies that tend to to drive the sentiment, "added Dhillon, suggesting that their quarterly reports are indirect indicators of corporate results health. "Banks are up there." (Stephen Culp report, edited by Alden Bentley and Dan Grebler)
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