As we approach the beginning of Q2 bank earnings, analysts are bracing themselves for what is anticipated to be the most significant decline in earnings since the onset of the pandemic, with a staggering -7% expected. This pattern seems eerily familiar, as we witnessed a similar sequence of events back in 2018 when the Federal Reserve was actively increasing interest rates.Interestingly enough, history seems to be repeating itself as it did before. In 2018, while the broader market reached its peak early in February, mega-cap stocks continued their upward trajectory only to face a catastrophic implosion during Q3.
Q2 bank earnings begin Friday.
"The fuse is lit"t.co/C7osd5SpXN pic.twitter.com/PNEzxQ87zt
— Mac10 (@SuburbanDrone) July 11, 2023
Analysts are expecting the worst earnings decline since the pandemic, -7%. t.co/KoHcltaWSa
Bulls are wondering, what could go wrong? pic.twitter.com/9UwhPhPT7K
— Mac10 (@SuburbanDrone) July 11, 2023
We saw this same sequence in 2018 when the Fed was raising rates. The broader market peaked early in February. The mega caps went higher and then imploded in Q3. pic.twitter.com/4DPinYTe1I
— Mac10 (@SuburbanDrone) July 11, 2023
Another major factor weighing on mega cap Tech is the impending rebalance of the Nasdaq 100. The weightings of the "Magnificent 7" will be "significantly reduced". TBD.t.co/kv3pjvH3LW
"Rebalance" was way overdue to occur anyway. pic.twitter.com/PSvqqokOni
— Mac10 (@SuburbanDrone) July 11, 2023