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Today's big stories

Investors will be squarely focused on companies’ forecasts this week, when almost a fifth of US firms report earnings updates
Our analysts look into why Morgan Stanley is recommending smaller US stocks for the first time in years – Read Now
Shares of JPMorgan Chase rose after the banking behemoth reported first-quarter earnings

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Future Shock

What’s Going On Here?

Companies have started to announce how they performed in the first quarter of the year, but forward-looking investors are more interested in how they’ll hold up in the dystopian future that awaits them…

What Does This Mean?

An assortment of companies – together representing 18% of the US stock market – will report their earnings this week, and they’re expected to be 10% lower on average than the same time last year.

Given the dramatic selloff last month, that expectation is probably already factored into stock prices. Instead, the direction of stocks from here on out will be driven by earnings predictions for the rest of this year and the next. Last week, the stock market regulator urged companies not to use their quarterly updates to focus on the past like they normally do, but rather to tell investors where they stand today and how coronavirus may impact them moving forward. That, they argued, would be far more relevant.

Why Should I Care?

For you personally: Tech-tical thinking.
Weighing in at over 20% of the US stock market, the tech sector is bound to attract Finimizers’ attention when its companies begin reporting next week. But there’s an industry split that might create opportunities for the savviest investors. Analysts are expecting demand for Netflix and Amazon’s products to stick around during the pandemic, which might explain why their share prices are near all-time highs. Facebook, Twitter, and Google-parent Alphabet might not be so lucky, mind you: they rely on advertising spending, and its decline will probably dent their earnings.

For markets: No more tears.
Pharmaceutical giant Johnson & Johnson (J&J) reported backward-looking first-quarter results that actually exceeded investors’ expectations. The company also announced it’d pay a higher dividend to its shareholders than they’d hoped for. And looking to the future, J&J did what investors reckon lots of companies might: it lowered its sales and profit forecast for the rest of 2020.

Spotting opportunity: The five steps to picking the right stocks.

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Little Victories

Morgan Stanley’s own quarterly earnings aren’t due until Friday, but the investment bank’s U-turn on smaller American stocks has already grabbed investors’ attention this week: it reckons they could lead the market recovery in 2020.

Get the full story in the Finimize app

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Winner Takes All

What’s Going On Here?

Investors were on tenterhooks as JPMorgan became the first investment bank to reveal its first-quarter results – and they seemed to like what they saw.

What Does This Mean?

While JPMorgan’s total revenue was slightly lower than investors had predicted, the bank did well where it mattered most. Its “net interest income” – the money it earns from loans, minus the interest it pays out – was higher than expected, even though the Federal Reserve cut US interest rates to a record low in March. That rate cut – and others around the world – encouraged investors to chop and change their portfolios, which earned JPMorgan’s trading business more in commissions and led to the segment’s highest-ever quarterly revenue (tweet this). It didn’t come out completely unscathed, of course: with companies dithering on deals and fundraising, the bank made less from advising them than expected.

Why Should I Care?

For markets: No pleasing some people.
JPMorgan’s stock rose after its announcement on Tuesday: the boost to its trading business might be temporary, but its dividend is intact – for now. Still, the bank and some of its rivals suspended their lucrative share buybacks last month, and according to Autonomous Research, that suspension meant large American banks went from paying out 135% of their expected 2020 earnings on average to just 45%.

The bigger picture: Dividend and conquer.
JPMorgan cautioned investors that lower rates will ultimately limit its net interest income, which could lead to even lower dividend payments. There’s another source of pressure too: a recent change in accounting rules means JPMorgan now has to put money aside for potential loan losses up front, rather than during the period the loan’s repaid. That cost JPMorgan a higher-than-expected $8 billion last quarter, and it was the reason its profit fell almost 70% from the same time last year. Still, since the bank’s increased costs weren’t its fault, investors didn’t pay much attention to its lowered profit.

Explained: How to use interest rate moves to predict banks’ earnings.

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💬 Quote of the day

“One of the keys to happiness is a bad memory.”

– Rita Mae Brown (an American writer, activist, and feminist)

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🌍 Finimize Community

🛀 Take the pressure off

Navigating the markets is tricky at the best of times, and these… well, these aren’t that. So we’re hosting live online events with some of the best minds in finance to put your mind at complete ease. Sign up below 👇

🇬🇧 Finimize HQ: Financial Health Check with Jason Butler – 6pm UK time, April 15th
🇬🇧 Finimize HQ: Global Economic Implications of COVID-19 with Anna Stupnytska – 1pm UK time, April 16th
🇮🇳 India: The Indian Macroeconomy with Achala Jethmalani – 7pm IST, April 16th
🌍 Finimize Workshop: How to Organize Your Own Finimize Virtual Event – 1pm UK Time, April 17th
🇦🇺 Australia: Investing During A Pandemic – 7.30pm AEST, April 22
🇭🇰 Hong Kong: COVID-Proof Your Portfolio with Stephen Chiu – 9pm HKT, April 28th

📚 What we're reading

Just chill out, watch some penguins (Edinburgh Zoo)
Highway to the danger zone (The Guardian)
A different kind of marathon (YouTube)

👋 A message from our founder

“Hey guys. There’s a lot of news out there at the moment, and you ought to feel informed right now, not overwhelmed. So we’re here to keep things simple: we’ll bring you the stories, insights, and deep-dives you need to follow exactly what’s going on without getting lost in the coronavirus weeds. You can find it all in the Finimize app.”

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Finimize - 🤕 JPMorgan beat the virus

Today's big stories

Future Shock

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Little Victories

Winner Takes All

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🛀 Take the pressure off

👋 A message from our founder

Older messages

🇺🇸 US jobs get worse and worse

💰 Airbnb's 1 billion richer

☠️ Dividends are doomed

📉 Stocks break records

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