Yesterday, major indices finished mostly lower, but climbed off the session's lows, as resolve continues to be the hallmark of the week.

Only two sectors finished in the green in the S&P 500, but the decliners were more noteworthy. Utilities (XLU) have picked on the carnage from 2023 despite being universally judged to be oversold. I haven’t looked into the situation with Utilities deeply enough to understand what’s happening. Meanwhile, Financials (XLF) eased lower ahead of big bank earnings reports this morning.

Bond Yields

The ten-year failed to close above a key resistance point of 4.10, and a close below 3.80 is a buy signal.

Calm, Cool & Collected

The bond market was non-pulsed, but the Volatility Index (VIX), (aka the Fear Index), was as cool as the other side of the pillow. There was a time when this was a screaming sell signal, but that hasn’t worked in a long time. On the contrary, stocks have performed well.

Banks At The Bat

Over the past year, non-bank Financials have shone in the following:

But over the past three months, super regionals have dominated:

This morning, heavy hitters in the banking sector are posting their latest financial results:

This should give us a greater understanding of the economy's health and the consumer's strength.

Keeping an eye on oil markets after the United States finally struck back against Houthi militants. Oil didn’t pop initially, but this quagmire is deepening.

Portfolio Approach

We added a Health Care and Materials name this morning.

Today’s Session

Core PPI remains unchanged for the third consecutive month. The good news for future CPI and PCE read, but as the chart illustrates, there is a huge difference between inflation stalling and prices going down.

Bank Earnings

Banks rallied hard into this earnings season, which increased the need for strong results and guidance.

 

For the most part, big banks came up short but will have a chance to talk their book and stocks up.

Big Banks 4Q 2022 Financial Results		JPM	C	BAC	WFC
Revenue	Actual	$39.94	$17.40	$21.96	$20.48
	Estimate	$40.23	$18.74	$23.73	$20.28
Earnings	Actual	$3.04	$0.84	$0.70	$0.86
	Estimate	$3.57	$0.81	$0.63	$0.71

The PPI number is setting the tone as futures start to firm into the open.

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