Ken Leon, Neil Dutta, and Jill Carey Hall discuss potential earnings surprises in the banking sector, Fed rate cut prospects, and the impact on small-cap stocks. Topics include credit loss provisions, economic outlook, inflation dynamics, and navigating uncertainty in the market.
Ken Leon highlights healthy loan activities to drive bank earnings growth.
Jill Kerry Hall emphasizes rate cuts' impact on small caps and year-end rally potential.
Deep dives
Key Points on First Quarter Earnings and Economic Outlook
Ken Leon, director of equity research at CFRA, highlights that the first quarter set a base for growth for the rest of the year, emphasizing conservative narrative amidst different economic backdrop indicating healthy loan activities projected to accelerate for the year with a focus on volume, net interest income, and business activities.
Small Caps Performance and Rate Cut Implications
Jill Kerry Hall discusses the influence of rate cuts on small caps, explaining that about 40% of smaller companies' debt is short-term or floating, emphasizing that multiple rate cuts over time may alleviate the detrimental impact on earnings, highlighting the importance of the ongoing profits recovery and potential impact on a year-end rally for small caps.
Sector Performance and Financials in Russell 2000
In a discussion about sector performance within the Russell 2000, Joe Kerry Hall advises favoring larger over regional banks due to sensitivity to credit conditions and the Fed, recommending a selective approach with commodity-oriented sectors benefiting from higher commodity prices, and potential challenges within the financials and real estate sectors due to refinancing risks and credit conditions.
Bloomberg Surveillance TV: April 12, 2024 -Ken Leon, Director of Equity Research, CFRA-Neil Dutta, Head of US Economic Research, Renaissance Macro Research-Jill Carey Hall, Head of US Small and Mid-Cap Strategy, BofA Global Research Ken Leon, Director of Equity Research at CFRA, reacts to earnings from JPMorgan, Citi and Wells Fargo, saying there are 'opportunities for these banks to surprise on the upside'. Neil Dutta of Renaissance Macro says rate cuts are still on the table for the Fed this year despite hotter-than-expected data so far. BofA's Jill Carey Hall says the outlook for small-cap stocks depends heavily on the Fed's next move.