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So why are they all trading down Friday?
There's two issues: fundamental and seasonal.
First, the soft economic data we saw Friday — retail sales, but particularly the Consumer Price Index — clearly lowered the chances for a Fed rate hike later in the year. That brought down Treasury yields, which is lowering the chances for increased profits from one of the primary profit centers for banks — interest income.
Less well-known is a seasonal phenomenon: Banks tend to trade up in the month before JPMorgan's earnings report, trade slightly down on the day of the report and are generally flat in the month after.
Here are the results for banks (represented by the SPDR KBW Bank ETF KBE) since 2010 in the month before JPMorgan reports earnings, the day of, and a month after:
Banks and earnings
One month before JPM: up 1.0%
Day of: down 0.1%
One month after: down 0.3%
Note that even a month after JPMorgan reports, banks tend to be down slightly (down 0.3 percent), while the S&P 500 is typically up 0.5 percent.
Bottom line: Expect some downward earnings revisions on second half bank earnings around lower interest income, but factor in the seasonal weakness as well.
Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.
Rates are rising all over the world. In the last couple of weeks, the U.S. 10-year yield has risen to an eight-week high, Germany's 10-year bonds are at 18-month highs, Japan's are at five-month highs, France'sat seven-month highs.
It's moving stocks. Banks are on the rise. The main bank ETF (KBE) is at the highest level since March. Interest rate sensitive sectors like real estate investment trusts have been lower.
What's going on? Investors are trying to get ahead of a change in central bank policies around the world. We have had 10 years of unconventional policies that are slowly coming to an end. The Fed is already raising rates, and while neither the Japanese nor the ECB are raising rates, it's clear they are considering reversing their policies of buying bonds and stocks, in the case of Japan.
Is this a recipe for disaster? Not at this pace, but it's being watched carefully. The rise is not very great. Even the 10-year at 2.38 percent is only 20 basis points higher than a few weeks ago. That's a very modest rise, and the cost of funding is not changing prohibitively. It's a sign of strength that central banks are more comfortable with higher rates.
It's true, nobody is raising rates aggressively. This move is in anticipation of something more aggressive happening. The Fed minutes, released Wednesday, clearly indicated the Fed is not wedded to an aggressive rate hike schedule. And what about those who say raising rates, even if modestly, when the economy is only fair is a bad idea? Is 2.25 percent GDP growth great? Not really. But it's better than the 1.75 percent we've seen recently. And European growth prospects certainly have improved.
We might be in for a big surprise when it comes to second quarter earnings.
It's early — only two dozen companies (about 5 percent of the S&P 500) have posted earnings for the period, but the results from the early reporters like Nike, Oracle and Darden have been surprisingly strong.
Profits from those 23 companies are up nearly 12 percent from the second quarter of last year, according to Nick Raich, who follows the markets as the Earnings Scout — continuing the earnings rebound that began at the end of last year. But revenues for those companies are up 8.5 percent, with nearly 90 percent exceeding estimates, far above normal.
For Raich, the revenue turnaround is the big story: "It's not just cost cutting any more. One of the bear arguments has been that what little earnings growth we have seen has been cost cutting and buybacks. But if you have revenue growth, it takes away a lot of the bear argument. And it shows you business activity has improved."
Indeed, the bottom for earnings and revenue for the S&P was the first quarter of 2016, and we have been steadily improving since then.
But 5 percent is a small sample — what about the 95 percent that have not yet reported? Earnings estimates for those companies are not being reduced nearly as much as in prior quarters.
Earnings estimates typically come down as we go through a quarter, but this time estimates for the entire S&P 500 are only 2 percent lower than they were at the start of the quarter in April, according to FactSet. That is well below the usual reduction of about 4 percent.
"This tells me analysts are more optimistic than usual," John Butters of FactSet told me.
Raich concurs: "It's a sign most of these companies are comfortable with the estimates. Otherwise, they would have guided down more aggressively."
As for the third quarter, which we have just started, the early signs are also positive, as estimates are also holding up better than expected. Right now, according to Raich, 43 percent have seen their third-quarter estimates go higher for the period. That's the highest level in five years.
Of course, there are outliers, and for those, analysts have been quick to take down numbers. Take Bed Bath & Beyond, which had its third-quarter earnings estimates reduced by analysts nearly 7 percent after the company reported "increased softness in transactions in stores, as well as higher net-direct-to-customer shipping expense, coupon expense and advertising costs during the quarter."
Homebuilder Lennar beat its earnings estimates after it reported on June 20, but analysts overall reduced third-quarter estimates as many noted that valuations were stretched and there may be limited upside to housing after several years of strong growth.
"It's a small sample, but it's a really good start," he said.
Berenberg says Wells Fargo will report earnings next year below Wall Street expectations due to "weak demand for credit."
U.S. crude prices fell more than 1 percent Friday after a report said supply from OPEC will rise.
The agenda released by the Trump administration signaled the government has halted its work on restricting Wall Street bonuses and other pay incentives.