We've talked about the big banks the past couple of days. If you look just a bit past the headlines, you find that the performance of the biggest banks in the country have been good — despite enduring what increasingly looks like a technical recession in the first half of the year (technical recession = two consecutive quarters of negative growth).
But as we've discussed here in my daily notes, this is negative growth AFTER the effects of 40+ year high inflation. For perspective, nominal growth is still running hot (6%+). That means economy is still moving. Demand is still there.
With that, the biggest takeaway from bank earnings: the consumer is strong, and balance sheets and credit worthiness (for both business and consumers) remain strong.
So, we've talked about the opportunity in bank stocks. Today, they led the way, in a day of broad stock market strength. JP Morgan was up 2.5%. Bank of America was up 3.6%. Citi was up 4.2%. Wells Fargo was up 4%. And Goldman Sachs was up 5.6% on the day.
We heard from Haliburton before the bell today. This is the biggest provider of products and services to the energy industry. They beat on earnings, and beat on revenue estimates. They put up huge growth numbers, just compared to the past quarter!
That should wake up the investment community to energy and commodity stocks, both of which are benefiting from structural supply shortages, and high prices — a recipe for expanding margins.
Yet both (the stocks) of which have been pummeled in the past five weeks.
Since June 8th, the energy sector ETF (XLE) declined 27%. This is an industry that put up record numbers in Q1, and we will very likely find that they set new records in Q2.