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Financials Are Set To Miss Already Lowered Earnings Estimates

Summary

The big banks will dominate the unofficial start of the Q1 earnings season this week.

Earnings for the financials are expected to drop 9% year over year, down from a forecast of breakeven just three months ago.

The Atlanta Fed has dropped its Q1 GDP growth estimates all the way down to 0.1%.

Zero economic growth, a flattening yield curve and steep drops in trading revenue will make it difficult for banks to beat already lowered estimates.

Expected forward guidance for the remainder of 2016 to be lowered as well.

Earnings season starts in earnest this week with Alcoa (NYSE:AA) reporting after the bell on Monday. Following that, the big banks (NYSEARCA:XLFS) take center attention. To say that expectations are low would be an understatement. Brokerages have been steadily lowering earnings and revenue estimates for much of the last couple of months but I don't have a lot of confidence that the banks are going to be able to top even those depressed numbers.

To set the table, S&P 500 earnings are expected to drop over 9% from the same year ago period. That's way down from expectations of relatively flat earnings growth just three months ago.

The energy sector (NYSEARCA:XLE) will lead the way with the biggest declines as expected but it will be far from alone. Estimates have been revised downward for all 10 major sectors, some...


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