Earnings season began amid global tension
It’s hard to believe how fast it comes around, but earnings season is already under way. As usual, it starts with the U.S. banks. Results were mostly mixed, and markets treated them accordingly. JPMorgan reported lower profits, partly tied to a one-time expansion, as the bank becomes the issuer behind the Apple credit card, a role Goldman Sachs exited after discovering consumer lending is not as attractive as advisory fees. Bank of America delivered solid numbers, driven by strong net interest income. The spread between short- and long-term interest rates remains the bread and butter for most banks. Even so, the stock fell, a reminder that good earnings are not always enough when expectations are so high. Citigroup’s results were uneven, weighed down by lingering costs tied to winding down its Russian exposure. Nothing broke, but nothing impressed.
China reported a record full-year trade surplus of $1.2 trillion for 2025 and blamed the U.S. for worsening global trade imbalances. December trade data came in well ahead of expectations, with exports up 6.6% versus a 3.1% consensus, and imports up 5.7% versus the expected 0.9%. Notably, this surplus was achieved despite a roughly 20% drop in exports to the U.S., shifting pressure toward Europe and large developing economies that are already concerned about being flooded with Chinese goods. At the same time, Microsoft warned that U.S. AI firms are losing ground to Chinese competitors, where low-cost open models combined with state subsidies are proving hard to beat. Trade friction is far from over.
President Trump said he would impose a 25% tariff on goods from any country doing business with Iran, a move that could complicate relations with China, Iran’s largest oil customer. Speaking of which, rhetoric around Iran escalated sharply. Germany’s Chancellor, Friedrich Merz spoke openly about the regime’s final days, while Gulf states led by Saudi Arabia privately urged Washington to avoid military action. Their argument is pragmatic: a strike on Iran would likely spike oil prices, disrupt shipping lanes and ultimately hurt the global economy, including the U.S. Markets appear to be listening. Metals surged again this week, with silver pushing past $90 and gold, copper and tin hitting record highs. Investors are leaning into real assets in part as geopolitical insurance.
Looking ahead, earnings season will broaden out next week, with a mix of sectors reporting. Technology and energy will follow shortly after, then social media and consumer stocks. The macro and geopolitical noise is still loud, but so far fundamentals are overpowering it.
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