{"id":13463,"date":"2024-10-15T13:39:58","date_gmt":"2024-10-15T13:39:58","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13463"},"modified":"2024-10-15T13:41:14","modified_gmt":"2024-10-15T13:41:14","slug":"q3-2024-earnings-update-chinas-stimulus-not-impressing-markets-oil-prices-and-war","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/q3-2024-earnings-update-chinas-stimulus-not-impressing-markets-oil-prices-and-war\/","title":{"rendered":"Q3 2024 Earnings Update, China&#8217;s Stimulus Not Impressing Markets, Oil Prices And War"},"content":{"rendered":"\n<p>As we enter Q4, it&#8217;s the perfect time for investors to reassess their portfolios and explore new strategies. In this week\u2019s <em>Steady Investor<\/em>, we highlight three key trends that could shape your investment approach moving forward:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What to look for as bank earnings hit the tape<\/li>\n\n\n\n<li>China offers more economic support<\/li>\n\n\n\n<li>Fears of a global oil shock grow as Mideast crisis escalates<\/li>\n<\/ul>\n\n\n\n<p><strong>What to Look for as Bank Earnings Hit the Tape \u2013 <\/strong>Q3 2024 earnings season is officially underway, with the first major banks reporting results on Friday. Investors will have much to parse. For one, this will be the first earnings reporting in years where interest rates are being actively lowered by the Federal Reserve, which can greatly impact everything from net interest margins, to the value of fixed-rate loans on banks\u2019 balance sheets, to the unrealized losses many banks have on government and mortgage-backed securities purchased when the benchmark Fed funds rate was anchored to the zero bound. According to data from Zacks Investment Research, loan demand has been anemic in recent quarters, with industry data suggesting loan growth of about +1% in Q3. With respect to investment banking, revenues should be up in the low- to mid-teens percentage range, with year-over-year gains in the debt and equity capital markets activities offset by continued weakness on the M&amp;A side. The outlook for M&amp;A should perk up once the election uncertainty is in the rearview mirror and clarity about the political and regulatory environment emerges.&nbsp;All told, the Zacks Major Banks industry is expected to earn -15.7% fewer earnings in 2024 Q3 on +0.5% higher revenues. Zooming out to the Financials sector, however, we find that earnings are expected to be up +1.9% from the same period last year on +4.6% higher revenues.<sup>1<\/sup><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"620\" height=\"156\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic.jpg\" alt=\"\" class=\"wp-image-13466\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic.jpg 620w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic-300x75.jpg 300w\" sizes=\"auto, (max-width: 620px) 100vw, 620px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Zacks<sup>2<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><a href=\"https:\/\/go.steadyinvestor.com\/stock-market-returns-election-zim?source=zim&amp;medium=email&amp;term=steadyinvestor_zim_2024_07_27&amp;content=election_year_returns\"><strong><span style=\"text-decoration: underline;\">The 2024 Presidential Election and Its Effects on Your Investing Portfolio<\/span><\/strong><\/a><\/p>\n\n\n\n<p>The election is around the corner, and as challenging as it is to invest in this current economy, it\u2019s still essential to stay focused on sound, objective decisions rather than emotions.<\/p>\n\n\n\n<p>We recommend looking at historical market performance during election years to shape your current investing decisions. Our free guide,\u00a0<a href=\"https:\/\/go.steadyinvestor.com\/stock-market-returns-election-zim?source=zim&amp;medium=email&amp;term=steadyinvestor_zim_2024_07_27&amp;content=election_year_returns\"><strong><em><span style=\"text-decoration: underline;\">Stock Market Returns in an Election Year<\/span><\/em><\/strong><\/a>, shares insights into historical market performance during election years, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>How stocks have performed in every election year since 1928<\/strong><\/li>\n\n\n\n<li><strong>The effect on performance when an incumbent runs for re-election<\/strong><\/li>\n\n\n\n<li><strong>How 2024 has compared to election year averages so far<\/strong><\/li>\n\n\n\n<li><strong>And more\u2026<\/strong><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more, fill out the form to get your free copy of this special report today\u2014and invest smarter during this election year!<\/p>\n\n\n\n<p><a href=\"https:\/\/go.steadyinvestor.com\/stock-market-returns-election-zim?source=zim&amp;medium=email&amp;term=steadyinvestor_zim_2024_07_27&amp;content=election_year_returns\"><strong><em><span style=\"text-decoration: underline;\">Get our FREE guide:\u00a0Stock Market Returns in an Election Year<\/span><\/em><\/strong><\/a><strong><em><sup>3<\/sup><\/em><\/strong><\/p>\n\n\n\n<p><strong>China\u2019s Stimulus Measures So Far Fail to Impress Markets \u2013 <\/strong>Last month, China caught the market\u2019s attention with surprise announcements for monetary stimulus. Readers may recall that the People\u2019s Bank of China (PBOC) announced it would cut its benchmark interest rate and allow banks to hold less cash in reserves relative to deposit levels, which was designed to free up more capital for lending. Mortgage rates were also cut by 50 basis points, and $70 billion in loans were made available for funds, brokers, and insurers to buy Chinese stocks. Now, on top of these stimulus measures, China\u2019s National Development and Reform Commission announced another round of stimulus. The difference this time, however, was that it disappointed markets. The announcement called for $14 billion in 2025 funds to be pulled forward into this year for fiscal spending with an additional $14 billion for construction projects. This $28 billion outlay pales in comparison to the hundreds of billions of dollars investors were hoping to see, and the disappointment was immediately reflected in equity markets.<sup>4<\/sup><\/p>\n\n\n\n<p><strong>Are Oil Prices Set to Surge as the Crisis in the Middle East Escalates? <\/strong>Investors are growing increasingly concerned that the escalating war in the Middle East is poised to disrupt oil markets and send prices rising.<sup>5<\/sup> In the week ending October 4, for instance, crude oil prices soared&nbsp;9.1% on concerns that Iran\u2019s oil fields would be targeted. It was the biggest&nbsp;advance for oil prices since March 2023.<sup>6<\/sup> We agree that this is a risk worth watching, especially if Israel targets Iranian oil fields and Iran chooses to retaliate by blockading the Strait of Hormuz, through which roughly 17 million barrels of oil travel every day (roughly 25% of total global consumption). In worst case scenarios, this could indeed send prices skyward which could dent growth and be inflationary at the same time. At the same time, however, conflicts in this region and threats to the Strait of Hormuz are not new, and it is also important to note that Iran produces a little over 3 million barrels per day of oil, which is about 3% of global daily output. In a scenario where this oil production goes offline, other oil producing countries in the region like Saudi Arabia have plenty of spare capacity to make up for any hit to global supply, which they would likely do if prices rise. It\u2019s also worth remembering that oil prices (chart below) remained firmly above $100 a barrel from the beginning of 2011 through the summer of 2014, during which time the U.S. economy grew, and the stock market went up by over +50%. We don\u2019t think oil prices will reach this level, with supply and demand largely in balance at current prices.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"395\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic1-3-1024x395.png\" alt=\"\" class=\"wp-image-13465\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic1-3-1024x395.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic1-3-300x116.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic1-3-768x296.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/10\/pic1-3.png 1168w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>7<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong>Concerned with Your Investments During This Election Year?<\/strong>&nbsp;Investing during an election year requires setting aside political views to focus on objective, well-supported decisions.<\/p>\n\n\n\n<p>To keep your portfolio on track during these turbulent times, we recommend taking a look at market performance from previous election years to guide your decision-making.<\/p>\n\n\n\n<p>Our free guide,\u00a0<a href=\"https:\/\/go.steadyinvestor.com\/stock-market-returns-election-zim?source=zim&amp;medium=email&amp;term=steadyinvestor_zim_2024_07_27&amp;content=election_year_returns\"><strong><em><span style=\"text-decoration: underline;\">Stock Market Returns in an Election Year<sup>\u00a08<\/sup><\/span><\/em><\/strong><\/a>, shares insights into historical market performance during election years, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>How stocks have performed in every election year since 1928<\/strong><\/li>\n\n\n\n<li><strong>The effect on performance when an incumbent runs for re-election<\/strong><\/li>\n\n\n\n<li><strong>How 2024 has compared to election year averages so far<\/strong><\/li>\n\n\n\n<li><strong>And more\u2026<\/strong><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more, fill out the form to get your free copy of this special report today\u2014and invest smarter during this election year!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Q3 2024 earnings season is underway and bank earnings are in focus, China&#8217;s stimulus measures so far are failing to impress markets, the Middle East crisis and its effect on oil prices. <\/p>\n","protected":false},"author":3,"featured_media":13464,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-13463","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13463"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13463\/revisions"}],"predecessor-version":[{"id":13467,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13463\/revisions\/13467"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13464"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}