Colin’s notes: all week long bleeding edge, I’ve previously talked about how the next four weeks will be the most important weeks of 2024 for investors, and how we can navigate them.
On Monday, I realized that the next four weeks are going to be critical…and on Wednesday, I shared a guide to surviving the dips and dips that may come…
Today I’ll put on my radar some alarming data that recently caught my eye. That suggests we could be heading straight for a downturn…something we haven’t seen since just before the 2022 market crash that caught so many people off guard. This is a data point that was missing.
So, we will introduce what you should be careful about. This will help you prepare for anything that can happen over the next four weeks and the weeks that follow.
Click below to watch…or read the transcript that my team and I have compiled for Flow.
bleeding edge Happy Friday, subscribers! I hope you all have a wonderful day.
If you’ve been following us all week, you’ll know that I’ve been calling April, the next four weeks, the most important period in the stock market all year.
The next four weeks will determine where the market heads for the rest of the year. That’s because we’re in the midst of an important earnings season that officially begins next week.
Publicly traded companies report earnings quarterly. Think of it as a report card showing your company’s performance. Perhaps more importantly for investors, there is a flood of financial information and data that can move stocks and stock markets up or down.
Next week, some of the most important data we’ll receive throughout earnings season will arrive early Friday morning before the market opens. This data is so important that it can indicate the direction of the market in the coming months.
In fact, the last time the market saw data points at these levels was right before the 2022 stock market crash that wiped out many investors.
In many ways, this data point can predict a stock market crash. Today we’ll explain what you can look for.
One of the world’s largest financial institutions will report its results next Friday, April 12th. And that financial report contains data that could hint at where the market is heading for the rest of this year and perhaps beyond.
JP Morgan is such a dominant bank and has so many assets under its control that even if you have no interest in owning any stock in the company… You need to be careful when doing so.
I’ve been covering the company on YouTube for years. And I’ve always emphasized that it gives you a window into consumers and other businesses.
The company manages nearly $4 trillion and is the largest bank of its kind. There are many aspects of JPMorgan’s financial report that are worth noting. That includes several paragraphs filled with opening sentences and headline-grabbing quotes from CEO Jamie Dimon.
But the most important point is one that many investors tend to overlook.
Certainly, I will be paying close attention to this metric a week from now. Because, as we showed earlier, the last time we saw it at this level was right before the 2022 stock market crash.
But I’m talking about the allowance for loan losses.
This isn’t something you see many financial experts discuss on a regular basis…but that “allowance for loan losses” number means J.P. Morgan’s loans that are in arrears (default), or money set aside to cover loans that need to be renegotiated.
JPMorgan sets its allowance for loan losses by considering past loan performance, current economic conditions, expected future economic conditions and future losses. The allowance for loan losses is recognized as a financial expense of the company and can therefore directly impact the company’s profitability and stock price.
However, the allowance for loan losses represents the overall health of consumers and businesses. Rising loan losses mean business consumers may be struggling to repay their debts.
In 2020, all major banks’ loan loss provisions increased rapidly due to the economic uncertainty caused by the pandemic. However, thanks to government stimulus and low interest rates, banks did not experience much stress during this period.
But that’s not the case now.
Over the past year, we’ve seen loan loss provisions steadily increase again. We’re at levels not seen since 2022…just before a big stock market crash.
The fact that banks are setting aside more funds for loan losses due to delinquencies and data write-offs means that the situation is actually not good.
Consumers are delinquent on their credit cards at a rate not seen in more than a decade. Commercial real estate loans are in a similar predicament. Unlike the federal government, businesses and consumers cannot simply print dollars to pay their bills.
The effects of persistent inflation and rising interest rates are hurting the economy. And financial markets, near all-time highs, are barely pricing in this news.
Next Friday could be the first sign that markets start paying attention to this vital data.we’ll be sure to cover it here cutting edge. Have a fun and safe weekend! See you next week.
