Markets: JPMorgan confident for corporate results

(Boursier.com) — JP Morgan Chase challenge the most pessimistic! The teams of the American bank believe that the profits of the companies will allow, as in the last months, the markets to go higher. “We remain very positive on the earnings outlook for 2022, expecting another year of significant overruns,” JPM strategists said in a note picked up by ‘Bloomberg’. “Despite the fears of many over mounting input cost pressure, profit margins have been very strong over the past year, reaching new highs in the United States and Europe.”

This optimistic view contrasts with that of several experts who believe that inflation, rising rates, bottlenecks in the supply chain and slowing economic growth will dampen the outlook for companies after strong earnings growth in Last year. Credit Suisse, for example, says rising bond yields are creating “a problem for equities”, squeezing spreads and weighing on valuations.

Several major Wall Street banks also kicked off the quarterly season with mixed results last week, disappointing investors and reducing some profit expectations for this year.

But for JPM, “it is important to note that global industrial production has rebounded very strongly, Asian growth appears to have bottomed out, inventories have started to recover and various bottlenecks have eased.” The strategists of the New York bank thus estimate that the market strongly underestimates the growth of the EPS of companies, and in particular in Europe where they see the EPS 2022 increase by 20%, against a consensus of less than 6% currently (for the MSCI Europe). On the Old Continent, the quarterly season really kicks off this week with heavyweights such as ASML Holding and Richemont. Accounts that could set the tone in the trading rooms.