Low rate environment and flat yield curve have created an unprofitable environment for banks and financials.
In addition the recently dovish fed in a still tight labor market will likely increase inflation and marginal costs weighing on financial's and corporate companies' alike profit margins. These factors will make earnings and guidance difficult this coming earnings season (april-may).
From a technical perspective the financials have rallied with the market since the Dec. 24 bottom. XLF has underperformed as rates have fallen and now is hitting fibonacci resistance making a lower high with hidden negative divergences on the daily chart.
XLF
Expect momentum to turn downward and earnings and guidance through april and may to only serve as a catalyst for lower prices in the financials sector.
In addition the recently dovish fed in a still tight labor market will likely increase inflation and marginal costs weighing on financial's and corporate companies' alike profit margins. These factors will make earnings and guidance difficult this coming earnings season (april-may).
From a technical perspective the financials have rallied with the market since the Dec. 24 bottom. XLF has underperformed as rates have fallen and now is hitting fibonacci resistance making a lower high with hidden negative divergences on the daily chart.
XLF
Expect momentum to turn downward and earnings and guidance through april and may to only serve as a catalyst for lower prices in the financials sector.
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This sucked...
fundamentals are still very poor however
fundamentals are still very poor however