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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Few jobs in finance have changed more than that of the investment analyst. Some senior stock pickers might be old enough to remember plucking corporate announcements from fax machines in the late 1990s, but even relative newcomers have tools at their disposal that were hard to imagine just two years ago.
In a test of number-crunchers’ souped-up efficiency, Tuesday will see five of the world’s biggest banks, with more than $2tn in combined market capitalisation, report second-quarter earnings: JPMorgan, Goldman Sachs, Bank of America, Wells Fargo and Citigroup. It’s the first time that has happened in at least 10 years, according to AlphaSense data. Wells Fargo analyst Mike Mayo calls this confluence “the World Cup of banking”.
Complex as banks are, it makes sense that closing the books and getting sign-off from audit committees take a similar amount of time. But there’s an element of preference too. JPMorgan tends to go first; Morgan Stanley tends to go last. Since banks announce their future reporting dates more than a year in advance, they could easily add breathing space if they chose.
Fortunately, the fact that everyone is going at once matters ever less. Investors are increasingly spoiled for choice of AI-powered tools that can pull “unstructured” data out of press releases and turn it into fodder for more sophisticated analysis. Asset managers like BlackRock and Man Group are rolling out “agents” to parse corporate happenings at speed.
Meanwhile, the amount of intel available for beating the market goes far beyond earnings releases. It’s not just quantitative funds that chew up diffuse, unstructured data. Investors also look to secondary metrics like “sentiment” encoded in articles, social media posts and executive commentary, cooked up by companies such as RavenPack. Even retail investors armed with a chatbot can make light work of lengthy filings.
Perhaps earnings pile-ups are actually a good thing. As analysis gets faster, there’s much to be said for being able to tell in the blink of an eye whether an earnings surprise is company-specific or sector-wide. That’s particularly true for interconnected sectors like tech, where chipmakers, hyperscalers and software companies from Alphabet to Nvidia to Salesforce scatter their reflections on the state of a red-hot market over weeks rather than days.
The remaining snag is the tradition of the earnings call, where executives ideally get put through their paces by analysts. Overlapping calls between JPMorgan and Bank of America on Tuesday, while a rarity, are thus unhelpful. For now, those generally play to a human audience, though real-time transcripts and tonal analysis — able to reveal when an executive sounds uncertain, stressed or evasive — should eventually change that too.
All of which means the idea of drip-fed quarterly updates, to the extent it survives at all, is starting to look somewhat antiquated. Earnings season is old hat: a few years from now, it will be time to mark your calendar for S&P 500 earnings day.
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