Risky Business...I see more downside risk than upside this week, with CDN Bank earnings and PCE numbers due.
It seems like lowered expectations for the banks, increases to PCL, drags on profit. I would think much of this is already baked in, and it is reflective somewhat in their share prices. S&P hittings all time highs but bank numbers are still trying to get to old highs, and its happening faster in the US than Canada.
Of course, who knows what's going to happen, but I don't really see any upside catalyst. Loan growth is subdued due to affordability, cost savings from layoffs will probably materialize later this year rather than Q1.. Just don't know what could surprise to the upside here. It seems like the numbers are going to either be worser than we thought, or right there / marginally better than estimated.
As for PCE, the Fed's favored measure of inflation, who knows what's going to happen. There is a lot of talk about there being seasonality in the January numbers, that they come higher in Jan due to annual price increases, etc. CPI and PPI both came in hotter than expected. There was a significant pullback after the CPI release, but not the PPI. And the recovery from the CPI was swift.
Will the market shrug off a hot PCE number? I think there is still a risk of a significant pullback. PCE is known as the Feds favored measure, so there is an increased importance in this number. And given that CPI and PPI came in hot, I'm thinking PCE will too most likely. Will the market rally off a cooler than or as expected PCE number... a little for sure, but how much. The goldilocks scenario of falling inflation is kind of priced in.
So with these thoughts ruminating in my head, I sold all of my FTN today (30K @ $7.85), DFN (25K @ $5.39) and FFN (35K @ $5.10). Really pains me to sell the day before I can lock in the dividends.... but just think the risk of capital losses is too high.