Earnings, inflation take center stage

Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look-ahead to this week's market-moving events, along with the weekend's top news and analysis. Hello, today is Sunday, July 12th, and I'm your host, Kim Kahn. Earnings season officially kicks off this week as the big banks report, but major updates on AI spending could overshadow the financial results. Wall Street analysts remain overwhelmingly bullish on the banking sector, with no sell ratings on the major banks reporting this week, including J.P. Morgan Chase, Citigroup, Wells Fargo, Bank of America, Goldman Sachs, and Morgan Stanley. Seeking Alpha analysts are a bit more cautious, though they also rate the sector a buy overall. This weekend, Seeking Alpha analyst Ian Brezhik issued a rare sell rating on Citigroup, arguing that consensus EPS estimates for 2027 and 28 may be too high, and there's a risk of downward revision, especially if financial markets weaken. Barring major disappointments from the banks, market attention is likely to shift quickly to chip equipment companies for the latest read on AI demand Taiwan Semiconductor and ASML are both due to report Seeking Alpha Analyst Oliver Rojanko says guidance will be the key focus for TSM Investors should look out for advanced packaging capacity commentary, 2nm margin dilution, and perhaps most importantly, whether management still sounds like the business is supply constrained. Here's how the calendar shapes up. On Tuesday, J.P. Morgan, Bank of America, Goldman, Wells Fargo, and Citi report. On Wednesday, ASML, Johnson & Johnson, Morgan Stanley, BlackRock, Bank of New York Mellon, and United Airlines report. On Thursday, Taiwan Semi and Netflix report. Regions Financial and Fifth Third Bank Corp round out the week on Friday. For Netflix, Seeking Alpha analyst Louis Girard says it's a pound-the-table buy based on valuation. The only thing that's really deteriorated for the firm has been its price, while the new competitive behemoth I warned about is being assembled by Paramount under a mountain of leverage, and Netflix got paid $2.8 billion to not participate in that folly. Looking to the economy, inflation dominates the economic calendar this week, with the June consumer price index due on Tuesday and the producer price index on Wednesday Economists expect headline CPI to fall 0 in June bringing the annual inflation rate down to 3 for 4 Core CPI is expected to rise 0.2%, leaving the annual rate unchanged at 2.8. Wells Fargo economists say core services inflation should moderate in June. While supply-side developments continue to generate volatility in a handful of categories, the broader data do not suggest inflation pressures are re-accelerating across the economy, they said. In the news this weekend, U.S. Senator Lindsey Graham, a longtime Republican lawmaker from South Carolina and one of President Donald Trump's closest allies on Capitol Hill, has died at age 71 following a sudden and brief illness, according to a statement from his office. No cause of death was disclosed. The United States launched a new wave of strikes against Iran after Tehran allegedly attacked a commercial vessel transiting the Strait of Hormuz. American forces targeted about 140 Iranian military sites, including communications, air defense, drone storage, and naval mine laying facilities. Nouran responded with missile and drone attacks targeting U Gulf states including Bahrain Kuwait Qatar and the United Arab Emirates in Oman Prediction markets indicated that oil would rise more than 3 in Monday trading And MGM Resorts has reportedly opened discussions with People over a potential buyout after Barry Diller's media company offered to acquire the casino operator in a $12.4 billion deal last month. The Wall Street Journal reports that MGM has formed a special board committee and hired advisors to evaluate the bid, which it believes undervalues the company. And for income investors, Pershing Square goes ex-dividend on Monday and will pay shareholders on July 21st. Abbott Labs and AbbVie go ex-dividend on Wednesday. Abbott pays off on August 17th, while AbbVie pays out on August 14th. And Williams-Sonoma goes ex-dividend on Friday and will pay shareholders on August 21st. That's all for today's Wall Street Brunch. Look for links to stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com slash WSB and join the elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com slash subscriptions.