Corporate Earnings Well Underway
October 20, 2025
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What a difference a week makes. Friday closed out on a high note for the opposite reason it was weak to close out the previous week — trade war de-escalation rhetoric from President Trump.1 Earlier in the week, investors were concerned about regional banks and potential credit issues spreading systemically. However, for now, the credit and bank-specific issues are isolated. The American Express (AmEx) earnings report on Friday portrayed the best example of the resilient high-end consumer. To quote the AmEx chief executive officer, “The health of our consumer is really, really good. They’re spending, they’re engaging with the products and they’re paying their bills.”2 The company also noted loss provisions coming in lower than expected and growth with younger customers as well as internationally.3 The Federal Reserve comments pointed to the balance sheet runoff ending earlier than markets may have been expecting, which should also be a tailwind.4
The other central question for investors regards artificial intelligence (AI) spending and its sustainability. The capital expenditure announcements have been massive (in the trillions), but how companies plan to pay for them remains the big question. In the high-yield market this week, one company raised money thanks to a “new twist” to data center financing, which Bloomberg termed the “Google Backstop.”5 Overall, high-yield credit spreads were 11 basis points tighter on the week, implying no material concern regarding systemic credit issues.6
Overnight, China reported slightly better-than-expected gross domestic product (GDP), which is supportive of the global growth narrative.7 We will also watch for any news emerging from China’s Fourth Plenum starting today. In the week ahead, key economic data includes the United Kingdom’s Consumer Price Index (CPI) for September released on Wednesday and the U.S. CPI for September out on Friday.8 The U.S. CPI will be provided — albeit a week and a half later than originally scheduled — even amid the U.S. government shutdown. This CPI data is critical to release before the end of October. It is a component in the third quarter CPI inflation data, which is utilized to set next year’s cost-of-living adjustments for Social Security. The Street is expecting an acceleration in headline CPI to 3.1%, which would imply an annualized three-month growth rate of nearly 4%.9 We will also listen closely to the wave of earnings expected this week. Today, the focus will be on Zions Bancorp as investors await new information regarding the charge-off it disclosed last week.10
Sources:
1CNBC – Stocks close higher as bank credit worries, China trade tensions ease; 10/17/25
2,3The Wall Street Journal – Amex Sales Increase as Consumers Regain Confidence; 10/17/25
4CNBC – Fed’s Powell suggests tightening program could end soon, opens door to rate cuts; 10/14/25
5Bloomberg – ‘Google Backstop’ Adds New Twist to Data Center Financing Frenzy
6,8,9Bloomberg
7Investing.com – China GDP rises slightly more than expected in Q3, but at slowest pace in a year; 10/19/25
10CNBC – The alleged ‘sweeping betrayal of trust’ that rocked Zions bank and spooked Wall Street; 10/18/25
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