Morning News: October 25, 2024
Posted by Eddy Elfenbein on October 25th, 2024 at 7:04 am

Arctic Doomsday Vault Stashes More Seeds for Future Food

Gender Rift on Climate Change Widens Among Young Americans

South Africa Unveils Job Plan Amid Coal Phase-Out Backlash

Why the Philippines Is Building Its Capital Market

Tokyo Consumer Inflation Slows Below Bank of Japan’s Target

Russia’s Central Bank Lifts Key Interest Rate to Post-Invasion High

China Lawmakers to Meet During US Election Amid Stimulus Hopes

Trump 2.0 Haunts World Economy Chiefs Gathering in Washington Before Vote

It’s the Inflation, Stupid: Why the Working Class Wants Trump Back

U.S. Bond Market Braces for the ‘Trump Trade’ of Large Tariffs and Deficits

Clock Change Will Spark Headache for Power Market Traders

Wall Street Takes Tax-Loss Harvesting to the Next Level

Millennium Among Hedge Funds Losing Money Over Failed China Deal

Barclays Wins Bid to Slash UK Investors’ $727 Million ‘Dark Pool’ Lawsuit

What Can We Learn From the Romans About Money?

Masayoshi Son Inflates the AI Bubble Even More

Arm CEO Sees AI Transforming the World Much Faster Than the Internet

Apple Gets Sell Rating as ‘Unrealistic’ Expectations Turn KeyBanc Bearish

Why Boeing Workers Rejected a New Contract: Retirement Benefits

Auto CEOs Aren’t Telling the Whole Story About Phasing Out Combustion Cars

Mercedes-Benz Earnings Slump on Tough Economic Backdrop, Fierce Competition

Elon Musk’s Dream of a Drive-In Movie Diner With EV Charging Is Taking Shape

Electrolux Shares Tumble After North America Weakness Weighs on Results

Sanofi Earnings Get Boost From Early Vaccine Sales

Tapestry $8.5 Billion Capri Deal Halted by Judge in FTC Win

The Influencer Bros Selling More Baseball Bats Than the Pros

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Morning News: October 24, 2024
Posted by Eddy Elfenbein on October 24th, 2024 at 7:04 am

Eurozone Activity Stagnates on Germany, France Weakness

Putin Warns of Middle East Conflagration and Debates Ukraine at BRICS

Brazil Reluctant to Pick Between US and China in Polarized World

The U.S. and IMF Disagree About China. That’s A Problem.

Trump Inflation Is Being Priced In by Traders

Bond Markets Fear the ‘Known Unknown’ of a GOP Sweep

The French Connection to Online Bets on Trump

Era of Big Price Hikes Is Over, Giving Comfort to the Fed

Rate Cuts to Accelerate US Banks’ Move to Higher-Yielding Investments

Bankers Do Anything It Takes to Grab a Slice of Rare Buyout Deal

Apple and Goldman Sachs Must Pay Nearly $90 Million in Credit-Card Inquiry

Russia Says It Can’t Build All the Vessels It Needs for Arctic Shipping Route

More Companies Ditch Junk Carbon Offsets but New Buyers Loom

Tether Asks Turkey to Consider Digital Token for Borate Minerals

Biden Administration Outlines Government ‘Guardrails’ for A.I. Tools

The White House Bet Big on Intel. Will It Backfire?

How Intel Got Left Behind in the A.I. Chip Boom

Boeing Workers Resoundingly Reject New Contract and Extend Strike

Why It’s Getting Harder to Fly to China

New York’s Air Traffic Has Still Been Messy, Even When Run Out of Philadelphia

Southwest Air Tops Profit Estimates as Cost Cuts Take Hold

Southwest Airlines Ends Feud With Activist Investor Elliott

Keurig to Buy Ghost Energy Drinks for Over $1 Billion

Unilever Underlying Sales Beat Forecasts as Shoppers Welcome Easing Price Hikes

Kroger and Walmart Deny ‘Surge Pricing’ After Adopting Digital Price Tags

TKO to Pay $3.25 Billion for Endeavor’s Bull Riding, Other Units

Gucci Has Problems. The Biggest May Be a Safe New Look

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Morning News: October 23, 2024
Posted by Eddy Elfenbein on October 23rd, 2024 at 7:05 am

Gold’s Record-Breaking Run Is Drawing Attention

Producing Lithium Is Slow and Dirty. Is There a Fix?

Hydrogen Startup Verdagy Opens California Plant at Risky Moment

Javier Milei Infuriates G-20 by Rejecting Call for Gender Equality

Despite Global Crises, Gas Prices Slide as U.S. Election Nears

European Officials Voice Concerns About US Shift From Free Trade

As Election Looms, Disinformation ‘Has Never Been Worse’

How the Media Can Escape Its Doom Loop of Distrust

Harris Backs $15 Minimum Wage in Fight With Trump Over Pay

Jamie Dimon Privately Supports Kamala Harris. He Just Won’t Say So.

Deutsche Bank’s Bad Debt Outlook Deteriorates for Second Time

Shares in Operator of Tokyo’s Subways Soar in First Day of Trading

The ‘Irresistible’ Real Estate Bet Gripping Investors

US Mortgage Activity Gauges Drop to Lowest Levels Since August

Arm to Scrap Qualcomm Chip Design License in Feud Escalation

What’s Going on With AI Model Names?

Boeing’s New C.E.O. Calls for ‘Culture Change’ as Strike Vote Looms

Boeing CEO Says Planemaker’s Problems Will Take Time to Fix

American Airlines Fined $50 Million for Treatment of Passengers Using Wheelchairs

Frontier, Spirit Airlines Revive Merger Talks

Cracked Skull, Fractured Bones Show Danger for Rivian Factory’s Workers

F.D.A. Names a New Chief of Medical Devices

E. Coli Outbreak Linked to McDonald’s Quarter Pounders

Coca-Cola Raises Outlook, Continued Price Hikes Lift Sales

Starbucks CEO Pours a Cold Brew

Lysol Maker Reckitt Benckiser Beats Views as Easing Prices Draw Shoppers

Cash-Strapped Colleges Are Selling Their Prized Art and Mansions

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CWS Market Review – October 22, 2024
Posted by Eddy Elfenbein on October 22nd, 2024 at 2:19 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Q2 Earnings Are Looking Good (Mostly)

Q2 earnings season is in full swing. This week, 112 members of the S&P 500 and seven of the 30 stocks in the Dow are due to report earnings. The early numbers look mostly good. The good news is that more companies are beating earnings, but they’re doing it by smaller amounts.

This looks to be the fifth quarter in a row of earnings growth, but it will be the slowest growth in the last year.

The stock market doesn’t seem terribly concerned. The S&P 500 is down a bit since its last all-time high close reached on Friday.

The stock market has had a very impressive run since the last low reached in early August. The index is currently more than 3% above its 50-day moving average.

So far, 14% of the companies in the S&P 500 have reported earnings results. Of those, 79% have beaten expectations. That’s a little above the usual rate. (Yes, on Wall Street, you’re expected to beat expectations.)

Companies are reporting results that are 6.1% above expectations. That’s lower than normal. Over the last five years, companies have topped results by 8.5%.

Digging into the details, we’ve seen decent results from many large banks, but the weak spot is that we’ve seen lower guidance from industrials.

Some of these numbers for expectations have been helped by analysts cutting back on their forecasts. Earnings growth is now tracking at 3.4%, but that’s down from 4.3% at the end of Q3.

Of the companies that have reported so far, 64% have beaten on revenue which is a little below the five-year average of 69%. On average, companies are beating on revenue by 1.1%. That’s below the five-year average of 2%.

If 4.7% is the actual revenue growth rate for the quarter, it will mark the 16th quarter in a row of positive revenue growth.

The “Magnificent 7” stocks are expected to report earnings growth of 18.1% for Q3. If you took those seven out of the S&P 500, then the other 493 stocks are expected to report earnings growth of 0.1%.

For this calendar year, analysts expect earnings growth of 9.4%. They see that ramping up to 15.1% for next year. I expect to see both numbers gradually lowered. The forward price/earnings ratio is currently 21.9 which is elevated but not extreme.

Moody’s Posts a Big Earnings Beat

Seven of our Buy List stocks are due to report this week. We already had three reports out earlier today. I’ll go over all of them in our premium issue, but I wanted to highlight one of them for today’s issue.

For Q3, Moody’s (MCO) said that its adjusted earnings rose 32% to $3.21 per share. Wall Street had been expecting $2.86 per share. The CFO said this was a “fantastic” quarter for Moody’s and I agree.

Moody’s also raised its full year guidance to a range of $11.90 to $12.10 per share. The previous range was $11 to $11.40 per share. Since Moody’s has already made $9.85 per share so far this year, the new guidance implies Q4 earnings of $2.05 to $2.25 per share. Wall Street had been expecting $2.18 per share.

CEO Rob Fauber said:

“Moody’s record-breaking revenue performance in the third quarter is a testament to our unwavering status as the Agency of Choice for our customers and our actions to prime the business for durable future growth. In parallel, we delivered strong recurring revenue growth in our analytics business, driven by investments and innovation that enhance our offerings and empower our customers with the insights necessary to navigate the complexities of an increasingly dynamic risk environment.”

The stock fell after the earnings report, but I’m not at all concerned. It’s not unusual for our stocks to drop after their earnings reports. The company continues to do very well. Over the last two years, shares of Moody’s have doubled for us, and that includes some big drops.

This week will be dominated by earnings news. There’s not much going on as far as economic reports. Several Fed officials will be speaking but that’s usually not so important for economic news.

Next week, however, will see some important news. The October jobs report will be out next Friday, November 1. If you recall, the jobs numbers for September were quite good. The U.S. economy created 254,000 net new jobs last month.

The other report to look out for is the first report on Q3 GDP. Of course, this report will be revised many times, but next Wednesday we’ll see the government’s first stab at it. Growth for Q2 was 3.0%. The Atlanta FED’s GDPNow model sees Q3 growth of 3.4%. That would be very impressive.

If the economy is doing better than expected, then we can see possible evidence in other places. For example, the yield on the 10-year Treasury has slowly crept higher. On October 1, the 10-year yield was 3.74%. By Monday’s close, it had risen by 45 basis points.

Tied to the higher bond yields is that growth stocks have been outperforming value stocks over the last few weeks. It’s not by a huge amount but the value/growth divide often mimics what Treasury bonds are doing.

Stock Focus: MarketAxess

Lately, I’ve been watching shares of MarketAxess (MKTX). This is a good example of a company that’s fairly large but not well known outside the world of financial data.

The company runs an electronic trading platform for the institutional credit markets. In other words, this is how the big boys trade bonds, and MarketAxess dominates the field. In electronic trading, 85% of bonds are traded on MKTX’s platform, as are 84% of junk bonds. That works out to 20% of all corporate bond trading in the U.S.

The company was started by Richard McVey in 2000, and he served as CEO until last year. The stock IPO’d in 2004 at $11 per share and it was a huge success. By 2020, MKTX got to $600 per share. Then it started to struggle. Earlier this year, the stock dropped below $200 per share.

Is there a potential bargain here? Possibly. MKTX dominates its business, and the company continues to be profitable, although it’s not seeing much growth in recent years. The business was impacted last year by lower corporate bond issuance.

The stock is suddenly popular again. In August, MKTX reported Q2 earnings of $1.72 per share. That was a four-cent beat. Last week, the stock briefly broke above $300 per share. That’s a huge turnaround for a short period of time.

MarketAxess is due to report earnings again on November 6. Wall Street is looking for earnings of $1.85 per share. The stock is hardly cheap. It’s currently going for about 35 times next year’s earnings. At a lower price, it could be worth buying.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: October 22, 2024
Posted by Eddy Elfenbein on October 22nd, 2024 at 7:06 am

How a Vicious Poverty Cycle Is Plaguing 12 Million People in the Amazon

Modi Touts Closer Russia Ties at BRICS Summit Amid US Annoyance

Why Turkey, a NATO Member, Wants to Join BRICS

Countries Wary of Picking Geopolitical Sides Now Have a Name

World’s Hottest Market Could Be Magnet for Foreign Issuers

ASML Chief Sees US Pressure Building for More China Restrictions

Yellen Rebukes Chinese Lending Practices in Call for Debt Relief

Bonds Slump Globally as Traders Rethink Fed’s Rate Cut Path

Helter-Skelter in Bonds as Markets Doubt Fed Cuts

Emerging-Market Debt Joins Global Selloff on Slower US Easing Bets

Private Markets Are Reserved for the Rich. Should a Test Let You in?

Simple Economic Explanations Keep Breaking Down. Here’s Why.

America’s Most Famous Inflation Gauge Is Easing — But Some of Your Biggest Expenses Are Left Out

S&P 500 Exposure Hits Levels That Preceded 10% Slide, Citi Says

The Era of Outsized Market Rallies Could Be Over

The Case Against Goldman’s Post-Election Stock Bounce

HSBC Appoints Pam Kaur as First Female CEO in Bank’s History

Elon Musk’s $1 Million Giveaways Test the Bounds of Election Law

Retailers Grasp for Holiday Magic Amid Raucous U.S. Elections and Shorter Season

How Kyiv Became a Leader in Digital Services Amid Wartime Strain

Japan’s Biggest Electronics Show Loses Its Consumer Charm

Form Energy’s Utility-Sized Battery Can Run for Four Days

SAP Gains $26 Billion in Market Value, Surging Past ASML

The Surprisingly Lucrative Business of Recycled E-Waste

The Quest to Save the ‘King’ of Japanese Rice From Rising Temperatures

America Is Primed for a Home-Renovation Resurgence

Walmart to Offer Prescription Delivery, Challenging Amazon

The CEO-Obsessed Succession Pro Leading Disney’s Search for Iger’s Replacement

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Morning News: October 21, 2024
Posted by Eddy Elfenbein on October 21st, 2024 at 7:05 am

What to Know About the BRICS Group of Countries Rivaling the G-7

Chinese Banks Slash Lending Rates to Bolster Ailing Economy

Why Chinese Are Rushing Into a ‘Casino’ Stock Market

Israel Hits Hezbollah Finances as US Eyes Diplomacy in Lebanon

As Poor Nations’ Default Wave Peaks, Cash Shortage Could Take Its Place

JPMorgan Figures Show Surging Dollar Demand as US Election Nears

Trump’s Tariffs Appeal to Voters. Don’t Be Fooled.

Elon Musk Is Giving Away $1 Million a Day in Bid to be the ‘Secretary of Cost-Cutting’

U.S. Agencies Fund, and Fight With, Elon Musk. A Trump Presidency Could Give Him Power Over Them.

Wall Street Braces for a Lost Decade — But Not Yet

So You Have Decided to Buy Bonds. Here Are Six Charts Showing Your Options.

The Climate Short: Hedge Funds Pile Up Huge Bets Against Green Future

Coming in 2025: Even More Restraint on the Oilfield

The Energy Transition Is Powered By — Wait for It — Coal

Threat of Chinese Overcapacity Looms Over Memory Chips

TSMC’s Dominance Is Starting to Worry More Than Just Rivals

MetLife Said to Be in Talks to Buy Tycoon Li’s PineBridge Assets Outside of China

UBS sells its 50% stake in Swisscard to American Express

Crises at Boeing and Intel Are a National Emergency

Apple CEO Tim Cook’s Other Job: Helping Nike Turn Things Around

Meet the Florida Billionaire Who Wants to Be a Newspaper Baron

Behind Many Powerful Women on Wall Street: A Doting ‘Househusband’

Eight Bosses Confess Their Pop-Culture Guilty Pleasures

Empty Tables and Rising Costs Push More Restaurants Into Bankruptcy

CITIC to sell stake in McDonald’s China, HK operations for $430.3 Million

Watch Parties, Clinics and Guinness: How the N.F.L. Builds a Fan Base in Ireland

Halloween’s Mutation: From Humble Holiday to Retail Monstrosity

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Morning News: October 18, 2024
Posted by Eddy Elfenbein on October 18th, 2024 at 7:02 am

The Billionaire Property Queen on Death Row in Vietnam

Japan Inflation Slows in September

China’s Lackluster Growth Continues, Signaling Why Beijing Acted on Economy

How China’s Planning Its Biggest Push in Years to Cut Hidden Debt

China Moves to Support Markets After Data Showing Economy Slowed

European Luxury Stocks Rise After Chinese Economic Data Fuels Recovery Hopes

Some ECB Governors Wanted to Drop Pledge to Keep Policy Tight, Sources Say

Shoppers Spend More Freely Than Expected, Sign of Solid U.S. Economy

How Is the Economy for Black Voters? A Complex Question Takes Center Stage.

Want to Understand the U.S. Economy? Watch ‘Shark Tank.’

How Trump Would Weaponize the Justice Department

Headhunter Said to Use Fake Identities to Dupe Wall Street Traders

AmEx Quarterly Profit Exceeds Expectations on Cost Control

A Reality Check for the AI-Driven Energy Rush

Microsoft and OpenAI’s Close Partnership Shows Signs of Fraying

Amazon Pitches Merchants on Artificial Intelligence for Ads

Northvolt Closes in on $300 Million Funding Deal, Source Says

Japan Hopes Electric Cars Were Just a Bad Dream

Robotaxi Flop Leaves Tesla’s Lofty Stock Multiple Looking Shaky

Tesla ‘Full Self-Driving’ Faces Defect Probe After Fatality

P&G Earnings: Sales Slip but It Holds the Line on Prices

At the Grocery Store, Blinded by the Light of the ‘Health Halo’

Why This Pharma Boss Isn’t Chasing the Obesity Hype

CVS Ousts CEO Karen Lynch, Names Caremark Head as New Chief

What It Really Means When a 1-in-1,000-Year Rainstorm Hits

Netflix Shares Jump 7% in Premarket After Third-Quarter Earnings Beat

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Morning News: October 17, 2024
Posted by Eddy Elfenbein on October 17th, 2024 at 7:05 am

Japan Exports Fell More Than Expected in September

Eurozone Trade Surplus Declines as Exports to China Fall

China Considering Higher Tariffs on Car Imports

China’s $562 Billion Loan Push for Unfinished Homes Disappoints

A Second Trump Presidency Stands to Radically Remake World Trade

Yellen to Warn Sweeping Tariffs Would Ignite Inflation

Fed Stuck on Six-Week Data Cycle When Investors Want a Forecast

Blackstone’s Credit Arm Is Now Top Business, Fueling Profits

Tapped-Out Consumers Are Ditching Fast Shipping to Save Money

Easing Food Prices Aren’t Enough for Pinched Shoppers, Nestlé Says

Florida Homeowners Fear Soaring Insurance Cost After Hurricanes

The Math Says It’s Getting Harder to Break Into the American Middle Class

Boeing’s Strike Stalemate Leaves Mediators Hunting For Consensus

TSMC Hikes Revenue Outlook in Show of Confidence in AI Boom

Nokia Tempers Earnings Expectations After Sales Fail to Recover

BYD Is Winning the Global Race to Make Cheaper EVs

Musk’s Empire Risks Being Targeted by EU for Potential X Fines

Water Dispute Before Supreme Court Gives Rise to Unusual Alliances

Hungry for Energy, Amazon, Google and Microsoft Turn to Nuclear Power

Biofuel Boom Still Leaves US Soybean Glut

Financial Innovation for Nature Sparks Hope, Greenwashing Fears

Netflix’s 340% Rally Seen Sputtering With Sales Growth Past Peak

US ‘Click to Cancel’ Rule to Ban Subscription Traps

Disney Introduces New US Park Perk: Skip the Long Lines for $400

Jeweler Becomes Billionaire After 192-Year-Old Indian Firm’s IPO

Ski-Doo Maker BRP Looks to Shed Struggling Marine Brands

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Morning News: October 16, 2024
Posted by Eddy Elfenbein on October 16th, 2024 at 7:06 am

End of the Oil Age Beckons for Top Forecaster

Why Milei Can’t Lift Argentina’s Currency Controls Any Time Soon

Why Europe Is Unprepared to Defend Itself

What 66 Economists Say About Where the Economy Is Headed, in Charts

Trump Defends Tariff Plan While Pressing for More Fed Influence

The True Cost of Trump’s Tariff Scheme

Can Remote Workers Reverse Brain Drain?

US Mortgage Rates Climb to 6.52%, Highest Since Early August

Savers Bid a Sad Farewell to Higher Yields

Why Wall Street Is Warming to the Tokenization of Assets

Morgan Stanley’s Profit Beats Estimates on Investment Banking Windfall

U.S. Bancorp Lending Income Beat Estimates in Third Quarter

Stock Futures Flat Amid Morgan Stanley Earnings, Decline in Global Chip Stocks

Three Big Takeaways From Bank Earnings

Jamie Dimon Charts JPMorgan Expansion Plan Into Africa

Singapore Entertainment Firm Neon Is Said to Pick Banks for IPO

China’s Wild Stock Market Swings Hurt a $21 Trillion Bull Case

Global Chip Stocks Erase $420 Billion After ASML Sales Warning

California’s ‘Surgical’ Approach to Regulating AI Is Working

Hyundai’s Tarnished Alabama Plant Is Now Driving Its US Growth

Musk’s SpaceX Sues California Regulator Over Rocket Launches

Neuralink’s Top Surgeon Is the Even-Handed Counterbalance to Musk

CVS and Walgreens Are Ailing. Here’s Why

Holiday Sales Growth Expected to Normalize in an Abnormal Year

Luxury’s Last Growth Engine Has Stalled

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CWS Market Review – October 15, 2024
Posted by Eddy Elfenbein on October 15th, 2024 at 5:24 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The Stock Market Rally Turns Two Years Old

The bond market was closed on Monday in honor of Columbus Day, but the stock market was open, and it was a good day. The S&P 500 rallied to another all-time high. This was our 46th new high of this year. The market gave back some of those gains today, but we’re very close to more new highs.

Interestingly, we just passed the two-year anniversary of the market’s last major low. That came on October 11, 2022 when the S&P 500 closed at 3,577.03. From there to Monday’s close, the S&P 500 has gained more than 63%, not including dividends.

It’s been a remarkable rally, but what’s impressed me about the last two years, on top of the impressive gain, is how steady it’s been. To be sure, there have been bumps and turns like last August, but for the most part, this has been a smooth and steady 63% run.

I was also pleased to see several of our Buy List stocks hit new highs today like Broadridge Financial Solutions (BR), FICO (FICO), Fiserv (FI), Intercontinental Exchange (ICE) and Science Applications International (SAIC).

We’re in the early stages of earnings season and so far, the results look pretty good. According to Bloomberg, “analysts expect S&P 500 firms to report a 4.2% increase in third-quarter earnings versus a year earlier, down from a 7% forecast in mid-July.”

It’s early but so far, 30 companies in the S&P 500 have reported results. Earnings are coming in at an average of 5% better than estimates. At this time last quarter, earnings were running 3% higher than expected.

As we know, Wall Street’s usual game is to be as downbeat as possible going into earnings season thereby getting Wall Street analysts to lower expectations. Then, when earnings day comes, they announce a big earnings beat and hopefully, the stock will rally.

That’s pretty much what happened last week when the first earnings reports came out. Usually, the big banks are the first to report and that sets the tone for earnings season.

On Friday, JPMorgan (JPM) reported Q3 earnings of $4.37 per share. That easily topped the consensus of $4.01 per share. JPM is the biggest boy of a lot of big boys on Wall Street, and its results are very influential. It’s a Dow component and one of the largest companies by market value on Wall Street. If JPM is doing well, that’s probably a good sign for all banks.

JPM is particularly good at steering Wall Street’s outlook. Two months ago, the Street was expecting JPM to make $17.05 per share for next year. That’s now down to $16.73 per share.

JPM had a very good quarter for Q3, and lower rates will serve them well. More good news is that JPM said its net interest income will be about $92.5 billion this year. That’s up from its previous guidance of $91 billion. About geopolitical risks, CEO Jamie Dimon said, “Recent events show that conditions are treacherous and getting worse.”

Also on Friday, though not nearly as big, Wells Fargo (WFC) said it had particularly good results. For Q3, Wells made $1.52 per share which was 24 cents better than expected. The stock got a nice 5.6% pop on Friday, and the shares have continued to rally since then. Until a month ago, Wells looked like it was one of the weaker banks.

Thanks to the good earnings reports from many Wall Street banks, financial stocks have been doing well of late. Here’s the S&P 500 Financial Index compared with the S&P 500.

The financials hit a new high yesterday, and 36% of its members made new 52-week highs.

We had more good reports today. This morning, Goldman Sachs (GS) released a very good earnings report. For Q3, the bank’s profits increased 45% to $8.40 per share. That was above Wall Street’s consensus for $6.89 per share. Quarterly revenue was $12.70 billion. Wall Street has been looking for $11.8 billion.

Lower rates will be good for Goldman, as well. Last quarter, Goldman’s investment banking revenue rose 20% to $1.87 billion. Equities trading was up 18% to $3.5 billion.

Also on Tuesday, Bank of America (BAC) said it made 81 cents per share for its Q3. That was a four-cent beat. Compared with last year, the bank’s net income was down 12%. Revenue rose a bit to $25.49 billion.

In addition to traditional banking activity, BAC did very well last quarter with Wall Street operations like trading. BAC’s net interest income fell 2.9% to $14.1 billion.

In BlackRock’s (BLK) earnings report, the company said that its assets under management rose to $11.5 trillion. That’s staggering. In Q3, BLK had inflows of $221 billion. For the quarter, BlackRock made $10.90 per share which beat expectations by 92 cents per share.

Citigroup (C) has been trying to turn itself around, and the early results look favorable. The bank’s traders had their best Q3 performance “in at least a decade.” Revenue for its markets division rose a tiny bit to $4.82 billion. Trading revenue rose by 32%.

Citi’s credit card business is dragging along, but its other businesses are helping to make up for the weakness. CEO Jane Fraser is trying to engineer a major about-face for the Wall Street giant. While Citi is looking better, it still has a way to go to get back to full health.

Last quarter, the bank’s fees from investment banking increased 44%. Citi’s EPS fell to $1.51. Bloomberg noted that the “quarter included a provision of $2.7 billion, which was driven by the higher losses in the company’s card business.”

After today, we’ll see more of the non-banks report earnings. Wall Street is mostly optimistic.

Steer Clear of Boeing

I mentioned the turnaround efforts at Citigroup which leads me to an important lesson with investing. One kind of stock I generally steer clear of is the turnaround play. These are companies that have fallen on hard times. With the poor performance, the companies now have the latitude to make dramatic changes to right the ship.

However, in my experience, the problems usually run very deep, and the proposed changes are largely cosmetic. Turnaround stocks rarely turn.

The problem for investors is that the stocks can often appear to be value stocks. The prices are low relative to the company’s recent performance. The problem is that these ratios are backward looking, and it’s the future that’s worried the market.

A good recent example is Boeing (BA). The airplane maker has been in a mess recently. Today the company said it may turn to Wall Street to raise a heap of cash in stock or debt. Boeing said it could raise as much as $25 billion. That could stem some of the short-term financial issues, but Boeing is far from being a strong company.

In a separate filing, Boeing said it reached a $10 billion credit agreement with banks. Some of the credit agencies have warned Boeing that its credit may be downgraded. That would be very costly to Boeing.

Last week, CEO Kelly Ortberg said Boeing could lay off 17,000 workers which is about 10% of its workforce. On top of that, Boeing faces a strike from 33,000 of its machinists. S&P said the strike is costing Boeing more than $1 billion a month.

In January, a Boeing 737 Max 9 suffered “uncontrolled decompression.” A door plug flew off the airplane. Fortunately, no one was hurt but it was not favorable for Boeing. The FAA told Boeing that it’s under investigation.

Boeing’s stock is currently going for 1.24 times sales. In normal times, that could be considered cheap, but not now. Boeing has lots of problems that need to be addressed. I hope the company can turn itself around, but I caution investors that any value in Boeing may be a mirage.

This week will will be dominated by earnings news. Later this week, our first Buy List stock will report its earnings. I’m expecting more good results from our stocks.

I’ll be paying attention to the actual results, but I also want to hear what our stocks have to say about guidance. Typically, our stocks start out the year conservative with guidance and then will gradually raise guidance as the year goes on.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy