Equities report: The earnings season has begun

US stock markets appear to be moving in upwards direction, after the US Core Retail sales rates were released yesterday. The lower than expected rates, seem to have weakened the expectations continued high interest rates for a prolonged period, thus it may appear that the Fed’s hand may be forced sooner rather than later. As such, it could be that the S&P 500, NASDAQ 100 and the DOW JONES 30 are all moving in upwards fashion, in anticipating of easing inflation and interest rates in the economy. Furthermore, we note that the earnings season has begun with the earnings reports of JP Morgan, Wells Fargo and City,  last Friday. With  JP Morgan and Wells Fargo exceeding earnings expectations, thus appearing to be leading the equities markets higher. We note for the remainder of the week that we are anticipating earnings reports from IBM (#IBM), Tesla (#TSLA), Netflix (#NFLX) today, Johnson&Johnson(#JNJ), Travelers Companies (#TRV) on Thursday and American Express (#AXP) on Friday.

JPMorgan (#JPM) emerges as the victory following First Republic deal

JPMorgan released its earnings report last Friday for Q2, which stunned investors as it greatly exceeded analysts expectations for its earnings per share and revenue. Market analysts had anticipated an EPS of about 3.76 and the firm’s revenue to come in at 38.4B, yet the company reported an EPS of 4.75 and revenue at 41.31B. This surprise came in after the controversial takeover of First Republic, which appears to have only bolstered the goliaths standing as a Global Systematically Import Bank or G-SIB for short. The CEO Jamie Dimon, commented on the financial results stating that “Almost all of our lines of business saw continued growth in the quarter”, implying that the banks good fortune may continue well into the later stages of the year.

Tesla (#TSLA) board members return $735 million to the company

According to multiple news outlets, Tesla’s directors have agreed to return more than $700 million back into the company after accusations that they had overpaid themselves on the backs of shareholders, marking the return of cash as one of the largest corporate settlements in history according to Reuters. Furthermore, according to Bloomberg, part of the direct-compensation settlement includes a clause that “Tesla board members must hand over stock or cash and agree to forgo compensation for their roles as directors for 2021 through this year”. Despite the negative publicity, the agreement and injection of cash into the company could have an adverse effect and potentially prop up the company’s share price in the long run, thus potentially benefiting investors in the long run.

Goldman Sachs (#GS) earnings release paints a worrying picture

Goldman Sachs (#GS) , reported a greater than expected drop in Q2 earnings per share, with the estimated figure being $3.18 per share whilst the actual figure came in at $3.08 per share. The difference may not seem significant at first sight, yet compared to the previous quarter, where the earnings per share stood at $8.79, Goldman Sachs has reported now a 65% decline, with Reuters claiming that the bank took a write-down of $504 million in regards to its GreenSky business. The worrying financial earnings by a bank of this size could spell trouble for the banking sector in the long run, should they fail to bounce back from the disappointing earnings release. However, not all is bad, as the bank managed to slightly beat analyst’s expectations on its revenue by reporting $10.9B compared to expectations of $10.66B, yet is still lower than last quarters revenue which came in at $12.22B.

기술적 분석

#JPM Daily Chart

Support: 148.50 (S1), 139.00 (S2), 130.40 (S3)

Resistance: 155.05 (R1), 162.75 (R2), 169.25 (R3)

#JPM appears to be moving in an upwards trajectory following the release of its earnings report last Friday. We maintain a bullish bias for the stock and supporting our case is the RSI indicator below our 4-Hour chart which currently  registers a figure above 70, implying a strong bullish market sentiment, in addition to the upwards moving channel formed on the 29  of June. For our bullish outlook to continue, we would like to see a clear break above the 155.05 (R1) resistance level, with the next possible target for the bulls being the 162.75 (R2) resistance ceiling. On the other hand, for a bearish outlook we would like to see a clear break below the 148.50 (S1) level if not also the 139.00 (S2) support line, with the next possible target for the bears being the 169.25 (S3) support base.

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