Well this is the earning season, the first earning report is coming out this Friday. I’m going to be paying close attention to Banks. As I’ve sold all of my share of BAC back in December 2019 to buy my commercial property. Since then, BAC has double in price. Don’t cry for me, Argentina! As that moved has increased my passive/semipassive income from $6K/yr to $50K per year. I couldn’t tell you how much my property is worth right now, but for sure, I’ve missed out having BAC worthing $400K right now had I kept all of my shares.
Anyhow, the macro-economy talks, and noise lately regarding tarrif, and trading war with China, Syrian government bio-chemical weapons, North Korean “considering” de-nucleotide program, Brexit (is it a still a thing, I guess it is), Russia additional sanction, Cuba Sonic attack on US embassy, etc. All of this has cause the market to move up and down. Swinging 1000 points per day is no longer a “record”. But the trend is the market is on the down trend. If you had a dollar invested in the market 1/1/18, right now the balance is $0.90. Yes, the market is down 10%.
The consequences of this is investment banks like GS, JPM, MS, BAC, WFC … ‘s earnings should decrease. At the beginning of the year, people expected Trump’s tax euphoria will continue until he dropped the tariff bomb shell. Although, I don’t think it’s really that bad for the US’s economy, but short tern pain for the farming and steel (company who relying on steel imports) are greatly affected. But largely it might leads to good growth in the US. ***What people did during the Recession was, they innovate. The Americans today are more self-efficient than the American prior to 2009. People are appreciating more handmade crafts. I’m talking about people are building their table, houses, making RVs from trucks, van, school buses. Urban farmings are becoming a *Thing* now. And Yes, the pain for Tariff will raise the price of China goods, and somebody will figure out a way to make products here in the US cheaper! and Yes, AI and robotic techno will make that happen. Tariff might facilitate that sooner. President of Samsung once says “Innovate or Die”, we should apply the same for all of our companies to survive.
Instead of having the middle class in China, they have the exponential growth on millionaires and billionaires, that kind of wealth transfer might get back to the US once we’ve start innovating again in the manufacturing period. That’s only if Trump following through, and corporate’s welfare is continuing. Pruitt still in the EPA undoing the progress of the Obama’s era on environmental regulations. Some of the regulation might be … “good” such as: Higher MPG for Foreign Cars, and take off the requirement for US’s produce cars. LOL 🙂 That would essentially lower the price on US’s car, improve production count in the US and create more job???!! hahah… I’m not sure. But it sounds good on paper.
Okay, back to the BANKS…
So trading has been bad. 10% bad. Earnings might not meet expectation for the first time in 7 years for JPM and GS. I’ve gotten some cash, the month is still young, so I haven’t spent it all on taxes yet. I’ll jump on a big 5-10% should bank’s stocks fall that much. hhaha
Otherwise, I’m looking to add Visa, MA, DFS, D, GE, F, GM … in the very near future.
Are you fully invested, or you’re still have some ammo? Please let me know what you think about the up and coming earning season.
Hi Vivianne
Im highly expecting this friday banks earnings as well… interestingly though I am expecting them to be doing well instead with lower provision of O&G and higher NIM.
The markets have been volatile lately swinging big up and downs. Hopefully it will gyrate back to earnings given now is another season of reporting.
You’re right.
However, I look at the top share holder for AAPL and FB they both gotten beaten down from $200 to $160. MS owns 1% of each company. Yahoo only lists the top 10 shareholders, but I’m thinking GS, JPM are not far behind, probably holding at least 0.95% of the whole company.
That’s just the top FANG stock, but they’re all kind of gotten beaten by 10%. Hihi, as long term investors, I guess it doesn’t matter what the entry point, just hold it so in the end buying GS at 225$ or $230 doesn’t matter all that much in dividend payout. 🙂
The cash cow this round with the banks is the rising LIBOR. Some estimates have banks getting a windfall of $1B or more through year-end if the rise continues.
Headlines bank stock tumbled https://www.cnbc.com/2018/04/13/us-stock-futures-dow-data-earnings-tech-and-politics-on-the-agenda.html
Anyhow, it’s not related to earnings, banks have been using stock buy back to increase earnings. Wfc, back haven’t been able to increase revenues. Wfc, the only bank that I hold right now with 10 shares 🙂 has been declining earnings by 24% if we priced in the stock buy back some since 2018.