Coffee With Greta: Goldman Crushes Earnings Expectations

DJIA Futures: +261 (+0.8%)

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NASDAQ Futures: +110 (+0.9%)

Good morning friends!

Futures are higher following mixed results from 2 big banks.

Let’s get right to it!

Goldman Sachs Crushes Q2 Expectations

Goldman Sachs (GS) shares are up 3.3% ahead of the open after crushing Q2 expectations. 

The investment bank reported earnings of $7.73 per share on $11.86 billion in revenue. 

That beat analysts’ expectations for EPS of $6.58 on $10.86 billion in revenue.

Profits were still down 48% year-over-year and revenue fell 23%. 

Goldman said its fixed-income operations generated $3.61 billion in revenue vs $2.89 billion expected, due to “significantly higher” trading activity in interest rates, commodities, and currencies. 

Equities trading revenue rose 11% to $2.86 billion vs $2.68 billion expect3ed. 

The CEO said, “We delivered solid results in the second quarter as clients turned to us for our expertise and execution in these challenging markets.”

Bank of America Posts Mixed Q2 Results

Bank of America (BAC) shares are down 0.4% in premarket trade after reporting mixed second-quarter results. 

The bank reported earnings of $0.73 per share vs $0.75 per share expected, while $22.79 billion in revenue topped estimates for $22.67 billion.

Profit dropped 32% annually and revenue rose 5.6%. 

Net interest income surged 22% to $12.4 billion as interest rates rose.

The CEO said, “Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment.”

Non-interest expenses rose 2% due to about $425 million in regulatory costs. 

Investment banking fees plunged 47% to $1.1 billion vs $1.24 billion expected. 

Fixed-income trading revenue rose 19% to $2.3 billion while equities trading revenue rose 2% to $1.7 billion, both in line with expectations. 

Alphabet Stock Split Takes Effect

Alphabet (GOOGL) shares are up about 0.4% ahead of the open after the company’s 20-for-1 stock split went into effect.

The stock is trading around $112.50 per share after closing at $2.255.34 on Friday. 

Alphabet announced the split in February, in an effort to make its shares more accessible to more traders.

Yield Curve Remains Inverted

Treasury yields are higher this morning as a key part of the yield curve is still inverted. 

The 2-year yield is up 5 basis points to 3.18% while the 10-year yield is up 8 basis points to just under 3%.

The market is now leaning toward a 75 basis point rate hike at next week’s Fed meeting. 

CME Group’s FedWatch Tool shows 66.8% of traders expect a 0.75% hike while 33.2% expect a 1% move.

Oil Prices Jumps On Tight Supply

Oil prices are higher as tight supply concerns offset worries about a recession and Covid lockdowns in China. 

West Texas Intermediate crude futures are up 2.2% to just under $100 bbl while Brent crude futures are up 2.6% to just under $104 bbl. 

President Biden’s trip to Saudi Arabia last week failed to yield any pledge from the kingdom to boost the global oil supply. 

Gas Prices Fall Further

U.S. gas prices fell for the 33rd day in a row today. 

AAA shows the national average for regular gas fell more than 1 cent overnight to $4.521/gal.

The national average for diesel also fell about 1 cent overnight to $5.535/gal.

The continued decline in prices comes amid lower demand. 

The Energy Information Administration reported gas demand fell to 8.06 million barrels per day last week while gasoline inventories rose sharply.

In Case You Missed It

• Elon Musk and Twitter (TWTR) are battling over the timeline for a trial. Twitter asked for the trial to be held in mid-September because the original merger agreement said both parties could exit free of charge if it weren’t complete by October 24. But Musk’s lawyers asked for it not to begin until February 2023, claiming a speedy trial would limit discovery and expert analysis. Musk’s team said, “The only relevant date is the outside date for the debt financing, April 25, 2023.” The judge will determine the trial date at a hearing on Tuesday.