Dow dropped 376, but advancers over decliners 5-4 & NAZ was off 34. The MLP index stayed in the 229s & the REIT index was up 1+ to the 395s. Junk bond funds fluctuated & Treasuries were little changed (more below). Oil rose to go over 80 & gold retreated 8 to 1813 following recent strength.
AMJ (Alerian MLP index tracking fund)
Goldman Sachs (GS), a Dow stock,posted its largest earnings miss in a decade as revenue fell &
expenses & loan loss provisions came in higher than expected. Profit plunged 66% from a year earlier to $1.33B (EPS of $3.32), about 39% below the estimate. That made
for the largest EPS miss since 2011. Revenue held up better, at $10.6B, down 16% from a year earlier & just below the estimate. “Widely
expected to be awful, Goldman Sachs’ Q4 results were even more
miserable than anticipated,” Octavio Marenzi, CEO of Wall Street
consultancy Opimas, said. “Revenues were largely in line
with forecasts, but earnings took a big hit. The real problem lies in
the fact that operating expenses shot up 11%, while revenues tumbled.” More cost-cutting & layoffs could be ahead because of that, Marenzi added. Operating expenses jumped 11% from a year earlier, to $8.1B, due to higher compensation, benefits & transaction-based
fees, among other reasons. That is about $800M more than expected. Analysts have flagged concerns that wage inflation would hit banks' results in Q4. Another
reason results disappointed, GS posted a $972M provision
for credit losses in the qtr, compared with $344M a year
earlier, as the bank set aside more funds for potential losses in credit
card & point-of-sale loan portfolios. That is 50% more than had expected. The bank is seeing “early signs of
consumer credit deterioration” as the economy slows and more borrowers
are at risk of falling behind on payments, CFO Denis Coleman said. The stock sank 26 (7%).
If you would like to learn more about GS, click on this link:
club.ino.com/trend/analysis/stock/GS_aid=CD3289&a_bid=6ae5b6f7
Goldman Sachs posts its worst earnings miss in a decade as revenue falls while expenses rise
United Arab Emirates Minister of Economy HE Abdullah bin Touq Al Marri
says leaders at the World Economic Forum in Davos were focused on
solutions to "take more hits," like with the pandemic, inflation &
possible recession. Many chief economists offered somber predictions about whether the global economy would fall into a recession in 2023, according to a World Economic Forum (WEF) survey. In the WEF’s Chief Economists Outlook survey,
63% of chief economists polled indicated they had expectations of the
global economy experiencing a recession this year. Of that figure, 45%
said one was "somewhat likely" & 18% said "extremely likely." The share of chief economists putting the probability of a global recession at "extremely likely" has more than doubled compared to those who thought so in Sep. 32% said one was "extremely" or "somewhat" unlikely. Outlooks for economic growth varied by region. The chief economists were most pessimistic about Europe, with 68%
predicting "very weak" growth & 32% saying "weak." For the US, 82%
forecasted "weak" growth while 9% said "very weak" & "moderate,"
respectively. The 2 regions of South
Asia & Middle East & North Africa (MENA) saw the most positive
expectations for economic growth. About 70% expected
moderate or strong growth in the MENA region while 85% said that about
South Asia. The Chief Economists Outlook survey also asked chief economists to weigh in on how inflation would be for various regions. More
than ¾ said they expected moderate inflation in the US
in 2023 while 24% said it would be high. In Europe, 43% predicted
moderate & 57% forecasted high inflation.
Global recession likely, say 63% of chief economists in WEF survey
Treasury yields rose as traders looked to remarks from Federal Reserve speakers that could provide hints about the central bank’s policy plans & awaited key economic data. The yield on the benchmark 10-year Treasury was up more than 6 basis points at 3.579% & the yield on the 30-year bond rose the same amount to trade at 3.691%. The 2-year Treasury, meanwhile, added 2 basis points & was trading at around 4.262%. Yields & prices move in opposite directions & one basis point equals 0.01%. Uncertainty about whether the central bank will increase rates by 25 or 50 basis points at its next meeting Feb. 1 has spread among traders in recent weeks. Many are concerned that the pace of the rate hikes implemented by the Fed so far in its fight against high inflation could drag the US economy into a recession. After announcing 4 consecutive 75 basis point rate hikes, the Fed slightly slowed the pace to 50 basis points at its last meeting in Dec. Many traders are hoping for the central bank to further slow, or completely pause, rate hikes this year. Last week's consumer price index reading reflected that prices of goods & services fell by 0.1% on a monthly basis in Dec.
10-year Treasury yields climb as traders await Fed speaker comments, key economic data
The GS earnings report was a major shock for the stock market. It signals more disappointments are possible with an economy that is still reporting a lot of layoffs. The producer price index will be announced shortly.
Dow Jones Industrials
No comments:
Post a Comment