Canadian Rules on Cannabis May Not Be so Great
More Bank Earnings
Bank of America Corp. (BAC) reported stellar earnings on Monday, beating analysts' estimates on both revenue and earnings per share. Like JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) , Bank of America showed that net interest margins expanded as the Federal Reserve has increased interest rates. All those banks also didn't show much weakness in loan volumes.
Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) report earnings before the market opens. The key questions won't differ from the other big banks. Although both Goldman and Morgan Stanley are investment banks and don't have big consumer banking businesses, they both have important corporate lending units. Net interest margins and loan volumes will be important. Investors should know how the economy is doing by reading the tea leaves from Goldman Sachs and Morgan Stanley.
As I said in Monday's newsletter, I think we'll see loan volumes get hit harder next quarter and subsequent quarters as more rate hikes will kick in and consumers' wallets will take a hit. Cramer is "worried" about the what he thinks is an aggressive rate hiking path on the Federal Reserve's part, as he noted in his Action Alerts Plus teach-in Saturday.
Netflix Reports Earnings, But Don't Forget These Other Names
Netflix Inc. (NFLX) is set to report earnings after the bell Tuesday. The stock is down about 16% since its rough earnings report in July, in which it missed earnings estimates and slashed its guidance. TheStreet's tech columnist Eric Jhonsa said the bar has been now set lower for Netflix, and, of course, the promising stock is way down of late so the earnings print could do investors some good.
Everyone loves to focus on Netflix. But don't forget other important tech names. International Business Machines Corp. (IBM) also reports after the market closes Tuesday. It's an interesting stock. It's down about 8.5% year to date. A Morgan Stanley note said "overall IT demand will remain strong." There seems to be some room for a bright earnings report. Be sure to look out for tech earnings in general, and not just the sexy Netflix.