Goldman Sachs Just Reported A Monster Earnings Beat

Plus, earnings results weren’t so good for Bank of America and Wells Fargo, stimulus is looking evermore unlikely prior to the election, and Apple unveiled its newest iPhones. 

Stocks were higher to start Wednesday with the Dow gaining 47 points, or 0.2%. The S&P 500 added 0.1%, while the Nasdaq traded 0.2% higher.

Earnings season day two kicked off with Goldman Sachs delivering a third quarter report that crushed estimates. Goldman reported record earnings of $9.68 per share on $10.78 billion in revenue, compared to analysts’ expectations for earnings per share of $5.57 on revenue of $9.46 billion. The firm’s trading division generated $4.55 billion in revenue, a 29% increase year-over-year, fueled in part by bond trading results of $2.5 billion, nearly half a billion dollars more than analysts expected. “Our ability to serve clients are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year,” said Goldman CEO David Solomon in the earnings release. Bank of America and Wells Fargo also reported earnings, albeit with less impressive results sending both stocks lower. Bank of America reported earnings per share of $0.51, beating estimates for $0.49, but fell just short of revenue estimates for $20.8 billion reporting $20.45. Wells Fargo reported earnings per share of $0.42 on revenue of $18.86 billion, compared to estimates for earnings per share of $0.45 on revenue of $17.978 billion.

The chances of a stimulus deal happening before next month’s election are looking bleak. On Tuesday, House Speaker Nancy Pelosi said the White House needed to revamp its latest $1.8 trillion offer, and Senate Majority Leader Mitch McConnell pushed a smaller-scale, targeted strategy that Pelosi quickly rejected. Discussing the White House’s offer with CNN yesterday afternoon, Pelosi said that the two sides are “not even close to good” in the stimulus talks, and said of the American people, “I know what their needs are and I listen to them. Their needs are not addressed in the president’s proposal.” Meanwhile, McConnell said the Senate will vote next week on just one provision, replenishing funds for the Paycheck Protection Program for small businesses, which even President Donald Trump seemed to reject, tweeting, “STIMULUS! Go big or go home!!!”

A seven-day average of daily new U.S. coronavirus cases topped 50,000 for the first time in nearly two months on Tuesday, with the U.S. surpassing 7.86 million. With cases continuing to rise higher, Federal Reserve Vice Chairman Richard Clarida said this morning that the U.S. will need another year or more until it gets back to its pre-pandemic levels of activity. Clarida said that policy moves by the Fed and Congress have helped stimulate economic activity like house and car buying, and companies investing in software and equipment, all things that help boost growth. “That said, the COVID-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak,” Clarida said to the Institute of International Finance. “It will likely take even longer than that for the unemployment rate to return to a level consistent with our maximum-employment mandate.”

Apple debuted its new iPhone 12 in a digital event yesterday. The new slate of iPhones feature faster chips, 5G speeds and capabilities, and improved cameras, and come with increased pricing from last year’s models. The most bullish Apple analysts predict a new “super cycle” for the iPhone with the new 5G capabilities of the new models. Analysts estimate that 30% or more of current iPhone owners are using a device that’s at least 3 years old, meaning a lot more people than in most years are feeling the urge to upgrade. “It really comes down to if Apple can exceed the 231 million peak units from 2015,” said Wedbush analyst Dan Ives. “If they can, then this goes into the Cupertino hall of fame as a super cycle. If they can’t, then the disappointment will be reflected in the stock. The only way is to execute on the super cycle.”

And Tesla shares are up this morning after billionaire investor Ron Baron said the company will one day be a $2 trillion business. Baron told CNBC that he sees the electric vehicle maker growing 50% annually in the coming years, and “We’re very excited about that.” “I’ve said for  a long time, I thought it was going to be $1 [trillion] to $2 trillion,” Baron said. “With what developments have taken place recently, I think $2 trillion is the right number. So I think it’s five times from here.” Tesla’s current market cap is $426.59 billion.

Stocks We’re Watching

Vaxart Inc (NASDAQ: VXRT): Vaxart shares popped yesterday after the clinical-stage biotech announced that the first subject in its Phase 1 study of its oral COVID-19 vaccine candidate, VXA-CoV-1, had been dosed. “We are advancing VXA-CoV2-1 into clinical development based on the strength of pre-clinical data that showed that the vaccine is capable of inducing both a robust systemic immune response and a strong mucosal immune response, specifically in the lungs,” said Sean Tucker, Ph.D., chief scientific officer and founder of Vaxart. “We are eager to explore the clinical profile of VXA-CoV2-1 for effective protection against SARS-CoV-2 infection and transmission in healthy adults.”

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