Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Making Sense of Second-Quarter Corporate Earnings So Far

Companies / Corporate Earnings Jul 21, 2009 - 03:45 AM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleNilus Mattive writes: As a stock guy, I keep a close eye on earnings releases … not just on the companies that I follow for Dividend Superstars, but across all sectors and industries.

That’s because earnings results are an important yardstick for sizing up the overall health of the stock markets and the underlying economy.

And equally important is the market’s reaction to the earnings reports coming out.

What I’m finding this quarter is that my reactions are not typically matching up with those of other investors.

Let’s start with what seems to be the biggest news …

Many Financial Firms Are Beating Estimates

The market has been cheering the news coming from our nation’s financial firms.

Indeed, the recent stock market rally was sparked by news that Goldman Sachs handily beat analysts’ profit estimates. And the party continued as JPMorgan Chase, Bank of America, Citigroup, and other institutions posted similarly upbeat reports.

A quick rundown of the headline highlights:

  • Goldman Sachs reported second-quarter earnings of $3.44 billion, the largest quarterly profit in its history as a publicly traded company
  • JPMorgan Chase earned $2.7 billion, 36 percent more than it made in the same quarter a year earlier
  • Bank of America’s net income fell 5.5 percent from a year earlier, but the company still raked in $3.22 billion
  • And Citigroup said its earnings came in at $4.2 billion, higher than many expected

But, wait a minute.

Aren’t these the same firms that were receiving billions and billions of our tax dollars just to (supposedly) stay afloat a couple months ago?

Um, yes.

And what have American taxpayers gotten in return?

That’s not exactly clear to me.

Goldman Sachs Group

Sure, Goldman has already repaid the $10 billion it borrowed directly from Uncle Sam. That’s probably just so it can hand out huge bonuses again this year.

Meanwhile, can anyone tell me how much more of our money is still being used by the company to rack up record profits? For example, what about the $12 billion we gave them on account of their dealings with AIG?

Investors don’t seem to care about such trivialities. They’re just cheering the news and move the stocks higher.

S&P 500 Index

Here are a few more things I’m thinking about the financial earnings hoopla:

First, as I already said, they are largely based on government handouts used for big trading profits during self-inflicted volatility.

Something stinks here and I’m not ready to call this a true recovery for the sector.

Second, not all financial companies are smelling like roses. Consider the fact that CIT — a major small business lender — just barely cleared a deal to keep itself out of bankruptcy.

Third, most banks beat estimates because their trading units were big winners. But take a closer look at what’s happening in other parts of their businesses …

Goldman is still wrestling with a losing commercial real estate loan portfolio and slow investment banking operations.

Meanwhile, JPM, BAC, and C are seeing deteriorating conditions in their consumer loan portfolios.

And with new legislation on the horizon — including the credit card reforms, possible caps on executive compensation, and other major initiatives — it’s hard to picture financial companies having smooth sailing from here on out.

Meanwhile …

Other Earnings Reports Have Also Been Typically Better Than Expected, But Here’s a Word of Warning

So far, about two-thirds of the companies that have reported earnings have beaten analysts’ expectations.

That’s fairly positive news for stocks, even if the expectations were already rather low.

But I have also seen some pitiful reports, particularly from some of the areas I’ve been warning you about in recent columns.

Harley-Davidson is the perfect example. Second-quarter profits fell 91 percent and the company is now laying off another 1,000 employees (11 percent of its workforce).

As I’ve been saying, consumers are changing their behavior. Credit is unavailable. And companies that produce frivolities are going to suffer the consequences.

Other examples of this same basic trend include Marriott, which said earnings dropped 76 percent as people travelled less and purchased fewer vacation timeshares, and Regency Centers, a shopping center real estate investment trust. The latter lowered its guidance for both the second-quarter and the full year.

As you can see, a consumer retrenchment is happening here. And in my opinion, that is an even bigger story than the individual earnings reports or big profits from Wall Street firms.

It’s going to dictate how quickly (or slowly) our economy turns around, and it has major implications for all the stocks in your portfolio.

So I suggest you pay attention to not just the earnings releases, but also the larger trends behind the numbers. The investing landscape is always changing, and some of these big-picture forces are going to affect your portfolio for years, not just the next few days or weeks.

Best wishes,


This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in