♒ Goldman's biggest miss in a decade...

This is MM, your daily dip into the ice bath that is stock market news; here to soothe you, lift your mood, and maybe even reduce some inflammation. Let’s see…

TOP STOCKS 2 WATCH💥

Stocks with big pops (& drops) in news sentiment

Boeing is making movezzzz ✈️

 | sentiment: 🟢🟢 | catalyst: growing orders on recovering travel

I’ll forgive you if you haven’t been paying attention, but Big Boe just quietly had one of its best quarters ever — BA stock is up more than 56% over the past 3 months, and remainz one of the hotter stocks on the market. Here’s today’s upside & downside:

• A big catalyst for BA’s bullish news coverage yesterday stemmed from United Airline’s hot earnings report, where they mentioned a deal to purchase 100 747 MAX airplanes from BA, expected to generate $4B in rev (it’s a big chunk, considering BA made $16B in total rev last quarter)

• More generally, folks tend to be bullish on air travel’s comeback, and so far into 2023 we’re seeing travel volume near 2019 levels. 🔥

• On one hand, this increase in post-pandemic travel has caused airlines struggle throwing together enough flights (hence the high prices & outages over the holiday szn). Buying more planes (from Boeing) = better supply, cheaper flights.

• On the other hand, a bonafide recession could certainly hurt the demand for flights we’ve seen recently (especially vacation or discretionary travel), and would likely have an adverse effect on Boeing’s order flow

• And on the third hand (just covering all our bases here):

Goldman Sachs dissappointzzz 🚽

| sentiment: 🔴🔴 | catalyst: biggest earnings miss in a decade

As the big banks kick off Q4 earnings season this week, Goldman’s report came out looking like a steaming turd (according to analysts, of course) — revealing earnings of $3.32 per share versus the consensus estimate of $5.48. That’s a 60% miss; ya don’t see that very often. So… what happened? A few things:

• The first piece here is dealmaking. Goldman’s major money maker is & always has been its investment banking activity. But with a weakening global economy and worries about heightened interest rates, Goldman can’t broker deals like it used to, & revenues fell by two thirds.

• Second, it’s operating expenses. While most expected profits to be awful, results were more miserable than anyone expected. Its revenues were largely in line with its low forecasts (~$10B), but operating expenses shot up 11% over the quarter to throw some spice on the wound.

• This is a sign that we could see more cost-cutting and major layoffs ahead for the bank (and its friends).

• The third reason: credit losses. GS posted a $972M provision in credit losses from customers, compared to $344M last year — showing what the bank is calling “early signs of consumer credit deterioration” as the economy slows & more borrowers are at risk of falling behind on payments.

• And it’s NOT just Goldman dealing with credit losses, it’s ALL the banks. More here on what this means for 2023’s economic prospects (hint, not great):

OTHER NUGGETS🥔

Top commentary parsed from recent news:

  | source: TipRanks | sentiment: 🟢 | economic prospects ⛵

“Citigroup analyst Alicia Yap expects a faster-than-expected recovery in China’s consumption story, supporting the upside in BABA stock.”

  | source: 247WallSt | sentiment: 🟢 | earnings this week 🗓️

“With free cash flow of around $1.5 billion per quarter and free cash flow per share of $22.26 over the past 12 months, Discover’s dividend is safe and probably could be increased again to make the shares more attractive.”

   | source: TipRanks | sentiment: 🌑 | ratings update📎

“In a report released today, Phillip Jungwirth from BMO Capital maintained a Buy rating on Devon Energy, with a price target of $75.00”

  | source: MotleyFool | sentiment: 🔴 | competition ⚔️

“The threat from ChatGPT should be taken seriously, but it's too early at this point to know if it will have a fundamental effect on Alphabet… If income keeps falling – with a risk too that revenue growth may also go into reverse as advertising expenditure falls – I think the Alphabet price may slide further.”

  | source: Investing.com | sentiment: 🟢 | earnings this week 🗓️

“After ending at its strongest level since mid-April on Friday, I expect NFLX to extend its rally in the coming week, as I believe the streaming giant’s fourth-quarter earnings will surprise to the upside thanks to an improving fundamental outlook.”

| source: Investing.com | sentiment: 🌑 | Euro merger 🤝

“U.S. home appliances maker Whirlpool is folding its European business into a new company controlled by Turkish rival Arcelik, reducing its exposure to a market where it had warned attractive profit margins could be some way off.”

FLUB AWARDS🏆

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

SENTIMENT KEY: 🟢=bullish, 🌑=neutral, 🔴=bearish