Dr. Stoxx
Stock Trader & Author, Oxford DPhil, Trading Education
Goldman Sachs' compressed valuation and tempered expectations improve its risk/reward. After a 20%-plus sell-off, its forward P/E is in the low-to-mid 12s, and management has cooled expectations for FICC and expenses. A positive earnings reaction Tuesday has room if equities deliver, the backlog stays healthy, or expenses are better than feared. x.comÂ
Goldman's sharply higher equities-trading revenue and longer-run stock gains make the current drawdown tolerable. The division's net revenue rose 72% to $6.44 billion and drove 77% of Goldman's year-over-year net revenue increase. Despite ugly recent price action, the stock is up 18% over one year and 203% over three years. x.comÂ
Morgan Stanley's confirmed double top points to a next leg down. Oppenheimer cut it to Underperform on valuation, an OpenAI IPO delay and a gated credit fund hit shares in June, and Q2 showed margin compression and slow investment banking. A close below the 218.30 neckline makes the breakdown live, with targets of 206.66, 199.68 and 192.68, and RSI shows bearish divergence into the second top. x.comÂ
Morgan Stanley could quietly build a structural edge in retail IPO distribution that the market has not priced. Per Bloomberg, its E-Trade may be Elon Musk's chosen platform for SpaceX's 30% retail allocation, possibly cutting out Robinhood and SoFi. The direct revenue is small, but the halo should bring sticky new accounts and deposits, and Anduril, Anthropic and OpenAI could follow, letting it underwrite and distribute. It trades at 15x earnings with a 2.5% dividend. x.comÂ
Goldman Sachs's meager roughly 4.8% implied earnings move and past positive reactions make a relief bounce plausible after a 25% slide. Long seen as a top-tier bank, it is among its peers' worst performers this year; shares rose after 8 of its last 11 earnings reports, including a 9% jump last time that doubled the implied move. Earnings are Tuesday before the open. x.comÂ
Morgan Stanley and Goldman Sachs face a negative multiplier effect as worries about the return on AI capital spending start to be priced into tech. After 18 months of enthusiasm about AI spending returns, CNBC Halftime panelists are now finally concerned about its ROIC. That suggests the concern is being discounted in tech prices, which hurts related areas like brokerages that the show's investment committee has embraced. x.comÂ
Bank negativity may be priced in for Goldman Sachs, Morgan Stanley and Bank of America; stable credit and an active deal pipeline could bring relief. Goldman and Morgan Stanley are down about 14% in three months and sit 22% and 17% below their highs, respectively; Bank of America lost 13% in a month. x.comÂ
The big six US banks should report great Q2 results as the front line of a solid economy. Net interest income, fee growth, steady credit trends and capital levels all look supportive, and valuations remain cheap, leaving opportunities to add. x.comÂ
Goldman Sachs looks set for a major breakout and could catch up to Citigroup after banks broadly reported strong earnings. Goldman and JPMorgan are both working on weekly breakouts; Goldman's daily chart is gappy, so entries near the daily 9 EMA look better. x.comÂ
JPMorgan's miss on both revenue and earnings strengthens the case for avoiding bank and financial stocks. The earlier bank-index chart rollover had suggested possible profit disappointment, but the observed JPMorgan share weakness is not a near-term price forecast. x.com x.com x.comÂ