Daniel Grizelj
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Big banks and Netflix to report as Q2 reporting heats up. (0:14) June CPI seen rising. (1:50) Amazon sees biggest Prime Day ever in extended event. (2:59)
The following is an abridge transcript:
Earnings season is here in earnest this week.
The big banks will issue numbers, as will streaming giant Netflix (NASDAQ:NFLX).
JPMorgan (NYSE:JPM), Wells Fargo (WFC), BlackRock (BLK) and Citigroup (C) report on Tuesday.
The Street is looking for JPM to report a EPS of $4.48 on revenue of $44.04 billion.
Analysts say that the banking giant faces headwinds from declining net interest income due to lower rates and increased external borrowing. But JPMorgan's strong allowance for credit losses and a low nonperforming asset ratio provide stability and downside protection.
SA analyst Jeremy LaKosh, who has a hold rating on the stock, says ”the large external borrowing jump in the first quarter has made me too uneasy to get behind JPMorgan Chase shares combined with the headwinds in net interest income. The slowing deposit growth in the economy has made me concerned that JPMorgan Chase may need additional external borrowing to fund operations, which will impact earnings.”
Netflix (NFLX) is expected to report EPS of $7.08 on revenue of $11.04 billion.
Last week, Needham reiterated its Overweight rating on NFLX, raised its earnings estimates and boosted its price target to $1,500, up from $1,126.
Analyst Laura Martin said the company's global scale should maximize its revenue and content investment. Bundling with other services should lower NFLX's churn rate, and advertising should accelerate its revenue growth and expand margins.
Also on the earnings calendar:
J&J (JNJ), Bank of America (BAC), Morgan Stanley (MS) and Goldman Sachs (GS) report Wednesday.
Taiwan Semiconductor (TSM), GE Aerospace (GE). Abbott Labs (ABT) and PepsiCo (PEP) join Netflix on Thursday.
Friday brings numbers from American Express (AXP), 3M (MMM) and Charles Schwab (SCHW).
On the economic front, all eyes will be on the June consumer price index on Tuesday.
The headline CPI is expected to post a 0.3% monthly rise, taking the annual retail inflation rate up to 2.6% from 2.4%.
The core CPI, which excludes food and energy, is also expected to post a monthly rise of 0.3%, which would take the annual rate up to 3% from 2.8%.
Wells Fargo economists say: “The June CPI report is likely to show inflation beginning to strengthen again, albeit not enough to alarm Fed officials at this juncture.”
“The next three months will mark a key stretch of inflation data,” they added. “While inventory front-running has mitigated the need to raise goods prices, it will become increasingly difficult for businesses to absorb higher import duties as pre-tariff stockpiles dwindle.”
“We expect core goods prices to pick up further in the second half of the year as a result, but look for the pass-through to be limited by growing consumer fatigue. Amid a softer labor market and services inflation dissipating a bit more, the pickup in core inflation stemming from tariffs is likely to look more like a bump than a spike.”
In the news this weekend, President Donald Trump said that the goods imported from the European Union and Mexico will face 30% tariffs in the U.S. from August 1.
Amazon (AMZN) announced that its Prime Day event, which ran from July 8 to July 11, was its biggest Prime Day event ever, as shoppers enjoyed billions of dollars in savings from deals spanning over 35 product categories.
Amazon extended the duration of this year's Prime Day event from 48 to 96 hours, making the 2025 edition of its annual sales event a four-day shopping extravaganza for the first time.
And Apple (AAPL) has become the frontrunner to secure U.S. streaming rights for Formula 1 races, beating the current rights holder ESPN, Business Insider reported.
The iPhone maker has offered at least $150 million annually to buy the rights to stream F1 races in the U.S. from 2026, a bid ESPN, which has been reportedly paying about $85 million per year for its rights, isn't expected to match or beat.
For income investors, AbbVie (ABBV) and PNC Financial (PNC) go ex-dividend on Tuesday, Abbvie pays out on August 15 and PNC pays out on August 5.
Colgate-Palmolive (CL) and Williams-Sonoma (WSM) go ex-dividend on Friday. Colgate has an ex-dividend date of August 15, and Williams-Sonoma pays out on August 22.
Last week, S&P Global Market Intelligence identified 18 REITS expected to announce higher dividends this earnings season.
They include EastGroup Properties (EGP), with a hike to $1.52 per share from $1.40, Digital Realty Trust (DLR), with a potential hike to $1.27 per share from $1.22 and Realty Income (O), with a hike to $0.2695 per share from $0.269.
And in the Wall Street Research Corner, UBS is out with a list of its top- and bottom-rated stocks based on what it calls its REVS framework.
The REVS analysis looks at four factors: macroeconomic regime (R), the operating environment for earnings (E), the market assessment of valuations (V) and sentiment (S).
The top five stocks are Philip Morris International (PM), Exelixis (EXEL), Broadcom (AVGO), Pure Storage (PSTG) and Ingredion (INGR).
The bottom five are Frontier Group (ULCC), JetBlue (JBLU), Booz Allen Hamilton (BAH), Iovance Biotherapeutics (IOVA) and Fluence Energy (FLNC).
