October 14, 2020

U.S Futures Trade Higher, Goldman Sachs To Report Earnings

U.S Futures Trade Higher, Goldman Sachs To Report Earnings

U.S. futures are trading higher, and this comes despite the fact that traders aren’t that optimistic about a second stimulus aid package from the U.S. lawmakers. In addition to this, there is a lot of pessimism among investors about a potential coronavirus vaccine. J&J has halted its coronavirus vaccine along with Eli Lily & Co. In addition to this, the two giants of Wall Street, JP Morgan, and Citibank think there is more risk ahead for the U.S. economy. This had made investors cautious, because they believe that the U.S. economy may drift lower before it goes into full recovery mode. 

Earnings: Goldman Sachs, Bank of America, and Wells Fargo 

The earning season kicked off officially yesterday. The focus will remain on the U.S. financial sector once again as more Wall Street giants will report their earnings today. There is nothing more important than their loan provision numbers. Investors would like to know how these banks are positioned for the rest of the year, and how much more capital are they allocating for potential defaults from their clients.

The anticipation is that we are likely to hear good news from Bank of America concerning their loan provision; the number should drop sharply. The same is also expected from Wells Fargo. As for Goldman Sachs, investors and traders are hoping to see stronger numbers in terms of FICC sales (Fixed Income). Trading revenue should also see a decent surge because they have seen no shortage of volatility in the markets. 

 However, as we mentioned yesterday, we know a lot more about coronavirus today as compared to the beginning of the year, and there is still hope for a potential vaccine,.especially if the vaccine’s first wave is able to halt the pandemic situation. We may need a few months once the vaccine is developed in order to get the vaccine to the public. 

Apple’s New iPhones 

The tech giant Apple announced a number of new iPhone releases yesterday. It seems that their strategy is to push users to upgrade their iPhones, and they are also now targeting the lower end of the market withcheaper phones—from a relative perspective. Apple’s new iPhone has changed the landscape once again as it has phased out the old charging cable and brought new wireless charging as the only option. 

From the outset, it may appear that Apple hasn’t increased its iPhone price, especially the higher-end phone such as the iPhone Pro, but the fact is that new phones do not come with chargers, and this means that one will need to buy separate chargers, which pushes the prices higher for their new product. 

So without increasing the actual price, Apple has found a backdoor to deceive its loyal customers by pushing them to pay extra for their new iPhones. 

Stimulus Talks Are Jammed 

The U.S. lawmakers are more interested in playing politics than anything else because the second stimulus negotiations are completely jammed once again. House Speaker, Nancy Pelosi, has asked the White House to revamp their offer once again as both sides are still miles apart in terms of agreeing on a package. Investors are also unclear if there will be any further talks between the U.S. Treasury Secretary, Steven Mnuchin, and House Speaker, Nancy Pelosi. One thing is pretty clear; it is highly unlikely for us to see anything positive in relation to the stimulus package this week. 

Energy 

Crude oil prices crossed above the $40 mark as traders are hopeful for more compliance from OPEC members. The fact that both Saudi Arabia and Russia have urged OPEC+ producers to comply with their production level is a further confirmation that the two most powerful oil producers do not want to let things get out of hand, and more importantly, both of them want to prop up the prices. The only way to boost the oil price is to make sure that supply remains in check, and that OPEC+ producers are complying with their quotas.