By: Todd M. Schoenberger, @TMSchoenberger, @JonesFallsPub
When Thomas W. Lawson authored the novel Friday, the Thirteenth in 1907, the western world had already considered the date as unlucky. But when Lawson’s book was published, the story about a stockbroker taking advantage of the superstition to create a Wall Street panic on a Friday the 13th, Wall Street traders took notice and typically are met with fear when the day appears.
Fast forward one hundred and ten years after Lawson’s literary tale was written, and Wall Street opened the day wondering if investors are about to commence a period of hapless trading as bulge bracket firms Bank of America (NYSE: BAC), JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) kicked off the long-anticipated quarterly earnings period for financials. Somewhat surprising, all three beat analysts’ expectations and expressed optimism about 2017, thus reducing Friday the 13th fears for investors and traders.
And, why not?
One week until President-elect Trump is sworn into office, there is a much-needed breeze of optimism making its way to the corner of Wall and Broad Streets in lower Manhattan. Mr. Trump has pledged to “dismantle” the crushing Dodd-Frank reforms, and is obviously pro-business. Add in his cabinet picks of names like Gary Cohn, Steven Mnuchin and Jay Clayton (whose wife works as a wealth advisor at Goldman Sachs) and there is likely to be a significant feeling of freedom after eight years of overreaching regulation in the sector.
Investors have taken notice. Since the election, bulge bracket beauties JP Morgan and Morgan Stanley have posted gains of 24 percent and 29 percent, respectively. And the darling of the group, Goldman Sachs, has bested all of them with a remarkable 35 percent advance. To compare, the S&P 500 has banked a 6.7 percent gain during the same period.
So what should investors expect from Goldman’s quarterly earnings release this Wednesday? The easy answer is fireworks. As UBS stated, to wit:
“Other expected changes under President-elect Donald Trump, including lower corporate taxes, higher U.S. interest rates and increased fiscal spending, should generate a favorable business environment for financial institutions, especially Goldman Sachs.”
Goldman Sachs (NYSE: GS) will report on Wednesday before the bell. Analysts are expecting earnings per share of $4.82 on revenue of $8.52 billion.
Disclosure: None of the Jones Falls Financial Directorate own a long or short position in Goldman Sachs (GS).