Netflix earnings; High hopes for banks; Volkswagen’s latest fine

Posted at 3:28 AM, Oct 16, 2018
and last updated 2018-10-16 05:37:21-04

1. Netflix earnings: Netflix (NFLX) is expected to release its latest earnings after the bell on Tuesday.

Investors are hoping for a rebound from the second quarter, when the company added about 1 million fewer subscribers than it anticipated.

Wall Street is expecting Netflix to report modest growth. Analysts at research firms Cowen and Imperial Capital both estimate the company will say it has added just under 5 million subscribers in the third quarter.

The disappointing second quarter weighed on Netflix stock. While it’s still up a stunning 73% for the year, it has dropped 20% since the middle of July.

2. High expectations for banks: Analysts are hoping for strong numbers from Goldman Sachs (GS), BlackRock (BLK) and Morgan Stanley (MS). All three are reporting results before the opening bell on Tuesday.

Tax cuts helped drive bank profits to new records during the first half of the year. Banks that have already reported third quarter figures, including JPMorgan Chase (JPM) and Citi (C) showed that strong trend continued well into the second half.

It’ll be the first report card for Goldman Sachs under new CEO David Solomon, who is attempting to turn around the investment bank’s trading division.

3. Volkswagen’s latest fine: Volkswagen announced Tuesday it has been ordered to pay €800 million ($926 million) by German prosecutors over diesel emissions cheating by its subsidiary Audi (AUDVF), the latest fine to hit the group as a consequence of the scandal that emerged in 2015.

Volkswagen (VLKAF) said it accepted the fine, and added that the new penalty will hit its earnings for the year. “As a negative special item, [it will] reduce the group earnings for fiscal year 2018 accordingly,” it said in a statement.

4. Saudi saga: The main market in Saudi Arabia opened 1.6% lower on Tuesday, amid a deepening crisis surrounding the disappearance of journalist Jamal Khashoggi.

US Secretary of State Mike Pompeo has arrived in Riyadh where he is expected to meet with the Saudi King Salman and Crown Prince Mohammed bin Salman over the issue.

Sources have told CNN that the Saudis are preparing a report that will acknowledge that Khashoggi was killed during an interrogation that went wrong.

Saudi Arabia is finding itself increasingly isolated. Leading figures from corporate America have withdrawn from its “Davos in the desert” conference later this month, including JP Morgan Chase (JPM) CEO Jamie Dimon, Ford (F) Executive Chairman Bill Ford and Uber CEO Dara Khosrowshahi.

5. Global market overview: US stock futures were pointing higher.

European markets opened higher, except for London’s FTSE 100 index. Asian markets ended the session mixed.

The Dow Jones industrial average closed 0.4% lower on Monday, suffering a slide late in the day. The S&P 500 was down 0.6%, while the Nasdaq closed 0.9% lower.

6. Earnings and economics: It’s another busy day on Wall Street. In addition to the banks, a mixture of tech heavyweights and global corporations expected to report their latest results.

Domino’s Pizza (DPZ), Johnson & Johnson (JNJ) and Progressive (PGR) plan to release earnings before the open Tuesday.

Meanwhile, Del Taco (TACO), IBM (IBM) and Sonic (SONC) are set to release earnings after the close.

7. Coming this week:
Tuesday — IBM (IBM), BlackRock (BLK), United Airlines (UAL), eBay (EBAY), Domino’s Pizza (DPZ), UnitedHealth (UNH), Goldman Sachs (GS), Netflix (NFLX), Johnson and Johnson (JNJ) and Morgan Stanley (MS) earnings
Wednesday — Alcoa (AA) and Winnebago (WGO) earnings
Thursday — American Express (AXP), Blackstone (BX), Bank of New York (BK), E*TRADE (ETFC) and PayPal (PYPL) earnings
Friday — Procter & Gamble (PG), VF Corp (VFC) and State Street (STT) earnings