US pre-mkts: Bank earnings strong, Cat upgrade

Very strong bank earnings coming through this morning – JPM led the way yesterday and the latest numbers from peers also look strong. Real good signs of improving loan growth in particular is a positive for BAC.

US pre-market key pointers

Bank of America (BAC)

Strong performance from Bank of America.

• Net income of $7.7bn, EPS of $0.85 vs $0.71 expected
• Revenues up 12% year-on-year – JPM was just up 2.2%
• Net interest income up 10% to $11.1bn – most rate-sensitive of the big banks
• Record M&A activity – Noninterest income up 14% to $11.7bn, driven by record asset management fees, strong investment banking revenue and higher sales and trading revenues
• Expenses down on the quarter, flat on the year
• $624m clawback from bad loan provisions – bottom line flattered less than the JPM numbers.
• Stock up pre-mkt to tune of 2.5%, having fallen 0.92% yesterday in sympathy with JPM, which is trading mildly higher in pre-mkt.

Wells Fargo (WFC)

Wells Fargo results showed:

• Net income of $5.1bn, EPS $1.17 vs $0.98 expected
• Net interest income was down 5%, due to lower loan balances that reflect soft demand, also higher prepayments, lower yields
• Results include $1.7bn decrease in credit loss provisions – equivalent to $0.30 per share.
• Pre-mkt trades +1%, having slipped 1.3% yesterday.

Meanwhile, ahead of the cash open on Wall Street, US futures indicate all the major averages will open higher. SPX seen opening up 30+pts at just under 4,400, Dow Jones +200pts at 34,610, NDX at 14,900. Risk looking solid.

• Walgreens Boots Alliance reported earnings $1.17, vs $1.02 expected, revenues $1bn ahead of expectations, cost-cutting programme a year ahead of schedule. US comparable sales up 8.1% from a year before.
• UnitedHealth shares +2% pre-mkt after reporting earnings beat and raised guidance.
• Caterpillar +1% pre-mkt, bouncing of its weakest level since Jan, as Cowen advises clients to buy ahead of the first ‘megacycle’ in 14 years, initiates with ‘Outperform’ rating and PT of $241.
• Tesla shares are up pre-mkt to their best level in 7 months.
• Boeing down 1% pre-mkt after report says co. dealing with new Dreamliner defect, production problems
• FTSE 100 at HOD just a whisker under 7,200
• Dollar continues to struggle. GBPUSD making a fresh 3-week high at 1.37334.
• Gold also trades at HOD at $1,800, sitting on its 100-day SMA.
• Treasury yields lower, 10s at 1.532%