Pavan Sharma

US markets (S&P 500 Index –1.5%) gave up early gains to close lower on Wednesday, posting its worst day in a month. Investors looking to take profits following the strong start to the year while weak retail sales data also weighed negatively on investors sentiment.  

Goldman Sachs reported Q4 earnings that came in under the street’s expectations. EPS came in at $3.32 per share vs. expectations of +$5.70, whilst revenue narrowly missed estimates, coming in at $10.59B. Return on equity was 10.2% for the quarter, whilst annualised ROE was 4.4%. We initiate our coverage of Goldman with a sell rating.

The New Zealand market (NZX 50 Index, 0.6%) continued advancing Tuesday on optimism of China’s reopening.  The heavyweights of the index were some of the best performers on the day, including Mainfreight (+3.5%) and Fisher & Paykel Healthcare (+2.4%). 

JPM reported strong results as the US earnings season kicks into gear. Strong net interest income (NII) was buoyed by the Fed’s increase in interest rates, while trading revenues were driven by continued volatility in the market. We continue to favour JPM as our best bank stock pick – it trades at ~11x fwd earnings, trades for 1.45x book value and generates a 16% return on equity – since last quarter these fundamentals have become paradoxically more tempting and less tempting; book value is slightly “cheaper” at 50bps less than last quarter, whilst the bank’s return on equity has fallen 200bps.

The New Zealand market (NZX 50 Index, +0.5%) followed global trends of a positive start to the year to reach a four-month high. One of the highlights was Auckland Interntional Airport which shot up +2% to $8.31 a share touching post-covid highs.

Good morning and welcome to our inaugural “Market Thoughts”, our newsletter covering Blackbull Research’s house views on broad-based market themes on the week that’s been and the week ahead. Let’s crack into it.

Nike reported good earnings which significantly beat the street’s expectations, suggesting that the company’s logistics-related issues we highlighted in our last report appear to be behind it. The company reported EPS of 0.85 vs. estimates of 0.65 and revenues of $13.3B vs. estimates of $12.57B. Lower inventories ($9.3B vs $9.7B in Q2) suggest that the company’s strategy of selling direct to consumers is bearing fruit. We retain a buy rating for Nike.

We initiate coverage of Squarespace with a sell rating. The company is engaged in providing an all-in-one website solution ranging from design to hosting. The company’s main competitors are Wordpress and Wix. While the company provides a good product — it is easy to use and looks very professional, we think the company appears to be struggling to scale its product well. In short, it has a limited audience.