Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, summarizes recent financial headlines and explains the implications for Canadian investors.
Big wins for major U.S. banks
American consumers have remained resilient, and U.S. banks reaped the rewards this past week with broadly strong results. Below is a concise summary of the latest quarterly reports (all figures in USD).
U.S. banking earnings highlights
Notable results from this week’s reports:
- JPMorgan (JPM/NYSE): Earnings per share $4.33 (vs. $3.97 expected). Revenue $40.69 billion (vs. $39.63 billion estimate).
- Bank of America (BAC/NYSE): Earnings per share $0.90 (vs. $0.82 expected). Revenue $25.32 billion (vs. $25.14 billion expected).
- Wells Fargo (WFC/NYSE): Earnings per share $1.48 (vs. $1.29 expected). Revenue $20.86 billion (vs. $20.27 billion expected).
- Morgan Stanley (MS/NYSE): Earnings per share $1.38 (vs. $1.28 expected). Revenue $13.27 billion (vs. $13.23 billion expected).
- Citigroup (C/NYSE): Earnings per share $1.52 (vs. $1.31 expected). Revenue $20.14 billion (vs. $19.29 billion expected).
- Goldman Sachs (GS/NYSE): Earnings per share $5.47 (vs. $5.31 expected). Revenue $11.82 billion (vs. $11.19 billion expected).
Many banks cited higher interest income as a major contributor to improved profitability. Still, JPMorgan CEO Jamie Dimon issued a cautionary note, calling the moment potentially the most dangerous the world has seen in decades. That warning contrasts with deposit flows: some data show customers moving money out of the largest banks and into regional banks that had seen stress earlier in the year.
In short, sentiment about risk varies across stakeholders. For investors, the takeaway is clear: betting against the U.S. consumer and its banking system has been costly so far.
For an update on Canadian banks and dividend opportunities, see my article on Canadian bank stocks at MillionDollarJourney.com.
Tesla sacrifices profit for market share
Tesla’s recent results underscore the company’s strategic decision to lower prices to sustain demand. The automaker missed both earnings and revenue estimates for the first time since 2019, prompting a near 5% drop in the share price the day of the announcement.
Reported figures: earnings per share $0.66 (vs. $0.73 expected) and revenue $23.35 billion (vs. $24.10 billion expected). The margin story was the most concerning: operating margin declined from 17.2% year-over-year to 7.6%, reflecting the impact of price cuts intended to keep vehicles affordable as financing costs rise.
CEO Elon Musk has emphasized affordability amid a higher-rate environment, warning that rising interest rates make vehicle purchases harder for many buyers. He described the competition for consumer spending as a fierce, penny-by-penny struggle. Despite slimmer margins, Tesla still targets delivering 1.8 million vehicles this year, which would maintain its rapid growth trajectory.
Broad U.S. earnings strength
The positive momentum wasn’t limited to banks or auto makers. This week’s U.S. earnings season produced beats across technology, consumer staples, and media. Here are a few noteworthy results (all figures in USD).
Mass U.S. consumer brand earnings highlights
Selected corporate results from the week:
- Johnson & Johnson (JNJ/NYSE): Earnings per share $2.66 (vs. $2.52 expected). Revenue $21.35 billion (vs. $21.04 billion expected).
- Procter & Gamble (PG/NYSE): Earnings per share $1.83 (vs. $1.72 expected). Revenue $21.87 billion (vs. $21.58 billion expected).
- Netflix (NFLX/NASDAQ): Earnings per share $3.73 (vs. $3.49 expected). Revenue $8.54 billion (in line with expectations). Memberships reached 247.15 million, above the 243.88 million forecast.
For long-established consumer names like J&J and P&G, profit trends reflect a balance between margin management and slower volume growth as consumers watch prices more closely. Netflix’s membership gain suggests its anti-password-sharing measures may be gaining traction, supporting revenue and subscriber growth.
What about Canada?
Canadian markets saw fewer earnings headlines this week, but several developments are worth noting.
Lululemon (LULU/NASDAQ), headquartered in Vancouver, was added to the S&P 500, triggering roughly a 10% jump in the share price to a two-year high. Inclusion in the index typically boosts demand from index funds and automatic investment plans, which can raise liquidity and interest in the stock.
Tourmaline Oil (TOU/TSX) announced a $1.45 billion acquisition of Bonavista Energy, funded equally with cash and Tourmaline shares. Management said the deal complements Tourmaline’s existing operations in the Deep Basin and will add substantial reserves and production inventory in southern Alberta.
A&W Revenue Royalties Income Fund (AW/TSX) reported third-quarter results roughly in line with expectations, with royalty earnings up 5.4% year over year. The fund’s dividend yield remains attractive to income-focused investors.
Free Canadian Financial Summit happening now
The Canadian Financial Summit is currently underway, offering free sessions featuring familiar contributors from MoneySense. Registration is free, and the lineup includes practical personal finance topics relevant to Canadians.
Jonathan Chevreau
The Personal Finance Book Hall of Fame
Jonathan Chevreau reviews the best personal finance books for Canadians and international readers alike, covering classics, modern takes, and lesser-known gems. His session is ideal for anyone who prefers learning from books.
Michael McCullough
Top Canadian ETFs for This Year and Beyond
Michael McCullough outlines ETF options Canadians might consider, drawing on MoneySense’s ETF analysis to help investors build diversified portfolios.
Allan Norman, MSc, CFP, CIM
All your FHSA questions answered
Allan Norman answers common questions about the new First-Home Savings Account (FHSA), explaining how it works and where Canadians might consider opening one.
Lisa Hannam
Personal finance trends to plan for in 2023 and 2024
Lisa Hannam and Kyle Prevost review the big personal finance themes affecting Canadians—interest rates, employment, AI, GICs, crypto, and more—and offer practical planning advice for the year ahead.