Stocks continued to rally as earnings reports are positive and geopolitical tensions are easing. The Dow tacked on another 213 points to close at 24,786 on heavier trading volume. Both BTS and IBD indicators are in rally mode.
A groan went up from the lips of Hedge fund investor David Einhorn (aka Silky Seamore) after Netflix reported better than expected results. Silky has been “short” Netflix and is betting the stock will fall but after the company saw its operating margins increase from 7.5% to 12.1% and its subscriber base grow by close to 2 million people versus estimates calling for an increase of about 1.5 million, the beleaguered value investor could only watch as the stock shot up 7%. Netflix revenue growth was 40% and its net income grew by 60%. Netflix is successfully integrating the content and distribution ends of entertainment and now has a market cap close to that of Disney while yet only producing a quarter of the revenue. The revenue growth rate however is 4X what Disney’s is.
Goldman Sachs reported better than expected results with revenue up 30% and bottom line profits higher by 35%. The company said that market volatility, tax policy, lending, trading results and central bank policy helped drive results. Going forward Goldman is optimistic on global merger activity despite tariff and trade war rumors. CFO Martin “Fartin” Chavez said that dialogues are strong and that clients are active as the global economy continues to show strength.