It was “Bank shocker Friday” as earnings reports from JP Morgan and Wells Fargo came in better than expected and ignited a stock rally on heavy trading volume. The Dow closed up 269 points at 26,412. For the week the Dow posted a flat performance and is up 12.1% for the year. On the Greystone Faceplant page we posted a Bloomberg article about the effects of the electric vehicle revolution on the German car industry. It is a great read and a look into what could be the biggest economic challenge facing the European Union over the next decade. According to my simple estimates, even if Germany does everything right and becomes an EV powerhouse, they could still see 6% of their economy disappear. Hit the link here. This article highlights why caution with regards to investing in Europe is wise.
JP Morgan Chase reported a 13% increase in revenue and a 17% jump in net profits sending shares up 4% and igniting a rally in bank stocks. Both top and bottom-line results were better than guru estimates. CEO Jamie Dimon said of the results; “In the first quarter of 2019, we had record revenue and net income, strong performance across each of our major businesses and a more constructive environment. Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong,” Warren Buffett had a smile on his face as he has been a big buyer of JPM last year. This report is significant because it speaks to the underlying strength of the US economy and how bank stocks could be undervalued due to a misunderstanding of this dynamic.
In other news, Chevron agreed to purchase Anadarko Petroleum for $33 billion smackers in an effort to become a major player in the US shale and LNG export market. This move by Chevron puts them in the same league as British Petroleum, Exxon and Shell.