Ted Pick, co-president of Morgan Stanley, speaks during a Bloomberg Television interview in New York, US, on Thursday, Oct. 26, 2023.
Jeenah Moon | Bloomberg | Getty Images
My top 10 things to watch Wednesday, Oct. 16
1. Club Name Morgan Stanley‘s third-quarter earnings report was great across the board. Many good numbers here. EPS much better, $1.88 per share vs. $1.58 estimate. Revenue much better, $15.38 billion vs. $14.41 billion expected. The bank’s wealth management division posted a 14% sales jump from a year ago to $7.27 billion. Join us for our October Monthly Meeting at noon ET, when we’ll discuss Morgan Stanley and all the other stocks in the portfolio. Also, the top five performers since our last Monthly Meeting.
2. LVMH is a disaster in China. The French luxury goods giant’s sales in the Asia region, excluding Japan, dropped 16% in its latest quarter after falling 14% in the previous quarter. The Chinese government’s stimulus is not working. Now the hope is some new stimulus on Thursday, but it feels like 1932 over there. Georges Kern, CEO of Swiss luxury watchmaker Breitling, confirmed on “Mad Money” Tuesday that China business is very, very bad, but U.S. is up double digits.
3. Dutch semiconductor equipment maker ASML posted a disappointing sales outlook, dragging down other global chip stocks. This is not about the high end. It is about the Samsung and Intel low-end chips. On Tuesday, Nvidia CEO Jensen Huang was talking about superhuman devices. Taiwan Semi makes these and is a customer of ASML, but said the AI is the bright spot.
4. People are desperate to own the transports. That’s why there are buying J.B. Hunt. Seems real stupid to me. The Street wants to get behind it with lots of silly price target boosts, just desperate to play the cycle.
5. Johnson & Johnson posted a good quarter Tuesday thanks to strong sales of its oncology drugs. Overlook the lag in MedTech because it was a one-off in its negativity. RBC Capital raises its price target to $181 from $178, Morgan Stanley goes to $175 from $169.
6. Wells Fargo is aiming to be a top-three bank and I think it can pull it off. CEO Charlie Scharf is planning do this through investment banking, credit cards, and corporate lending, to be a very big and very good after seven years in the wilderness.
7. Medicare Advantage is facing pricing pressure, that’s what got to UnitedHealth. The company is cutting its FY25 and FY26 EPS to reflect that. Several analysts lowered their price targets on the company and one raised. Go with the raised as this is a loved stock no matter what.
8. Odd call: Yum Brands downgraded to hold from buy at TD Cowen. Removal of Taco Bell breakfast will create a headwind. But the real issue here is that the only one that people want is McDonald’s. All because of that hold-the-line price gambit.
9. Emerson Electric downgraded to hold from buy at Stephens, fears it will buy the rest of Aspen Tech at dilutive price. I like Dover and Eaton so much more: data centers, plus tailwinds from mega projects
10. Former President Donald Trump wants tariffs on Mexican imported cars. Wow, this is directly against the spirit of NAFTA/USMCA. In 2023, General Motors produced about 19% of the nearly 3.8 million cars made in Mexico. Stellantis wants to build the Ram there.
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