In markets last week, the earnings reports from financial giants JPMorgan Chase & Co (NYSE:JPM), Goldman Sachs (NYSE:GS), and Bank of America (NYSE:BAC) bolstered the market although Chase Corporation (NYSE:CCF) and Morgan Stanley (NYSE:MS) missed. Chase misses and earns $7 billion in a quarter, and it demonstrates the earnings power of the largest banks. All had issues with their trading results in fixed income, currencies, and commodities, much of it related to the difficult December month.
In the oil and energy world, OPEC told us their production cuts had the desired result and in combination with lower than expected inventories in North America, oil prices strengthened. Schlumberger (NYSE:SLB), the largest energy servicing firm, noted shale production in North America will be lighter than expected in 2019 because of the recent drop in the price. Last week, I mentioned the price differential in Western Canadian and Bakken based crude and how it had blown out in recent months. Naturally, over the past few weeks, the Alberta provincial governor required production cuts to bolster prices and that spread has now narrowed. Along the Texas refining coast, heavy Venezuelan crude has been much harder to come by as well, also bolstering prices for the heavy stuff elsewhere.
Still, the lack of pipelines in Western Canada and the Bakken won’t be solved any time soon, so that pricing differential bears monitoring. The auto world’s leading figure, Mr. Musk, announced bad news with a reduction in the workforce by 7% in an effort to get the price of the Model 3 down to $35K. Brilliant guy, interesting and controversial company, but the car business remains brutally competitive and those conditions are not going to change any time soon.
Netflix (NASDAQ:NFLX) announced a price hike and added 9 million paying customers, adding to the 100 million they already have. Mr. Hastings mentioned on the call that in his mind their largest competitor is Fortnite, the massively popular video game. This week brings a shortened one, but the earnings reports will keep rolling in.
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