Risk Aversion on The Good, the bad and the Ugly Earnings

  • Fighting for survival, First Republic considers divesting up to $100 billion in asset sales
  • GM earnings a bright spot in what is becoming a very down day on Wall Street
  • Consumer Confidence expectations trigger recession concerns

US stocks are softening after a mixed bag of earnings was accompanied by the return of banking jitters and news that President Biden will run for re-election. Overall earnings are coming in better-than-expected, but the consumer is weakening and very concerned about the outlook. This deep into earnings season, it seems the outlook isn’t too bad and that should mean the Fed can stay on their tightening course with the risks of a June hike still remaining on the table. After this round of earnings and the latest consumer confidence report, the one thing that everyone can agree upon is that personal consumption is going to be a lot weaker going forward. ​ ​ ​ ​

US Data

Consumer confidence weakened more than expected as their expectations signal a recession is looming. The survey noted that “They also expect fewer jobs to be available over the short term.” ​ The headline index fell from 104.2 to 101.3, also much lower than the consensus estimate of 104. ​ What caught everyone’s eye was the plunge with expectations, a decline from a revised 74 to 68.1. ​ The present situation posted an expected improvement. ​

It is also worth noting an impressive surge to a one-year high with new home sales. ​ No one saw this coming given the weaker consumer and the overall rise with mortgage costs. ​ This might be more of buying new homes versus existing ones. ​

The Good

GM posted strong numbers, bumped up their outlook, and unveiled their EV strategy for the next couple of years. ​ GM’s strong earnings beat at $2.21, was higher than the $1.72 the street was eyeing, while revenue impressed, rising 11.1%, to $39.985 billion. Full-year EPS guidance was raised from $6-7 to $6.35-7.35, while adjusted EBIT was bumped up to $11-13 billion verse a prior guidance of $10.5-12.5 billion. ​ ​ ​ ​ ​


McDonalds told a similar story that we heard from Coca-Cola, the US consumer is willing and able to take on these price increases. ​ The fast-food giant posted better than expected first quarter profit with a 32-cent beat, robust revenue growth of 4%, and comparable sales growth of 13%, which blew past the analysts’ expectation of 8.2%. ​ CEO Kempczinski noted “amidst a challenging operating environment, customer demand for McDonald’s Brand remains strong.”

As the economy figures out what type of a recession it will have, McDonalds seems like it is positioned nicely given its pricing power.


JetBlue didn’t post the best results, but they did deliver an upbeat outlook. ​ JetBlue noted that “demand trends remain robust into the second quarter, with strong demand for leisure and visiting-friends-and-relatives (VFR) travel particularly during peak periods.”

It looks like the consumer is prioritizing experiences versus other purchases and the more friendly priced airliners might be in a better position to deal with whatever recession we end up seeing. ​


With a deteriorating macro backdrop, Raytheon did a solid job this earnings season. ​ The defense giant delivered a solid earnings beat of nine cents and was able to raise their dividend by 7%. ​


Spotify missed revenue but reported strong subscriber numbers. The music streamer was finally able to see their monthly active users top the 500 million mark, rising 22% in the period to 515 million. ​ It is all about paid subscribers and that is something Spotify is finally getting done. ​ The ad softness is why they missed on revenues, but the street might give them a pass on that. ​ ​ ​

The Bad


More restructuring is coming to the Minnesota company that makes tape and other home-use products. ​ The US industrial giant will cut 6,000 jobs globally as they aggressively try to manage their costs. ​ 3M earnings weren’t that bad at all as they delivered a strong earnings beat, EPS of $1.97 versus $1.59 expected and sales came in at $8.0 billion, well above the $7.47 billion estimate. ​ The guidance for the second quarter was the ugly part, as EPS was seen between $1.50 and $1.75, well below Wall Street’s expectations of $2.14. ​ ​

The Ugly

First Republic deposits plunged by almost 40% in the first quarter, much worse than what Wall Street was fearing. ​ The regional lender noted that deposit flows have stabilized and that they are pursuing strategic options. ​ Deposits were down over $70 billion from a quarter ago and that includes a $30 billion in rescue funds from other banks. ​ Despite only a 1.7% drop in deposits from March 31st to the 21st, First Republic is still in the danger zone. ​

UPS shares are tumbling after delivering a pessimistic outlook and cutting their full-year outlook. The shipping and logistics giant said that “given current macro conditions, we expect volume to remain under pressure” Full-year revenue was lowered from a range of $97-99.4 billion to ~$97 billion, which was below analysts’ expectations of $97.6 billion. ​ Earnings and revenue declined as expected to an adjusted $2.20 v $3.05 from a year ago and sales dropped from $24.4 billion to $22.9 billion. ​

S&P 500

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.