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    Cramer’s week ahead: Keep an eye on bonds and Ukraine as earnings season picks up

    Monday – Friday, 6:00 – 7:00 PM ET

    CNBC’s Jim Cramer on Thursday previewed next week’s slate of earnings and what investors should have on their radar to prepare for the tumultuous market ahead.
    The “Mad Money” host said that bonds, Russia’s invasion of Ukraine and Covid lockdowns in China are “the stories that do matter with Treasurys running roughshod over everything once again.”

    CNBC’s Jim Cramer on Thursday previewed next week’s slate of earnings and what investors should have on their radar to prepare for the tumultuous market ahead.
    The “Mad Money” host said that bonds, Russia’s invasion of Ukraine and Covid lockdowns in China are “the stories that do matter with Treasurys running roughshod over everything once again.”

    Cramer also previewed next week’s earnings roster. All earnings and revenue estimates are courtesy of FactSet.
    Monday: Bank of America

    Q1 2022 earnings release at 6:45 a.m. ET; conference call at 8:30 a.m. ET
    Projected EPS: 75 cents
    Projected revenue: $23.13 billion

    “We are beginning to see this behemoth assert itself as the world’s number one bank. I bet it won’t disappoint,” Cramer said.
    Tuesday: Halliburton, Johnson & Johnson, Travelers, Prologis, Netflix
    Halliburton

    Q1 2022 earnings release before the bell; conference call at 9 a.m. ET
    Projected EPS: 34 cents
    Projected revenue: $4.2 billion

    Cramer said that Halliburton is a great company, noting that it’s becoming one of the Charitable Trust’s biggest positions.
    Johnson & Johnson

    Q1 2022 earnings release at 6:45 a.m. ET; conference call at 8:30 a.m. ET
    Projected EPS: $2.59
    Projected revenue: $23.64 billion

    Cramer had little to say about Johnson & Johnson, simply stating that it is “busy breaking itself up to create more value.”
    Travelers

    Q1 2022 earnings release before the bell; conference call at 9 a.m. ET
    Projected EPS: $3.61
    Projected revenue: $8.03 billion

    Travelers is “boring but really good,” Cramer said.
    Prologis

    Q1 2022 earnings release tbd; conference call at noon ET
    Projected EPS: $1.07
    Projected revenue: $1.09 billion

    Cramer said that Prologis is “a cacophony of greatness all worthy of your trust.”
    IBM

    Q1 2022 earnings release after the close; conference call at 5 p.m. ET
    Projected EPS: $1.39
    Projected revenue: $13.78 billion

    “[CEO Arvind Krishna] spun off the slower-growing businesses, kept the fast ones. Should be IBM’s time to shine when it reports after the close,” Cramer said.
    Netflix

    Q1 2022 earnings release at 4 p.m. ET; conference call at 6 p.m. ET
    Projected EPS: $2.92
    Projected revenue: $7.94 billion

    The company needs to charge customers more and isn’t as bold as it used to be, according to Cramer.
    Wednesday: Procter & Gamble, Tesla, United Airlines
    Procter & Gamble

    Q3 2022 earnings release at 7 a.m. ET; conference call at 8:30 a.m. ET
    Projected EPS: $1.30
    Projected revenue: $18.70 billion

    Cramer said that he is “leaning on” making the company the largest position in his Charitable Trust if the price comes down.
    Tesla

    Q1 2022 earnings release after the close; conference call at 5:30 p.m. ET
    Projected EPS: $2.26
    Projected revenue: $17.60 billion

    Cramer’s betting that CEO Elon Musk will wow investors on the conference call.
    United Airlines

    Q1 2022 earnings release after the close; conference call on Thursday at 10:30 a.m. ET
    Projected loss: loss of $4.22 per share
    Projected revenue: $7.67 billion

    Cramer said that if the company reports having a fantastic number of bookings as Delta Air Lines did this week, it’ll go to show that the travel industry is doing well.
    Thursday: AT&T, Freeport-McMoRan
    AT&T

    Q1 2022 earnings release before the bell; conference call at 8:30 a.m. ET
    Projected EPS: 60 cents
    Projected revenue: $38.24 billion

    “I’m not a huge believer in this one,” Cramer said.
    Freeport-McMoRan

    Q1 2022 earnings release before the bell; conference call at 10 a.m. ET
    Projected EPS: 90 cents
    Projected revenue: $6.32 billion

    “Copper is a terrific proxy for the Chinese economy, and Freeport will tell us where the copper is going,” Cramer said.
    Friday: American Express, Schlumberger
    American Express

    Q1 2022 earnings release at 7 a.m. ET; conference call at 8:30 a.m. ET
    Projected EPS: $2.39
    Projected revenue: $11.61 billion

    Cramer said he believes American Express is “screaming buy” in light of Delta’s bullish outlook on travel.
    Schlumberger

    Q1 2022 earnings release at 7 a.m. ET; conference call at 9:30 a.m. ET
    Projected EPS: 33 cents
    Projected revenue: $5.92 billion

    “Will Russians one day have a decline in oil production? I bet Schlumberger can trace out what is about to happen if they stop drilling,” Cramer said.
    Disclosure: Cramer’s Charitable Trust owns shares of Halliburton, Procter & Gamble and Wells Fargo.

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    Jamie Dimon sees ‘storm clouds’ ahead for U.S. economy later this year

    The risk that the Federal Reserve accidentally tips the U.S. economy into recession as it combats inflation is rising, according to JPMorgan Chase CEO Jamie Dimon.
    “I’m simply pointing out that those are storm clouds on the horizon that may disappear, they may not,” Dimon said.
    In the event that a recession does develop, the bank would “have to put up a lot more” for loan loss reserves, Dimon told reporters.

    Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., listens during a Business Roundtable CEO Innovation Summit discussion in Washington, D.C., Dec. 6, 2018.
    Andrew Harrer | Bloomberg | Getty Images

    The risk that the Federal Reserve accidentally tips the U.S. economy into recession as it combats inflation is rising, according to JPMorgan Chase CEO Jamie Dimon.
    The CEO of the biggest U.S. bank by assets said Wednesday that economic growth will continue at least through the second and third quarters of this year, fueled by consumers and businesses flush with cash and paying off debts on time.

    “After that, it’s hard to predict. You’ve got two other very large countervailing factors which you guys are all completely aware of,” Dimon told analysts, naming inflation and quantitative tightening, or the reversal of Fed bond-buying policies. “You’ve never seen that before. I’m simply pointing out that those are storm clouds on the horizon that may disappear, they may not.”

    Dimon’s remarks show just how quickly major events can change the economic landscape. A year ago, he said the U.S. was enjoying an economic “Goldilocks moment” of high growth coupled with manageable inflation that could last through 2023. But stubbornly high inflation and a host of possible impacts from Russia’s invasion of Ukraine have clouded that picture.
    The risks spilled into view on Wednesday, when JPMorgan posted a 42% profit decline from a year earlier on increased costs for bad loans and market upheaval caused by the Ukraine war.
    Specifically, the bank took a $902 million charge for building loan loss reserves, a stark reversal from a year ago, when it released $5.2 billion in reserves.
    JPMorgan made the move — unusual because executives said borrowers of all income levels are still paying their bills — as odds increased of a “Fed-induced” recession, according to CFO Jeremy Barnum. In the past, the Fed has hiked rates to the point that the U.S. economy shrinks. Last month, the Fed hiked its benchmark rate and said increases could come at each of the remaining six meetings this year.

    Bank stocks have been hammered this year, despite rising interest rates, which tend to improve their lending margins. That’s because parts of the yield curve have flattened and even inverted this year, which is a highly watched indication of a possible recession in the future.

    The JPMorgan executives made it clear that they weren’t predicting a recession; but that high inflation, exacerbated by the impacts of the Ukraine war and Covid, as well as Fed actions have made it more likely than before. Managers have to survey a variety of hypothetical, probability-weighted scenarios in judging how much in reserves to set aside.

    Stock picks and investing trends from CNBC Pro:

    “Those are very powerful forces and these things are going to collide at one point, probably sometime next year,” Dimon said during a media conference call. “And no one actually knows what’s going to turn out so I’m not predicting a recession. But you know, is it possible? Absolutely.”
    In the event that a recession does develop, the bank would “have to put up a lot more” for loan loss reserves, Dimon told reporters. JPMorgan shares dropped 3.2% on Wednesday, making a new 52-week low.
    “Wars have unpredictable outcomes, you’ve already seen in oil markets. The oil markets are precarious,” Dimon said. “I hope those things all disappear and go away; we have a soft landing and the war is resolved, okay. I just wouldn’t bet on all of that.”

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    Jim Cramer says falling used car prices suggests inflation could be easing

    Monday – Friday, 6:00 – 7:00 PM ET

    CNBC’s Jim Cramer on Thursday said that while headwinds facing the used car market make it un-investable, its declining performance is also an indicator that inflation might be cooling.
    “When everybody was freaking out about the 8.5% consumer price index number – that is a hot number – you might’ve noticed that used car and truck prices were down 3.8% from the previous month,” he said.

    CNBC’s Jim Cramer on Thursday said that while headwinds facing the used car market make it un-investable, its declining performance is also an indicator that inflation might be cooling.
    “When everybody was freaking out about the 8.5% consumer price index number – that is a hot number – you might’ve noticed that used car and truck prices were down 3.8% from the previous month,” he said.

    “While that’s bad news for the used car industry, it could be a fabulous sign for the broader economy because it means we’re finally making some progress in getting inflation under control,” he added.
    The “Mad Money” host’s comments come after CarMax reported better-than-expected revenue but missed on earnings in its latest quarter. JPMorgan downgraded the stock due to concerns about how vehicle affordability could affect CarMax’s performance.
    “We’re finally seeing what’s known as demand destruction. People just don’t want to buy as many used vehicles if they’re going to have to pay that much. … In the end, used car prices can’t keep soaring like this forever,” Cramer said of CarMax’s quarterly results.
    He added that while now is not an optimal time to own a used car stock, he does have one option to offer investors still wanting to try their luck.
    “If you insist on owning a used car play, I say go with Lithia. …. I think it’s the wrong moment for this one, too, but if you disagree with me, Lithia’s the way to go,” he said.

    He also said he has some confidence in the performance of used and new car dealerships including AutoNation, Sonic Automotive, Group 1 Automotive and Asbury Automotive. 
    “They benefit from the return of new car supply, as the automakers finally get their supply chains in order. More importantly, these dealerships are actually profitable and their stocks are fairly reasonable. Honestly, though, they’re so cheap that you’ve got to worry that the estimates need to come down,” he said.
    Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.
    Disclaimer

    Questions for Cramer?Call Cramer: 1-800-743-CNBC
    Want to take a deep dive into Cramer’s world? Hit him up!Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram
    Questions, comments, suggestions for the “Mad Money” website? [email protected]

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    Here's why Airbnb's 2019 acquisition of HotelTonight could be key to its post-pandemic playbook

    Launched in January 2011, HotelTonight looked to popularize a part of the travel and leisure sector that its founders felt had been overlooked: last-minute and same-day bookings.
    The company quickly gained traction as it leaned into its mobile-first experience that resonated well with a younger, more cost-conscious demographic.
    Ultimately Airbnb acquired HotelTonight on its road to an IPO in March 2019 in a deal reported to be worth more than $400 million.

    HotelTonight CEO Sam Shank
    Ben Robertson

    In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.
    Like many mobile-first, on-demand service-based companies started in the early 2010s, HotelTonight saw similarities with two of the biggest disruptors in that category.

    “That’s how the world is moving: with Uber, you push a button and get a car; with GrubHub, you push a button and you get food,” HotelTonight CEO and co-founder Sam Shank said during a June 2013 appearance on CNBC’s “Squawk Box.”
    “With us, you push a button, and you get a place to stay,” he said. “We’re the app for on-demand shelter.”
    Launched in January 2011, HotelTonight looked to popularize a part of the travel and leisure sector that its founders felt had been overlooked: last-minute and same-day bookings.
    “The idea from the start was all about trying to bring the idea to the mainstream that spontaneous travel is just more fun and rewarding,” Jared Simon, the former COO and co-founder of HotelTonight, said in a recent interview. “At the outset, that was not a concept that was mainstream in the least, and we got a lot of pushback about the notion.”
    But HotelTonight quickly gained traction as it leaned into its mobile-first experience that resonated well with a younger, more cost-conscious demographic.

    “At the time, the process of booking travel was like buying a house or applying for a loan,” Simon said. “The amount of information and time you had to give up sort of killed any sort of spontaneity in traveling at all and just made it feel like a transaction, not an experience.”
    Simon said that travelers would often tell them that they “had been treated really poorly by the incumbent online travel agencies for years,” and HotelTonight instead tried to “prove that we could develop a real partnership with them.” That led to a focus on things like simplifying the information you had to enter and providing more images and well-written descriptions of the rooms themselves, features that Simon said have “become much more pervasive now.”
    Even the concept of last-minute bookings was cribbed by some of the incumbents. Booking.com launched its own Booking Now app in 2015, which it shut down roughly two years later, while several other clones popped up around the globe with similar business models.
    While Shank said in 2013 that the company wouldn’t look to “go after the entire market of travel,” HotelTonight did make a shift over time to become a more traditional hotel booking platform, expanding its booking window, adding a desktop browser version and even leaning into more luxury hotel deal offerings for their cost-conscious base.
    In 2017 it announced a $37 million Series E round that took it to a $463 million valuation, bringing its total funding to $126.9 million from firms like Accel Partners, Battery Ventures, and First Round Capital, according to Crunchbase. It even struck partnership deals with Madison Square Garden and the New York Yankees, providing geolocated offers to fans at sporting events and concerts.
    “We were fortunate we were in a space where we were one of the earliest mobile-only commerce apps,” Simon said. “That gave us some latitude and some space to work because the larger behemoths hadn’t figured out how to colonize that space yet, so we were able to pioneer some marketing concepts and other ways of reaching consumers that gave us a beachhead, and then allowed us to take another step with the MSG partnership and other areas where we were innovating on in addition to the core product.”
    HotelTonight grew to the point that it had more than 25,000 hotels in approximately 1,700 cities worldwide on its platform.

    The original CNBC disruptors: Where are they now?

    Ultimately Airbnb acquired HotelTonight on its road to an IPO in March 2019 in a deal reported to be worth more than $400 million. Simon said the deal was something that “just made sense,” as the companies “were very complimentary in terms of product.”
    At the time, Airbnb CEO and co-founder Brian Chesky said the move was a “big part of building an end-to-end travel platform.” The company also cited the demand from and for boutique hotels to be on Airbnb. Airbnb said at the time of the acquisition that the HotelTonight app and website would operate as it had before, something that is still true.
    However, less than a year later the Covid-19 pandemic hit, which presented a new set of challenges for Airbnb to navigate while also trying to build that end-to-end platform HotelTonight was expected to be a big part of.
    Jed Kelly, managing director of equity research at Oppenheimer & Co., said HotelTonight has “been operating pretty quietly within Airbnb.”
    “It hasn’t been a big focus of the company just judging by the last like four shareholder letters, they don’t talk about it,” Kelly said. “When you see the Airbnb commercials it says ‘Made possible by hosts.’ That doesn’t really scream hotels.”
    A spokesperson for Airbnb declined to make an executive available for comment.
    Andrew Boone, a managing director at JMP Securities, said while HotelTonight had likely helped Airbnb accelerate its relationship with hotels, he said “it’s hard to say if it’s been either successful or unsuccessful just because of everything that has happened that is exogenous to Airbnb.”
    Part of the challenge, Boone said, will be to see how travel trends evolve moving forward. Airbnb has benefitted from the trend of travelers choosing longer stays at alternative accommodations, often outside of major city centers, Boone said. HotelTonight, on the other hand, was more city-located, often appealing to customers who may have traveled for work last minute or stayed late after a show or sporting event, travel and entertainment sectors that haven’t bounced back as well.
    Simon said that he believes coming out of the pandemic there will be a larger desire for “spontaneous travel,” which was an initial guiding principle of HotelTonight.
    “I think it’s one of those changes we’ll see, that people recognize the value of the experience and the value of not making plans and the value of living life as it comes,” he said. “Travel will be back, and we’re already seeing a lot of evidence of that. Hotels will be at the center of that.”

    Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at companies like HotelTonight before they’re acquired, and founders like Shank and Simon who continue to innovate across every sector of the economy. More

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    American Airlines pilots' union sues carrier over request to help with training on days off

    American asked line pilots to come in on their days off to participate with simulator training for pilots.
    The Allied Pilots Association argued that would constitute a change in work rules, which would require negotiation with the union.
    Airlines are racing to hire and train pilots as travel demand surges.

    An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.
    Joe Raedle | Getty Images

    The union that represents American Airlines’ pilots sued the carrier in federal court Thursday to block a program that encourages aviators to help with simulator training, an initiative the carrier launched as it races to add staff and meet strong travel demand.
    The Fort Worth, Texas-based airline asked line pilots to come into one of American’s training centers on their days off to participate in pilots’ simulator sessions, which is normally handled by specially trained check pilots. A check airman would still conduct the evaluation.

    “As demand continues to grow and we continue to hire, we need to expand our pilot-training capabilities to a historically unprecedented level,” said Lyle Hogg, vice president of flight operations training, in a note to pilots.
    But the Allied Pilots Association argued in its suit, filed in U.S. District Court for the Northern District of Texas, that the training sessions would constitute a change in work rules, which would require negotiation with the union.
    “Management right now is making up rules as they go along,” said Dennis Tajer, spokesman for the union, which represents some 14,000 American Airlines pilots. “They’re in a crisis to get pilots through training. They’re underwater trying to get as many pilots through as possible.”
    The lawsuit comes as American and other carriers are scrambling to hire as many pilots as possible as passengers return in droves.
    Correction: American Airlines pilots were asked to participate in simulator sessions on their days off. A previous version of this story mischaracterized the pilots’ role in the trainings.

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    Peloton is raising subscription fees while cutting prices for its Bikes and other equipment

    Peloton is hiking the monthly fee for its on-demand fitness content for the first time ever.
    The connected fitness equipment maker is also slashing the prices of its Bike, Bike+ and Tread machines in a bid to reach new customers under Chief Executive Barry McCarthy.
    The moves come as Peloton is attempting to turn around a recent sharp decline in its share price.
    McCarthy, a former Netflix and Spotify executive, has been candid in recent press interviews about what he viewed as an opportunity at Peloton to cut hardware costs.

    A Peloton Interactive Inc. logo on a stationary bike at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.
    Adam Glanzman | Bloomberg | Getty Images

    Peloton is hiking the monthly fee for its on-demand fitness content for the first time ever, while it also slashes the prices of its Bike, Bike+ and Tread machines in a bid to reach new customers under Chief Executive Barry McCarthy.
    McCarthy, who has been at the helm of the company for a little over two months, is set to announce the sweeping changes internally Thursday. It comes as Peloton is attempting to turn around a recent sharp decline in its share price.

    Peloton shares initially jumped on the news before they were halted shortly after 11 a.m. for trading volatility. The stock closed the day down 4.6%.
    McCarthy, a former Netflix and Spotify executive, has been candid in recent press interviews about what he viewed as an opportunity at Peloton to cut hardware costs. This, in theory, would lower the barrier to entry for a consumer, and then the company could pivot its focus to growing monthly recurring revenues.
    “The pricing changes being announced today are part of CEO Barry McCarthy’s vision to grow the Peloton community,” a company spokesman told CNBC.
    Effective June 1, the price of Peloton’s all-access subscription plan in the United States will go up to $44 per month, from $39. In Canada, the fee will rise to $55 per month, from $49. Pricing for international members will remain unchanged, Peloton said. The cost of a digital-only membership, for people who don’t own any of Peloton’s equipment, will still be $12.99 a month.
    Peloton explained the decision in a company blog post shared with CNBC. “There’s a cost to creating exceptional content and an engaging platform,” the company said. The price increases will allow Peloton to continue to deliver to users, it added.

    Meantime, beginning Thursday at 6 p.m. ET, Peloton will slash the prices of its connected-fitness bikes and treadmills in hopes of making its products more affordable to a wider audience and increase its market share coming off of a pandemic-fueled surge in demand.

    The price of its Bike will drop to $1,445 from $1,745. The cost includes a $250 shipping and set-up fee.
    The Bike+ will drop to $1,995 from $2,495.
    The Tread machine will sell for $2,695, down from $2,845. The Tread cost includes a $350 shipping and set-up fee.

    Peloton is also currently testing a rental option in select U.S. markets, where users can pay a monthly fee anywhere between $60 to $100 for a rented Bike and for access to its workout content library. The company said it recently expanded the test to additional markets and has added the Bike+ as another rental option.
    As of Dec. 31, Peloton counted 2.77 million connected fitness subscribers. It has more than 6.6 million total members, including people who only pay for access to its workout classes.
    The company has already shown a penchant for making its hardware more affordable, particularly as McCarthy pushes the subscription model. Earlier this month, it began selling its new strength product, Peloton Guide, for $295. That’s $200 less than what Peloton last November said the device, bundled with a heart rate armband, would retail for.

    Peloton under pressure

    In recent weeks, Peloton’s stock has been trading below $29, where it priced at its initial public offering in 2019, also putting it back at pre-pandemic levels. Shares have fallen almost 35% since the day McCarthy was announced as CEO.
    McCarthy took over in early February as CEO from Peloton’s founder, John Foley, who is now serving as executive chairman.
    At the time, Peloton also announced plans to cut about 2,800 jobs across its business and get rid of hundreds of thousands of dollars in annual expenses, as part of a massive restructuring and operational reset.
    Still, there are concerns that McCarthy, who says he still works closely with Foley, isn’t doing enough to get back to profitability.
    On Wednesday, activist Blackwells Capital reiterated its call for Peloton to consider a sale of the company, arguing in a presentation that shareholders in the business are worse off now than they were before McCarthy took over. Peloton didn’t comment.
    What Blackwells and other analysts can agree on, however, is that Peloton has built a loyal base of subscribers who have invested in the company’s workout equipment and continue to pay the monthly fee for content to go along with it. Its average net monthly connected fitness churn in the latest quarter was 0.79%. The lower the churn rate, the better news for Peloton.
    As of Dec. 31, Peloton’s connected fitness subscribers were also averaging 15.5 workouts each month.
    Peloton continues to roll out new types of classes, from yoga to meditation to kickboxing, in a bid to give its members more for their money.

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    Stocks making the biggest moves midday: Twitter, Tesla, Goldman Sachs, IBM and more

    Kacper Pempel | Reuters

    Check out the companies making headlines in midday trading.
    Twitter — Twitter shares fell 1.7% after surging earlier on news that Elon Musk offered $54.20 a share to buy the social media company and take it private. Earlier this month, the Tesla CEO disclosed a 9.2% stake in Twitter.

    Goldman Sachs — Shares of the bank erased earlier gains and traded 0.1% lower even after its first-quarter results blew past expectations. Goldman’s traders were able to navigate a surge in market volatility sparked by the war in Ukraine. The bank’s fixed income desk produced $4.72 billion in first-quarter revenue, thanks to strong activity in currencies and commodities, the bank said.
    Morgan Stanley — Shares of the New York-based bank rose 0.8% after the firm reported first-quarter earnings and revenue that surpassed Wall Street expectations. The bank saw stronger-than-expected revenue from equity and fixed-income trading amid volatile markets and higher completed M&A transactions. 
    Wells Fargo — Shares fell 4.5% after the bank posted lower-than-expected revenue. A slowdown in its mortgage banking arm amid rising interest rates weighed on results. Wells Fargo beat profit expectations, however, as it released $1.1 billion from its credit reserves. 
    UnitedHealth Group — Shares of the health insurance giant closed down 0.4% after the company beat estimates on the top and bottom lines for the first quarter. UnitedHealth reported $5.49 in earnings per share on $80.1 billion in revenue. Analysts surveyed by Refinitiv had projected $5.38 in earnings per share on $78.79 billion of revenue. UnitedHealth’s total customers served was up 1.5 million year over year.
    Rite Aid — The pharmacy stock declined 3.6%. Rite Aid posted an adjusted $1.63 per-share loss for its fiscal fourth quarter. Rite Aid also announced a cost-cutting program, which includes the closure of 145 unprofitable stores.

    Nike — Shares of the footwear and apparel retailer rose 4.7%. The move comes as UBS reiterated the stock as a buy and said it was “very bullish” as demand in North America continues to withstand the current environment.
    IBM — IBM shares closed marginally higher after Morgan Stanley upgraded the stock to overweight and said the company is a good “place to hide” in the current economic backdrop. The bank also raised its price target in the technology stock.
    Western Digital, Seagate Technology — Shares of the disk-drive makers dipped 3.2%, respectively, after Susquehanna Financial downgraded both stocks amid concerns of weaker demand next year. The firm downgraded Western Digital to “neutral” and Seagate to “negative.”
    Tesla — The electric vehicle stock dipped 3.7% after its CEO Elon Musk revealed he wants to purchase Twitter and turn it into a private company.
    Rent The Runway — Shares of the fashion rental company closed flat after falling earlier in the session. Rent The Runway reported a smaller-than-expected loss and beat revenue estimates for the previous quarter.
    — CNBC’s Jesse Pound, Yun Li and Hannah Miao contributed reporting

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    Morgan Stanley earnings top estimates fueled by trading revenue gains

    Morgan Stanley saw stronger-than-expected revenue from equity and fixed-income trading amid volatile markets, helping it to top estimates in the quarter.
    Equity trading revenue came in at $3.2 billion, higher than an expectation of $2.7 billion, according to StreetAccount.
    Fixed income revenue totaled $2.9 billion, topping estimates of $2.2 billion.
    While Morgan Stanley’s headline numbers exceeded expectations, the bank still experienced a slowdown in some parts of the business compared with a year ago.

    A screen displays the trading information for Morgan Stanley on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
    Brendan McDermid | Reuters

    Morgan Stanley on Thursday reported first-quarter earnings that surpassed Wall Street expectations, thanks to the bank’s solid revenue gains from trading.
    Shares of the New York-based bank rose 0.8% on Thursday.

    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    Earnings per share: $2.02 vs. $1.68 expected
    Revenue: $14.8 billion vs. $14.2 billion expected

    The bank saw stronger-than-expected revenue from equity and fixed-income trading amid volatile markets and higher completed M&A transactions.
    Morgan Stanley’s equity trading revenue came in at $3.2 billion, higher than an expectation of $2.7 billion, according to StreetAccount. Fixed-income revenue totaled $2.9 billion for the quarter, topping an estimate of $2.2 billion from StreetAccount.
    “The Firm delivered a strong ROTCE [return on average tangible common shareholder’s equity] of 20% in the face of market volatility and economic uncertainty, demonstrating the resilience of our global diversified business,” Chairman and CEO James Gorman said in a statement.
    “Institutional Securities navigated volatility on behalf of clients extraordinarily well, Wealth Management’s margin proved resilient and the business added $142 billion net new assets in the quarter, and Investment Management benefited from its diversification,” Gorman said. “The quarter’s results affirm our sustainable business model is well positioned to drive growth over the long term.”

    While Morgan Stanley’s headline numbers exceeded expectations, the bank still experienced a slowdown in some parts of the business compared with a year ago. Net income of $3.7 billion, or $2.02 per share, was nearly 8% lower than the $4.1 billion, or $2.19 per share, it reported a year ago.
    Wall Street banks are grappling with a sudden slowdown in mergers-related advisory fees and a sharp drop in IPO activity in the first quarter, a reversal of the boom that fueled last year’s strong results. The change was triggered by stock market declines and Russia’s invasion of Ukraine, forces that made markets less hospitable for deals and public listings.
    The source of the other half of Morgan Stanley’s revenue, the bank’s giant wealth management and investment management divisions, didn’t hold up as well.
    Its revenue from wealth management totaled $5.9 billion, flat from a year ago and missing an estimate of $6.2 billion, according to StreetAccount.
    Morgan Stanley’s investment banking revenue also disappointed, coming in at $1.6 billion, marking a 37% decrease from a year ago and lower than a $1.8 billion estimate per StreetAccount. The slowdown was due to a significant decrease in equity underwriting revenues, the bank said.
    Read the full earnings release here.
    — CNBC’s Hugh Son contributed reporting.

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