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    Exxon Mobil's fourth-quarter profit tops estimates as oil and gas prices soar; shares rise

    A view of the Exxon Mobil refinery in Baytown, Texas.
    Jessica Rinaldi | Reuters

    Exxon Mobil’s revenue jumped more than 80% year over year during the fourth quarter amid a rebound in oil and gas prices, the company said Tuesday. With Exxon now in a stronger financial position, the company said it will begin to buy back stock during the first quarter.
    The oil giant earned $2.05 per share during the period excluding items, ahead of the $1.93 that analysts surveyed by Refinitiv were expecting. Revenue came in at $84.97 billion, which was short of the $91.85 billion analysts were expecting.

    In the same quarter one year ago the company earned 3 cents per share excluding items on sales of $46.54 billion. During the third quarter of 2021 the company earned $1.58 per share on an adjusted basis, on sales of $73.79 billion.
    In the latest quarter Exxon generated $48 billion of cash flow from operating activities, which was the highest since 2012. The company also paid down an additional $9 billion in debt during the fourth quarter, reducing debt by $20 billion over the course of full-year 2021. Exxon’s debt level is now back to pre-pandemic levels.
    The company said it will begin buying back stock during the first quarter of 2022, as part of a previously announced plan to repurchase up to $10 billion over the next 12 to 24 months.
    On Monday the company announced that it’s restructuring its business into three divisions, and also moving its headquarters to Houston from Irving, Texas. Beginning April 1 the company’s three divisions will be: Upstream, production solutions and low-carbon solutions. The company said the streamlined operations will enhance effectiveness and reduce costs.
    “Our new streamlined business structure is another example of the actions we are taking to further strengthen our competitive advantages and grow shareholder value,” Exxon CEO Darren Woods said in a statement Tuesday. “We’ve made great progress in 2021 and our forward plans position us to lead in cash flow and earnings growth, operating performance, and the energy transition.”

    Shares of Exxon rose to the highest level since Since 2019 on Monday, and are up 69% over the last year.
    Exxon’s benefitted from the recovery in oil and gas prices. Crude is trading around its highest level in more than seven years, and on Friday international benchmark Brent crude settled above $90 for the first time since October 2014.
    Exxon said it spent $16.6 billion during the full year 2021, which was in line with guidance. For 2022, the company expects to spend between $21 billion and $24 billion.
    Shares of Exxon advanced 2% during premarket trading Tuesday.

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    in Finance

    UBS quarterly profit drops to $1.35 billion, but the Swiss bank set ambitious new earnings targets

    The Swiss bank posted net profit of $1.35 billion for the fourth quarter, down from $1.64 billion a year earlier and also lower than the $2.28 billion reported the previous quarter.
    The bank’s bottom line was hit by an increase of $740 million in litigation provisions for a French cross-border tax case.

    LONDON — UBS on Tuesday reported a decline in quarterly profit, but beat analysts’ expectations. The Swiss bank also set ambitious new profitability targets as part of a strategic update.
    UBS posted net profit attributable to shareholders of $1.35 billion for the fourth quarter, down from $1.64 billion a year earlier and also lower than the $2.28 billion reported in the previous quarter.

    Analysts had forecast UBS to post net income attributable to shareholders of $863 million, according to the consensus published by the bank.
    “The fourth quarter was a very good ending to a record year, the best year in 15 years, both from a pre-tax and a post-tax perspective,” CEO Ralph Hamers told CNBC on Tuesday.
    “The markets business held up really well with an operating income of 11% increase year-on-year, we saw net new money in the asset manager at $16 billion and we saw $27 billion of fee-generating assets coming in in the wealth manager,” he said.
    The quarterly figures take the bank’s full-year profit to $7.46 billion, above a company-compiled consensus of $6.98 billion and 14% higher than the previous year.

    French money-laundering case

    However, UBS’ bottom line was hit by an increase of $740 million in litigation provisions for a French cross-border tax case. In late December, the bank filed an appeal with France’s Supreme Court against a decision by a Paris appeals court to uphold a money laundering conviction, although with a reduced penalty.

    Hamers said the bank was still assessing how best to approach the ongoing appeal against the ruling.
    “Given the fact that you have another verdict here, we also looked at the overall case, whether we needed to change the provision that we already had,” he told CNBC.
    “Our best estimate at this moment in time, in terms of what could be payable at a certain moment in time, is 1.1 billion euro [$1.24 billion], and therefore we had to increase our provisioning by another 650 million euros, which is $740 million.”

    Here are other highlights for the third quarter:

    CET 1 ratio, a measure of bank solvency, reached 15.0% versus 14.9% in the previous three months.
    Operating income came in at $8.73 billion versus $9.1 billion in the previous quarter.
    Return on equity, a measure of financial performance, stood at 8.9% from 15.3% in the third quarter of 2021.

    New targets

    “We are aiming to create sustainable value through the cycle. Reflecting our improved operating performance over the last two years, we have updated our financial targets, while our capital guidance remains unchanged,” the bank said in a statement accompanying the results.
    In its first major strategic update since Hamers took the reins in Nov. 2020, UBS said it will aim for $6 trillion in invested assets across its global wealth management, asset management and personal and corporate banking divisions.
    Meanwhile, the bank set the target range for its return on CET1 capital at 15-18% and cost-to-income ratio at 70-73%. The bank will also aim for 10-15% growth in profit before tax at its wealth management business.
    “Our new aspirations, targets and goals will position us to live up to our purpose, better serve clients, deploy technology in differentiated and impactful ways, and open our ecosystem for new and existing clients,” CEO Ralph Hamers added in a statement.
    UBS proposed a dividend to shareholders of 50 cents per share for 2021, rising from 37 cents in 2020, and aims to buy back $5 billion worth of its own shares in 2022. Buybacks offer a way for firms to return cash to shareholders — along with dividends — and usually coincide with a company’s stock pushing higher as shares get scarcer.

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    in Business

    Charts and history suggest stocks, most commodities may have a strong 2022, says Jim Cramer

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

    CNBC’s Jim Cramer on Monday explained why Carley Garner holds a positive outlook for a range of asset classes despite the Federal Reserve’s policy tightening.
    The “Mad Money” host said that view is “something frankly almost no one else is predicting.”

    CNBC’s Jim Cramer on Monday broke down technical analysis from Carley Garner, explaining why the DeCarley Trading co-founder holds a positive outlook for a range of asset classes despite the Federal Reserve’s policy tightening.
    “The charts and the history, as interpreted by Carley Garner, suggest that 2022 could be a strong year for most commodities, the bond market, and even the stock market,” the “Mad Money” host said.

    “Even with the Fed hitting the brakes, she thinks the momentum from the last couple years of money-printing will continue to push these asset classes higher, something frankly almost no one else is predicting.”
    Garner’s analysis is focused on forecasting the impact of the Fed reducing the pace of its monthly bond purchases and then ending them all together later this year. It would mark the end of what’s known as quantitative easing, which the U.S. central bank started in 2020 for only the second time. The first came in 2008 in response to the financial crisis; it concluded in 2014.
    “If history is any guide, Garner suspects we could be in for a period similar to 2010 to 2012, when all assets increased in value at some point, occasionally at ridiculous levels. Even with the Fed taking its foot off the gas pedal, Garner thinks it could take another year or maybe two before we digest all the liquidity that’s been created since 2020.”

    Arrows pointing outwards

    Monthly chart of corn futures for the past 20 years.
    Mad Money with Jim Cramer

    For example, Cramer said Garner thinks corn prices could be in for another rally this year — even though it’s declined from its recent highs in May 2021. She expects it to be similar to 2012, when “we got round two of the post-financial crisis rally.”
    For the stock market, in particular, Garner believes the S&P 500 may move lower in the near term, but she’s not expecting there to be a severe downturn for equity indexes at this stage of the Fed’s tightening efforts.

    Arrows pointing outwards

    Monthly chart of the S&P 500 over the past two decades.
    Mad Money with Jim Cramer

    “Remember, when the Fed started raising rates last time in late 2015, we caught some early volatility, but then the S&P resumed its long march higher,” Cramer said. “Because we already seem to have priced in several rate hikes in advance, Garner thinks we’re headed for a period where bad news for the economy is good news for the stock market, because weak economic data means the Fed won’t have to raise interest rates as aggressively as we expect.”
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    Here’s what the bank that bought assets from Zuckerberg’s crypto project plans to do with them

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

    Silvergate Capital CEO Alan Lane told CNBC on Monday the bank holding company hopes to launch a stablecoin by the end of this year.
    The comments follow Silvergate’s confirmation Monday that the California-based firm was buying assets and intellectual property from Mark Zuckerberg’s beleaguered cryptocurrency project.
    “We think the potential worth is off the charts when we think about using the blockchain technology for payments and remittance,” Lane told CNBC’s Jim Cramer.

    Silvergate Capital CEO Alan Lane told CNBC on Monday the bank holding company hopes to launch a stablecoin by the end of this year, following its acquisitions of assets and intellectual property from Mark Zuckerberg’s beleaguered cryptocurrency project.
    The California-based financial firm, which through its subsidiary Silvergate Bank operates the crypto-focused payments platform Silvergate Exchange Network, confirmed it was buying assets from the Diem Group on Monday. Silvergate had previously been a partner on the Facebook-backed project.

    “The Facebook engineers that developed this over the last couple years are truly world-class engineers,” Lane told “Mad Money” host Jim Cramer in an interview. “We were working last year with Diem and we got to know the team very well, and we couldn’t be more excited to, essentially, be taking the reigns and bringing a stablecoin to market hopefully later this year.”
    With Lane at the helm, Silvergate Bank is known for being one of the first traditional banks to embrace digital currencies. Its Silvergate Exchange Network offers account holders the ability to execute real-time, 24/7 transfer among themselves. Crypto trading platforms such as Coinbase Global and Gemini are part of the Silvergate Exchange Network.
    Lane told Cramer that Silvergate hopes to expand the everyday usefulness of stablecoins, which are a type of digital asset that has its value pegged to traditional currencies such as the U.S. dollar. Right now, Lane said they’re mostly used in crypto trading.
    “We think the potential worth is off the charts when we think about using the blockchain technology for payments and remittance,” Lane said, after Cramer asked how much Silvergate thinks Diem’s assets are worth. The Wall Street Journal reported last week that the bank paid about $200 million, citing an anonymous source.
    The Silvergate Exchange Network is already used by existing stablecoin issuers to create and redeem the digital tokens, Lane said. “But again, those are primarily used for cryptocurrency trading. Where we see the opportunity is creating a stablecoin that could be used by folks …. to pay for things.”

    “It’s kind of the original promise of bitcoin, but folks don’t want to be spending their bitcoin with all that volatility. But the blockchain technology is here, and we think that’s what a Silvergate-issued stablecoin can provide,” he said.
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    Cramer says industrial stocks are falling out of favor as supply chain, Covid woes persist

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

    CNBC’s Jim Cramer said Monday he’s starting to question the ability of value stocks to outperform growth counterparts even as Wall Street worries about a more aggressive Federal Reserve.
    Value-oriented industrial stocks like GE, in particular, are in a tough position right now, the “Mad Money” host said.
    “The growth selling is over, the value selling has begun. That’s my takeaway” from Monday’s trading day, he said.

    CNBC’s Jim Cramer said Monday he’s starting to question the ability of value stocks to outperform growth counterparts even as Wall Street worries about a more aggressive Federal Reserve.
    In particular, the “Mad Money” host said he’s concerned about the value-oriented industrial stocks, citing an assortment of problems facing their businesses, including supply chains and labor challenges related to the coronavirus.

    “If you want a value stock here, pick one where we know there aren’t any supply chain, semiconductor or Covid woes. Otherwise, it’s going to be tough without owning some predictable, profitable growth [stocks],” Cramer said after a second straight session of strong gains for the technology-heavy Nasdaq Composite.
    “The growth selling is over, the value selling has begun. That’s my takeaway from today’s action,” Cramer added. However, he acknowledged there will be some exceptions, pointing to Otis Worldwide after the elevator maker reported earnings earlier Monday. “But I’m betting that’s a rarity,” Cramer said.
    Instead, Cramer said this earnings season has revealed cracks in the thesis surrounding industrial value stocks that were embraced in earnest in late November. Over the past three months, the iShares S&P 500 Growth ETF (IVW) is down nearly 5%, compared with a gain of 0.5% for the iShares S&P 500 Value ETF (IVE).
    “One by one, we had big, industrial value plays like GE, 3M, Boeing and Caterpillar report subpar numbers that made us question the legitimacy of the value rally,” Cramer said. “These companies are all feeling the sting of supply chain woes, inflation, port congestions, and worst of all, Covid.”

    Stock picks and investing trends from CNBC Pro:

    That picture stands in stark contrast to what some growth-oriented tech companies like ServiceNow and Microsoft have reported in recent days, Cramer said. He said those strong quarters — devoid of the supply chain struggles hitting industrials — have helped Wall Street regain confidence in the growth cohort, particularly in light of Netflix’s poor results.

    The growth-focused IVW is up 3.3% in the past five days, while the value IVE is up just 1%.
    “How long can this growth rebound rally last? Arguably, as long as value stocks have to deal with supply chain, semiconductor and Covid worries,” Cramer said, adding that growth stocks are benefiting from a dramatic slowdown in the number of new public listings.
    “I don’t want companies that make excuses, even when those excuses make sense. Anything that results in a number cut is a nightmare; beat and raise will always take precedence for me,” he added.
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    Cramer's lightning round: Willis Towers Watson is a stock worth owning

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

    It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

    Dover Corp.: “I liked the quarter. We’re looking for companies that make things and do stuff, but it does have some of these industrial problems that others have. I’m going to say you can hold onto it.”
    Perficient: “This is one of those companies that sells at 60 times earnings, and we have been saying unless it sells at less than 50 times earnings — which is still a great deal — we cannot recommend it. It’s just not going to fit our parameters.”

    Norwegian Cruise Line: “It is my favorite [of the cruise lines]. I have to tell you that all these companies need such a break it. I just don’t know whether they’re going to get it in time to make it so that they’re good stocks. They’ll all make it, but I just don’t know if they’ll be good stocks.”
    Willis Towers Watson: “That is a very good insurance broker. I happen to like that business very much. I think that’s a stock worth owning.”
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    Disclaimer

    Questions for Cramer?Call Cramer: 1-800-743-CNBC
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    Stock futures dip after S&P 500 wraps up worst month since March 2020

    Stock futures declined in overnight trading Monday after Wall Street wrapped up a tumultuous month with steep losses as investors grappled with the Federal Reserve’s policy shift.
    Futures on the Dow Jones Industrial Average dipped 80 points. S&P 500 futures and Nasdaq 100 futures both traded 0.3% lower.

    While stocks pulled off a tech-driven rally Monday, major averages still suffered a brutal month marked by wild price swings. The S&P 500 and the Nasdaq Composite posted their worst months since March 2020 at the depth of the pandemic, down 5.3% and 8.9%, respectively. It was also the S&P 500’s biggest January decline since 2009. The blue-chip Dow declined 3.3% for the month.
    January’s sell-off came as the central bank signaled its readiness to tighten monetary policy, including raising interest rates multiple times this year, to tame inflation that has shot up to the highest level in nearly four decades. Investors flocked out of growth-oriented technology shares, which are particularly sensitive to rising rates.
    Volatility exploded during the month as investors deciphered the Fed’s messaging on its policy pivot. At one point last week, the S&P 500 dipped into correction territory on an intraday basis, briefly down 10% from its record high. The recent comeback pushed the large-cap benchmark 6.3% below its peak. Meanwhile, the tech-heavy Nasdaq is still in a correction, last down 12% from its all-time high.

    Still, many Wall Street strategists are reminding investors that corrections are normal in bull markets. Since 1950, there have been 33 S&P 500 corrections of 10% or more since 1950, and the median episode has lasted about five months, according to Goldman Sachs.
    “The latest decline is a normal market correction that does not signal a recession or the end of this bull market,” said Chris Haverland, global equity strategist at Wells Fargo. “We continue to believe that economic growth and corporate earnings will be solid this year, and that the Fed will not be overly aggressive in dialing back monetary policy.”

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    This week a flurry of key companies are expected to report earnings, which could set the tone for the month of February. Exxon Mobil is slated to post numbers before the bell on Tuesday, while Alphabet, General Motors, Starbucks, AMD and PayPal will report after the bell.
    So far, of the 172 companies in the S&P 500 that have reported earnings to date, 78.5% topped analysts’ estimates, according to Refinitiv.
    “We still anticipate solid, albeit more modest, gains for markets this year, alongside more normal pullbacks, especially given the transition in monetary policy,” Keith Lerner, chief market strategist at Truist, said in a note.

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    Tesla climbs more than 10% on Monday after Credit Suisse upgrade

    Shares closed up more than 10% after Credit Suisse upgraded the electric automaker to “outperform,” citing margin improvements and the promise of FSD.
    Shares had previously declined almost 20% year to date, with particular pressure after CEO Elon Musk informed shareholders on an earnings call that Tesla would not be making any new vehicle models in 2022.
    Other EV makers, including Rivian and Lucid, also rebounded Monday.

    A Tesla mobile service vehicle outside a dealership in Vallejo, California, U.S., on Tuesday, Oct. 19, 2021.
    David Paul Morris | Bloomberg | Getty Images

    Shares in electric vehicle maker Tesla climbed more than 10% closing at $936.72 on Monday after Credit Suisse upgraded the stock to “outperform” and the broader market rebounded.
    Tesla had previously declined almost 20% in January amid a sell-off that dragged the Nasdaq down.

    Shares were especially under pressure after CEO Elon Musk said on the company’s most recent earnings call that Tesla would not deliver any new model vehicles to customers in 2022, including the Cyberbtruck, an experimental pickup.
    Instead, Musk informed shareholders that Tesla plans to focus on scaling production at its old and new factories, and to dedicate resources to developing a humanoid robot and driverless vehicle tech. Musk has been promising to make driverless vehicles a reality since 2016, and has yet to deliver a “robotaxi” safe for hands free use by drivers.
    Credit Suisse saw a buying opportunity, and has a price target of $1,025 on shares of Tesla now.

    Read more about electric vehicles from CNBC Pro

    Analyst Dan Levy wrote in a note out on Monday, “Tesla has surprised to the upside on margins, in large part driven by cost reductions; we believe the strong margins are sustainable.” And he said, “We believe legacy OEMs are taking clear steps to transitioning to an EV world, yet we expect Tesla to maintain a lead for the foreseeable future.”
    The note also said, “Up until now Tesla margins have largely been a function of auto hardware sales, with some modest benefits of software…specifically FSD (Full Self-Drive features). However, as Tesla releases more FSD features and unlocks more deferred revenue (which likely flows through at 100% contribution margin), Tesla should see incremental margin benefit.”

    This weekend, Musk said on Twitter, “Tesla will support FSD licensing by other manufacturers,” but did not say when or whether any automakers had expressed interest.
    Other electric vehicle makers also rebounded with Rivian closing 15% higher, and Lucid up more than 8% on Monday. Legacy automakers with significant plans for battery electric vehicle production also closed higher on Monday — Ford was up more than 3% to close at $20.30 and GM closed at $52.73 up nearly 5% for the day.
    According to analysis by the International Energy Agency, there were about 6.7 million battery electric vehicles (BEVs) already on the roads around the world by the end of 2020, including 1.1 million in the US that year.
    President Biden said last August that he wants half of all vehicles sold in the US to be electric by 2030, including hybrids and battery electric vehicles.

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