Finance

In this articleUBSG-CHUBS has beaten second-quarter earnings expectations as the wealthy poured money into its flagship wealth management business.The Swiss banking giant on Tuesday reporting net profit attributable to shareholders of $2 billion for the second three months of the year. This marks a rise of 63% from the same period last year, and significantly above analysts expectations of $1.34 billion, according to Refinitiv data.In its earnings report, UBS attributed the success to “favorable market conditions and investor sentiment,” along with “continued momentum in flows and volume growth.”Other highlights for the quarter:Operating income hit $8.98 billion from $7.4 billion a year ago.Return on tangible equity stood at 15.4%, versus 9.7% a year ago.CET 1 ratio, a measure of bank solvency, reached 14.5% versus 13.3% a year ago.”Our growth in the second quarter was underpinned by the relationships we have built and strengthened throughout the pandemic and by the trust our clients placed in our people and in our firm. All business divisions and all regions contributed to our results,” UBS CEO Ralph Hamers said in a statement.”Momentum is on our side and our strategic choices and initiatives are paying off. And we are eager to make the most of the future.”Hamers told CNBC on Tuesday that the bank’s strategic focus on particular sectors and clients was now starting to manifest itself as increased demand.”All the changes that we made over the last one to two years around the banking side [are] actually paying off, and with that you see actually that we are gaining market share. It is because of the focus on our client franchise,” he said.Wealth management boomThe bank’s flagship Global Wealth Management division was the biggest contributor to the results, generating a 47% increase in quarterly profit before tax to $1.3 billion. Recurring net fee income also increased by 30%.This, alongside buoyant market conditions, helped lift invested assets in the global wealth management business by 4% to $3.2 trillion.Hamers said that while strong market momentum had boosted the wealth management division and stimulated further investment demand from clients, the underlying trends were also promising.”We profit from market developments, absolutely, but if you look at the inflows in net fee-generating assets of $25 billion just in a quarter in the wealth business, if you look at the underlying transaction income increasing by 16%, then you see that there is real increase in activity, also from the clients and not just the market,” he told CNBC’s Joumanna Bercetche.In a recorded message released alongside the earnings report, Hamers highlighted that credit card transactions in Switzerland had almost returned to pre-Covid levels, while investors around the world were growing more optimistic about the short-term economy.”If I were to characterize last quarter with just one word, it would be this: momentum,” Hamers said.Switzerland’s largest lender has also emerged from the shadow of the collapse of U.S. hedge fund Archegos Capital. The scandal caused a $774 million hit to profits in the first quarter and stunned investors.Though not mentioned in the second-quarter report, the bank has previously said that it had exited all exposure to Archegos and that any second-quarter losses would be “immaterial.”Stock picks and investing trends from CNBC Pro:Tom Lee says this is not the month to be a hero, expects more volatilityInvestor Dan Niles adjusted his Covid reopening positions. Here’s how he’s allocated nowFund manager reveals exactly how she decides what to invest in More

Bull and bear sculptures in front of the German stock exchange in Frankfurt, Germany.Kai Pfaffenbac | ReutersEurope’s corporate earnings season began in earnest last week, with analyst consensus projecting a 140% year-on-year increase in earnings per share for the second quarter.Earnings per share is an important metric used by traders to gauge the value of a stock or a wider index, and it grew by an annual 87% across the pan-European Stoxx 600 index in the first quarter.Over the past six months, sell-side analysts have raised their second-quarter EPS growth projections by more than 50 basis points, according to Factset data aggregated by Bank of America’s European equity quant strategy team.Meanwhile, consensus EPS growth expectations for 2021 as a whole have risen from 35% in March to a new high of 48%.With the second quarter representing the peak, analysts expect EPS to tail off for the remainder of 2021, with 32% year-on-year growth in the third quarter and 21% in the fourth.Given the sharp decline in the second quarter of 2020 as the Covid-19 pandemic took hold, second-quarter earnings across the European blue chip index this year are still set to remain 2% below their pre-pandemic peak.”Our macro projections imply 9% potential further upside for the 12-month forward EPS by end-2021 and 11% by mid-2022,” Bank of America analysts said in a note Friday.”This would bring the total increase from last year’s trough to 50%, broadly in line with the EPS rebound after the global financial crisis.”In terms of sectors, analyst consensus has autos, retail and resources showing the strongest earnings growth in the second quarter. Consumer discretionary, energy and financials are jointly seen contributing 29 percentage points to the 48% earnings growth projected for the Stoxx 600 this year, BofA analysts said.”The 12-month forward EPS for resources has been revised up by almost 60% over the past six months, the strongest earnings momentum on record, with energy’s relative EPS momentum close to a 25-year high, at 45%,” they said.”Despite the strong earnings upgrades, the resource sectors’ price relatives have faded, with energy underperforming the market by 15% since March and mining by 12% since May.”The latter trend has driven the energy sector’s price-to-earnings ratio to an all-time low, BofA highlighted, while mining is at its lowest since 2008.Deployment of cash reservesBased on a systematic analysis of companies’ post-earnings communications last quarter, BNP Paribas expects the second quarter to bring more capital expenditure announcements, share buybacks and M&A.Buybacks happen when firms buy their own shares trading on the stock exchange, reducing the portion of shares in the hands of investors. They offer a way to return cash to shareholders — along with dividends — and usually coincide with a company’s stock pushing higher as shares get scarcer.Coming into reporting season, Viktor Hjort, global head of BNP Paribas’ credit strategy and analyst team, said corporates appear to be looking after both bond and equity holders.Stock picks and investing trends from CNBC Pro:Iron ore at $300? Three stocks could be winners, says mining expertPeak growth means these global stocks are now a buy, according to BarclaysFund manager reveals exactly how she decides what to invest inLeverage continues to decline and liquidity ratios — a company’s ability to pay off current debt obligations without raising further capital — remain near record levels, Hjort pointed out in a note Friday.Meanwhile, management teams across the board signaled more risk-taking in their first-quarter earnings communications, in the form of capex spending, share buybacks and M&A plans.”Last quarter marked the second consecutive quarter of declining cash reserves. Corporates have shifted gears on capital deployment from the pandemic’s defensive stance to the offensive and this ultimately translates to declining liquidity ratios,” Hjort said.Investment banks: What to watchDuring the pandemic, major lenders received significant boosts to their investment banking revenues amid heightened volatility and vastly increased trading volumes. However, investment banking activity is expected to cool in the upcoming reporting round.Stateside, Goldman Sachs has been unique in powering past earnings expectations on the back of strong investment banking contributions due to a robust IPO market. While others such as JPMorgan and Citigroup have also exceeded expectations, their windfalls have come in the form of reduced provisions for bad loans.UBS kickstarted second-quarter reporting for European banks on Tuesday, beating expectations to record a net profit attributable to shareholder of $2 billion, up 63% from the same period last year.Barclays Co-Head of European Equity Research Amit Goel said prior to the earnings report that the Swiss lender may benefit from risk reduction efforts from domestic rival Credit Suisse.Goel said Credit Suisse will suffer from a “double whammy” from the normalization of its fixed income, currencies and commodities trading revenues, with pandemic-induced volatility subsiding, along with risk reduction efforts following a string of high profile governance failures.The bank has so far this year been exposed to the collapse of supply chain finance firm Greensill Capital and the meltdown of U.S. family hedge fund Archegos Capital, resulting in an overhaul of its wealth management leadership.”As such, Q221 earnings are likely to contract significantly from underlying Q121 levels and we are below the latest consensus,” Goel said.”Nevertheless, we think investors are discounting these issues, and the real fundamental questions are on how the group will be restructured in the future; we look at potential IB [investment bank] deleveraging scenarios.”The trading division is also in focus for Deutsche Bank, and Goel expects the German lender to show “materially better” year-on-year trading revenue trends than its peers.”It will be important to see how market share evolves and if the (full-year) guidance can be maintained,” he said.”We will also be looking at cost trends, where we see a risk of slippage versus the group targets.” More

The Evergrande Group or Evergrande Real Estate Group logo of a Chinese real estate company is seen on a smartphone and a PC screen.SOPA Images | LightRocket | Getty ImagesBEIJING — The Hong Kong-listed shares of China Evergrande Group fell Tuesday to four-year lows following news of an asset freeze that renewed attention on the real estate conglomerate’s debt troubles.Evergrande shares declined by more than 14% as of midday Tuesday, following a 16.2% drop a day earlier.The drop has wiped off about 37 billion Hong Kong dollars ($4 billion) off China Evergrande’s shares since Friday, leaving it with a market value of about 93 billion Hong Kong dollars (nearly $12 billion), according to Wind Information.China Evergrande shares tumbled more than 60% over the last 12 months as Chinese authorities attempted to cool the country’s hot property market with new restrictions, particularly lending to real estate businesses.The latest stock drop followed news that in early July, a local court in Jiangsu province ruled that a branch of China Guangfa Bank could freeze 132.01 million yuan ($20.6 million) in deposits from Evergrande Real Estate and its subsidiary Yixing Hengyu Real Estate.The ruling was disclosed last Tuesday, but didn’t gain market attention until Sunday evening, according to Reuters.Evergrande said in a statement Monday that Hengyu had a loan of 132 million yuan from the bank in question — due next year on March 27. The company said it would sue the bank, according to a CNBC translation of the Chinese text.”I am not so much concerned,” Henry Chin, global head of investor thought leadership and head of research Asia Pacific at CBRE, told CNBC’s Martin Soong on “Squawk Box Asia.”Chin pointed to news in the last few days that indicated to him the Chinese government can gain greater oversight of commercial property debt issues.Citing sources, Reuters reported Friday that Chinese regulators want monthly disclosures from property developers on a form of debt called commercial paper. The report said Evergrande is the biggest issuer, with its primary real estate group holding 205.7 billion yuan ($32 billion) in commercial paper last year — up 390% from 2015.Read more about China from CNBC ProBernstein picks 5 high-yielding China stocks to buy while the regulatory crackdown hits techMorgan Stanley downgrades Tencent Music, warns of hit from new Chinese regulationsChinese tech stocks face other risks on top of tighter regulation, says portfolio managerRequiring regular disclosures on commercial paper debt will reduce the chance of unexpected shocks from property developers, Chin said. He expects Evergrande to follow other property developers in selling non-core assets to pay their debt and improve their financial condition.Evergrande was founded in the late 1990s as a real estate developer.In the last several years, the company has climbed into the ranks of Fortune’s Global 500 list and expanded into industries such as film and entertainment, life insurance and spring water. Evergrande backs Guangzhou’s soccer team.The conglomerate’s unit for new energy autos — which includes electric cars — has announced ambitious annual production goals of 1 million vehicles by 2025 and 5 million by 2035. More

Andreessen Horowitz is adding a new, high-profile partner to help deploy its $2.2 billion cryptocurrency fund.Thirty-year-old Arianna Simpson is being promoted to general partner from deal partner roughly a year after joining, the company announced Monday.Simpson has become somewhat of a celebrity in the cryptocurrency world. She left a global marketing job at Facebook and joined BitGo in her early 20s. Then she launched her own venture capital firm at age 24 to invest in blockchain and crypto companies. Friends and mentors advised her not to.”It was an unpopular decision,” Simpson told CNBC in an interview. “But the opportunity cost of not going into this industry was just too high.”Simpson said she was “blown away” after reading bitcoin’s white paper and thought it was “the most important innovation” of her lifetime. She continued researching cryptocurrencies and tried to convince Facebook to launch a crypto project before its foray into the space with Libra, now called Diem. It was “four to five years too early,” she said.Simpson invested early in a bear market. Bitcoin’s value dropped by as much as 80% in early 2018 and most smaller cryptocurrencies followed suit. Her second firm, Autonomous Partners, backed companies such as Celo during those years, overlapping with some of Andreessen’s early crypto plays.Navigating bear marketsAndreessen Horowitz entered the crypto space through its 2013 investment in Coinbase. It began raising dedicated funds for crypto three years ago, during the bear market now known as the “crypto winter.” The firm, founded by Marc Andreessen and Ben Horowitz, announced its third such fund in June. The latest $2.2 billion fund is more than seven times larger than the first.Simpson joins partners Ali Yahya, as well as Katie Haun Chris Dixon, who have been running the firm’s crypto efforts and met on the board of Coinbase. Haun, a former Justice Department prosecutor, investigated the now-defunct cryptocurrency exchange Mt.Gox and the internet black market Silk Road. Haun and Dixon have compared blockchain’s potential to the internet and remain “radically optimistic.”Simpson first connected with Haun through a direct message on Twitter.”From the first moment I met Arianna several years ago I knew that she was a force to be reckoned with,” Haun said. “Her drive for crypto and for connecting people and ideas was immediately clear during a coffee that turned into several hours of conversation.”The firm has stakes in companies powering the recent NFT boom, like OpeanSea and Dapper Labs. Simpson highlighted the company’s focus on “decentralized finance.” Known as “defi,” the term is used to describe traditional finance applications built on the same technology that underlies bitcoin. She also pointed to investments in less-obvious crypto-related categories such as gaming.While categories like NFTs and defi have taken off this year, the price of bitcoin has dropped in half from its all-time high above $60,000 in April. Simpson said prices can be a “lagging indicator — not a leading one,” for private investments.”You have to really separate the short-term prices from what is fundamentally being built — we just kind of ignore the headlines and just focus on the technologies,” she said. “Bear markets are often where the real work happens.” More

In this article.VIXMarket bull Art Hogan is looking beyond the trading week’s rough start.The National Securities chief market strategist expects the violent moves will set the stage for a massive comeback that will prompt him to hike his S&P 500 year-end target.”Here we are with everything for sale in a risk-off mode. People piling into the Treasurys,” Hogan told CNBC’s “Trading Nation” on Monday. “Likely, all of that gets stretched.”The Dow saw its worst day on Monday on jitters associated with Covid-19 Delta variant risks. The S&P 500 and tech-heavy Nasdaq saw their biggest drops since May. Plus, the benchmark 10-year Treasury Note yield slid to 1.17%, a five-month low.”This is a blip on the radar screen,” Hogan said. Hogan believes a 5% to 10% drawdown is unfolding. But he emphasizes it would be par for the course. “We have a 5% drawdown every year on average. Often we have a 10% drawdown on an annual basis,” noted Hogan.In this environment, he’s encouraging long-term investors to be equal-weight growth and cyclical names. He has had the strategy going back to the early days of the pandemic.”If you rebalance that every two months and keep that barbell level, I think you’re going to outperform the S&P 500,” he said. “You did last year, and you likely will again this year.”On the growth side, Hogan likes 5G, cloud security and cloud computing. He likes financials, energy, industrials and materials best among cyclicals.Hogan, who oversees $20 billion in assets under management, acknowledges Covid-19 risks are growing. But he doubts it will spell extreme restrictions and a significant slowdown in economic growth.”We’ve got a very short-term memory and very well-toned memory muscle towards [Covid] increases,” he said. “This current wave will likely peak and we’ll get back to focusing on things we should be focusing on like great earnings growth.”Hogan predicts second quarter earnings season, which is underway, will solidly exceed Wall Street estimates. If they do, he expects to boost his S&P 500 year-end target of 4,400, a 3% increase from Monday’s close.”There’s plenty of upside in this market. Volatility is part of that process,” Hogan said. “Remember, this is an economy that’s just starting to reopen and these are consumers that are just starting to get back to getting active.”Disclaimer More

Stock futures climbed in overnight trading on Monday after concerns about the spread of Covid-19’s delta variant sent investors dumping equities, especially those directly affected by pandemic restrictions.Futures on the Dow Jones Industrial Average rebounded 80 points. S&P 500 futures gained 0.3% and Nasdaq 100 futures traded 0.4% higher.Wall Street suffered a sharp sell-off during regular trading hours as investors feared that the fast-spreading delta coronavirus variant could hinder the economic recovery. The blue-chip Dow tumbled more than 700 points to post its worst day since October, while the S&P 500 fell 1.6% and the Nasdaq Composite dropped about 1.1%.”Fear of stagflation will be a major concern for investors if a resurgence in COVID infections causes economies to slow while consumer prices continue an upward trajectory,” said Peter Essele, head of investment management at Commonwealth Financial Network.New Covid cases are rebounding in the U.S. as the delta variant spreads, largely among the unvaccinated. The U.S. is averaging about 26,000 daily cases in the last seven days, more than double the average from a month ago, according to CDC data. Shares that are directly tied to a successful reopening, such as airlines and cruise line operators, bore the brunt of the sell-off. Carnival and Norwegian Cruise Line dropped more than 5% each, while Royal Caribbean fell 4%. Shares of United Airlines dropped 5.5%.Classic cyclical sectors energy and financials were the biggest losers, falling 3.6% and 2.8%, respectively. The 10-year Treasury yield tumbled as much as 12 basis points to 1.17%, its lowest level since February, intensifying fears of an economic slowdown.Still, even after Monday’s drop, the S&P 500 is just 3.1% below its record hit last week. Additionally, while the equity benchmark dipped below its 50-day moving average during Monday’s rout, it ultimately closed above that key technical level, offering some hope to investors looking for a rebound.”Many of the cyclical companies are selling off on fears that Covid will stop the recovery in its tracks,” said Chris Zaccarelli, CIO at Independent Advisor Alliance. “We don’t believe that that’s the case and are willing to let the sell-off run its course and buy the dip on the belief that the economy will fully recover and return to its prior growth trajectory, bringing most of the cyclical companies in the airline, travel and leisure industries along with it.”IBM shares jumped 3% in extended trading Monday after the enterprise technology and services provider reported second-quarter results that topped expectations and showed its strongest revenue growth in three years. More

Jorge Sanz | LightRocket | Getty ImagesJitters around the delta variant of Covid hindering the economic comeback sparked a steep sell-off Monday on Wall Street, pushing a number of stocks into bear market territory already.The Dow Jones Industrial Average dropped more than 700 points for its worst one-day decline since October. The S&P 500 fell 1.6%, led to the downside by energy stocks. Investors are dumping cyclical shares as coronavirus cases rebounded in the U.S. with the delta variant spreading among the unvaccinated.Here are the stocks in the S&P 500 that have fallen the most from their 52-week highs, some of which have retreated more than 60% from their records. Bear markets are defined by a 20% decline or more from a recent peak.Shares that are directly tied to a successful reopening such as airlines and cruise line operators bore the brunt of the sell-off. Carnival and Norwegian Cruise Line dropped more than 5% each, while Royal Caribbean fell nearly 4%. The trio have all tumbled at least 30% from their 52-week highs. Shares of United Airlines dropped 5.5% on Monday, pulling back nearly 32% from its recent high.Discovery shares — both Class A and Class C — have plunged more than 60% from their records. ViacomCBS also slid a similar magnitude from its peer. Earlier this year, these media stocks were sold off in massive blocks during the collapse of Archegos Capital Management. The highly levered family office failed to meet its margin call, forcing brokers to sell these names.A few names in the energy sector also pulled back a massive amount after an impressive rebound from the pandemic hit. Diamondback Energy and Enphase Energy both fell about 30% from their recent highs.Tesla is also among the 20 biggest losers in the S&P 500, tumbling 29% from its 52-week high reached in late January. The electric vehicle maker was one of the biggest winners in 2020 with a whopping 740% rally as investors favored high-growth stocks.— CNBC’s Nate Rattner contributed to this story.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

In this articleWFCGSBDEmployees work in the cargo hold of a Boeing 737 MAX 9 test plane outside the company’s factory, on March 14, 2019 in Renton, Washington.Stephen Brashear | Getty Images News | Getty ImagesCheck out the companies making headlines in midday trading.Delta, United, American Airlines, Boeing — Airline stocks fell in tandem as concerns about a rebound in Covid-19 cases intensified.  Shares of Delta fell more 3.7%, American Airlines shares lost 4.1% and United shares declined 5.5%. Aircraft manufacturer Boeing’s stock also fell 4.9%. Covid cases have ticked up in the U.S. this month with the delta variant spreading among the unvaccinated.Carnival, Norwegian Cruise Line — Shares of cruise line operators were among the biggest laggards amid Monday’s broad sell-off. Carnival and Norwegian Cruise Line dropped more than 5% each, while Royal Caribbean fell nearly 4%. The decline came as the U.S. is averaging nearly 30,000 new cases a day in the last seven days ending Friday, up from a seven-day average of around 11,000 cases a day a month ago, according to CDC data.Diamondback Energy, Devon Energy, Marathon Oil — Shares of oil companies sunk amid falling U.S. oil prices as OPEC and its allies agreed to raise output. West Texas Intermediate crude futures fell below the key $70 level Monday for the first time in more than a month. Diamondback Energy slid 6.6%. Marathon Oil fell 5.4%. Devon Energy erased 3.3%. Chevron shed 2.7%, while Exxon Mobil declined 3.4%.JPMorgan, Morgan Stanley, Goldman Sachs — Bank stocks took a hit Monday as bond yields plummeted, crimping their profitability prospects. JPMorgan dropped more than 3% while Morgan Stanley, Goldman Sachs, Wells Fargo, Bank of America and Citi all slide more than 2%.Peloton, Chewy, DoorDash — Shares of companies that benefited from consumers staying at home amid the pandemic saw a boost on Monday as concerns of the spreading delta Covid variant heightened. Exercise company Peloton added 7.1%. Pet supplies online retailer Chewy gained 6.8% each. Food delivery service DoorDash rose 4.9%.Kroger, Albertsons — Investors also flocked into grocery store stocks, which were major pandemic beneficiaries. Albertsons climbed 3.4% and Kroger gained 4.3% amid worries about rising Covid cases. “If this plays out and Covid starts to rear its head again and things start to shut down, you’d see grocery benefit from that,” said Brian Yarbrough, a retail analyst for Edward Jones.Tractor Supply – Tractor Supply’s stock fell 4.3% despite a better-than-expected second-quarter earnings report. The farm equipment and services company posted quarterly earnings of $3.19 per share on revenues of $3.6 billion, beating analysts’ earnings estimate of $2.96 per share on revenues of $3.46 billion.Zoom Video — Shares of the video conferencing company dipped 2.2% on Monday after accounting that it’s buying Five9, a provider of cloud contact center software, in an all-stock transaction valuing the company at $14.7 billion. The deal marks Zoom’s first billion-dollar acquisition.Moderna – Moderna shares added 9.5%, continuing the stock’s climb after news last week that the pharmaceutical company would join the S&P 500 on Wednesday, July 21. Moderna will replace Alexion Pharmaceuticals, which is being acquired by AstraZeneca.— CNBC’s Yun Li, Maggie Fitzgerald and Tanaya Macheel contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More