Corporate News

(New York)

There have been a lot of stories lately talking about Trump’s impact on markets or how his import tax plans have divided the opinion of US companies. However, analysis of corporate sentiment as measured through statements shows that businesses have not been this bullish in many years. US executives used the words “optimistic” on 51% of earnings calls this season, the highest rate since 2003. They also used “better” rather than “worse” or “weaker” on earnings calls at the best rate in two years. The big question is whether this bullish sentiment might lead to more spending rather than buybacks and dividends.

FINSUM: If companies start spending it could lead to much better GDP growth, but given their track record of buybacks and dividends we expect that may not happen.

Source: Bloomberg

(San Francisco)

Apple investors have high hopes for the company’s newest 10-year anniversary iPhone. That excitement drove Apple’s share price to its highest ever close yesterday. The new high caps a strong rally that has pushed the company’s market value to around $700 bn, more than $120 bn past its next competitor (Google), who was just recently on its heels. No big shift sparked the rally, though CEO Tim Cook has made some bold goals, such as doubling the company’s services revenue by 2021. Additionally, Apple has said that the government’s proposed tax changes could help it bring money home.

FINSUM: There is a lot riding on the new iPhone, so the stock seems to be set up for disappointment.

Source: Wall Street Journal

(New York)

Bank investors should be licking their chops at the announcement from the Trump administration on Friday that it was starting the rollback of the Dodd-Frank act. Why should they be excited? Well, besides the many business opportunities it will open for banks (e.g. prop trading and less need for capital on their balance sheets), it will also open the door to high levels of buybacks and dividends. This article says the rollback of Dodd-Frank would open the door to $100 bn or more of dividends and buybacks by the US big banks.

FINSUM: The outlook for banks is very bright. Reflation and higher rates are bullish, but the chance to open up new business lines and the lure of buybacks and dividends means the shares look set to outperform.

Source: Wall Street Journal

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