Wall Street’s biggest financial institutions kick off fourth-quarter earnings on Wednesday, with portfolio names Wells Fargo , Goldman Sachs , and BlackRock set to report results before the opening bell. The rally in financial stocks last year, which really started in October 2023, went into high gear in the run-up to the Federal Reserve ushering in a monetary easing cycle with a jumbo 50-basis-point interest rate cut at its September meeting. It was supercharged in early November after Republican Donald Trump emerged as the winner of the presidential race and the Fed cut rates by another 25 basis points. Following its December meeting, the Fed cut rates by another 25 basis points and projected two more reductions in 2025. Bank stocks, much like the broader market, have come off the boil in the new year as traders pushed up bond yields, signaling they think the Fed may have been too heavy-handed with its rate cuts. While the incoming Trump administration’s stance on regulations is seen as more business-friendly, some of the president-elect’s proposed policies, especially when it comes to trade tariffs, could be inflationary. The labor market has proven more resilient than expected too, raising concerns about sticky inflation. That’s why the market, according to the CME FedWatch tool, sees only one rate cut or maybe none this year. Against that backdrop, there are still individual factors to consider when Wells Fargo, Goldman Sachs, and BlackRock report their quarters. We’re looking for answers to nine questions. WFC YTD mountain Wells Fargo (WFC) year-to-date performance 1. What is Wells Fargo’s guidance on net interest income? Wells Fargo’s guide on net interest income (NII) — the difference between what the firm makes on loans and what it pays on deposits — will be crucial. Interest-based revenues for Wells took a hit last year as the Fed held rates higher for longer. Not only did this weigh on loan growth, but customers decided to take their deposit money to higher-yielding alternatives. Despite the Fed rate cuts, those higher-yield alternatives are still competing against deposits. The company has taken action, but we’re going to have to see how management deals with those higher funding costs. NII is expected to fall about 1% year over year in 2025 based on FactSet consensus estimates. 2. Will management continue to diversify revenue streams? We’ve praised Wells Fargo’s push into investment banking and other ways of accruing fee-based revenue streams. In recent years, the firm has made a slew of senior-level hires to expand its IB efforts. It’s a way for Wells to not rely so heavily on interest-based revenues like NII, which are at the mercy of the Fed’s policy decisions. Over time, these fee-based revenues can also be higher-margin revenue streams. Last quarter these efforts paid off as revenue from its investment banking division beat analysts’ expectations. An expected easing of regulations by the Trump administration is seen as a positive for dealmaking and initial public offerings (IPOs), which IB operations at Wells Fargo and Goldman Sachs help put together and get paid advisory fees. 3. Any further progress on the regulatory front? It’s unlikely that Wells Fargo executives will reveal too much, but analysts will likely ask about the steps Wells Fargo and CEO Charlie Scharf have taken to appease regulators. Scharf has been cleaning up the bank’s act in hopes of getting the Fed-imposed $1.95 trillion asset cap on Wells Fargo removed. It was placed in 2018 for past wrongdoings that predated Scharf. Any indication of progress on getting rid of the asset cap will be welcome news for shareholders like us. That’s because once the cap is gone Wells will be able to grow its balance sheet and invest further into budding yet lucrative lines of business such as investment banking. Based on recent reporting, there is a belief that the asset cap could be lifted as early as the first half of this year. 4. How does the bank’s expense guide measure up? We want to make sure that management’s strides to cut down on expenses are still taking place. When Scharf assumed the CEO role in 2019, Wells Fargo had one of the most bloated expense bases out of all the big banks. Scharf’s been slashing costs left and right ever since. We want to see more progress in the fourth quarter as well. Operating expenses are expected to be flattish year to slightly higher year over year in 2025, based on FactSet consensus estimates. GS YTD mountain Goldman Sachs (GS) year-to-date performance 5. What’s the state of Wall Street dealmaking? We’re long shares of Goldman Sachs because it’s a great investment banking rebound play. In fact, it’s so good that the Club exited Morgan Stanley entirely this month and plowed the money into starting and building a position in Goldman, a stop on Jim’s career on the Street. Therefore, remarks from Goldman management about the appetite for IPOs, mergers and acquisitions, and other kinds of dealmaking are key during the conference call. That’s because more deals mean more revenue for Goldman’s IB division, which made up a significant portion of overall revenue last quarter. We have already noticed an uptick in M & A, and some of those deals probably would have never come together without a Washington regime change. 6. What’s up with Goldman’s interest in private credit? The Wall Street Journal reported Monday that Goldman has plans to restructure itself to embark further into facilitating various types of financing deals. This will be the first quarter we hear directly from management about it. BLK YTD mountain BlackRock (BLK) year-to-date performance 7. What are BlackRock’s net new assets? It’ll be the first quarter that BlackRock reports as a portfolio stock since being added in late 2024. Net inflows will be a key metric to watch for the world’s biggest asset manager. BlackRock posted a record $11.48 trillion in assets under management (AUM) last quarter, up from $10.65 trillion in the quarter prior. The more assets that the firm rakes in, the more fees it can generate. If management stays disciplined on costs from there, this will help to improve BlackRock’s fiancial performance. 8. What are the firm’s operating margins? This is another important gauge for investors to watch because it measures how much profit BlackRock is generating from its core businesses before interest and taxes. A higher operating margin usually suggests that a company is more efficient in generating profits. Plus, this figure can also give investors a read into how BlackRock is managing its expenses. 9. How is BlackRock’s strategic push going? The asset manager has made a bunch of acquisitions over the past year to boost its presence in fast-growing segments like infrastructure and private credit. It recently completed a $12.5 billion deal to acquire Global Infrastructure partners to create a world-leading infrastructure private markets investment platform. It’s paying $3.2 billion to buy a private markets data provider called Preqin. More recently, BlackRock pushed into private credit with a $12 billion acquisition of HPS Investment Partners. We want to know how all these deals are progressing because they are key to the company’s goal of becoming a larger alternative manager. (Jim Cramer’s Charitable Trust is long BLK, WFC, GS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Wells Fargo, Blackrock and Goldman Sachs.
Jeenah Moon | Reuters | Justin Sullivan | Michael M. Santiago | Getty Images
Wall Street’s biggest financial institutions kick off fourth-quarter earnings on Wednesday, with portfolio names Wells Fargo, Goldman Sachs, and BlackRock set to report results before the opening bell.
It’s milestone month for the exchange-traded fund industry.
Actively managed ETFs now have more than $1 trillion in assets under management, according to independent research firm ETFGI.
That’s roughly the market cap of Berkshire Hathaway, Saudi Arabia’s gross domestic product and the value of 121 New York Yankees franchises.
The ETF Store’s Nate Geraci thinks it will grow even bigger due to the appetite for new active investing strategies.
“It’s interesting for an industry where the roots are passively managed products. That’s what the industry was built on,” the firm’s president told CNBC’s “ETF Edge” this week. “It’s interesting to see active ETFs getting all of the attention right now.”
Geraci finds most of the flows are going into “much more systemic strategies,” including a combination of passive and aggressive.
“When you look at the growth in the number of actively managed ETFs out there … these aren’t what you necessarily think of as traditional active,” he added. “It is products like options-based income ETFs [and] buffer ETFs.”
Actively managed ETFs now comprise almost one-tenth of the ETF industry, according to VettaFi’s Kirsten Chang.
A flying taxi displayed at the China Telecom booth at SNIEC in Shanghai, on June 26, 2024, during the opening of Mobile World Congress 2024.
Nurphoto | Nurphoto | Getty Images
Flying taxis will become a viable method of transportation in China in the next three to five years, according to a senior executive at Ehang, a company that makes autonomous aerial vehicles (AAVs).
The prediction by Ehang’s Vice President He Tianxing comes days after the company became the first company, along with its joint venture partner Hefei Heyi Aviation, to obtain a certificate to operate “civil human-carrying pilotless aerial vehicles” from the Civil Aviation Administration of China.
Ehang said the certification clears the way for commercial operations of its vehicles, allowing for paid human-carrying services and any other low-altitude use cases the company develops.
At first, Ehang’s AAVs will be used for tourism, with passengers able to ride along designated routes in Guangzhou and Hefei by the end of June, He told CNBC in an interview translated from Mandarin.
The company will gradually explore air taxi services as its tourist operations progress. He named Hefei and Shenzhen as examples of some of the first cities expected to get air taxi services.
Ehang’s EH216-S, which received the certification, is a fully electric, pilotless two-seater aerial vehicle that features 16 propellers, according to Ehang’s website. It has a maximum design speed of 130 kilometers per hour, with a maximum range of 30 kilometers.
He expects to get certifications to operate in additional cities this year and next, with the second set of locations for tourist operations expected to include Zhuhai, Shenzhen, Taiyuan, Wuxi, Wenzhou and Wuhan.
For the forthcoming Hefei and Guangzhou locations, he declined to share the price per ride but hoped it would be reasonable enough to encourage more people to try out the pilotless aerial vehicle.
The experience should be “just like riding in a car,” added He, noting that no helmet or parachute is required. He said the initial length of rides offered by the company would vary from around three minutes to 10 minutes.
When asked about global markets, He said overseas partners had actively reached out since news of the certification, and he expected Ehang could expand overseas in the next few years.
Early lead
According to technology analysts, China’s allowing commercial use of passenger AAVs signifies its innovation and leadership in transportation and mobility.
“This is a major development and shot across the bow from China showing technology innovation is accelerating,” said Dan Ives, global head of technology research at Wedbush Securities.
China has already established itself as a global leader in electric vehicles and autonomous driving. Flying taxis, meanwhile, represent “one of the next frontiers for the auto and tech industry,” said Ives, adding that China already has created a clear lead in that space.
Beijing first released rules for unmanned aircraft flight — vehicles without a pilot on board — in June 2023. The U.S., on the other hand, has yet to roll out comparable regulations.
Instead, Washington’s Federal Aviation Administration last year unveiled general rules for “powered-lift” vehicles, which includes some electric vertical takeoff and landing (eVTOL) aircrafts.
eVTOL encompasses electric-powered aircrafts designed to carry passengers and take off and land vertically without the need for runways. However, the FAA has focused on those that are manually piloted.
Tu Le, founder of auto industry consultancy Sino Auto Insights, told CNBC that the U.S. has been falling behind China and even the EU in eVTOLs due to this lack of favorable policies, chalking it up to overregulation, lobbying from competing industries or “just plain politics.”
Meanwhile, China has been backing eVTOL technology as part of its “low-altitude economy,” the development of which has become a major policy goal. The term refers to economic activity taking place in airspace below 1,000 meters, well under the around 9,000 meters most commercial planes cruise around.
In addition to flying taxis and other eVTOLs, examples of the low-altitude economy include unmanned drones for delivery and helicopter-operated air shuttle routes.
The term was recently included in China’s annual work report for 2025, with the government promising to promote its development. Beijing has also committed to boosting consumption in the low-altitude economy, notably in low-altitude tourism, air sports, and consumer drones, as part of a special action plan in March.
Already, China’s low-altitude economy is one of its fastest-growing industries, with it projected to be worth 1.5 trillion yuan ($205 billion) by 2025, and almost double that by 2035, according to a report by the research group Hurun.
Competition ramping up
Sino Auto Insights’ Le also credits China’s progress in the eVTOLs sector to a high degree of domestic competition.
China has seen a major ramp-up of prospective players in recent years, as companies prepare for a high-tech future that was once confined to science fiction.
Firms investing in the space have included electric vehicle makers like GAC, Geely and Xpeng.
Xpeng’s flying car division, Xpeng Aero HT, last week, completed a maiden flight of its “Land Carrier” product — a van paired with a 2-man quadcopter, the company told CNBC.
Xpeng Aero HT said it will hold a pre-sale launch event and complete the construction of its mass production factory in the second half of the year. It also aims to obtain certifications for airworthiness by the end of the year.
Last month, XPeng Motors CEO He Xiaopeng told state media the company plans to mass-produce flying cars by 2026, as China’s low-altitude economy is boosted by supportive policy.
However, despite China leading in eVTOL regulation, it is expected to face competition from international companies also investing in and building various types of air vehicle technologies.
Some of those companies include international companies like America’s Boeing, France’s Airbus, and the Brazilian firm Embraer, which have taken steps to take advantage of future flying car demand.
Numerous startups, including Joby Aviation, Archer, and Wisk, in the U.S. are also planning on launching various commercial air taxi services over the next few years.
According to Wedbush’s Ives, the global electric vertical takeoff and landing (eVTOL) aircraft business could grow into a $30 billion market opportunity over the next decade.
Chinese national flags flutter on boats near shipping containers at the Yangshan Port outside Shanghai, China, February 7, 2025.
Go Nakamura | Reuters
BEIJING — China’s reaction to new U.S. tariffs will likely focus on domestic stimulus and strengthening ties with trading partners, according to analysts based in Greater China.
Hours after U.S. President Donald Trump announced additional 34% tariffs on China, the Chinese Ministry of Commerce called on the U.S. to cancel the tariffs, and vowed unspecified countermeasures. The sweeping U.S. policy also slapped new duties on the European Union and major Asian countries.
Chinese exports to the U.S. this year had already been hit by 20% in additional tariffs, raising the total rate on shipments from China to 54%, among the highest levied by the Trump administration. The effective rate for individual product lines can vary.
But, as has been the case, the closing line of the Chinese statement was a call to negotiate.
“I think the focus of China’s response in the near term won’t be retaliatory tariffs or such measures,” said Bruce Pang, adjunct associate professor at CUHK Business School. That’s according to a CNBC translation of the Chinese-language statement.
Instead, Pang expects China to focus on improving its own economy by diversifying export destinations and products, as well as doubling down on its priority of boosting domestic consumption.
China, the world’s second-largest economy, has since September stepped up stimulus efforts by expanding the fiscal deficit, increasing a consumption trade-in subsidy program and calling for a halt in the real estate slump. Notably, Chinese President Xi Jinping held a rare meeting with tech entrepreneurs including Alibaba founder Jack Ma in February, in a show of support for the private sector.
The policy reversal — from regulatory tightening in recent years — reflects how Beijing has been “anticipating the coming slowdown or even crash in exports,” Macquarie’s Chief China Economist Larry Hu said in a report, ahead of Trump’s latest tariff announcement. He pointed out that the pandemic-induced export boom of 2021 enabled Beijingto “launch a massive regulatory campaign.”
“My view stays the same,” Hu said in an email Thursday. “Beijing will use domestic stimulus to offset the impact of tariffs, so that they could still achieve the growth target of ‘around 5%.'”
Instead of retaliatory tariffs, Hu also expects Beijing will focus on still using blacklists, export controls on critical minerals and probes into foreign companies in China. Hu also anticipates China will keep the yuan strong against the U.S. dollar and resist calls from retailers to cut prices — as a way to push inflationary pressure onto the U.S.
China’s top leaders in early March announced they would pursue a target of around 5% growth in gross domestic product this year, a task they emphasized would require “very arduous work” to achieve. The finance ministry also hinted it could increase fiscal support if needed.
About 20% of China’s economy relies on exports, according to Goldman Sachs. They previously estimated that new U.S. tariffs of around 60% on China would lower real GDP by around 2 percentage points. The firm still maintains a full-year forecast of 4.5% GDP growth.
Changing global trade
What’s different from the impact of tariffs under Trump’s first term is that China is not the only target, but one of a swath of countries facing hefty levies on their exports to the U.S. Some of these countries, such as Vietnam and Thailand, had served as alternate routes for Chinese goods to reach the U.S.
At the Chinese export hub of Yiwu on Thursday, businesses seemed nonchalant about the impact of the new U.S. tariffs, due to a perception theiroverseas competitors wouldn’t gain an advantage, said Cameron Johnson, a Shanghai-based senior partner at consulting firm Tidalwave Solutions.
He pointed out that previously, the U.S. had focused its trade measures on forcing companies to remove China from their supply chains and go to other countries. But Chinese manufacturers had expanded overseas alongside that diversification, he said.
“The reality is this [new U.S. tariff policy] essentially gives most of Asia and Africa to China, and the U.S. is not prepared,” Johnson said. He expects China won’t make things unnecessarily difficult for U.S. businesses operating in the country and instead will try harder to build other trade relationships.
Since Trump’s first four-year term ended in early 2021, China has increased its trade with Southeast Asia so much that the region is now Beijing’s largest trading partner, followed by the European Union and then the U.S.
The 10 member states of the Association of Southeast Asian Nations (ASEAN) joined China, Japan, South Korea, Australia and New Zealand in forming the world’s largest free trade bloc — the Regional Comprehensive Economic Partnership (RCEP) — which came into being in early 2022. The U.S. and India are not members of the RCEP.
“RCEP member countries will naturally deepen trade ties with one another,” Yue Su, principal economist, China, at the Economist Intelligence Unit, said in a note Thursday.
“This is also partly because China’s economy is likely to remain the most — or at least among the most—stable in relative terms, given the government’s strong commitment to its growth targets and its readiness to deploy fiscal policy measures when needed,” she said.
Uncertainties remain
The extent to which all countries will be slapped with tariffs this week remains uncertain as Trump is widely expected to use the duties as a negotiating tactic, especially with China.
“Unlike some of the optimistic market forecasts, we do not expect a US-China bilateral grand bargain,” Ting Lu, chief China economist at Nomura, said in a note Thursday.
“We expect tensions between these two mega economies to worsen significantly,” he said, “especially as China has been making large strides in high-tech sectors, including AI and robotics.”