Finance

Wells Fargo, Goldman Sachs, BlackRock Q4 earnings preview

Published

3 months ago

January 14, 2025

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

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.