CXMT Challenges MU, SNDK, Other AI Memory Stocks; Bank Stocks Retreat After Earnings

Sam (0:00)

Let's get out to Kevin Green, who joins me now. We do have some deep data to hitting the wire right now as far as what it's telling us about the housing market. We know that this has been somewhat frozen, but we've got existing home sales data. KG, what are you seeing there?

Kevin Green (0:16)

Good morning, Sam. Yeah, we are seeing existing home sales for September up 1.5% on a month over month basis, coming in at 3.99 million. She was looking for 3.95 million. Now, what's also very interesting, we actually had a pretty sharp revision to the downside for the August print. It went from 3.98 million down to 3.93 million. That's a drop of around 3.2% on a month over month basis. But we once again kind of offset that with the September numbers. Now, obviously we know that the mortgage rates are at elevated levels and we are seeing a slowing when it comes to existing home sales, as well as new home sales for that matter. And this kind of aligns with the fact that the consumer might be a little bit standoffish when it comes to trying to buy new homes because of the affordability factor. And that is something that has impacted a lot of the stocks that are associated with new homes or even existing homes like a Home Depot or a Lowe's for that matter here. So not a sharp move to the upside, kind of a gradual bounce back from what we saw from the previous month here, but nothing really to write home about. We're still at relative lows if you kind of look at the overall one year chart for existing home sales.

Sam (1:25)

All right. And as we know, obviously the housing market also important for the banks. With respect to some of that lending, we got a mixed report out from the names that obviously reported this morning. A bit of a mixed reaction in this market right now as well. It was interesting how we saw that weakness in FIC coming from Goldman, JP Morgan, but Citi actually bucking the trend when it certainly came to that particular category. It looks like consumer cards holding up in some respects, although did misestimate over at Citi, but all in all, it looked like equity trading was pretty strong at Goldman and also JP Morgan. Just walk us through your highlights from these earnings reports this morning.

Kevin Green (2:08)

Well, both of those companies, JP Morgan and Goldman Sachs, kind of hinted about a month ago that they might see some weakness when it comes to the fixed income trading, and then also maybe some slowing when it comes to investment banking, that's exactly what we saw in the JP Morgan numbers. Now, Citi did kind of surprise to the upside here in some of the marks, but I would say that these were mixed reports and kind of aligned with some of the commentary that we've heard over the last month or so. The challenging thing when it comes to financials, Sam, is the fact that we kind of see maybe a little bit of a bullish reaction in pre-market trading, and then we see it fade throughout the equity session. I think that's exactly what we were seeing right now. We're seeing Citi down about 2.25%. We have JP Morgan down about 0.7%.

So it is kind of selling off or backing off here, but nothing that screams economic slowing, but some weakness in pockets of their portfolio that actually have been able to surprise the street over the last couple of quarters, especially when you're looking at the fixed income side of their business here. So investment banking is slowing, but kind of not surprising. We know that there are some deals that have been delayed to either later on this year or early next year. And once those deals kind of go through, I would not be surprised you see a little bit more of a bounce back in that activity.

Sam (3:17)

As you say, well flagged and probably priced in at this point as far as some of the commentary going into the financials earnings today. But as you mentioned, interesting pre-market trading, particularly in JP Morgan, when we initially got those numbers, we did see a sell off. And then the guide, which was unusually late, about 45 minutes, which it then reported to the upside, we did see a little bit of a turnaround in that stock. But as you say, coming off now in the session, Goldman has actually just slipped to the downside as well. It had actually been helping the Dow out this morning. We've slipped on the index too. So yeah, interesting to watch the reaction here this morning. We'll see what they have to say moving forward because I guess for all the worries, the guides don't look too bad. But let's talk about the chips because obviously we've had this kind of China scare 3 as some people are calling it with CXMT.