Market Momentum, New FTC and DOJ Merger Guidelines, Waiting for Netflix and Tesla 7/19/23

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David Faber (0:32)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:37)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures looked at a touch more to Tuesday's melt up as Goldman wraps up the big banks.

We head into mega cap tech tonight with Netflix and Tesla. UK inflation is a relief and yields are lower as housing misses as well. Our roadmap begins with the markets though. Major indices hitting their highest levels in more than a year.

Traders closely watching corporate results. Goldman with a revenue beat.

David Faber (1:03)

Plus the FTC and the Department of Justice announced those long awaited new guidelines on how those enforcers will go about enforcing merger law. Meantime, Microsoft Activision, they extend their deal until October.

We'll have more on that. How about Carvana shares surging? The company reaching a deal to cut its debt by more than a billion dollars.

Carl Quintanilla (1:27)

Let's get to Goldman, though. Joining the bank earnings parade, a lot to dig in here, Jim, including return on equity, which may be among the lowest of the group.

Jim Cramer (1:36)

Yeah, but there are some specifics that actually drove it down, including the right of the green sky issue.

I would say the ultimate issue with Goldman Sachs is they're not as bullish as Morgan Stanley was about the green shoots. Even though they have a deal, a pharmacy, by the way, it's a cosmetic deal out of Israel that's profitable, and they think that's an arbiter. They're seeing good IPO pipeline. And let's not forget, if they go wealth management, the margins are going to be much higher, and that's where they're headed. I regard the quarter, the stock were not big yesterday, I think it'll be fine.

David Faber (2:10)

You have to regard this quarter as a one-off, don't you? Look at this return on tangible equities.

Jim Cramer (2:15)

Yeah, but they had to take... Horrible. They're getting out of a lot of stuff. Right.

David Faber (2:19)

The green sky. That was $670 million.

Jim Cramer (2:24)

It's not positive.

It's not a positive. It's suboptimal.

David Faber (2:27)

It is suboptimal.

Jim Cramer (2:28)

Right.

David Faber (2:29)

So, you're not concerned overall?

Jim Cramer (2:31)

No, because I keep seeing in whether we're going to have... There's some new merger guidelines, which I think are just as...

David Faber (2:38)

Well, we're going to get to that. But...

Jim Cramer (2:40)

No, but I think...

David Faber (2:41)

I mean, an annualized return on equity is still only running at 7.8%.

Jim Cramer (2:45)

I think that they can have a higher... I think that they have made a commitment with Greensky. I think that everything is for sale.

It's difficult to sell the Apple deal they have because Apple has to go along with it. That matters. They have some real estate that they have to get rid of. But the fact is they're going back to the roots. And the roots is a very profitable business. You have IPO, you have M&A, you have wealth management, you'll have some fixed income trading. Very possible.

So, that's all happening, but that's why the stock is up. We can't forget this group has moved dramatically. Goldman moved with Morgan Stanley. Now, I don't know if anyone listened to Gorman yesterday, but it was a happy day as we're here again in terms of the cadence of how things were going.

Carl Quintanilla (3:29)

He did say, God have a plan as deals become available. KRE up four yesterday got some attention, got an upgrade to Schwab today. Or at least JPMorgan adding it to the focus list.

Jim Cramer (3:40)

Well, the sky was not falling.

Everything that Schwab told us, which is that they have this bank business that's not that important, came true. They were totally straightforward.

I do think that we've had an amazing run in banks, including banks like PNC that didn't even do that well, whose stock opened down and then reversed, a very positive action. But David, I don't want to go by the action. What I see is I need to know IPOs. I think they're better. I need to know M&A. I think they're worse.