Q2 Beats for BofA and Morgan Stanley, Dow Aims for 7-Day Win Streak, June Retail Sales Miss 7/18/23

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Jim Cramer (0:31)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:38)

Good Tuesday 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. Pre-market's a little soggy as some of the bank earnings underwhelm.

Retail sales come in a bit light on headline, up two tenths, the Dow. Industrials are riding a six-session win streak. A roadmap begins with the banks, BofA and Morgan Stanley top estimates, but PNC shares are under some pressure as revenue misses.

David Faber (1:01)

Plus, we'll talk the macroeconomic picture. Retail sales knocked a third straight month of gains. Goldman Sachs lowering its recession forecast.

And as for stocks, well, they continue to be near those 15-month highs. We're also looking for perhaps signs of a rebound in the telecom group after just what has been a significant loss of market cap in the last couple of trading sessions.

Carl Quintanilla (1:24)

Let's start with the bank earnings led by BofA and Morgan Stanley. Jim, the Morgan Stanley story, we'll hear from Gorman in the next hour with Leslie Picker, but this balance between wealth management revenue trying to make up for deal shortfalls.

Jim Cramer (1:36)

Well, I think it does. I mean, you've got something, look, you have 100 billion new net money.

That just beats everyone by a mile. I think it's fantastic. There is 200 billion in six months. It's really incredible. Now, the fact that it's trading slow, M&A is soft and we expect that. We hope that that changed. Comp costs were high, but it was because they took a severance.

I think it's a very solid quarter and solid shouldn't matter. We can't just dismiss it because it's only solid. David, it just doesn't make sense to dismiss a quarter that's solid.

David Faber (2:15)

So direction for the stock off of this, what?

Jim Cramer (2:18)

Well, I think that what you have to do is you say to yourself, okay, it's not an editor's income story, you've got all these things going, you have a lot of money coming in, and if you have M&A doing better, which I expect it will, if you have trading that's slow and do better, then it's a great stock to buy.

Well, okay means that everything I just said is, well, that's like my mother used to do that when I prattled. Okay, Jim. I mean, I think there's more to it. I think that this is the kind of situation where you have a great CET 1, a 15.5.

You basically have a dividend increase, a dividend that's got 4%. This is the, look, is it JP Morgan? Everything's gonna be compared to JP Morgan. And JP Morgan, I told you, is a big growth stock now. Right. Because they've been able to consolidate and do a lot of nationwide banking. I think this is, I don't wanna call this acceptable. I'm not gonna call Bank of America acceptable either. I think these banks are doing incredibly well.

But they're not in video. I mean, that's a...

David Faber (3:19)

I know, but just a quick, you know, Mike Mayo, long time analyst at Wells on Morgan Stanley. A beat, mixed bag in the quarter, slightly better than expected revenue versus what had been lowered expectations, helped by institutional securities and wealth, but mitigated by worse than expected investment management and expenses.

Jim Cramer (3:37)

Well, expenses we know is cause of a severance. So I don't buy that one bit. Severances were good.

I do think that this is, if the bank can do this well, this is the way I wanna posit. If it can do this well, without M&A, okay, without any IPOs, then what will it do when it gets M&A and IPOs? You have to be thinking about where it's gonna be, not where it is.

Carl Quintanilla (4:01)

Kind of takes us to what Katie Huberty of Morgan Stanley publishes today in one of her chart books. And that is an inflection point for M&A. They believe Jim, beginning in 2024, equity capital markets starting to show signs of life, M&A typically next.

Additionally, corporates are receiving increased clarity on the regulatory front.

Jim Cramer (4:20)