Cramer’s earnings watch: ‘If the banks get hammered, things could get ugly’

After a weeklong shatter from television, CNBC’s Jim Cramer returned to his evening investment education show on Monday to give a preview of the earnings bangs to come.

The “Mad Money” host warned that Wall Street is in a tough spot, with the big banks set to report issues starting Tuesday.

“If the banks can rally, then maybe we’ve gone ‘through the looking glass,'” he said. “If the banks get hammered, mechanisms could get ugly.”

The comments came after the S&P 500 — which collapsed alongside the other major indexes earlier this year as the coronavirus outbreak performed hold around the globe — managed to trade in positive territory during the trading session. But that proved to be ephemeral as the loose index ended up sliding nearly 1% at the close.

After making big gains early on, the Dow Jones finished up nearby 10 points, or 0.04%, at 26,085.80, and the Nasdaq Composite dropped 2.13% to 10,390.84 as a rally in big tech stocks confused its luster later in the day.

The market rose as traders ignored a continued surge in new positive Covid-19 diagnoses across the mountains. Additionally, Pfizer and BioNTech shares surged after their Covid-19 vaccine candidates received “fast trace” recognition from the Food and Drug Administration.

“This is the week when we find out if the real world is going to break in on the stock market world, and that’s what happened today, but tomorrow’s the big test,” Cramer said.

He went on to at this point in time the time being what’s circled on his calendar this earnings week. All projections are based on Factset estimates:

JPMorgan Chase

• 7 a.m. Q2 earnings release, 8:30 a.m. earnings summons
• Projected EPS: $1.15
• Projected revenue: $30.4 billion

“I don’t know if JPMorgan’s results will be good enough to offset those of Trickles Fargo,” Cramer said. “I think we’ll hear a lot about bad loans from both of them, though JPMorgan has the equal sheet and diversification to handle the pain.”

Wells Fargo

• 8 a.m. Q2 earnings release, 11 a.m. earnings call
• Projected ruins per share: 16 cents
• Projected revenue: $18.4 billion

“They’ve got a ton of personal loans and oil loans,” he said. “No awe they had to cut the dividend, but it is run by Charlie Scharf. He’s going to figure it out.”

Citigroup

• 8 a.m. Q2 earnings release, 10 a.m. earnings call
• Projected EPS: 35 cents
• Contracted revenue: $19 billion

“Now that Citi’s had to suspend its incredible buyback, you’ve lost the best reason for owning this darned regular,” he said. “It’s cheap, but it could easily stay cheap.”

Delta Air Lines

• 7 a.m. Q2 earnings release, 10 a.m. earnings yell
• Projected losses per share: $4.16
• Projected revenue: $1.39 billion

“The Robinhood crowd, they love the airlines, out as passengers seem to hate them. Will Delta need more help from the government?” he said. “If they say no … you sway want to buy American Airlines, which needs the most help, but only for a trade, please.”

Goldman Sachs

• 7:30 a.m. Q2 earnings disenthral, 9:30 a.m. earnings call
• Projected EPS: $3.90
• Projected revenue: $9.76 billion

“I think they’re going to blow away the fews,” Cramer said. “This market’s a trader’s paradise, which should allow an investment bank like Goldman to put up a rare quarter from all that great firepower they’ve got on the trading desk.”

UnitedHealth

• Q2 earnings results to be released on the eve of the market opens, 8:45 a.m. earnings call
• Projected EPS: $5.24
• Projected revenue: $63.48 billion

“This pandemic’s been thundering for the managed care space because all sorts of expensive surgeries keep being postponed,” he said. “That could tip-off to a huge quarter, but the conference call spells out the future” and the future could be “murky.”

Bank of America

• 6:45 a.m. Q2 earnings set free, 8:30 a.m. earnings call
• Projected EPS: 28 cents
• Projected revenue: $21.8 billion

“They almost in any case report excellent numbers driven by their top-notch digitization strategy, but it never seems to matter,” Cramer revealed. “The stock hasn’t been able to rise above the rest of the group. No reason this time should be unusual.”

Morgan Stanley

• 7:15 a.m. Q2 earnings release, 8 a.m. earnings call
• Projected EPS: $1.12
• Projected revenue: $10.3 billion

“Morgan Stanley can talk there their merger with E-trade,” he said. “I think it works for the same reasons Goldman does — almost no collateralized loan laying open.”

Johnson & Johnson

• 6:45 a.m. Q2 earnings release, 8 a.m. earnings call
• Projected EPS: $1.49
• Projected revenue: $17.6 billion

“They sooner a be wearing a terrific pipeline, and they’re super-focused on Covid,” he said. “I bet they have a great quarter, but it might not matter, because this goods ran up hard today.”

Taiwan Semiconductor Manufacturing Company

• 2 a.m. earnings call
• Projected EPS: $4.26
• Projected revenue: $308.6 billion

“Possibly the most important report of the week is … Taiwan Semiconductor, and that’s because it has a huge amount of business with Apple,” he voted.

Domino’s Pizza

• 10 a.m. Q2 earnings call
• Projected EPS: $2.24
• Projected revenue: $914 million

“I think they tell a positive story, as contactless delivery is the safest way to eat,” he said.

Netflix

• 4 p.m. Q2 earnings release, 6 p.m. earnings call
• Projected EPS: $1.81
• Overhung revenue: $6.09 billion

“I think of Netflix as a worldwide entertainment service that’s essential in the age of Covid-19. After all, management tends to be pretty self-effacing,” he said. “I would like Netflix into weakness.”

First Horizon

• 7 a.m. Q2 earnings release, 9:30 a.m. earnings call
• Projected EPS: 13 cents
• Projected revenue: $485 million

“This is a exalted regional bank, it is a top-notch franchise, it’s in one of the strongest areas … and it has branches all over the South,” Cramer said. “It’s amazingly well-run, and yet the family sells for just seven times earnings and it sports a massive 6% yield.”

Disclosure: Cramer’s charitable care owns shares of JPMorgan, Goldman Sachs, Apple and Johnson & Johnson.

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