US bank mgmt teams other than those at JPM are downbeat. Citi missed on revenues, with the CEO citing a “very disappointing” 4Q23. BofA’s trading revenues were hit by continued high interest rates and geopolitical tensions, and profits by a regulatory charge. JPM started down (that pesky $2.9bn fee tied to gov seizures of failed regional banks), but its stock turned around after forecasting higher interest growth. It generated over $4bn in profits from First Republic, out of its total of nearly $50bn. Wells Fargo was solid, on the back of cost cuts and higher rates, but it missed on EPS because of higher non-interest expenses.
Dimon is saying that inflation is probably stickier than folks are expecting. Bloomberg notes that the latest flow data shows that investors are ignoring inflation risk with their March Fed rate cut expectation. Fed’s Mester says it is premature to consider cutting interest rates in Mar. So, why is no one believing them with their positioning? Maybe look at the PPI data today. Producer prices unexpectedly declined.
Crude is back at $75 on the back of the joint airstrikes launched by the US and the UK against Houthi targets in Yemen. Hopefully this conflict remains contained in its current areas.
Bloomberg is reporting that US credit card delinquency rates climbed to a decade-long high, per a Fed study. If Dimon is right on inflation, the consumer is already stretched.
Lots of folks came out short on Japan. But, as we’ve reported, they have been strong. Japanese equities closed higher on Friday, yet off intraday highs: Nikkei +1.50% and Topix +0.46%. The short folks are either doubling down right now or reconsidering their shorts after a strong overall week.
If stuff is late or gets more expensive, you’ll know why via this chart by BofA.
They are saying that net exposure is not long enough into the 4Q23 earnings prints happening right now, so if the numbers beat, we’ll see a continued rally.
Daily Chartbook is saying that strong macro data should drive an upside surprise this earnings season.
Strongest start to a year on record, with $163bn of inflows in the first two weeks of 2024.
It’s loan growth fell to a record low. Demand is soft. They’ve actually got deflation, remember, with a soft economy. For an economy historically dependent on real estate, folks are jittery about the current situation—and banks are too. So, it’s a stall situation. The stock of aggregate financing, pretty much the biggest measure of credit to the real economy—while up in Dec—grew at a much slower pace than the double digits experienced in prior years.
