The central theme is: theUS economy Has she finally reached that turning point that she's been waiting for for months? And the Fed will begin its campaign of rate cut in September? It is with this key that every single piece of data that emerged this week was read: starting from a data on inflation, but above all, at the very end of the week fromstart of the US quarterly season with the publication of the financial statements of the big credit companies: JP Morgan, City and Well Fargo. So if inflation showed a decline even beyond expectations, i US banking giants have recorded good profits, but the high rates have opened the first cracks: in any case for investors they are signals that the Fed no longer has any excuses for delaying the turning point and therefore will have to start cutting rates at the meeting in early September, not without having provided explicit deductions in a couple of weeks, to the FOMC of 30 and 31 July.
La next week it will be the turn, among the big names, of Johnson & Johnson, Bank of America, Netflix, Morgan Stanley and Goldman Sachs. Overall, 182 companies will present their accounts to the market. At that point operators will have more information to confirm or not the bet on the soft landing. Overall, according to the specialized company FactSet, i profits from S&P 500 stocks should increase overall by 8,8% in the second quarter, the highest since the first quarter of 2022, with the tech sector and AI leaders still in focus. But let's look for the first clues in the pages of bank balance sheets.
The accounts confirm the stability of the stress tests, but reveal an uncertain climate
Overall, it must be said, the data of second quarter of the large American banks they showed a good bookkeeping. After all, the large Stars and Stripes banks are veterans of the passing stress tests annual reports of the Federal Reserve, with which they have demonstrated sufficient solidity in the face of adverse scenarios, including serious economic and financial crises. Furthermore, they could also improve if that were achieved modification of the coefficients assets that the Fed is studying.
But in all three budgets they emerged traces of an uncertain climate generated by the combination of high rates of interest e slowdown in consumption, which pushes to greater coverage of potential non-performing loans. Wall Street, immediately after the accounts, the securities of the three banks they have lost ground, with Wells Fargo the most penalized.
JP Morgan beats expectations driven by investment banking
JP Morgan, America's largest bank, showed the best accounts of the three, beating forecasts in the second quarter. Has registered revenues for 50,2 billion dollars, up 22%, while expectations stopped at 42,23 billion dollars. Eps also beaten (earning per share) which was expected at 5,88 while it emerged at 6,12%, approximately 4% more than expected, with a Net income to 18,15 billion, up 25%. However, it is necessary to consider i extraordinary earnings of 8 billion, which the institute reported, in particular thanks to a conversion operation into ordinary shares of the stake in the giant Visa credit cards.
However, yet another record quarterly report has not alleviated the concerns of the CEO of JP Morgan, Jamie Dimon, which fears higher-than-expected inflation, so much so as to lead him to shelve 3,05 billion, above the 2,78 billion expected, in the event of Loan-related losses, even if the net interest margin, the difference between what the bank collects on loans and what it pays on deposits, rose again, by 5% to 22,9 billion. The figure of a bank like JP Moragn is lhigh finance, with the stock trading jumped 21% to 3 billion and that bond by 5% to 4,8 billion.
Dimon, which also recognizes that "there has been some progress in reducing inflation" and that market values seem to assume a "benign outlook", has nevertheless expressed some doubts: “They still exist multiple inflationary forces: large fiscal deficits, infrastructure needs, global trade restructuring, and a remilitarization of the world.” Again: “The geopolitical situation remains complex and potentially the most dangerous since the Second World War, although its outcome and effect on the economy remain unknown." The title is on the stock market it closed last night down 1,13%.
Citigroup focuses on cost reduction (-2%), profits +10%
Citigroup, the third largest American bank by assets, grappling with ambitious reorganization strategies under the leadership of CEO Jane Fraser, has focused on cost containment: i profits increased by 10% to 3,22 billion, with the expenses reduced by 2 percent. As with JP Morgan, investment banking shone: revenue soared by 63% to 935 million with investment banking at 853 million (+60%) and equity trading at 1,5 billion (+37%). The to evaluate are up 150% to 210 million and theearning per share it was 1,52 dollars, above the estimated 1,39. The net interest margin it instead decreased more than anticipated, by 3% to 13,49 billion. And the stock on the stock exchange it closed down 3,1%.
Well Fargo: profits -1%. EPS at $1,33 above expectations, but on the stock market it loses 8%
Wells Fargo, the fourth largest American bank by assets, is the third of the three more traditional bank and therefore more direct contact with the real economy: Earnings for the quarter fell 1% to 4,91 billion and recorded revenue for 20,7 billion, higher than expected. L'earning per share it reached $1,33 ($1,29 expected), but it is decreased on an annual basis. net interest margin however, it fell by 9% to 11,9 billion, a value lower than expected (12,12 billion) due to the higher interest income paid by the bank for financing. In scaling down the outlook, the institute forecast a declining margin of between 8% and 9% for the full year. The group also reported declines in demand for business loans. The CEO Charlie Scharf expects growth in fee income to offset the reduction in net interest income. The title on the stock exchange it closed yesterday down by 7,78% .
