|Bid||70.80 x 3200|
|Ask||70.92 x 1100|
|Day's Range||70.86 - 72.17|
|52 Week Range||48.42 - 75.24|
|Beta (3Y Monthly)||1.82|
|PE Ratio (TTM)||9.87|
|Earnings Date||Oct 15, 2019|
|Forward Dividend & Yield||2.04 (2.84%)|
|1y Target Est||82.24|
President Donald Trump is warning that there is still a "long way to go" on the trade deal between the U.S. and China. Erin Gibbs, President and Chief Investment Officer at Gibbs Wealth Management, and Brian Levitt, Global Market Strategist for North America at Invesco, join Yahoo Finance's 'The First Trade' to discuss what's moving the markets around the opening bell.
(Bloomberg) -- Medallia Inc. ended its first day as a public company with one of the year’s 10 best trading debuts after its $325.5 million initial public offering.Shares of the enterprise software provider, which rose as much as 88% Friday, closed up 76% to $37.05. That gave it the eighth-best first-day performance out of 105 IPOs in the U.S. this year, according to data compiled by Bloomberg.The company and some of its investors sold 15.5 million shares on Thursday for $21 each after marketing 14.5 million of them for $16 to $18. The listing values the company at about $4.5 billion, based on the additional stock sold and the number of shares outstanding, as listed in regulatory filings.Beyond Meat Inc. had the year’s best U.S. trading debut after its $276 million IPO in May. The meat-substitute producer soared 163% on first day and is now up 581% from its offer price, also the best in the U.S. this year.Medallia Chief Executive Officer Leslie Stretch said he was pleased with the company’s debut, as well as its progress toward profitability.“We need to invest in sales and marketing -- go to market -- and we’re doing that aggressively,” Stretch said in an interview. “We’re going to continue with our trajectory.”The San Francisco-based company’s net loss for the quarter ending April 30 was $2.6 million on revenue of $94 million, it said in the filings. That compared with a net loss of $28 million on revenue of $71 million for the same period last year.The offering was led by Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The shares are trading on the New York Stock Exchange under the symbol MDLA.(Updates with closing share price in second paragraph)To contact the reporter on this story: Michael Hytha in San Francisco at email@example.comTo contact the editors responsible for this story: Liana Baker at firstname.lastname@example.org, Michael Hytha, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The Federal Reserve has resorted to fallacy.After the central bank’s June meeting, policy makers indicated that the case for easing monetary policy had grown but that they wanted to wait to see further evidence of weakening data before lowering interest rates. U.S.-China trade tensions were certainly a risk, but as Chair Jerome Powell noted on June 25, a week after the central bank’s decision, “the amount of tariffs that are in place right now is not large enough to represent a major — from a quantitative standpoint — threat to the economy. The concern is about confidence and financial market ripple effects.”Fast-forward to the present, and you’d hardly recognize that patient, prudent stance. Bond traders in the past 24 hours have rapidly moved toward pricing in not just an interest-rate cut at the end of the month, but a steep, 50-basis-point reduction. New York Fed President John Williams and Fed Vice Chair Richard Clarida tag-teamed to jolt the market odds before the central bank’s self-imposed blackout period begins. Williams said that “when you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.”(2)Where’s the economic distress, exactly?Powell has cited “crosscurrents from global growth and trade” as potentially reverberating onto the U.S. economy. But there’s scant evidence of that happening on a large scale. He said he was watching to see whether tariffs would hurt confidence and financial markets. But a Bloomberg index of expectations for the American economy is the highest since November. The S&P 500 Index is near record levels. High-yield corporate bond spreads are around their one-year average.The only conclusion I can draw from watching the Fed over the past month is that, at best, officials have resorted to cherry-picking data (or ignoring it entirely) to support their plan to lower interest rates. This is sometimes referred to as the fallacy of incomplete evidence. At worst, the central bank caved to political pressure from President Donald Trump for lower rates and a weaker dollar — a point he hammered home again on Friday as he criticized the central bank’s “faulty thought process.”To put the Fed’s cherry-picking in stark relief, I selected a handful of U.S. data and compared it collectively with each month since the central bank’s tightening cycle began in earnest in December 2016. I chose the following metrics:Change in nonfarm payrolls: Arguably the most-watched number to assess the health of the labor market Core Consumer Price Index: Measures the less-volatile components of inflation Empire State Manufacturing Index and Philadelphia Fed Business Outlook: Both are considered good cyclical indicators Retail sales: A closely watched figure for retailers and wholesalers, as well as consumer spending Markit Manufacturing and Services PMIs: Gauges of the industrial and services parts of the economyEvery single one of these measures, when released in the past three weeks, beat analysts’ estimates.(1)That has never happened in a month going back to the end of 2016. It’s a stunning contrast to the baked-in expectations that the Fed will cut by at least a quarter-point, and quite possibly more, because the economy needs a boost.Am I cherry-picking a bit myself? Perhaps. Housing starts and building permits came in weak, for one, and average hourly earnings were an ever-so-slightly disappointing part of the jobs report. But overall, the data has certainly improved since the Fed’s last meeting, captured succinctly by U.S. economic surprise indexes from Citigroup Inc. and Bloomberg, both of which are at the highest since early June.How do top Fed officials explain themselves in the face of this flurry of stronger-than-expected economic figures? They now appear content to simply abandon the pretense of data dependency. Clarida remarked that “you don’t need to wait until things get so bad to have a dramatic series of rate cuts,” adding that research favors acting preemptively. He emphasized “disappointing” global data, while calling U.S. data “mixed.”As I wrote last week, a rate cut this month was never in doubt after Powell’s congressional testimony, which made every effort to highlight risks to the U.S. economy, however small, and areas where it’s doing worse than expected. He could have quite easily left the door open to keeping policy steady, especially after the rebound in the jobs data — in fact I laid out the path to doing so here — but he instead decided it wasn’t worth the effort.That’s too bad. For the Fed to maintain credibility, Powell is going to have to explain at his press conference after the July decision whether the central bank’s reaction function has changed. Because this abrupt change in the span of just a few months, from holding steady to potentially a shocking 50-basis-point cut, tests the limit of plausibility. It certainly seems as if officials are much more focused on comparing their policy to others around the world.I still think the most likely outcome is a consensus quarter-point cut on July 31. In fact, the aggressive commentary from Clarida and Williams could be seen as a way to move the goal posts and make a “smaller” rate cut seem like the patient and prudent way to handle monetary policy — effectively pulling off a “hawkish surprise” and an interest-rate cut at the same time. Indeed, Citigroup Inc. strategists were among those who rushed to adjust their call to a 50-basis-point drop in rates mere hours after the Fed duo moved the markets. Others expect the same.It’s important for bond traders to see through this shift and understand its implications. The Powell Fed of old is no more. Nothing fundamentally has changed in the U.S. economy in recent months, and yet the most influential members of the central bank are clearly determined to ease policy. Whatever the opposite of data-dependency is, that’s what’s driving interest-rate decisions now.(1) A New York Fed spokesman later said the following: "This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting."(2) For those of you who take issue with using CPI over the Fed’s preferred measure of inflation, the most recent reading of the core personal consumption expenditures index also topped forecasts when released on June 28.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Morgan Stanley earnings beat Q2 estimates, following results from Citigroup, JPMorgan Chase, Goldman Sachs and Bank of America.
Bank of America CEO Brian Moynihan just went a long way in showing not all millenials are broke.
Earnings season is underway and corporate buybacks are set to boost earnings per share for S&P 500 companies.
This week marked the start of the bank earnings season. Coming into it, I favored owning three bank stocks: JP Morgan (NYSE:JPM), Bank of America (NYSE:BAC) and Square (NYSE:SQ).The reactions to JPM and BAC earnings were tentative. So the opportunities there remain intact. The third hasn't yet reported, so the SQ stock price continues to hold its own for the bulls.So in light of the recent reports, are they still good to buy at these levels? The short answer is, yes.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, today, I reiterate the reasons why and I also add Citigroup (NYSE:C) to the list of banks to own for the long term.The first few days of the earnings season are muted and did not yet erase the predominant idea that bank stocks are boring and cannot rally. So the investment in them now should continue to be under the assumption that it's for the long term. So What About Their Environment?Contrary to popular belief, banks stocks do perform in lockstep with the general equity markets. Year-to-date JPM and BAC are up just as much as the S&P 500 and Citigroup stock is up double that.In addition, since all of them passed their stress test, they are all committed to defending their own stock prices with financial engineering.They will increase dividends and buy back their own shares so the efforts from the sellers will have to go against a tremendous headwind of cash flow from the banks themselves.The U.S. Federal reserve and other central banks have wreaked havoc with banks' ability to conduct business. They keep manipulating the interest rates and this creates tremendous confusion, especially on Wall Street.Most investors believe that banks need higher rates to profit, but that is not true. Money center banks need a wide spread between short- and long-term rates to profit.So the recent commitment from the Federal reserve to lower short-term rates should invite more lending activity and at a wide spread. Banks borrow short term to lend us long term. So I am not worried about their business models this year. * 10 Best Cryptocurrencies to Keep on Your Radar With that in mind, let's dive a bit deeper into what makes these three stocks to buy. JP Morgan Chase (JPM)Source: Shutterstock Perception on Wall Street is that JPM is the best of the best. Fundamentally it's cheap as it sells at a price-to-earnings ratio of 12x. The book value fluctuates from 1.2 to 1.6, so it's not likely to be a financial debacle to own it here. In addition, JP Morgan stock pays a respectable 2.8% dividend.The management team is a proven winner. They survived the worst financial crisis of the modern era, so they've seen a few hard days. The regulations that followed the 2008 financial crisis made it so that their balance sheets are bullet proof. Recently, JP Morgan recommitted to more capital return via buybacks and dividends.In addition to the value below, JPM stock is trading inside a tight range. It has support at $112 and $110 per share and a neckline at $116.5, above. Technically, this makes for a breakout opportunity since the bulls have been setting an ascending trend of higher lows while knocking at a resistance zone. If they can break through the resistance zone above, then they can overshoot higher and mount a $9 rally.I would own the shares here for this short-term opportunity and/or for the long-term equity investment. Either way, I think JPM stock is a winner.For those who like to trade options there is also the possibility to sell put spreads at the support levels for August and/or buy calls just above the current price. The combination would be cost neutral thereby offering an opportunity to profit with no out-of-pocket expense.The JPM earnings report did not add any new worries so the ongoing fundamentals still favor the long-term bullish thesis than the short. Bank of America (BAC)Source: Shutterstock The fundamentals for BAC stock are very similar to those of JP Morgan. The stock on the other hand trades in a much tighter range. Case in point, in the last few weeks, the Bank of America stock price is ping-ponging inside a $1 wide box and this includes the reaction to an earnings event.BAC sells at a 10.8 P/E and 1.1 times sales, so it's even cheaper than JPM stock. Management is also beyond reproach since they not only survived the crisis but also saved a few banks along with it.Since BAC trades in a tight bunch, I prefer to trade it via options. I like to sell puts into dips and what others fear. It's a low-priced ticker, so I don't mind being out of the stock if one of those trades temporarily fails. Over the long term it will work out. This way I generate income without any out-of-pocket expense.For example, if I sold the Jan $25 puts before the earnings they now are almost 20% cheaper to close the position. The stock only moved up 2% in comparison. And in my scenario, I risked no money out of pocket.It is important to note that I don't sell naked puts unless I am willing and able to own the shares.Since BAC stock is now tight, technically it too has an opportunity to breakout. The bulls need to overcome the current resistance level, so they can target $31.2, which was the fail of April 29. * 7 Battery Stocks for High-Powered Gains Here too the Bank of America earnings report did not change the overall bullish thesis on the stock. Citigroup (C)Source: Shutterstock Citigroup's reactions to earnings was negative. Since then, the C stock price has traded inside that earnings day candle. So, technically, I note the edges of it as short-term catalysts. Meaning that any breach of its sides would carry some momentum in that direction.So if the bulls can beat $72, they can target $76 per share. Conversely, if the sellers can break below $70, they can target $68 per share.Either way, it would be an exercise in short-term trading and won't change the long-term bullish thesis on the stock. Citigroup stock, for the long term, remains a "BUY" in my book and the experts on Wall Street agree since it has very few HOLD and almost no SELL ratings.So which one is best?They are all quality stocks to buy, but from a 2019 perspective, C stock has the best score. Logic says to stick with the winner.However, of the three banks today, C is my least personal favorite. This is nothing against its own fundamentals and more so my worry over its exposure to international situations. Specifically the chatter surrounding its exposure to entities like Deutsche Bank (NYSE:DB) for example. I don't have anything concrete, but if there is a rumor, then there must be some truth to it, and I don't want the surprise of finding out one day.In summary, I can confidently state that the major U.S. banks are almost all stocks to own almost at any time, while they carry their current fundamentals. JPM, BAC and C stock have so much value below that they make the bearish scenario seem shallow at its worst.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post 3 Bank Stocks to Buy After Earnings Headlines appeared first on InvestorPlace.
(Bloomberg Opinion) -- Goldman Sachs Group Inc. and Morgan Stanley are the two Wall Street banks most connected to high-stakes trading. Historically, that made them seem glamorous relative to the other big U.S. institutions, which focused on the more steady business of retail banking.The tide has turned. Persistently low volatility has made it clear that banks can’t count on traders to drive profits. Goldman’s equities revenue beat expectations earlier this week, in a small sign of hope, but Morgan Stanley’s results on Thursday were more far more indicative of the trend. Its $2.13 billion from equities was the highest among banks but was down 14% from a year ago and fell short of even the lowered estimates of $2.27 billion. In fixed income, currencies and commodities, revenue dropped 18% rather than the expected 7% decline.This puts Goldman and Morgan Stanley in a tough spot. They’re not well positioned to immediately compete with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. in catering to the banking needs of Main Street. At the same time, the bank executives have to feel pressure to limit the quarter-to-quarter fluctuations that are at the mercy of the whims of the global markets.Reading between the lines, their answer to this quandary appears to be more emphasis on wealth management.Now, this isn’t exactly a revelation, nor an abrupt shift. Morgan Stanley has been moving into wealth management strategically for a while, and Goldman’s division already oversees more than $1 trillion in assets. Still, the banks’ latest commentary and moves in the past quarter make clear that they see this business, which produces a steady stream of fee-based income, as a way to leverage their reputation as titans of Wall Street.In Morgan Stanley’s earnings call on Thursday, Chief Executive Officer James Gorman specifically praised Dan Simkowitz for his work on building up the firm’s asset-management unit. And by all accounts it was well deserved, with the division’s revenue at the highest in five years. On the wealth-management side, Morgan Stanley posted $4.41 billion of revenue, which was 2% higher than last year and blew away analysts’ estimates for a 9% decline.Moreover, Morgan Stanley’s wealth-management division posted an impressive 28% profit margin. So impressive, in fact, that it drew more than one question from analysts about whether the bank can sustain that sort of momentum, including from Mike Mayo of Wells Fargo. Gorman insisted “it’s not like we are sitting back and saying we are really milking this.” Rather, “we’re playing for the long run.”At Goldman, Chief Executive Officer David Solomon on Tuesday highlighted its $750 million purchase of wealth manager United Capital, which was announced in May and represented one of Goldman’s biggest acquisitions in recent memory. Bloomberg News’s Sridhar Natarajan noted at the time that Solomon has made building out fee-based businesses a high priority so that shareholders can more easily estimate the bank’s growth and earnings.None of this is to say that Morgan Stanley and Goldman will abandon their positions as premier trading firms. But it’s notable to parse what Morgan Stanley Chief Financial Officer Jon Pruzan told Bloomberg News’s Sonali Basak in an interview. “We’re No. 1 in the world” in equities trading, he said, adding that “we would expect to maintain our market share in this type of environment.” He reiterated those comments during the analyst call.It’s certainly possible that volatility will resume, given that stock markets are hovering near all-time highs and global central banks are on the verge of further easing monetary policy. But framing expectations in terms of maintaining market share would seem to indicate that Pruzan expects further challenges for trading in the coming months and years. Ted Pick, who oversees all of Morgan Stanley’s traders and investment bankers, made some interesting comments in May about the equities business. He said he had led the division with “high levels of paranoia” because it felt like a couple of competitors were coming after the bank, either on price or looser risk requirements or something else. He said “that’s not a game we’re going to play.”Rather, as these second-quarter earnings make clear, Morgan Stanley is playing the long game. So is Goldman. When it comes to dealing with the fickle nature of financial markets, sometimes the most sound strategy is to play the hand you’re dealt.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Rise in interest income and lower costs support Morgan Stanley's (MS) Q2 earnings. However, weak trading and investment banking performance is on the downside.
The Board of Directors of Citigroup Inc. declared on July 17, 2019 a quarterly dividend on Citigroup’s common stock of $0.51 per share, payable on August 23, 2019 to stockholders of record on August 5, 2019.
A year ago, PNC executives said they had no immediate plans to open the offices in Boston. Those plans have changed.
Bank of America earnings topped second-quarter views, with shares rising Wednesday. The banking giant has been nearing a buy point.
(Bloomberg) -- Netflix Inc.’s earnings should help answer a key question for the streaming giant: whether customers are willing to pay more in an increasingly competitive market.After boosting prices in markets around the world, the company will deliver its second-quarter results on Wednesday afternoon. Analysts don’t expect much growth at home -- they’re predicting a mere 309,240 subscriber additions in the U.S. on average -- but the hope is that the increases and more users overseas will let Netflix sustain the expansion investors have come to expect.“Recent price increases in multiple countries should result in revenue acceleration starting this quarter,” Citigroup Inc. analyst Mark May said in a research note.Wall Street is projecting revenue of $4.93 billion for the period, up 26%. Analysts also will be closely watching the growth in average revenue per user, international profitability, domestic streaming contribution margins and user engagement.Netflix is the dominant paid video streaming service, but it has reason to shore up its position right now. Walt Disney Co., AT&T Inc.’s WarnerMedia and Comcast Corp.’s NBCUniversal are all racing to deliver their own online services, ushering in a new era of intense competition.Against that backdrop, Netflix is building its presence overseas. The company is expected to report the addition of 4.75 million subscribers internationally in the second quarter, according to analyst data compiled by Bloomberg.Shares in the company have risen 36% this year, nearly double the gain of the S&P 500. But it’s still unclear how many customers globally are willing to pay for its product. Greg Peters, the company’s chief product officer, has hinted at the need for a lower-priced subscription tier for users with less disposable income.Read more: The ‘Stranger Things’ hunt for a billion-dollar franchiseSunTrust analyst Matthew Thornton views investor sentiment as neutral-to-cautious heading into earnings, particularly with the stock down as much as 1.2% intraday. But Netflix’s June content slate should lift some spirits as the bank has seen increased web searches for original series like “When They See Us” and “Black Mirror,” Thornton told clients in a note.Things should get more interesting for Netflix in the second half. On the plus side, the Los Gatos, California-based company will get a boost from new seasons of “Stranger Things” and “Orange Is the New Black.” Earlier this month, “Stranger Things” got off to a record start, with 40 million household accounts watching in the first four days of the new season.But Disney’s highly anticipated $6.99-a-month streaming service, called Disney+, arrives in November. Though no one is expecting a large-scale defection from Netflix to Disney+, it should shake up the industry.What Bloomberg Intelligence Says:The price increases should accelerate 2Q average revenue per unit and revenue gains, even as operating margin isn’t expected to improve until 2H with a 13% target for the full year.-- Geetha Ranganathan, senior media analyst-- Click here for the researchJust the Numbers2Q streaming paid net change estimate +5.06 million (Bloomberg MODL data)2Q U.S. streaming paid net change estimate +309,240 2Q international streaming paid net change estimate +4.75 million2Q revenue est. $4.93 billion (range $4.73 billion to $4.98 billion) 2Q GAAP EPS est. 56c (range 52c to 65c)3Q revenue estimate $5.23 billion (range $4.89 billion to $5.52 billion)3Q GAAP EPS estimate $1.03 (range 63c to $1.39)Data32 buys, nine holds, four sells; average price target $398.57 Shares rose after six of prior 12 earnings announcements GAAP EPS beat estimates in nine of past 12 quarters To see deep estimates in this story NFLX US Equity MODLTimingEarnings release expected 4 p.m. (New York time) July 17Conference call website; also follow along on our live blog(Adds SunTrust commentary in eighth paragraph, updates share move and estimates.)\--With assistance from Karen Lin.To contact the reporter on this story: Kamaron Leach in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Nick Turner, Rob GolumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Citigroup (NYSE: C ) got the party started on Monday while JPMorgan Chase (NYSE: JPM ), Goldman Sachs (NYSE: GS ) and others in the financial space, continued the earnings parade yesterday. In other words, ...
On Wednesday, Bank of America (BAC) reported mixed second-quarter results. The bank’s profitability beat analysts' expectation.
(Bloomberg Opinion) -- If there were any doubts left about the strength of the U.S. consumer, Bank of America Corp.’s latest round of earnings should put those to rest.The bank on Wednesday announced a record second-quarter profit, with Chief Executive Officer Brian Moynihan crediting “solid consumer activity across the board, with spending by Bank of America consumers up 5% this quarter over the second quarter of last year.” He added that he sees a steadily growing economy, informed by observing trends among “the one-in-two American households we serve.”Revenue and net income both increased in Bank of America’s consumer business, while credit provisions were stable. That mirrors much of what the other big U.S. banks reported earlier this week: Citigroup Inc.’s consumer division had its best second quarter since 2013; JPMorgan Chase & Co.’s consumer and community banking unit reported a 22% year-over-year increase in net income; and Wells Fargo & Co. had sharply lower credit-loss provisions than analysts estimated. Long story short, Bank of America, with its wide footprint across the country, affirmed the health of the consumer.It would be hard to get the same takeaway from just listening to Federal Reserve Chair Jerome Powell, however. In a speech on Tuesday, the Fed chief mentioned U.S. consumers just once,(2) and even then, he appeared to play down their strength, which would seem surprising given that consumer spending makes up more than two-thirds of the American economy. But it has become abundantly clear since his congressional testimony last week that Powell is going to lean heavily on “trade tensions” and slowing global growth as reasons to justify interest-rate cuts and will go out of his way to add caveats when mentioning positive aspects of the economy.He didn’t disappoint on either front during his comments in France (emphasis mine):“Growth in consumer spending, which was soft in the first quarter, looks to have bounced back, but business fixed investment growth seems to have slowed notably. Moreover, the manufacturing sector has been weak since the beginning of the year, in part weighed down by the softer business spending, weaker growth in the global economy, and, as our business contacts tell us, concerns about trade tensions.”The Fed looms large in just about every aspect of today’s markets, given the central bank’s abrupt shift toward favoring interest-rate reductions starting later this month. And the difference in tone about consumers between the central bank and the biggest U.S. banks is especially notable because the Fed’s about-face on interest rates has caused Bank of America, Citigroup, JPMorgan and Wells Fargo to all miss on net interest margins relative to expectations. That trend has led the leaders of those banks to face some uncomfortable questions this earnings season about their outlooks.Bank of America’s Paul Donofrio adjusted expectations for net interest income on the lender’s analyst call on Wednesday. During the first-quarter call, he had said it could increase by 3% in 2019 compared with 2018. Now, he said the growth will be closer to 2% if interest rates remain stable, and just 1% if the Fed cuts rates twice before the end of the year as bond traders expect.It’s worth noting that Moynihan didn’t see the Fed capitulating to the market’s demands for lower interest rates. I was in attendance when he spoke to the Economic Club of New York on June 4, and at the end of a question-and-answer segment he said he didn’t think the central bank would cut rates this year. What were his reasons for that call? Among them: “We feel very good about the consumer.”What Moynihan, and anyone who thought similarly, couldn’t have predicted is just how locked in the Powell Fed would become to easing policy. Even stronger-than anticipated figures on retail sales, factory output and housing on Tuesday failed to budge the market-implied odds of a July rate cut, not to mention the outlook for the rest of the year. That’s because Fed officials haven’t even pretended to push back on that pricing.U.S. consumers may be as strong as ever, but if Powell is content with brushing that off, then the biggest U.S. banks will have no way to escape the Fed squeeze.(1) Excluding a reference to "consumer price inflation."To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Modest loan growth, higher rates and prudent cost management aid BofA's (BAC) Q2 earnings. However, dismal trading and investment banking performance, and rise in provisions pose concerns.
Comerica's (CMA) second-quarter 2019 results reflect higher revenues and decline in expenses, partly offset by higher provisions.