Here’s the weekly rundown
*A bit short this week as I have been under the weather and not been able to watch things as closely.
Weekly Summary:
Forget #PSL and pumpkin spice season…It’s earnings season and earnings are exactly what the 4 major US banks are churning out in Q3!
This week, J.P. Morgan, Bank of America, Citigroup, and Wells Fargo all reported earnings that blew away Wall Street’s expectations. The key though, wasn’t as much their earnings as it was what they were saying.
While questions and lack of clarity about inflation, the supply chain, and overall direction of the US economy had put pressure on markets through September and the first half of October, it looks like the banks are giving some answers.
What answers?
First, almost all of the banks made a point to recognize major reserve releases that they had been holding onto if the COVID pandemic caused widespread defaults. You wouldn’t do that if you thought the economy was about to hit a rough patch.
Second, people have more money today than they did before the pandemic. How much more? A lot..for example, Bank of America stated clients with smaller account balances now have balances that are 3x-4x higher than they were pre-pandemic and growing. Similarly Wells Fargo stated their median account balances were up 40% compared to pre-pandemic levels.
Third, spending isn’t showing signs of slowing. Consumers are spending 10% – 20% or more on travel, entertainment, and restaurants today than they were at this same time in 2019. That’s 10% – 20% more than they were before the pandemic and in the light of consumers saving more money. Ultimately, this week’s earnings calls from the major banks were a confirmation that the demand side of the economy is strong and likely to remain so -which is why the S&P rallied 1.82%.
More From Financials
- Bank of America expects US GDP to be 5.5% for 2021 and 5.2% for 2022
- Jamie Diamon (CEO J.P. Morgan) expects inflation to be higher than consensus
The Major Headlines:
Oldest Man in Space
At 90 years old most people aren’t planning a space trip that is unless you’re Star Trek actor William Shatner –See Article
Southwest – You are Not Free to Move About the County
It’s a bad week for Southwest Airlines who had to cancel more than 2,000 flights as “bad weather” and lack of air traffic control staff in Florida caused issues for the point-to-point airline. –See Article
Advisors to the FDA Recommend Moderna’s Booster
For those 65 and older, Moderna may have a booster ready to compete with Pfizers which was approved less than a month ago. –See Article
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