What are your thoughts?
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The world may dodge another recession. But risks are growing
By Julia Horowitz, CNN Business
Published 7:48 AM EDT, Tue April 19, 2022
Bank earnings signal dark clouds on the horizon
America’s biggest lenders have deep insight into the health of the country’s economy. So when their earnings show signs of strain, it’s bad news for the path ahead.
The latest: Bank of America (BAC) was the last to share its results on Monday. The company posted a profit of $7.1 billion for the first three months of the year, a 12% decline compared to the same period in 2021.
Citi (C), Goldman Sachs (GS), Morgan Stanley (MS), Wells Fargo (WFC) and JPMorgan Chase (JPM) also saw large declines in profit during the first quarter.
Bank of America’s stock rose more than 3% on Monday, since it still managed to beat Wall Street’s expectations. But the sector is under pressure. The KBW Bank Index has shed 12% since the beginning of March.
Big takeaways: Market turbulence has put a chill on dealmaking, which was a huge boon to banks last year. Goldman Sachs, for example, saw its investment banking revenues fall to $2.4 billion, a 36% drop compared to the first quarter of 2021.
Main Street is holding up better than Wall Street.
“Lending strength continued with average firmwide loans up 5% while credit losses are still at historically low levels,” JPMorgan Chase CEO Jamie Dimon said last week. “We remain optimistic on the economy, at least for the short term — consumer and business balance sheets as well as consumer spending remain at healthy levels.”
But he cautioned that the outlook is increasingly murky, pointing to “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine.”
Truth be told, US economy has never truly recovered from 2008 financial crisis. It appears to have bounced back into an economic "bo-m" since then simply because of the many $trillions Federal Reserve has printed out of thin air. Food for thought - how much $1 is worth today compared to 2008?
Buy a bicycle and move to Amsterdam.
Yes.
And our managers will return to the same behaviors they displayed during the pandemic: reducing structural costs, becoming more nimble, how much they enjoy the fresh scent of hand sanitized hands and very much look forward to the latte from the favorite barista.
The current forward looking, energy transition greenwashing, "we are ExxonMobil where we work hard and have fun" attitude will evaporate as oil prices collapse.
Brace for impact.