Medicare Agent News: Big Banks Strike Back

Tuesday, April 18, 2023

Big Banks Strike Back

By Connor Smith | Friday, April 14

Earnings Season Returns. Stocks fell today as investors digested the first wave of earnings reports from big banks, along with a weak retail sales report.

The Dow Jones Industrial Average fell 0.4% but rose 1.2% on the week to extend its winning streak to four weeks. It's the Dow's longest weekly winning streak since the four week stretch ending Oct. 28.

The S&P 500 fell 0.2% but rose 0.8% on the week. It's risen in four of the past five weeks. So has the Nasdaq Composite, which fell 0.4% today but rose 0.3% on the week.

"Wall Street got scared after strong results from JPMorgan, surging inflation expectations, and some hawkish Fed speak, supported the idea that the Fed could raise rates not just in May but also in June," writes Oanda analyst Edward Moya. "There was too much news to digest this morning, but the key takeaway is that the Fed has room to do more harm."

Barron's Carleton English reports that JPMorgan Chase's first-quarter results soared past expectations. Profits jumped 52% year over year while revenue was up 25%. JPMorgan Chase, Citigroup, and Wells Fargo all topped expectations. Carleton writes:

Wall Street was jittery ahead of earnings in light of the collapses of Silicon Valley Bank and Signature Bank. But the reads from the large lenders suggested that the biggest banks, at least, are well equipped to deal with near-term headwinds.

“There is no evidence of a banking crisis except that it seems that JPM has been a port in the storm,” wrote Wells Fargo Securities analyst Mike Mayo. UBS analyst Erika Najarian echoed that sentiment, writing, “What crisis? The banking industry flexes back.”

The big banks also seem to be benefitting from the turmoil. JPMorgan and others witnessed deposit inflows in the final few weeks of the quarter after the downfall of Silicon Valley Bank and Signature Bank. Those banks’ failures may have prompted customers to move money to bigger lenders, which are seen as stronger and more strictly regulated.

Retail sales were another story. March retail sales fell 1% from February. Excluding changes in the prices of gas and automobiles, sales were down 0.3%.

"The retail sales report, in my opinion, is a disaster," writes Navellier & Associates' Louis Navellier. "Retail sales have now declined in four of the past five months, so there is no doubt that consumers have become much more cautious. Overall, this dismal retail sales report is further evidence of slowing GDP growth and indicative that the Fed does not have to raise key interest rates."

Fed Governor Christopher Waller also said inflation was "still much too high" during a speech on Friday.

"The way Fed’s Waller talking about inflation is as if it is hotter than a billy goat with a blow torch," Moya writes. That's one way to put it.

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