Empathy and Awareness in Personal and Professional Lives: CEO Mike Gitlin stresses understanding invisible struggles, while JPMorgan reports strong earnings, with net interest income exceeding expectations and deposits stabilizing
Key takeaway from the discussions on the Capital Ideas podcast and Bloomberg Daybreak weekend is the importance of empathy and awareness towards the challenges people face, both in personal and professional lives. Mike Gitlin, CEO of Capital Group, emphasized the significance of understanding invisible struggles like stress, burnout, caregiving, and misunderstanding. Meanwhile, in the financial sector, bank earnings have been a major focus, with JPMorgan reporting impressive results, including record revenue and a strong return on tangible equity. The net interest income came in better than expected, and the bank raised its guidance for the year. However, there were offsets in fee income for some banks, such as Citigroup. The absorption of regional bank failures, like First Republic, has proven to be beneficial for JPMorgan, but the industry dynamics have stabilized, with deposits migrating rather than fleeing. The coming week will bring more bank earnings reports from Bank of America, Morgan Stanley, Charles Schwab, and others.
Banking sector's revenue shift: Trading income overtakes investment banking fees: Despite investment banking fees returning to pre-pandemic levels, trading income, especially in fixed income, remains high. The industry is adjusting staffing levels to lower fee income, but optimistic hiring plans may be reconsidered due to a slow start in 2023. The industry looks towards 2024 for growth.
The banking sector is experiencing a shift in revenue streams, with trading income offsetting the decline in investment banking fees. Trading revenues, particularly in fixed income, are normalizing at historically high levels, while investment banking fees are returning to pre-pandemic levels. The decline in investment banking fees is not necessarily a sign of worsening conditions, but rather a reflection of staffing levels adjusting to lower fee income. The banking industry saw record levels of equities and M&A activity in 2021, leading to optimistic hiring plans. However, the slow start to 2023 has forced banks to reconsider their staffing levels, leading to a trend of rightsizing. While there are hopes for a pickup in the second half of 2023, the industry is increasingly looking towards 2024 for a return to growth. Bank of America, often seen as a bellwether due to its large small business and consumer client base, is also experiencing these trends.
Examining Bank Health: Commercial and Industrial Loans, Wealth Business, and Deal-Making: Monitor commercial and industrial loans for potential weakness, wealth business for deposit cost increases, and deal-making sectors for M&A headwinds and equity gains
That when evaluating the health of the economy and the banking industry, it's essential to examine key indicators from banks' commercial and industrial lending, wealth business, and deal-making sectors. Commercial and industrial loans may show weakness, with stabilized utilization rates and industry data pointing to flattish growth. The wealth business, a significant sector for banks like Bank of America, will be watched for potential leveling deposit cost increases. Goldman Sachs and Morgan Stanley, focused on deal-making, will face headwinds from weak M&A fees but may benefit from equity side gains. Investors should keep an eye on these trends as earnings from these banks are upcoming.
Japan's Inflation Dilemma: BOJ Faces Pressure to Change Policy: Japan's BOJ is considering a policy change due to inflation pressures, but its new governor is cautious and may wait for more evidence before acting.
Japan, which has experienced deflation for three decades, is now facing a unique challenge as inflation pressures have been building, and the Bank of Japan (BOJ) is considering a policy change. According to Paul Jackson, a Bloomberg reporter based in Tokyo, the markets are forecasting that the Consumer Price Index (CPI) will stay firm around 3.2% for June, which is considered high for Japan after decades of deflation. Economists are expecting the BOJ to change its policy, as there are signs of rising prices, such as household expectations and wage growth. However, the BOJ's new governor, Haruhiko Kuroda, who has been cautious about raising interest rates due to Japan's long history of deflation, may wait for more evidence before making a move. The BOJ could consider adjusting its inflation forecast or implementing a stopgap measure to make its stimulus more sustainable in the meantime. Critics have expressed concerns about Japan's addiction to keeping stimulus rolling, but the BOJ is hesitant to make a premature move, given its past experience with raising interest rates too early and falling back into deflation.
BOJ's monetary policy changes uncertain due to inflation and yen: The BOJ is unlikely to change monetary policy until inflation stays above 2% for years, but recent yen strength and political instability add uncertainty. Achieving and sustaining higher inflation rates is challenging due to demographic issues and wage uncertainty.
The Bank of Japan (BOJ) is not expected to make significant changes to its monetary policy until inflation stays above 2% for several years. The recent strengthening of the yen against the dollar has added uncertainty to the situation, as markets are not betting on the BOJ doing nothing at its upcoming meeting. The BOJ's current economic structure, including demographic challenges, makes achieving and sustaining higher inflation rates a difficult task. The wage component has been a critical factor in igniting inflation, but there is still doubt as to whether it will continue. The current political environment in Japan, with Prime Minister Fumio Kishida's popularity dropping due to issues with an identification number scheme, means the likelihood of an early election has decreased, reducing the pressure on the BOJ to avoid market disruptions.
Senate Democrats Propose New Law for Supreme Court's Code of Conduct: Senate Democrats aim to address ethics concerns at the Supreme Court by proposing a new law requiring justices to adopt a formal code of conduct, following a series of questionable actions by justices.
The Supreme Court in the United States is facing renewed scrutiny over ethics concerns, leading Senate Democrats to push for a new law requiring justices to adopt a code of conduct. This push comes in response to a growing list of ethically questionable actions by justices, including accepting luxury travel from donors and using staff to encourage book sales. Currently, the Supreme Court justices are not bound by any formal code of conduct, raising concerns about potential conflicts of interest and the need for greater transparency. The senate judiciary committee is set to vote on this proposed legislation on Thursday.
New legislation in the Senate aims to prevent future ethics conflicts for judges: The Senate introduces a bill to establish clearer disclosure rules, conflicts of interest guidelines, and an enforcement mechanism for lower court judges to prevent future ethics conflicts.
The ongoing debate surrounding ethical conduct and potential conflicts of interest among Supreme Court justices has led to the introduction of new legislation in the Senate. This bill aims to establish clearer disclosure rules, conflicts of interest guidelines, and an enforcement mechanism for lower court judges. The goal is to prevent future ethics conflicts rather than addressing past ones. However, it remains uncertain if this legislation will gain bipartisan support due to political divisions and the court's stance on Congress' constitutional right to impose ethical requirements. The judiciary committee has also faced resistance from key figures, such as Harlan Crowe and Chief Justice John Roberts, in their attempts to gather information related to recent controversies. The court's reluctance to engage in these discussions adds to the uncertainty surrounding the future of this legislation.
Supreme Court's Reputation at Record Low Among Americans: The Supreme Court's reputation is at a record low due to controversial rulings, ethics issues, and the way Republican nominees have been appointed. Reforms like expanding it or imposing term limits are unlikely to happen soon due to legislative hurdles.
The Supreme Court's reputation and trust among Americans, particularly Democrats, is at a record low due to controversial rulings, the way Republican nominees have been appointed, and ethics issues. Imposing a code of conduct may face resistance due to the need for consensus among all justices. The political reality is that court reform, such as expanding it or imposing term limits, is unlikely to happen soon due to the legislative hurdles involved. The court is increasingly seen as a zero-sum game extension of the political process, with Republicans generally supportive of its recent decisions on issues like abortion and affirmative action.
Spain's Election: Economy Takes Backseat to Regional Nationalisms: The Spanish general election is focused on regional nationalisms and cultural wars, with Pedro Sanchez's socialist party facing opposition from Alberto Nunez Feijo's Conservative People's Party. The economy, once a major campaign issue, has taken a backseat.
Spain's general election next weekend is entering its final week with Pedro Sanchez's socialist party facing strong opposition from the Conservative People's Party, led by Alberto Nunez Feijo. Sanchez called the snap summer election to prevent the PP from gaining momentum and to address internal issues within his coalition. The economy, once a potential campaign dominator, has not helped Sanchez, as the issues of regional nationalisms and local cultural wars have taken center stage. Sanchez's proximity to Catalan and Basque secessionists has become a significant point of attack for the right. Feijo, the PP leader, is known for his ability to appeal to both the center and the extreme right, having ruled his region, Galicia, for 12 years and effectively quelled the local nationalist movement. The election's outcome will significantly impact Spain's political landscape.
Last week of Spanish campaigning filled with intrigue: Discussed topics include challenges, AI future, risks, and unintended consequences. Bloomberg Tech conference to explore these issues further with industry leaders.
The last week of campaigning in Spain before the July 23rd vote was filled with intrigue, as discussed by Rodrigo Aruella in Madrid on Bloomberg Daybreak Europe. Meanwhile, important topics such as the challenges people face, the future of artificial intelligence, and its potential risks and unintended consequences continue to be explored. These issues will be further discussed at the Bloomberg Tech conference in San Francisco on May 9th, featuring industry leaders like Snap's Evan Spiegel, Xbox President Sarah Bond, OpenAI's Brad Lightcap, and top researcher Dr. Faye Feili of Stanford. Stay tuned for the latest developments on these and other global business news stories.
Bloomberg Daybreak Weekend: Banks, CPI, SCOTUS, Spain
Recent Episodes from Bloomberg Daybreak: Europe Edition
UPDATE: UK Debt At 100% of GDP, Inheritance Tax Fears & BOJ Holds Rates
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Asian stocks extended a rally in global equities as jobs data backed the view that the US economy is headed for a soft landing. The yen gained as the Bank of Japan left interest rates unchanged.
(2) The Bank of England has given Chancellor of the Exchequer Rachel Reeves a £4 billion ($5.3 billion) lifeline to help ease spending pressures ahead of what she has said will be a tough first budget.
(3) The UK’s Labour government is considering raising wealth taxes. Small businesses and farmers fear liquidation if relief is cut.
(4) French Prime Minister Michel Barnier met with President Emmanuel Macron in Paris late on Thursday to propose a new government after two weeks of tense consultations with rival political groups.
(5) UK government borrowing came in higher than forecast in the first five months of the fiscal year, keeping Chancellor Rachel Reeves under pressure to raise taxes to balance the books in her budget next month.
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BOJ Holds Rates, Inheritance Tax Warning & Understanding Kamala Harris
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Asian stocks extended a rally in global equities as jobs data backed the view that the US economy is headed for a soft landing. The yen gained as the Bank of Japan left interest rates unchanged.
(2) The Bank of England has given Chancellor of the Exchequer Rachel Reeves a £4 billion ($5.3 billion) lifeline to help ease spending pressures ahead of what she has said will be a tough first budget.
(3) The UK’s Labour government is considering raising wealth taxes. Small businesses and farmers fear liquidation if relief is cut.
(4) French Prime Minister Michel Barnier met with President Emmanuel Macron in Paris late on Thursday to propose a new government after two weeks of tense consultations with rival political groups.
(5) The German government has started an internal probe into its Commerzbank AG share sale after the transaction allowed UniCredit to swoop in and take a major stake in the lender.
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The Fed's Big Cut, More Devices Explode & Global Shadow Fleet Exclusive
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On today's podcast:
(1) Federal Reserve Chair Jerome Powell led his colleagues to an outsize interest-rate cut designed to preserve the strength of the US economy as risks to the labor market mount, marking an end to their single-minded focus on quashing inflation.
(2) Traders ramped up their bets on the pace of future US interest-rate cuts after the Federal Reserve reduced its benchmark by half a point and signalled more cuts coming this year.
(3) The Bank of England is likely to decide against cutting interest rates for a second straight meeting, maintaining a patient approach to reversing the most aggressive policy tightening in decades.
(4) Israeli Defense Minister Yoav Gallant declared what he called a “new phase” in the war with regional Islamist groups and said troops would be diverted to the Lebanese border, an indication that long-held fears of a wider conflict may soon be realized.
(5) The City of London thinks the UK could attract as much as £7.7 billion ($10.2 billion) more investment by 2030 if it did a better job of attracting foreign sovereign wealth.
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Exploding Pagers Blamed On Israel, Fed Cut Record Bets Risk & Baby Hedge Funds
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On today's podcast:
(1) Iran-backed Hezbollah accused Israel of orchestrating an attack that killed several people and left almost 3,000 wounded across Lebanon, increasing fears of an all-out war.
(2) Traders who are locked into record wagers tied to the Federal Reserve’s expected interest-rate cut Wednesday are risking sharp losses if officials opt for a standard-sized reduction.
(3) BlackRock Inc. and Microsoft Corp. are teaming up on one of the largest efforts to date to bankroll the build-out of data warehouses and energy infrastructure behind the boom in artificial intelligence.
(4) Steve Cohen has stepped away from the trading floor. While the billionaire hedge fund founder remains Point72 Asset Management’s co-chief investment officer along with Harry Schwefel, he’s no longer investing clients’ capital.
(5) The German Finance Ministry is sticking to a plan to sell off its entire stake in Commerzbank despite UniCredit's move to buy all the shares offered last week, according to people familiar with the matter.
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Rate Uncertainty Highest Since 2007, Amazon Ends WFH & Norway's Currency Slide
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On today's podcast:
(1) Not since the lead-up to the financial crisis have bond traders been so divided about the outcome of the next Federal Reserve decision.
(2) Donald Trump is poised to capitalize on the second attempt on his life in recent months, using the shocking development to try to snatch back the political momentum that Vice President Kamala Harris has enjoyed.
(3) Amazon.com Chief Executive Officer Andy Jassy is moving to streamline the world’s largest online retailer and cloud-computing company, cutting management layers and ordering employees to return to the office five days a week beginning in January.
(4) Intel Chief Executive Officer Pat Gelsinger has landed Amazon.com Inc.’s AWS as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker.
(5) Stavanger harbor bustled in the sun on a recent afternoon, the hoisting cranes, working ships and rigs under construction testament to the city’s status as Norway’s oil capital, and the main source of its wealth. Stavanger harbor bustled in the sun on a recent afternoon, the hoisting cranes, working ships and rigs under construction testament to the city’s status as Norway’s oil capital, and the main source of its wealth.
(6) Keir Starmer said he’s looking to his Italian counterpart Giorgia Meloni for lessons on tackling so-called irregular migration, as Britain’s prime minister grapples with an issue fueling a rise in Western democracies of right-wing parties that are not natural allies of his center-left Labour government.
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Second Trump Assassination Attempt Jolts Presidential Race
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On today's podcast:
(1) Former President Donald Trump is safe after his Secret Service detail opened fire at a man who was wielding an assault rifle at his West Palm Beach, Florida, golf course Sunday, in what the Federal Bureau of Investigation called an apparent assassination attempt.
(2) Back in January, Premier Li Qiang trumpeted China’s success in exceeding its 2023 growth goal without resorting to “massive stimulus.” Repeating the same feat this year now looks less likely.
(3) The Bank of England looks set to stick to its tentative interest-rate cutting when it meets this week, defying skepticism from a growing cohort of investors who see a need for more aggressive action.
(4) Italy and the UK are poised to reaffirm their pledge to defend Ukraine as Prime Minister Keir Starmer travels to Rome to seek support for a proposal to let Kyiv use non-US long-range weapons against Russia.
(5) Widespread flooding in central and eastern Europe from days of unrelenting rain is playing havoc with rail transportation and causing more evacuations of residents as well as damage to homes and infrastructure.
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Daybreak Weekend: Fed Meeting, Eurozone Data, BOJ Decision
- In the US – a preview of next week’s Fed meeting and FedEx earnings.
- In the UK – a preview of Eurozone data.
- In Asia – a look at next week’s BOJ decision and TOKEN2049 Summit .
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ECB Uncertainty, Putin NATO Threat & OpenAI Launches 'Strawberry'
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Clues on when the European Central Bank will next cut interest rates were in short supply on Thursday, with President Christine Lagarde and colleagues awaiting data on how drastically the economy is deteriorating — and how that will shift inflation.
(2) The US and UK governments are discussing allowing Ukraine to deploy British cruise missiles backed by US navigational data to conduct long-range strikes inside Russian territory, according to people familiar with the matter.
(3) The Bank of England's former Chief Economist -- Andy Haldane -- says the Chancellor's claim of a 22-billion pound 'black hole' in government finances is 'unnecessary, unhelpful' and a 'bad' idea.
(4) Republican Donald Trump ruled out appearing at another debate with Democrat Kamala Harris two days after he delivered an uneven performance at their first showdown of the election cycle.
(5) OpenAI is releasing a new artificial intelligence model known internally as “Strawberry” that can perform some human-like reasoning tasks, as it looks to stay at the top of a crowded market of rivals.
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Fed Rate Cut Bets Shrink, Trump Weighs Second Debate & The UK's Prison Problem
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) The bond market has ended its long flirtation with the Federal Reserve cutting interest rates by half a point this month as resilient inflation and labor market data reinforce a measured course of action.
(2) The European Central Bank is set to lower interest rates again, but will remain tight-lipped on the pace and extent of further action with inflation not yet fully defeated.
(3) Donald Trump said he is not inclined to have another debate with Kamala Harris after initially suggesting several additional matchups to supplement Tuesday’s forum.
(4) At least three top investment bankers from different securities firms have been detained by Chinese authorities since August, sending a chill through the industry.
(5) The early release of thousands of prisoners is a calculated move by the new government to relieve pressure on an aging system. Will it pay-off?
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Harris-Trump Fiery Debate, Yen Soars & Pensioner Benefit Cut Anger
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Democrat Kamala Harris and Republican Donald Trump sparred through their first debate on ABC News, with the former president often on the defensive over abortion rights, the January 6 insurrection and on foreign policy. This podcast includes extracts from that ABC News debate.
(2) The Bank of Japan will continue to adjust policy going forward provided the economy performs in line with its projections, BOJ Board Member Junko Nakagawa said, in comments that bumped the yen to its highest level against the dollar since January.
(3) US banks scored a big break from regulators on new capital rules — only to ruin their own celebration with downbeat outlooks on lending.
(4) Keir Starmer received a warning shot from his own Labour Party over the difficult battles ahead as he tries to fix Britain’s public finances, after his government suffered a significant display of dissent over his decision to scrap winter fuel payments for most UK pensioners.
(5) Australian real estate listing provider REA Group Ltd. presented a £5.6 billion ($7.3 billion) takeover proposal for Rightmove Plc that was rejected by the UK’s biggest property portal by market value.
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Related Episodes
Bloomberg Daybreak Weekend: Banks, CPI, SCOTUS, Spain
Bloomberg Daybreak Weekend with Amy Morris takes a look at some of the stories we'll be tracking for you in the coming week including the fresh flood of bank earnings we're waiting for, plus the latest inflation print coming out of Japan, what Senate Democrats want to do to rein in potential excesses at the Supreme Court and the closely-watched elections in Spain.
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Target cutting prices on 5,000 items
Show Notes
Nvidia in focus as Barclays, Stifel boost price targets ahead of Q1 results
The name Magnificent 7 needs to be retired - Goldman
Episode transcripts seekingalpha.com/wsb
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Big banks kick off earnings season
Show Notes
Wells Fargo in charts: Corporate and Investment Banking revenue falls most Q/Q
BofA in charts: Revenue declines in most segments amid slower loan expansion
Delta Air Lines falls after profit guidance lands short of long-term target
Dividend Roundup: Proctor & Gamble, Citigroup, Caterpillar, CVS Health, and more
Episode transcripts seekingalpha.com/wsb
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Retail inflation and big bank earnings arrive
Show Notes
Earnings Calendar
Buy-rated and sell-rated stocks within Technology
Episode transcripts seekingalpha.com/wsb
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National Journal Radio Episode 25: Supreme Court Controversies
