JPMorgan Chase economists on Friday bailed on their recession call, joining a growing Wall Street chorus that now thinks a contraction is no longer inevitable.
While noting that risks are still high and growth ahead is likely to be slow, the bank’s forecasters think the data flow indicates a soft landing is possible. That comes despite a series of interest rate hikes enacted with the express intent of slowing the economy, and several other substantial headwinds.
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Michael Feroli, chief economist at the nation’s largest bank, told clients that recent metrics are indicating growth of about 2.5% in the third quarter, compared to JPMorgan’s previous forecast for just a 0.5% expansion.
“Given this growth, we doubt the economy will quickly lose enough momentum to slip into a mild contraction as early as next quarter, as we had previously projected,” Feroli wrote.
Along with positive data, he pointed to the resolution of the debt ceiling impasse in Congress as well as the containment of a banking crisis in March as potential headwinds that have since been removed.
Also, he noted productivity gains, due in part to the broader implementation of artificial intelligence, and improved labor supply even as hiring has softened in recent months.
Rate risk
However, he said risk is not completely off the table. Specifically, Feroli cited the danger of Fed policy that has seen 11 interest rate hikes implemented since March 2022. Those increases have totaled 5.25 percentage points, yet inflation is still holding well above the central bank’s 2% target.
“While a recession is no longer our modal scenario, risk of a downturn is still very elevated. One way this risk could materialize is if the Fed is not done hiking rates,” Feroli said. “Another way in which recession risks could materialize is if the normal lagged effects of the tightening already delivered kick in.”
Feroli said he doesn’t expect the Fed to start cutting rates until the third quarter of 2024. Current market pricing is indicating the first cut could come as soon as March 2024, according to CME Group data.
Market pricing also points strongly toward a recession.
A New York Fed indicator that tracks the difference between 3-month and 10-year Treasury yields is pointing to a 66% chance of a contraction in the next 12 months, according to an update Friday. The so-called inverted yield curve has been a reliable recession predictor in data going all the way back to 1959.
Changing mood
However, the mood on Wall Street has changed about the economy.
Earlier this week, Bank of America also threw in the towel on its recession call, telling clients that “recent incoming data has made us reassess” the forecast. The firm now sees growth this year of 2%, followed by 0.7% in 2024 and 1.8% in 2025.
Goldman Sachs also recently lowered its probability for a recession to 20%, down from 25%.
Jamie Dimon, CEO of JPMorgan Chase speaking with CNBC’s Leslie Picker in Bozeman, MT on Aug. 2nd, 2023.
CNBC
JPMorgan Chase CEO Jamie Dimon told CNBC on Wednesday that lawsuits against the giant bank related to its former client, the sex offender Jeffrey Epstein, have impacted its brand equity “a little bit.”
“But we banked Jeffrey Epstein and I’m so sorry that we did. I wish we hadn’t,” Dimon told CNBC’s Leslie Picker. “Had we known then what we know today, we obviously wouldn’t have.”
“And yes, we make terrible mistakes sometimes and we apologize for it,” Dimon later said.
JPMorgan in June agreed to settle for $290 million a New York federal court lawsuit by an Epstein accuser alleging that the bank enabled Epstein’s sex trafficking of young women during the years he kept millions of dollars on deposit there, from 1998 to 2013. Other victims of Epstein will share in that settlement, in which the bank did not admit wrongdoing.
The bank is continuing to fight a similar lawsuit in the same court over its relationship with Epstein by the government of the U.S. Virgin Islands, which is scheduled to go to trial this fall. JPMorgan has denied any wrongdoing in that case.
The Virgin Islands accuses JPMorgan of retaining Epstein as a client despite multiple red flags being raised internally about him over the years.
Epstein had pleaded guilty in 2008 to a Florida state charge of soliciting sex from a minor, five years before JPMorgan booted him as a client.
Asked Wednesday if JPMorgan had changed the way it vets potential clients, Dimon said, “Yes, because we have to be very careful again, we can’t kick out people based on allegations, but again, yes, I think we can do more, particularly around a whole bunch of things.”
JPMorgan spokeswoman Patricia Wexler, when asked about Dimon’s comments, told CNBC, “Any association with Epstein was a mistake and in hindsight we regret it, but we did not help him commit his heinous crimes.”
“We would never have continued to do business with him if we believed he was engaged in an ongoing sex trafficking operation,” Wexler said.
Epstein, 66, killed himself in a Manhattan federal jail in August 2019, a month after he was arrested on child sex trafficking charges.
In May, Republican attorneys general in 19 states wrote Dimon a letter accusing the bank of closing some customers’ accounts “due to their religious or political affiliation.”
JPMorgan has flatly rejected that claim, telling The Wall Street Journal at the time, “We have never and would never exit a client relationship due to their political or religious affiliation.”
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Last week, employees of Florida retail health company Mercola Market told the Florida Voice that JPMorgan abruptly terminated their personal and company bank accounts without explaining the move.
“One of the employees believes the account shutdowns were politically motivated and due to their employer’s controversial stance on COVID-19,” the news outlet reported. Dr. Joseph Mercola owns the company.
JPMorgan told Florida Voice last week, “For privacy reasons, we can’t discuss customer relationships, but we don’t close accounts because of political affiliations, and we didn’t do so in this case.”
The Fitch Ratings downgrade of the United States’ long-term credit rating ultimately doesn’t matter, JPMorgan Chase CEO Jamie Dimon told CNBC on Wednesday.
“It doesn’t really matter that much” because it is the market, and not rating agencies, that determine borrowing costs, Dimon told CNBC’s Leslie Picker.
Still, it is “ridiculous” that countries including Canada have higher credit ratings than the U.S. when they depend on the stability created by the U.S. and its military, Dimon added.
“To have them be triple-A and not America is kind of ridiculous,” Dimon said. “It’s still the most prosperous nation on the planet, it’s the most secure nation in the planet.”
Fitch downgraded the country’s rating to AA+ from AAA on Tuesday, pointing to “expected fiscal deterioration over the next three years,” an erosion of governance and a growing general debt burden.
The agency put the U.S. rating on watch in May after members of Congress butted heads over raising the debt ceiling and brought the country to near-default.
“We should get rid of the debt ceiling,” Dimon said. “It’s used by both parties” in ways that sow uncertainty for markets, he said.
In the wide-ranging interview, Dimon touched on topics including geopolitics, bank regulation, artificial intelligence and the direction of the economy.
The U.S. economy is being supported by consumer and business strength, low unemployment and healthy balance sheets, he said.
“It’s pretty good, even if we go into recession,” Dimon said. “The storm cloud part is still there,” he added, referring to a warning he gave last year on the economy.
What worries Dimon most are the geopolitical risks created by the Ukraine war and the Federal Reserve’s effort to rein in its balance sheet known as quantitative tightening, he said.
Dimon lambasted regulators’ efforts to tighten standards on U.S. banks, saying the proposals unveiled last week were “hugely disappointing.” At one point, he held up a chart showing the web of regulators that banks deal with.
Banks will be forced to hold more capital as a cushion against a variety of risks, which will impact consumers because the industry will cede more products to non-bank players, Dimon warned. That’s what happened in the U.S. mortgage market, which is dominated by firms including Rocket Mortgage.
Part of the changes involve banks ditching internal risk models for more standardized versions from the Federal Reserve.
“If I was the Fed, I’d be careful about saying their models are perfect,” Dimon said. “Remember their models didn’t show inflation and didn’t show 5% interest rates.”
Artificial intelligence technology like ChatGPT “is a gamechanger” that will likely help future generations live longer, better lives, Dimon said.
“It needs to be done right,” Dimon added. “I do worry about it because bad guys are going to use it too.”
Pumpjack near school buses, Arvin, Kern County, California, USA.
Citizens Of The Planet | Universal Images Group | Getty Images
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Digesting data U.S. markets traded higher Monday as all three major indexes edged up. Asia-Pacific markets were mostly higher Tuesday. Hong Kong’s Hang Seng Index was near flat as advance estimates showed the city’s second-quarter gross domestic product contracting 1.3% quarter on quarter. Meanwhile, Australia’s S&P/ASX 200 rose around 0.7% as the central bank kept interest rates unchanged at 4.1% for the second straight month.
Intrigue in India Investors are growing interested in India as the country’s economy expands and stock market rallies — even amid high inflation. “Whatever the world is grappling with, it’s business as usual for India,” said Feroze Azeez, deputy CEO of Anand Rathi Wealth. Here are four sectors analysts think are the most appealing for investors.
HSBC’s humongous profit HSBC reported second-quarter earnings that easily beat analysts’ expectations. Pre-tax profit of the largest bank in U.K. jumped 89% year-on-year to $8.77 billion, while revenue surged 38% to $16.71 billion. In light of those sterling results, HSBC’s board announced they’re planning to initiate a share buyback of up to $2 billion.
New filing against JPMorgan Chase JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” even after the bank says it removed the sex offender as a client in 2013, a lawyer for the U.S. Virgin Islands told a judge Monday. The Virgin Islands alleges that JPMorgan facilitated and financially benefited from Epstein’s sex trafficking of young women.
[PRO] Benefiting from bankruptcies Corporate insolvencies in the U.K. have been rising in recent months. While it’s bad news, obviously, for those bankrupt firms, two global stocks stand to gain from the trend — analysts expect one of them to pop 31% over the next 12 months.
A soft landing — where inflation cools while the U.S. economy, labor market and corporate earnings continue growing — is, of course, good news for markets.
That gave all indexes a rosy July. For the month, the S&P climbed 3.1%, its fifth consecutive month of gains. The Dow jumped 3.4% after experiencing a 13-day rally, its longest since 1987. The Nasdaq Composite popped 4.1%, its first five-month streak in more than two years.
The optimism extended to the commodities market. The promise of higher economic activity, after all, raises demand for the raw input needed to keep the world moving, literally.
Oil prices had their best month since January 2022, when both Brent crude and West Texas Intermediate crude added more than 17.2%. As of publication time, October Brent futures were trading at $85.19 per barrel and the September WTI contract at $81.6 per barrel.
Metal prices are climbing as well. Prices for aluminum and zinc rose 2.7%. Copper — typically seen as an indicator of economic activity because it’s used in most parts of the economy — is at its highest since May 1, putting it on track to have its best month since January.
Rocketing stock prices might not necessarily, or directly, have effects on the cost of eggs in grocery stores, for example. But a hot commodities market nudges up prices in the real world.
That’s the difficult balancing act the Federal Reserve has to contend with: As a soft-landing scenario becomes more plausible, renewed economic activity might, ironically, make inflation harder to suppress.
Oil pump jack on Great Plains, southeastern Wyoming.
Marli Miller | Universal Images Group | Getty Images
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Tepid markets U.S. markets traded higher Monday as all three major indexes edged up slightly after a winning week. Europe’s regional Stoxx 600 index eked out a 0.12% increase on the back of a dip in inflation and higher-than-expected economic growth in the euro zone.
Upbeat euro zone figures The euro zone reported positive economic data Monday. Inflation in July was 5.3%, 20 basis points lower than June’s reading. Separate data showed that the continent’s gross domestic product grew 0.3% in the second quarter, higher than the 0.2% forecast. That figure was mostly boosted by Ireland’s economy, which expanded 3.3% during the period.
Tighter lending conditions For the second half of 2023, U.S. banks expect to tighten standards for all loan categories, according to the Federal Reserve’s Senior Loan Officer Opinion Survey. That means credit limits might lower, and auto loans might be harder to get. In the commercial and industrial lending segment, banks are already seeing less demand for loans.
New filing against JPMorgan Chase JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” even after the bank says it removed the sex offender as a client in 2013, a lawyer for the U.S. Virgin Islands told a judge Monday. The Virgin Islands alleges that JPMorgan facilitated and financially benefited from Epstein’s sex trafficking of young women.
[PRO] Where’s the S&P 500 going? The S&P 500 has rallied a remarkable 20% in seven months and is only around 200 points away from its all-time high. CNBC Pro’s Bob Pisani explains what drove the S&P to such heights, and where the index is going for the final five months of the year.
A soft landing — where inflation cools while the U.S. economy, labor market and corporate earnings continue growing — is, of course, good news for markets.
That gave all indexes a rosy July. For the month, the S&P climbed 3.1%, its fifth consecutive month of gains. The Dow jumped 3.4% after experiencing a 13-day rally, its longest since 1987. The Nasdaq Composite popped 4.1%, its first five-month streak in more than two years.
The optimism extended to the commodities market. The promise of higher economic activity, after all, raises demand for the raw input needed to keep the world moving, literally.
Oil prices are poised to have their best month since January 2022, when both Brent crude and West Texas Intermediate crude added more than 17.2%. At publication time, Brent’s up 14.23% and WTI’s 15.8% for the month. (It’s still the last day of July in the U.S. because of time zone differences.)
Metal prices are climbing as well. Prices for aluminum and zinc rose 2.7%. Copper — typically seen as an indicator of economic activity because it’s used in most parts of the economy — is at its highest since May 1, putting it on track to have its best month since January.
Rocketing stock prices might not necessarily, or directly, have effects on the cost of eggs in grocery stores, for example. But a hot commodities market nudges up prices in the real world.
That’s the difficult balancing act the Federal Reserve has to contend with: As a soft-landing scenario becomes more plausible, renewed economic activity might, ironically, make inflation harder to suppress.
Jeffrey Epstein attends Launch of RADAR MAGAZINE at Hotel QT on May 18, 2005.
Patrick McMullan | Getty Images
JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” after the giant bank says it fired the sex offender as a client, a lawyer for the U.S. Virgin Islands told a judge Monday.
Many of the girls or women had Eastern European surnames, the attorney, Linda Singer, wrote to Manhattan federal Judge Jed Rakoff.
And more than $320,000 of the payments were made to “numerous individuals for whom JPMorgan had no previously identified payments,” Singer wrote in the letter.
The letter accuses JPMorgan of failing to disclose the payments until after the end of discovery, the period during which the bank and the Virgin Islands exchanged evidence as part of an ongoing lawsuit.
Singer asked Rakoff to impose monetary sanctions on JPMorgan for not turning over the information when the Virgin Islands said it should have been disclosed, and to order the bank to turn over “all financial records for any newly disclosed girls or women to whom Epstein made payments.”
The Virgin Islands in its suit alleges that JPMorgan facilitated and financially benefited from sex trafficking by Epstein of young women during the years when he was a client.
Epstein maintained a residence on a private island in the American territory where he sexually abused scores of women, and during that time kept tens of millions of dollars on deposit at JPMorgan.
JPMorgan says it cut ties to Epstein in 2013. But Monday’s court filing challenges the bank’s timeline.
The bank, which denies any wrongdoing related to Epstein, had no immediate comment on the letter.
Singer wrote that documents recently turned over by JPMorgan contained information that had been previously sought by the Virgin Islands during the discovery period.
That information was assembled internally by the bank in October 2019, more than three months after Epstein was arrested on federal child sex trafficking charges. Epstein killed himself in jail in August 2019.
“There is no legitimate reason for JPMorgan failing to identify payments to girls or women the bank itself identified as being related to Epstein — and potential evidence of Epstein’s sex trafficking venture — years before receiving the USVI’s discovery requests,” the attorney wrote.
The letter says that a spreadsheet prepared by JPMorgan listing the dates and beneficiaries of more than 9,000 transactions payable to Epstein-related persons between 2005 and 2019 “had a combined value of over $2.4 billion.”
“Many of the entries reflected accounts and payments, numbering in the thousands and totaling in the hundreds of millions of dollars in value, of which USVI had no prior knowledge or information from JPMorgan’s responses and productions during the fact discovery period,” Singer wrote.
The letter says that JPMorgan has argued the information was not disclosed earlier “because it was not in a custodial production and/or did not relate to individuals specifically identified by the USVI as related to Epstein.”
But Singer noted, “The USVI has repeatedly made clear that its discovery requests are not limited to individuals it specifically identified as being related to Epstein.”
“The USVI specifically identified the individuals it knew were related to Epstein to make its discovery requests clearer — not relieve JPMorgan of its duty to produce known relevant documents,” the lawyer wrote.
Singer told Rakoff that it remains unclear whether JPMorgan has now disclosed all of the payments from Epstein to girls and women.
The lawyer asked the judge to order JPMorgan to produce, within five days, all documents and information concerning its 2019 review of its business with Epstein, and “all financial records for any newly disclosed girls or women to whom Epstein made payments.”
Hosted by Brian Sullivan, “Last Call” is a fast-paced, entertaining business show that explores the intersection of money, culture and policy. Tune in Monday through Friday at 7 p.m. ET on CNBC. TIFIN CEO Vinay Nair joins the show to discuss the team up with JPMorgan.
Mary Callahan Erdoes, chief executive officer of asset management at JPMorgan Chase & Co.
Simon Dawson | Bloomberg | Getty Images
JPMorgan Chase executive Mary Callahan Erdoes sought advice for a $600 million tax issue from disgraced former financier Jeffrey Epstein in 2005, legal filings alleged.
Erdoes, a veteran JPMorgan executive who became head of the bank’s asset and wealth management division in 2009, “personally sought” help from Epstein to resolve the massive tax issue, according to court documents the U.S. Virgin islands filed overnight.
The request from Erdoes was on behalf of someone else, but that information was redacted in the filing.
“It was simply a request for an introduction and it was well before Epstein was arrested or officially accused of any crimes,” a JPMorgan spokeswoman said Tuesday in a statement.
The new allegations about the bank’s yearslong relationship with Epstein came as part of the U.S. territory’s lawsuit accusing JPMorgan of facilitating the notorious ex-money manager’s sex trafficking operation. Epstein killed himself in August 2019 while in jail in Manhattan on child sex trafficking charges.
The USVI in court filings Monday night asked the court for partial summary judgment in its favor. JPMorgan also filed a motion for partial summary judgment overnight.
The territory alleged that Epstein was a “personal resource” for Erdoes and her former boss at JPMorgan, Jes Staley, and that the two bankers decided to keep Epstein as a client for years after he was accused of paying to have underaged girls brought to his home. In a deposition this year, Erdoes acknowledged that JPMorgan was aware of the accusations against Epstein by 2006.
The bank took years to decide to cut Epstein off, only doing so in 2013. JPMorgan agreed to pay $290 million to settle a lawsuit from Epstein’s victims, but the USVI suit has continued.
In 2008, after the Bernie Madoff ponzi scheme was uncovered, Erdoes allegedly asked Staley to reach out to Epstein “to get the scoop from down there,” according to USVI’s latest court filing.
On that, JPMorgan had this statement: “Jeffrey Epstein was in Florida where many of Madoff’s victims lived. If she had made any call at all, it would have been to reach out [to] Jes to see if Epstein had any more details about what was happening there.”
Leon Black, chairman and chief executive officer of Apollo Global Management LLC, at the annual Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 27, 2015.
Patrick T. Fallon | Bloomberg | Getty Images
A Senate panel on Tuesday revealed a yearlong investigation into Apollo Global Management co-founder Leon Black‘s ties to the late disgraced financier Jeffrey Epstein, with a focus on $158 million Black allegedly paid Epstein for tax and estate planning services.
Black has so far provided “inadequate responses” to the committee and refused to detail his payments to Epstein, raising concerns about whether those payments were “were properly characterized as income or gifts for tax purposes,” Senate Finance Committee Chairman Ron Wyden, D-Ore., wrote in a letter dated Monday.
The probe into Black’s tax schemes is one of a series of investigations by the committee into how ultra-wealthy people skirt their tax bills, Wyden’s letter said.
Black, a billionaire, is declining to give the committee anymore personal information.
A spokesperson for Black said that the private equity investor “has cooperated extensively with the Committee, providing detailed information about the matters under review.”
“The transactions referenced in the Committee’s letter were lawful in all respects, were conceived of, vetted and implemented by reputable law firms and tax and other advisors, and Mr. Black has fully paid all taxes owed to the government,” the spokesperson said.
A separate memo responding to Wyden notes that Black has already answered more than a dozen of the committee’s prior questions and produced more than 150 pages of his personal tax and estate documents. The committee’s latest round of questions are “inappropriately invasive” and potentially overstep the panel’s oversight role, Black’s memo contended.
The newly unveiled congressional scrutiny into Black’s relationship with Epstein marks just the latest example of the ongoing backlash faced by high-profile contacts of the money manager, who hanged himself in jail in 2019 while facing child sex trafficking charges.
Overnight, the U.S. Virgin Islands lobbed new accusations against JPMorgan Chase in a lawsuit accusing the bank of enabling Epstein’s criminal activity.
The territory in new court filings alleged that JPMorgan in 2004 had opened accounts and credit cards for two teenagers described as models and friends of Epstein.
A bank report for one of the girls, whose name is redacted, notes that she is a Slovakian citizen and that “Epstein has asked us the favor of opening a checking account for her and he will guarantee her credit card application,” according to the court filing.
The Virgin Islands’ filing also revealed that JPMorgan CFO of Asset and Wealth Management David Brigstocke compared a client’s house to Epstein’s by calling it “more tasteful, and fewer nymphettes.”
Both the Virgin Islands and JPMorgan filed motions overnight for partial summary judgment in the lawsuit.
The Finance Committee opened its investigation in in June 2022, Wyden wrote. The probe sought information about a review of Black’s financial relationship with Epstein that had been commissioned by Apollo’s board of directors in 2020 in the wake of Epstein’s federal indictment.
That review, conducted by law firm Dechert LLP and filed to the SEC in 2021, found that Black paid Epstein $158 million between 2012 and 2017. Witnesses told the firm that Epstein had helped Black solve a potential estate planning problem that could have resulted in a tax liability of $1 billion or more if left unresolved. The firm also reported that Epstein provided additional tax advice to Black that he estimated had saved $600 million in value.
“As a result of Epstein’s work, Black believed, and witnesses generally agreed, that Epstein provided advice that conferred more than $1 billion and as much as $2 billion or more in value to Black,” the law firm reported.
Wyden’s letter alleged Black has refused to address some of the committee’s questions, leaving them without the information needed to evaluate how Black retained income from his Apollo holdings “while avoiding gift and estate taxes on the transfer of enormous wealth to your children.”
The chairman also said that his committee has not heard a sufficient reason for why Epstein “was paid amounts vastly exceeding that paid to other attorneys and accountants involved in these transactions, and why you were willing to pay Epstein over $100 million without a written services agreement or contract.”
Wyden added that he has long been concerned about the “sophisticated tax avoidance schemes” used by the rich “to circumvent federal gift and estate tax laws.”
“With the assistance of sophisticated advisors, the wealthiest one percent of Americans often exploit estate planning and loopholes in the tax code to avoid paying hundreds of millions, or billions, of dollars in gift and estate taxes,” he wrote.
The territory has accused the bank of facilitating and concealing Epstein’s human trafficking operation for more than a decade by ignoring ample evidence of his criminal activity. Top executives at JPMorgan “turned a blind eye” to Epstein’s misconduct, the Virgin Islands alleges, because of the money and high-profile clients that the well-connected financier brought to the bank.
U.S. financier Jeffrey Epstein (C) appears in court where he pleaded guilty to two prostitution charges in West Palm Beach, Florida, U.S. July 30, 2008.
Uma Sanghvi | Palm Beach Post | Reuters
JPMorgan has denied wrongdoing and accused the USVI of helping Epstein, who owned a private island in the territory, carry out his crimes. In May, the bank alleged in a court filing that the former first lady of the Virgin Islands helped secure student visas for some of Epstein’s victims.
The USVI’s motion for summary judgment came less than two weeks after the government revealed that it sought at least $190 million from JPMorgan, in addition to a court order that would protect potential future trafficking victims.
The USVI’s case against the bank is currently scheduled to head to trial on Oct. 23.
Epstein at age 66 killed himself in a federal jail in Manhattan in August 2019, weeks after being arrested on federal child sex trafficking charges.
He had previously pleaded guilty in 2008 to a Florida state charge of procuring sex from an underage girl. He registered as a sex offender and served about 13 months in jail, though he was allowed out on work release for much of that sentence.
JPMorgan ended its banking relationship with Epstein in 2013.
Last month, JPMorgan agreed to pay about $290 million to settle a lawsuit brought by Epstein’s victims.
Goldman Sachs on Wednesday posted profit below analysts’ expectations amid write-downs tied to commercial real estate and the sale of its GreenSky lending unit.
Here’s what the company reported:
Earnings: $3.08 a share vs. $3.18 a share Refinitiv estimate
Revenue: $10.9 billion, vs. $10.84 billion estimate
Second-quarter profit fell 58% to $1.22 billion, or $3.08 a share, on steep declines in trading and investment banking and losses related to GreenSky and legacy investments, which sapped about $3.95 from per share earnings. Revenue fell 8% to $10.9 billion.
The company disclosed a $504 million impairment tied to GreenSky and $485 million in real estate write-downs. Those charges flowed through its operating expenses line, which grew 12% to $8.54 billion.
Shares of the bank climbed less than 1%.
Goldman CEO David Solomon faces a tough environment for his most important businesses as a slump in investment banking and trading activity drags on. On top of that, Goldman had warned investors of write-downs on commercial real estate and impairments tied to its planned sale of fintech unit GreenSky.
Unlike more diversified rivals, Goldman gets the majority of its revenue from volatile Wall Street activities, including trading and investment banking. That can lead to outsized returns during boom times and underperformance when markets don’t cooperate.
Exacerbating the situation, Solomon has spent the past few quarters retrenching from his ill-fated push into consumer banking, which has triggered expenses tied to shrinking the business.
“This quarter reflects continued strategic execution of our goals,” Solomon said in the earnings release. “I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.”
The bank put up a paltry 4.4% return on average tangible common shareholder equity in the quarter, a key performance metric. That is far below both its own target of at least 15% and competitors’ results including JPMorgan Chase and Morgan Stanley, which put up returns of 25% and 12.1% respectively.
Trading and investment banking have been weak lately because of subdued activity and IPOs amid the Federal Reserve’s interest rate increases. But rival JPMorgan posted better-than-expected trading and banking results last week, saying that activity improved late in the quarter, and that raised hopes that Goldman might exceed expectations.
Goldman’s results “reflect the limitations of a business mix that relies more heavily on investment banking and principal investments,” David Fanger of Moody’s Investors Service said in an e-mailed statement. “When client activity remains weak and higher interest rates are pressuring valuations, earnings decline more than at a bank with higher recurring revenues.”
Fixed income trading revenue fell 26% to $2.71 billion, just under the $2.78 billion estimate of analysts surveyed by FactSet. Equities trading revenue was essentially unchanged from a year earlier at $2.97 billion, topping the $2.42 billion estimate.
Investment banking fees fell 20% to $1.43 billion, just below the $1.49 billion estimate.
Asset and wealth management revenue fell 4% to $3.05 billion as the firm booked losses in equity investments and lower incentive fees.
Analysts will likely ask Solomon about updates to his plan to exit consumer banking. Goldman has reportedly been in discussions to offload its Apple Card business to American Express, but it’s unclear how far those talks have advanced.
Goldman shares have dipped nearly 2% this year before Wednesday, compared with the approximately 18% decline of the KBW Bank Index.
A man walks by the Bank of America headquarters on July 18, 2023 in New York.
Eduardo Munoz | View Press | Getty Images
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Market momentum All major U.S. indexes advanced Tuesday. The Dow Jones Industrial Average had its seventh consecutive day of gains as investors digested better-than-expected corporate earnings. Asia-Pacific markets were mixed Wednesday. Hong Kong’s Hang Seng Index slid 1.2%, extending its losses of over 2% yesterday, while Japan’s Nikkei 225 rose 0.78% even as business sentiment in the country fell in July.
Microsoft 365 + $30 Microsoft shares popped around 4% to hit an all-time high after the company announced pricing for its new artificial intelligence service. Named Copilot, the service costs an additional $30 per month, on top of the base Microsoft 365 subscription for Office products. Microsoft also announced its Bing Chat can now respond to images.
I’m feeling unlucky Google is cutting internet access for some employees to reduce the risk of cyberattacks, CNBC has learned. Employees chosen to participate in the new pilot program will only be able to access Google-owned websites, and will also be restricted from administrative permissions like installing software. “Googlers are frequent targets of attacks,” one internal description viewed by CNBC stated.
[PRO] Predictions for the global market The U.S. stock market has rallied this year, but the picture across the world is more varied. CNBC Pro asked 15 market strategists to predict how global stock markets will end the year. Find out which country has the best chance of beating its U.S. counterpart, according to strategists.
In another sign the U.S. economy is more resilient than anticipated, banks have had a good showing this earnings season.
Yes, big banks like JPMorgan Chase, Morgan Stanley and Bank of America are supposed to benefit from the higher interest rates that felled regional banks like Silicon Valley Bank and First Republic.
But investment banking activity — which slowed as higher rates first kicked in last year — is seeing signs of a revival.
JPMorgan’s investment banking revenue beat estimates. As Octavio Marenzi, CEO of consultancy Opimas, put it, “investment banking, which has been a problem child over the past year or so, is starting to show signs of life.”
Indeed, investment banking fees for Bank of America increased 7% to $1.2 billion.
And while Morgan Stanley didn’t do so well on the investment banking front, CEO James Gorman said he believes “we are very, very close” to the end of rate hikes. That would give the banking sector more stable ground on which to operate and rebuild.
Regional banks weren’t left out of the surge of optimism in the sector, either. Charles Schwab, which had struggled since the banking turmoil in March, also saw better-than-expected earnings and revenue last quarter. Investors cheered and gave the bank’s shares a 12.57% bump.
More tellingly, the SPDR Regional Banking ETF added 4.22% to hit $45.73, its best day of gains since June 6, and the most expensive it’s been since early March, prior to the failure of several regional banks.
Goldman Sachs reports later today, wrapping up earnings from big banks. Even if Goldman beats estimates, keep in mind that analysts aren’t expecting much from the investment bank for the second quarter because of several of its ownmissteps.
A woman exits the Bank of America headquarters on July 18, 2023 in New York.
Eduardo Munoz Alvarez | View Press | Getty Images
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Positive market momentum All major U.S. indexes advanced Tuesday. The Dow Jones Industrial Average had its seventh consecutive day of gains as investors digested better-than-expected corporate earnings. European markets traded higher as well. The benchmark Stoxx 600 index added 0.6% as British grocery delivery firm Ocado surged almost 20%.
Microsoft 365 + $30 Microsoft shares popped around 4% to hit an all-time high after the company announced pricing for its new artificial intelligence service. Named Copilot, the service costs an additional $30 per month, on top of the base Microsoft 365 subscription for Office products. Microsoft also announced its Bing Chat can now respond to images.
The other Morgan Morgan Stanley’s shares jumped 6.45% after the bank reported better-than-expected second-quarter earnings and revenue. Revenue climbed 2% to $13.46 billion, boosted by a 16% increase in wealth management revenue. Profits declined 13% to $2.18 billion from a year earlier, but investors took comfort in CEO James Gorman’s comments that the upcoming quarter looks “more constructive.”
Banking on Bank of America Investors pushed Bank of America shares up 4.42% on the bank’s earnings and revenue beat for the second quarter. Both figures were also higher year on year. Profit rose 19% to $7.41 billion while revenue increased 11% to $25.33 billion, helped by a 14% jump in net interest income.
[PRO] Cautious fund managers In the past days, we’ve heard about how the S&P 500 may hit a record high this year amid a perpetually postponed recession. But fund managers are still cautious, according to the latest Bank of America Global Fund Manager Survey. This is how managers are allocating their investments, and the assets they are worried about.
In another sign the U.S. economy is more resilient than anticipated, banks have had a good showing this earnings season.
Yes, big banks like JPMorgan Chase, Morgan Stanley and Bank of America are supposed to benefit from the higher interest rates that felled regional banks like Silicon Valley Bank and First Republic.
But investment banking activity — which slowed as higher rates first kicked in last year — is seeing signs of a revival.
JPMorgan’s investment banking revenue beat estimates. As Octavio Marenzi, CEO of consultancy Opimas, put it, “investment banking, which has been a problem child over the past year or so, is starting to show signs of life.”
Indeed, investment banking fees for Bank of America increased 7% to $1.2 billion.
And while Morgan Stanley didn’t do so well on the investment banking front, CEO James Gorman said he believes “we are very, very close” to the end of rate hikes. That would give the banking sector more stable ground on which to operate and rebuild.
Regional banks weren’t left out of the surge of optimism in the sector, either. Charles Schwab, which had struggled since the banking turmoil in March, also saw better-than-expected earnings and revenue last quarter. Investors cheered and gave the bank’s shares a 12.57% bump.
More tellingly, the SPDR Regional Banking ETF added 4.22% to hit $45.73, its best day of gains since June 6, and the most expensive it’s been since early March, prior to the failure of several regional banks.
Brian Moynihan, CEO of Bank of America Corp., during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., Sept. 22, 2022.
Al Drago | Bloomberg | Getty Images
Bank of America on Tuesday posted second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.
Here’s what Bank of America reported:
Earnings: 88 cents a share vs. 84 cents a share Refinitiv estimate
Revenue: $25.33 billion vs. expected $25.05 billion
related investing news
The bank said earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier. Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion, essentially matching the expectation of analysts surveyed by FactSet.
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” CEO Brian Moynihan said in the release. “Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.”
Bank of America shares climbed more than 4%.
The company’s Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, edging out the $2.77 billion estimate, and equities trading slipped 2% to $1.6 billion, topping the $1.48 billion estimate.
Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn’t played out that way. The company’s net interest income, one of the main drivers of a bank’s revenue, has been questioned lately as loan and deposit growth has slowed. Last week, rival JPMorgan Chase posted a far stronger jump in net interest income that helped fuel a 67% surge in quarterly profit.
Still, CFO Alistair Borthwick told analysts Tuesday that net interest income would be slightly above $57 billion for the year, reaffirming the bank’s previous guidance.
BofA shares declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.
This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.
Mark Smith, Wells Fargo Advisors senior vice president and portfolio manager, joins ‘The Exchange’ to discuss soft landing the bullish case for semiconductors, investment opportunities in banks, and trimming names that are moving up with the rally.
A person enters the JPMorgan Chase headquarters in New York, June 30, 2022.
Andrew Kelly | Reuters
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Lackluster markets U.S. stocks traded mixed Friday, with the Dow Jones Industrial Average the only major index to rise, though all big indexes ended in the green for the week. Asia-Pacific markets fell Monday. China’s Shanghai Composite retreated around 1.2%, leading losses in the region, after disappointing economic data.
The Chinese economy slows China’s second-quarter gross domestic product grew 6.3% from a year ago, falling short of the 7.3% increase analysts had expected. Moreover, the number looks impressive on a year-on-year basis only because Shanghai was in lockdown this time last year. When tabulated month over month, GDP grew only 0.8%, much slower than the 2.2% increase in the first quarter.
Caged bird Twitter’s experiencing negative cash flow because of an approximately 50% drop in advertising revenue and “heavy debt,” Elon Musk said Saturday morning. Musk, who is Twitter’s CTO and executive chairman, told a BBC reporter in April that the company’s “roughly breakeven” and expected to have positive cash flow within the next quarter.
Thawing Activision Blizzard deal Microsoft’s one step closer to acquiring Activision Blizzard. The U.S. Appeals Court on Friday denied the Federal Trade Commission’s motion to stop the $68.7 billion deal, while Britain’s competition regulator said it would consider Microsoft’s proposals to “restructure the transaction.” Meanwhile, Sony’s signed a 10-year agreement with Microsoft to keep Activision’s Call of Duty on the PlayStation console.
[PRO] Retail therapy China’s economy may be slowing, but the country’s “premium” spenders are still splashing out on goods, according to Bernstein. The private wealth management firm estimates there are 263 million people in that category, who are spending on products from these companies and potentially boosting their shares.
Even JPMorgan, the grand dame of U.S. banks, didn’t manage to rouse investor interest. Its net income soared 67% year over year; its stock inched up 0.6%.
Why aren’t investors more excited about banks?
The memory of March’s banking turmoil, I think, still lingers. Higher interest rates may benefit big banks because their deposits are relatively sticky compared with those at regional banks — such as the ill-fated Silicon Valley Bank.
But high rates are also deepening commercial real estate debt, impeding dealmaking and lowering loan demand — all headwinds for banks, regardless of their size. It’s hard, in other words, to muster enthusiasm over banks when rates are still at historically high levels.
Another reason for the disinterest in the banking sector, I think, is because stocks are essentially promises of future earnings. And there’s nothing new or exciting that banks can do, really, to generate income.
In fact, I’d argue that banks are supposed to be boring. No one wants the place where they entrust their money to be exciting. The banks that collapsed this year were all, loosely speaking, deviating from boring banking business: Focusing on tech startups, the crypto industry, or — in the case of Credit Suisse — just straightforwardly plagued by scandals.
It’s maybe not a bad thing, then, that investors aren’t piling into big banks.
The boogeymen continue to be fictional, despite endless attempts to drum up fear and hasten the departure of millions of scared investors. I’m calling the endless negative prattle the “Bear Bilge,” the stuff thrown at us that seems so cerebral and intellectual, but just turns out to miss the mark. I’m being plenty genteel in that summary. I won’t stay that way. You know my thesis by now. There are dozens of commentators who come on-air and posit the “hard landing” scenario for the economy, making it clear that we are indeed on the eve of destruction. These Cassandras are from two camps. The first is made up of negative analysts who dug in their heels and overstayed their welcome. The second group is wealthy hedge fund managers and individuals who see no harm in generating chills simply because they don’t think they are doing so. They regard their fear-mongering as first class advice that can’t possibly have consequences. I get that. If the market crashes they will be lauded for a lifetime. if it percolates, big deal — they didn’t tell you to sell, they just told you not to buy. This “heads I win, tails you lose” mentality is rarely questioned because the media often shares the same bias. The impossibility of any company doing anything right, or as right as the market seems to judge, serves as the only homily worth offering. The sole exception is Warren Buffett who, aside from owning Apple (AAPL), provides no agenda beyond being a happy warrior and a buyer of a second-rate oil company. Sure, he deserves to get away with it, but a lot of his armor stems from history not from current events. It’s not like he’s endorsing Federal Reserve Chair Jerome Powell’s every move, or any move, and he’s the most optimistic of the opining lot. You can see why this is. The Fed has not distinguished itself over the years, with only former Chair Alan Greenspan getting an undeserved free pass. We remember Ben Bernanke, who led the central bank from 2006 to 2014, as the man who saved us from the housing crash, but not the one who caused the crash with endless rate hikes. We slam Powell as the man who kept rates too low for too long without ever considering that every other nation did the same. But we are the only one with great growth and falling inflation in the entire universe. Those who deride Powell never dare to discuss the disaster of the People’s Republic of China, with its once-inconceivable inability to generate any sort of growth even via inflation. An economy that’s one-quarter based on property can’t afford to have no gain in property values as has been the case for most of the year. An economy that’s trying to pivot and become like that of the U.S. — which is 60% service and not 30% as China sports currently — has failed miserably to do so even as it’s been the stated goal for a multitude of years. Sometimes deflation can be as hard to uproot as inflation. Right now what you own in China is going down in value, not unlike a car after it leaves the lot in our country. So why spend at all? It didn’t take long to dispel so many of the boogeymen. Earnings season kicked off with spectacular numbers from Wells Fargo (WFC), JPMorgan (JPM) and PepsiCo (PEP). Wells was expected to take in 10% in net interest income, now it expects to gain 14%. You couldn’t have a bigger delta for its most important line item. JPMorgan showed it is a true growth stock, with beats on the top and bottom lines, and has a ridiculous price-to-earnings multiple of 10. It used to be a big deal for PepsiCo to grow at 4%. Now if it doesn’t grow by 8% we are disappointed. Thank heavens it’s growing at 10%. The gains are no longer just in Frito-Lay. They are in carbonated beverages, too. The emphasis isn’t on good tasting versus good for you. The emphasis is on growth itself. Oh, and weren’t we supposed to fear higher utilization rates for UnitedHealth (UNH)? But what if it’s ready for those rates? Does that count? I’d say it does. So does the market. But let us deal with the bigger issues of the day, the things that were supposed to make equities more dangerous and the 2-year Treasury a more lovey blanket. The first? We had the dichotomy of “hard landing” versus “soft landing.” The cognoscenti swore to us that Powell would haplessly cause the plane to crash. We were just trying to figure out how well they foamed the runaway. The soft landing camp never told us what that really entailed. Shifting in the overhead compartments? But what if there was no landing. What if we just kept on flying because Powell was and is simply better than we thought. So what if he has the charisma of non-participating character. What do we want? Vin Diesel? Powell has set us on a course that plays for time and acknowledges that he’ll be bailed out of any real collapse in employment by the hundreds of thousands of admittedly blue-collared jobs that the multiple rounds of federal largesse will soon bring us. I have been harping of late on how hard it’s been to get all of these dollars to those who need them. The state regulations confounded many who thought that we would have already done the bulk of hiring and would probably be on the side of the firing. Instead, I put all of the spending to date on infrastructure, semiconductors and climate change at about 10%, with 90% about to hit the economy just when the Bear Bilge swore to us that we had to crash. You don’t foam the runway with trillions in federal spending. You simply don’t land at all. The genius of Powell is that he has played for time so well. We are finally getting the intractable items in the consumer price index — cars and rent — to come down. No, we don’t have deflation, just disinflation. The consumer has shifted her pattern of buying to going out and going away — two paths we’ve never seen before so we have no way to gauge their impact. The bears therefore presume the worst. I just say that the retailers have had a hard go because we never thought that anything could change our conspicuous consumption. Who knew that the xenophobes would even travel abroad? But that’s not all we learned. We had come to believe that the biggest of the boogeymen, commercial real estate, had become the ticking time bomb, or some other crank cliché. (Can we retire canary in a coal mine now that we almost never deep mine?) But then we listened to what we expected would be two of the three biggest offenders — JPMorgan and Wells, with only Bank of America awaiting — and we found the loan losses ridiculously low and the reserves dubiously high, making us think that we are going to have to blast some of these negativists with a couple of left hook roundhouses to the temple. But no one will actually do that because the media mogul fear complex can’t resist. You must resist. I know that next week Goldman Sachs (GS) will report and that once-rigorous-now-hapless entity will have to do some serious real estate reserve writing, if not outright write-offs, but the containment to that once-hallowed firm might be shocking but true. The bears just aren’t delivering on the goods on any key negative issue. Of course, the biggest worry to this market is its two-tiered nature: The mega-cap techs versus all the rest. The sense is that the mega-caps have to come back to Earth at some point. I can’t tell you how tempted I am to say that it’s the UnitedHealths and JPMorgans that will play catch-up. But even I, with card carrying bullish credentials, can’t argue for that cause. Nor do I like the leapfrogging of one artificial intelligence play over another, even as we own most of the lot. What has Alphabet (GOOGL) done to deserve its rally? You buy it simply because its CEO now gets that there is actual wood to chop when it comes to its bloated table of employment — not because it’s been chopped. The whole turnaround from a gentle to a precipitous decline in growth and then a pivot to upward revisions based on ChatGPT seems fanciful but enjoyable, certainly not as investible as thought. I like it because it seems to have regained its e-commerce crown. Microsoft (MSFT) owns so much of everything, including video games after its purchase of Activision Blizzard (ATVI), that I can’t come up with a reason to slag it. Although its CFO Amy Hood will most definitively. She won’t have the strong dollar to kick around anymore, though, as that earnings slayer has at last cooled off. Apple makes too much sense not to stay higher. Its ubiquitous nature seems to know no bounds and the fact that the iPhone 14 remains in play is a good sign, not a bad one. There is that much demand still for what we would call an old model. Of course, only those of us who have worn the Vision Pro know what awaits . And those who have not will play the needed role of antagonists. They will get away with their pessimism typically because they are telegenic, an interesting credential, to use a less-than-loaded term. Tesla (TSLA)? It’s Cybertruck will find adherents among the non-truck buyers, so no need to fret about that stock’s multiple. I am beginning to fret about Meta Platforms (META), if only because the Vision Pro is Tim Cook’s pro tennis entry to Mark Zuckerberg’s pickleball contestant. And then there is Nvidia (NVDA). It’s tough to ask for an encore to the $4 billion guide-up for this current quarter. The fact is though, you must think about the nature of computing as going from the multitudinous central processing unit (CPU) to the unique graphics processing unit (GPU), with Intel (INTC) and Advanced Micro Devices (AMD) ceding their actual existential need to that of Nvidia. You just don’t need a lot of CPUs in the new regime. What I suspect will happen soon will be a series of articles about how artificial intelligence is simply an overused term for recommendations (“If you like Colgate, you might like its tooth brush, or if you like Clive Cussler, welcome to Stephen King.”) Sure there will be lots of talk about how it displaces many people, but it hasn’t displaced anyone yet. If it were so powerful wouldn’t it be doing so? The articles won’t buy the “it’s a matter of time” logic and the reversal in Nvidia’s stock on Friday was breathtaking enough to allow the bears out of the den. All of that said, the bullish genie has unleashed the enterprise software hoards, the highest multiple group that has been dormant for ages. Now they are flying — Datadog (DDOG), Cloudflare (NET), Atlassian (TEAM) and the like. That means we are about to see a huge wave of issuance from that venture capitalist-loved sector. Meanwhile Federal Trade Commission Chair Lina Khan’s stunning defeat in the Microsoft-Activision case will lead to a ton of mergers. You can’t block everything. With that defeat, it’s time for the zealot with rigor, Jonathan Kanter from the Justice Department, to assert himself and tell corporate America how to do a deal that can pass muster. He can’t stop Khan, who has no rigor whatsoever, but he can blunt her errant ways with unassailable doctrine. So, put it all together and a more robust M & A market and a better IPO market — you heard it hear first —will take up the slack of the banks and put down the monotony of endless price target boosts from sycophantic analysts. At last they will be busy with new issuance. Now, the good news for the bears is that the next phase of the earnings season could be rocky. Look how the banks opened up and then just collapsed on the altar of State Street’s hideous numbers. Go figure how that piddling institution could erase the gains of Wells and Morgan, but it’s a reminder of how good news is still shunned as an outlier. To me, let’s get the overbought worked off. Let’s go toe-to-toe with the bears and our own mistakes as I did so in an incredibly naked fashion this last Monthly Meeting . Let’s bet that we will tread water until it’s clear that the we don’t have much to fear from the Fed or a recession — and earnings will be good enough to inspire some buying where stocks haven’t run, and some selling where a beat-and-raise is already in the stock price. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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Visitors around the ‘Charging Bull’ statue near the New York Stock Exchange (NYSE) in New York, US, on Thursday, June 29, 2023.
Victor J. Blue | Bloomberg | Getty Images
The boogeymen continue to be fictional, despite endless attempts to drum up fear and hasten the departure of millions of scared investors. I’m calling the endless negative prattle the “Bear Bilge,” the stuff thrown at us that seems so cerebral and intellectual, but just turns out to miss the mark.
I’m being plenty genteel in that summary. I won’t stay that way.
You know my thesis by now. There are dozens of commentators who come on-air and posit the “hard landing” scenario for the economy, making it clear that we are indeed on the eve of destruction. These Cassandras are from two camps. The first is made up of negative analysts who dug in their heels and overstayed their welcome. The second group is wealthy hedge fund managers and individuals who see no harm in generating chills simply because they don’t think they are doing so. They regard their fear-mongering as first class advice that can’t possibly have consequences. I get that. If the market crashes they will be lauded for a lifetime. if it percolates, big deal — they didn’t tell you to sell, they just told you not to buy.
