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Fed Chair Jerome Powell answers questions from reporters after the central bank announced an additional 25 bps hike in July.
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Tag: SPDR S&P Regional Banking ETF
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This is not a credit driven cycle, it’s an income driven cycle, says Unlimited’s Bob Elliott
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Bob Elliott, Unlimited CEO, joins ‘Closing Bell Overtime’ to talk the banking sector, tightening lending standards and more.
03:59
19 minutes ago
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CNBC Daily Open: Investment banking’s coming back
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[ad_2]A man walks by the Bank of America headquarters on July 18, 2023 in New York.
Eduardo Munoz | View Press | Getty Images
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.
What you need to know today
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.Banking boom
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. Meanwhile, 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.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.The bottom line
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.
Broader indexes closed higher as well. The S&P 500 rose 0.71%, the Dow Jones Industrial Average added 1.06% and the Nasdaq Composite climbed 0.76%.
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 own missteps.
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CNBC Daily Open: Investment banking sees signs of life
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[ad_2]A woman exits the Bank of America headquarters on July 18, 2023 in New York.
Eduardo Munoz Alvarez | View Press | Getty Images
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.
What you need to know today
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.The bottom line
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.
Broader indexes closed higher as well. The S&P 500 rose 0.71%, the Dow Jones Industrial Average added 1.06% and the Nasdaq Composite climbed 0.76%.
Goldman Sachs reports later today, wrapping up earnings from big banks.
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We shouldn’t be relying on the consumer to fuel banking growth, says Fmr. FDIC Chair Sheila Bair
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Sheila Bair, former FDIC Chair, joins ‘Fast Money’ to talk the financials sector, whether more bank failures are on the horizon and more.
06:00
Tue, Jul 18 20236:24 PM EDT
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Market gains could start broadening into cyclical sectors like financials: Edward Jones’ Mahajan
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Mona Mahajan, Edward Jones senior investment strategist, and Sameer Samana, Wells Fargo Investment Institute senior global market strategist, joins ‘Closing Bell Overtime’ to talk earnings, the banking sector, the markets as a whole and more.
05:13
Tue, Jul 18 20234:57 PM EDT
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Take advantage of regional bank fallout by buying ‘cheap’ financial stocks: Annandale’s George Seay
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Keith Lerner, Truist, and George Seay, Annandale Capital, joins ‘Closing Bell Overtime’ to talk the day’s market action.
04:16
2 hours ago
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Large banks with government backing are more resilient to rate hikes, says Wells Fargo’s Mark Smith
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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.
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Better valuations are ahead for bank stocks following stress test results: Christopher Marinac
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Christopher Marinac, Janney Montgomery Scott director of research, joins ‘Fast Money’ to discuss the results of the Federal Reserve’s banking stress test and what that means for bank stocks moving forward.
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All 23 stress tested banks stayed above the Fed’s minimum capital requierments
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Charles Lieberman, Advisors Capital Management CIO and Bruce Harting, Wedbush managing director, join ‘Closing Bell Overtime’ to discuss the banking sector, the latest banking data from the Federal Reserve, and more.
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Watch CNBC’s full interview with Charles Lieberman and Bruce Harting
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Charles Lieberman, Advisors Capital Management CIO and Bruce Harting, Wedbush managing director, join ‘Closing Bell Overtime’ to discuss the banking sector, the latest banking data from the Federal Reserve, and more.
06:54
Wed, Jun 28 20235:32 PM EDT
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Fmr. Wells Fargo CEO Dick Kovacevich: Based on the data the Fed should have increased not paused
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Dick Kovacevich, former Wells Fargo CEO, joins ‘Closing Bell Overtime’ to explain why he thinks the Federal Reserve made a mistake by pausing rate hikes.
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‘Bite of these higher rates is gaining traction almost every day,’ KBW CEO Thomas Michaud warns
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A major financial services CEO warns the economy hasn’t fully absorbed higher interest rates yet.
Thomas Michaud, who runs Stifel company KBW, notes there’s a delayed reaction in the marketplace from the last hike — calling a 25 basis point move at 5% a very different situation than off a half percent.
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“This is getting to be the real deal at the moment because of the level of rates,” he told CNBC’s “Fast Money” on Wednesday. “The bite of these higher rates is gaining traction almost every day.”
Michaud delivered the call hours after the Federal Reserve decided to leave interest rates unchanged. It comes after ten rate hikes in a row.
The Fed signaled on Wednesday two more hikes are ahead this year. Michaud expects one to happen in July. However, he questions whether policymakers will raise rates a second time.
“Trying to deliver a new message with these dots is not what I’m willing to hang my hat on from what I see happening in the economy,” he said. “The economy is slowing. So, I think we’re near the end of this rate increase cycle.”
He lists interest rate sensitive areas of the economy already in a recession: Office space in urban areas, residential mortgage originations and investment banking revenues. He sees the problems contributing to more pain in regional banks.
“Banks were already tightening in the fourth quarter of last year. It didn’t just start in March. Loan growth had been slowing,” added Michaud. “There are elements of like the global financial crisis that are in bank stocks right now.”
According to Michaud, the regional bank rally is a short-term bounce. The SPDR S&P Regional Banking ETF is up almost 18% over the past month.
“The overall industry rally for all participants probably doesn’t happen until we get some more stability in what we think the earnings are going to be,” said Michaud. “Earnings estimates haven’t settled. They haven’t stopped going down.”
He sees a shift from adjusting to the new interest rate environment to credit quality in the second half of this year.
“Before the first quarter we cut bank estimates by 11%. After the quarter, we cut them by 4%.” Michaud said. “My instincts are we are going to cut them again.”
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Fed Chair Jerome Powell: We’re constantly watching banks and credit conditions for our rate settings
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Fed Chair Jerome Powell answers questions from reporters after the central bank announced a Fed rate pause on interest rates with two more hikes possible in 2023.
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Regional banks aren’t out of the woods yet but are showing signs of value, says Invesco’s Matt Brill
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Matt Brill, Invesco head of North America investment grade credit and senior portfolio manager, joins ‘Fast Money’ to discuss where value is in the banking sector, inflow trends among investors, and more.
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Watch CNBC’s full interview with Kate Kelly and Larry McDonald
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Kate Kelly, New York Times reporter, Larry McDonald, The Bear Trap Report founder, and CNBC’s Leslie Picker join ‘Last Call’ to discuss the latest comments from Janet Yellen on the banking crisis, the ongoing debt ceiling debate, and more.
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We’re seeing some of the most disturbing economic trends since COVID, says author Larry McDonald
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Kate Kelly, New York Times reporter, Larry McDonald, The Bear Trap Report founder, and CNBC’s Leslie Picker join ‘Last Call’ to discuss the latest comments from Janet Yellen on the banking crisis, the ongoing debt ceiling debate, and more.
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Fed deposit data shows deposits at small banks down $2 billion compared to last week
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CNBC’s Leslie Picker joins ‘Closing Bell Overtime’ with breaking news concerning the Federal Reserve’s latest banking deposit data and what it means for regional banks.
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