Dow went up 35, decliners ahead of advancers 5-4 & NAZ slid back 7. The MLP index crawled up pennies in the 225s & the REIT index pulled back 2+ to the 405s. Junk bond funds hardly budged in price & Treasuries were bid higher. Oil crawled up pennies in the 58s after recent selling & gold fell 6 to 1544.
AMJ (Alerian MLP Index tracking fund)
The US, the EU & Japan proposed new global trader rules to curb subsidies they say are distorting the worldwide economy, with China their clear target. A day before Chinese officials are due to sign the first phase of a trade deal with the US, Beijing is again the focus of criticism from its main trading partners. The Phase 1 US-China deal will lead to China buying more US products, but not tackle hard issues such as subsidies. Japanese economy minister Hiroshi Kajiyama, US Trade Representative Robert Lighthizer & EU trade commissioner Phil Hogan said in a joint statement that existing World Trade Organization (WTO) rules were insufficient to tackle market distortions from subsidies. The proposed rules are the outcome of 2 years of trilateral discussions, but are only a precursor to the hard work of convincing other WTO members, including China. They also mark a note of harmony in US-EU relations, strained by US tariffs & disputes over aircraft subsidies & EU auto exports. The 3 partners intend to bring their proposals to the Geneva-based WTO, with as many countries involved as possible, even if probably not all the WTO's 164 members. "This would only make sense if the big subsidizers were on board," an EU source said. The EU last year hailed a breakthrough in talks with China on industrial subsidies & believes Beijing's desire to keep the WTO afloat may make it more flexible. Meanwhile, Beijing has said it would be more ready to discuss industrial subsidies if talks also extended to agricultural subsidies prevalent in the west. The WTO already bans any subsidies which are used to boost exports or to give an advantage to local over imported goods. The 3 partners want to add 4 banned subsidy types, namely unlimited guarantees, subsidies to ailing enterprises without a restructuring plan, subsidies to firms unable to obtain long-term financing & certain forgiveness of debt. They would also seek to ban other large subsidies, such as to prop up zombie enterprises, to create overcapacity or to lower input prices unless the subsidizing country can prove there are no negative effects. They are also seeking to devise rules to end forced technology transfer and current WTO rules that allow countries such as China, Korea & Singapore to designate themselves developing countries, which enjoy advantages.
Citigroup's (C) Q4 profits rose by 15%, as the banking conglomerate benefited from a boost in trading similar. The bank reported EPS of $2.15 compared with $1.65 last year. The results topped expectations of $1.81. Citi saw a boost in profits from its trading operations. Bond trading revenues rose 49% from a year earlier, when a steep downfall in the markets in Q4 took its toll on all its trading desks. In the consumer group, profits rose 12% from a year earlier, helped by the bank's large credit card division where more consumers borrowed & spent during the holiday season. The bank's return on common equity, a measurement on how well a bank performs with the assets it holds, was 10.6% in the qtr. Banks the size of Citi typically aim to have that figure above 10%. For the full year, Citi had a profit of $19.4B, up from $18.05B in 2018. Revenue at the bank was $74.3B compared with $72.9B a year before. The stock rose 1.78.
If you would like to learn more about Citi, click on this link:
club.ino.com/trend/analysis/stock/C?a_aid=CD3289&a_bid=6ae5b6f7
Wells Fargo (WFC) reported disappointing results for Q4, sending shares lower. The lender had EPS of 60¢ as revenue slipped 5.2% year-over-year to $19.98B & the bank recorded charges of $1.5B for an array of legal issues including sales practices in its retail division. The forecast called for EPS of $1.11 on $20.1B in revenue. It was the first qtr under the leadership of CEO Charlie Scharf. “During my first three months at Wells Fargo, my primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results,” Scharf said. Home loan originations rose 3.4% year-over-year to $60B, as buyers took advantage of lower interest rates after 3 cuts by the Federal Reserve. Meanwhile, new auto loans surged 45% to $6.8B as the company prioritized growing the business after an overhaul. Net interest income fell 11.1% from a year ago to $11.2B, impacted by falling rates, while net interest margin, the difference between interest charged to borrowers and paid to depositors, narrowed 13 basis points from Q3 to 2.53%. WFC has struggled thru a number of scandals in recent years. Scharf's predecessor, Tim Sloan, left the company in 2019 as regulatory issues mounted. He had taken over from John Stumpf when the fake accounts were exposed in 2016. A little more than a year later, the Federal Reserve capped WFC growth, ordering it not to increase assets beyond levels at the end of 2017 until oversight concerns were addressed. The stock fell 1.77.
If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
The early earnings reports don't send a clear message to investors. They are looking forward to the signing ceremony tomorrow on phase 1 of the US-China trade deal. However, as pointed out above, more trade issues need to be resolved with China & EU. The market is awaiting developments on trade & with earnings.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 58.33 | +0.25 | +0.4% |
| GC=F | Gold | 1,546.60 | -4.00 | -0.3% |
The US, the EU & Japan proposed new global trader rules to curb subsidies they say are distorting the worldwide economy, with China their clear target. A day before Chinese officials are due to sign the first phase of a trade deal with the US, Beijing is again the focus of criticism from its main trading partners. The Phase 1 US-China deal will lead to China buying more US products, but not tackle hard issues such as subsidies. Japanese economy minister Hiroshi Kajiyama, US Trade Representative Robert Lighthizer & EU trade commissioner Phil Hogan said in a joint statement that existing World Trade Organization (WTO) rules were insufficient to tackle market distortions from subsidies. The proposed rules are the outcome of 2 years of trilateral discussions, but are only a precursor to the hard work of convincing other WTO members, including China. They also mark a note of harmony in US-EU relations, strained by US tariffs & disputes over aircraft subsidies & EU auto exports. The 3 partners intend to bring their proposals to the Geneva-based WTO, with as many countries involved as possible, even if probably not all the WTO's 164 members. "This would only make sense if the big subsidizers were on board," an EU source said. The EU last year hailed a breakthrough in talks with China on industrial subsidies & believes Beijing's desire to keep the WTO afloat may make it more flexible. Meanwhile, Beijing has said it would be more ready to discuss industrial subsidies if talks also extended to agricultural subsidies prevalent in the west. The WTO already bans any subsidies which are used to boost exports or to give an advantage to local over imported goods. The 3 partners want to add 4 banned subsidy types, namely unlimited guarantees, subsidies to ailing enterprises without a restructuring plan, subsidies to firms unable to obtain long-term financing & certain forgiveness of debt. They would also seek to ban other large subsidies, such as to prop up zombie enterprises, to create overcapacity or to lower input prices unless the subsidizing country can prove there are no negative effects. They are also seeking to devise rules to end forced technology transfer and current WTO rules that allow countries such as China, Korea & Singapore to designate themselves developing countries, which enjoy advantages.
US, EU, Japan target China with new subsidy regulations
Citigroup's (C) Q4 profits rose by 15%, as the banking conglomerate benefited from a boost in trading similar. The bank reported EPS of $2.15 compared with $1.65 last year. The results topped expectations of $1.81. Citi saw a boost in profits from its trading operations. Bond trading revenues rose 49% from a year earlier, when a steep downfall in the markets in Q4 took its toll on all its trading desks. In the consumer group, profits rose 12% from a year earlier, helped by the bank's large credit card division where more consumers borrowed & spent during the holiday season. The bank's return on common equity, a measurement on how well a bank performs with the assets it holds, was 10.6% in the qtr. Banks the size of Citi typically aim to have that figure above 10%. For the full year, Citi had a profit of $19.4B, up from $18.05B in 2018. Revenue at the bank was $74.3B compared with $72.9B a year before. The stock rose 1.78.
If you would like to learn more about Citi, click on this link:
club.ino.com/trend/analysis/stock/C?a_aid=CD3289&a_bid=6ae5b6f7
Citigroup profits rise, helped by trading like JPMorgan
Wells Fargo (WFC) reported disappointing results for Q4, sending shares lower. The lender had EPS of 60¢ as revenue slipped 5.2% year-over-year to $19.98B & the bank recorded charges of $1.5B for an array of legal issues including sales practices in its retail division. The forecast called for EPS of $1.11 on $20.1B in revenue. It was the first qtr under the leadership of CEO Charlie Scharf. “During my first three months at Wells Fargo, my primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results,” Scharf said. Home loan originations rose 3.4% year-over-year to $60B, as buyers took advantage of lower interest rates after 3 cuts by the Federal Reserve. Meanwhile, new auto loans surged 45% to $6.8B as the company prioritized growing the business after an overhaul. Net interest income fell 11.1% from a year ago to $11.2B, impacted by falling rates, while net interest margin, the difference between interest charged to borrowers and paid to depositors, narrowed 13 basis points from Q3 to 2.53%. WFC has struggled thru a number of scandals in recent years. Scharf's predecessor, Tim Sloan, left the company in 2019 as regulatory issues mounted. He had taken over from John Stumpf when the fake accounts were exposed in 2016. A little more than a year later, the Federal Reserve capped WFC growth, ordering it not to increase assets beyond levels at the end of 2017 until oversight concerns were addressed. The stock fell 1.77.
If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
Wells Fargo posts big earnings miss, profits tank 13% under new CEO
The early earnings reports don't send a clear message to investors. They are looking forward to the signing ceremony tomorrow on phase 1 of the US-China trade deal. However, as pointed out above, more trade issues need to be resolved with China & EU. The market is awaiting developments on trade & with earnings.
Dow Jones Industrials
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