Dow slid back 27, advancers over decliners 5-4 & NAZ was off 8. The MLP index rose 4+ to the 122s & the REIT index fell 4 to the 355. Junk bond funds were little changed & Treasuries crawled higher in price. Oil climbed higher towards 41 & gold rebounded 24 to 1915.
AMJ (Alerian MLP Index tracking fund)
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The US economy needs another year or maybe more until it gets back to its pre-pandemic levels of activity, Federal Reserve Vice Chair Richard Clarida said. Clarida noted that policy moves by the Fed & Congress have helped stimulate activity like buying houses & cars & investing in software & equipment, all measure that help boost growth. “That said, the Covid-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak,” the central bank official said. “It will likely take even longer than that for the unemployment rate to return to a level consistent with our maximum-employment mandate.” His remarks come ahead of a 3rd-qtr GDP report expected to show annualized growth of more than 30%. Even though 11.4M jobs have been brought back since the virus-induced shutdown in Mar & Apr, the unemployment rate remained at 7.9% in Sep. Clarida that the actual rate probably would be 3 percentage points higher if labor force participation returned to its Feb level. ″“The global economy is going to look a lot like the U.S. It’s going to take some time to recover from this shock,” he added. “So far so good in terms of the recovery, but a ways to go not only in the U.S. but globally.” However, he expects the Fed's new approach to inflation to help the jobs picture. In a move adopted after a year of public hearings, officials said they no longer will raise interest rates pre-emptively when unemployment falls. In the past, the Fed considered a declining jobless rate to be a harbinger for inflation, but the new approach allows inflation to run above the traditional 2% goal for a period as long as it averages around that level over a period of time. The change “means that going forward, a low unemployment rate, in and of itself, will not be sufficient to trigger a tightening of monetary policy absent any evidence from other indicators that inflation is at risk of moving above mandate-consistent levels,” Clarida said. “While this new framework represents a robust evolution in our monetary policy strategy, this strategy is in service to the dual-mandate goals of monetary policy assigned to the Federal Reserve by the Congress — maximum employment and price stability — which remain unchanged,” he added. While Clarida said the Fed sees activity continuing to improve gradually after a sharp Q3 recovery, he cautioned that the outlook ahead is “highly uncertain” & subject to the path of the virus.
Clarida says U.S. economy needs ‘another year’ to return to pre-pandemic levelWells Fargo (WFC) returned to profitability in Q3 after the
lender was writing off fewer loans amid a downturn related to the COVID-19 pandemic. The lender had EPS of 42¢,
below the 45¢ estimate. The results, which included $718M in
restructuring charges, were an improvement from last qtr's $2.4B loss, but marked a 56% decline from the $4.6B earned a
year ago. Revenue, meanwhile, fell 14% to $18.9B, outpacing the $18B that was anticipated. “Strong mortgage banking fees, higher equity markets, and declining
sequential charge-offs positively impacted our results, while
historically low interest rates reduced our net interest income and our
expenses continued to remain elevated,” CEO Charlie Scharf said. Net interest income fell 19% from a year earlier to
$9.37B, driven by the Federal Reserve holding its key interest
rate near zero as it insulates the economy from the COVID-19 pandemic. Those
same low interest rates, however, helped triple mortgage banking
income, which reached $1.6B. Net mortgage servicing income
totaled $341M, up from a $689M loss in the previous
qtr. Pre-tax earnings saw a $961M hit
due to customer remediation accruals, a sign the fake accounts scandal
was still hurting its bottom line.
The stock fell 1.19.
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 swings to profit as coronavirus blow softens
Bank of America (BAC) shares fell after the lender posted 3rd-qtr results that missed on revenue. The
bank said it generated $20.45B in total revenue, missing the
$20.8B estimate. EPS was 51¢, edging out the
49¢ estimate. The bank's net interest income fell 17% from a year
earlier to $10.2B. CEO Brian Moynihan has said that the key
figure will likely bottom in Q3. CFO Paul Donofrio
reiterated that forecast, saying that he was
“optimistic” that NII will climb next year. He said that a drop in consumer & commercial loans is likely to
reverse by then, & the firm was putting money into higher-yielding
securities to help counteract the impact of low rates. The firm also
missed on net interest margin, a related metric, which was 1.72%, 10
basis points below the estimate. The firm's bond trading desks produced $2.1B in revenue, under
the $2.28B estimate. The
bank's equities operations matched estimates at $1.2B. The
bank had a $1.4B provision for credit losses, much less than the $5.1B in the previous period. BAC, the 2nd-biggest US lender by assets, has booked a total
$9.8B provision for credit losses in the first 2 qtrs of
2020.
The stock was off 94¢.
If you would like to learn more about BAC, click on this link:
club.ino.com/trend/analysis/stock/BAC?a_aid=CD3289&a_bid=6ae5b6f7
Bank of America shares dip as the lender misses on third-quarter revenue
After the opening the Dow rose, but then the sellers have taken command. Bank earnings are getting a lot of attention & traders are less than impressed. Corp earnings, coming shortly, should give another picture of the economy in Q3.Dow Jones Industrials
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