Big Banks Report Earnings

Four big banks kicked off earnings season last Friday and this Monday. J.P Morgan (JPM), Citibank (C), Bank of America (BAC), and Wells Fargo (WFC) were all part of the fun that lead to sizeable gains in Monday's trading session. Banks tackled issues such as rising interest rates and trade tensions in conference calls while discussing earnings numbers with investors. Overall, the data show one clear loser and mixed strength from the other three.

The clear loser was, and continues to be, Wells Fargo. The bank saw a contraction in all key indicators. An drop of 3 percent in revenue was accompanied by an 8 percent drop in debit and credit card spend, a 2 percent drop in deposits, and a 1 percent drop in loan growth. The only inkling of positivity came from a large drop in nonperforming loans of -19 percent. Despite a poor earnings report, shares of WFC still jumped almost 3 percent on strength in the sector.

The remaining three banks each saw their share price grow more than WFC by …

Bracing for Impact: How the Tariffs Affect the States

The hot-button issue of tariffs has everyone on the edge of their seat including some disgruntled government agencies. In opposition to the tariffs, the Chamber of Commerce published data showing the impact of tariffs on the different states in the country. The original data was broken down into very specific categories which have been manually grouped for convenience. The source of the raw data can be found here.

2018 Q2 Manufacturers' Outlook Survey: Positive Sentiment Before Trade War Begins

Manufacturers in the United States continue to be on edge as trade tensions materialize into established policies. The National Association of Manufacturers (NAM) is one organization that represents the industry and publishes data reflecting the outlook of manufacturing companies. In NAM’s “2018 Second Quarter Manufacturers' Outlook Survey,” the most recent industry outlook is provided for the second quarter of 2018. The survey was conducted from May 22nd to June 5th and included 568 participants.

Based on an overall outlook, NAM determined that 95.1 percent of respondents saw a positive outlook for their companies in the next 12 months. Included in this statistic were 97.9 percent of large manufacturers having a positive outlook and 89.5 percent of small manufacturers having a positive outlook. Interestingly, this disparity was reversed in the first quarter where 93.8 percent of large manufacturers had a positive outlook and 94.5 percent of small manufacturers had a positive outl…

Central Bank of Turkey: Rampant Inflation in Turkey

Choppy trading continues for the Turkish lira after President Recep Tayyip Erdogan was elected once again on Monday. As the status quo was kept, the lira strengthened about 4.0 percent early in the trading day but quickly capitulated to weakness giving back most of the progress it had made on the US dollar. The depreciating lira is leading to troubling trends in Turkey’s core inflation and price indexes. The Turkish Central Bank discusses this in its “Monthly Price Developments.

In general, May consumer prices grew by 12.15 percent on an annualized basis, 1.3 points higher than the April number of 10.8 percent. The Turkish central bank saw two main forces on prices in this period. Primarily, the depreciation of the lira deteriorated purchasing power for consumers as imported goods have become more expensive. Besides the direct threat of currency deflation, the central bank also pointed to rising commodity prices affecting inputs on most major consumer goods.
D - CPI excluding unproce…

Airbus, Boeing: Long-Term Aerospace Industry Growth Outlook

Last year, Boeing and Airbus published market outlooks through the year 2036. In their report, Boeing described the industries long-term demand as “robust” with an average annual passenger growth of 4.7 percent over the next 20 years while Airbus forecasted a 4.4 percent rate of growth. Boeing noted that over the next two decades China’s fast growth will make it the largest domestic market in the world while the rest of Asia will become the largest market for travel.
From Boeing and Airbus
Expected new deliveries by Airbus in the next 20-years fall just short of the 35,000 mark. With an existing produced fleet of just 18,890 aircraft as of Q1 2017, this growth appears substantial. Airbus is expecting to replace 12,936 aircraft in their fleet by 2036 and is expecting new growth to reach 21,230. Boeing is forecasting new deliveries to more than double over the next two decades. In order to meet the demand, they are forecasting a need for over 41,000 new deliveries. This will accommodate…

Small Business Credit Outlook: Loan Strength Fuels Russell Rally

Since the beginning of the year, the Russell 2000 small-cap index has been one of the bright performers out of the indices. With YTD returns of 10.13 percent on June 20th, only the NASDAQ, at 11.06 percent, has outpaced it since January 2nd. In comparison, the S&P 500 large-cap index and S&P 400 mid-cap index have returned 2.65 percent and 4.4 percent so far this year. Investors have made it clear they have preferred shares of smaller companies so far in 2018.
Data from the Thomson Reuters/PayNet small business reports present data that suggests stronger credit trends in the small business sector could explain some of the bullishness. The pair of data analytics companies aggregates lending data from firms that represent “Main Street” and presents its findings in their “Small Business Credit Outlook” and “Small Business Credit Monthly Report.” The PayNet website also includes historical data sets for the Small Business Lending Index (SBLI) and Small Business Delinquency Index

CaixaBank: Focus on Fragile Emerging Economies

Caixa Bank Research’s latest report on the international economy provided insight on the fragility of emerging markets. On June 14th, 2018, the Argentine Peso and the Brazilian Real lead the weakness in emerging market currencies falling 6.1 percent and 2.2 percent on the day. A down day that comes just a day after the Federal Reserve raises rates and reaffirms its hawkishness through the rest of the year.

Emerging market currencies have not just had a weak past 24 hours. Since the beginning of May, Caixa reports that “the Argentine peso has depreciated nearly 20% against the US dollar, the Turkish lira more than 10%, and a large number of currencies (including the Polish zloty, the Brazilian real, the Mexican peso, the Chilean peso and the Colombian peso) have depreciated by between –6% and –4%.” The numbers are quite staggering and suggest the hawkish trend in U.S. interest rates is viewed as a crisis-level threat to the stability of emerging markets’ financial systems. Caixa descr…