CNBC Daily Open: Big Bank earnings point to a grim season

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Banks kick off earnings
Four of Wall Street’s Big Banks reported earnings Friday. JPMorgan Chase began the season with decrease fourth-quarter profit because it paid a $2.9 billion fee linked to the rescue of some regional banks final yr. Citigroup reported a $1.8 billion quarterly loss, whereas additionally saying that it might slash 10% of its workforce. Bank of America’s fourth-quarter web earnings fell more than 50% from a year ago, whereas Wells Fargo reported higher quarterly earnings however warned about decrease curiosity earnings this yr.  

Positive inflation sign?
An sudden decline in wholesale prices indicated inflation could possibly be declining for good. The Labor Department’s producer price index fell 0.1% in December, as opposed to a 0.1% rise seen by economists surveyed by Dow Jones. PPI knowledge measures inflation from the producer or producer’s perspective.

Markets rose for the week  
The blue-chip Dow Jones Industrial Average shed over 100 factors on Friday however rose 0.3% for the week. The S&P 500 and the Nasdaq closed the day almost flat, whereas additionally ending greater for the week. Markets digested the beginning of the earnings season and an sudden decline in producer costs. In Asia, China stocks erased losses from earlier within the session after the nation’s central financial institution left its medium-term coverage loans fee unchanged, whereas Taiwan shares gained after election.

China skeptic wins Taiwan elections
Taiwan’s Lai Ching-te won the island’s presidential election on Saturday. This was the Democratic Progressive Party’s third straight win. Lai, who’s seen as a sturdy China skeptic, gained by greater than 40% of the favored vote. He mentioned he was “decided to safeguard Taiwan from threats and intimidation from China.” Beijing dismissed his victory.

[PRO] Goldman Sachs picks unloved shares
Goldman Sachs mentioned Europe’s utilities sector could not have had a lot motion within the final three years, however there could possibly be a potential shift ready to occur. The funding financial institution names which European shares, which have lagged the broader market by almost 20%, are worthy performs within the trade in 2024.

Fourth-quarter earnings have formally begun with 4 of Wall Street’s high six banks reporting moderately bleak outcomes.

JPMorgan Chase, the largest U.S. financial institution by property, paid a sizeable payment linked to the federal government seizures related to regional banking disaster final March, which impacted its earnings.

CEO Jamie Dimon mentioned: “the U.S. financial system continues to be resilient, with shoppers nonetheless spending, and markets at present count on a smooth touchdown.”

But he added that deficit spending and provide chain changes “could lead inflation to be stickier and charges to be greater than markets count on.”

Citigroup was additionally hit by final yr’s regional banking disaster however focus was totally on CEO Jane Fraser’s large overhaul plan aimed toward lifting sentiment across the financial institution’s monetary well being and in addition its inventory worth.

The third largest U.S. financial institution by property mentioned it’s going to slash about 20,000 jobs over the “medium time period,” however didn’t make it instantly clear on the precise length. Citigroup has lagged its Wall Street friends because the 2008 monetary disaster and stays the bottom valued among the many high six banks.

Outlook from Wall Street’s largest lenders was cautious in opposition to the backdrop of markets pricing in rate of interest cuts by the Federal Reserve as early as March. Lower charges harm the online curiosity earnings generated by banks.

Separately, knowledge displaying a decline in wholesale costs got here as a optimistic shock. It got here a day after prices consumers pay for goods and services rose 0.3% in December and had been up 3.4% on the yr. Still remaining a lot above the Fed’s 2% goal for the yr.

“What inflation dangers stay within the U.S. financial system clearly can’t be sourced to any upward stress in producers’ prices,” mentioned Kurt Rankin, senior economist at PNC.

“Whether surveying from producers’ intermediate or remaining demand perspective, there’s little to no pricing stress headed into the U.S. financial system from the provision aspect coming into 2024.”

During Asia hours, Taiwan’s election outcomes stole the present. Voters within the island selected the ruling Democratic Progressive Party, or DPP for a third straight presidential time period, handing victory to China-skeptic Lai Ching-te.

Lai, who gained by greater than 40% of the favored vote, mentioned he was “decided to safeguard Taiwan from threats and intimidation from China.”