JPMorgan Chase & Co. Chief Executive Jamie Dimon on Friday said the U.S. economy was basically doing OK, even if customers were spending \u201ca little more slowly.\u201d <\/p>\n
But with rivals like Bank of America Corp., Goldman Sachs Group Inc. and American Express Co. set to report quarterly results this week, recession agita still prevails.<\/p>\n
\n
For evidence, look no further than JPMorgan\u2019s
\n JPM,
\n +0.60%<\/bg-quote>
\n own quarterly results. The bank\u2019s second-quarter profit blew past expectations, but it set aside $2.9 billion during the second quarter to cover potentially bad loans, amid concerns that more consumers could run into more difficulty paying their bills on time as higher prices manage to stick at stores. <\/p>\nThat figure was well up from $1.1 billion in the same quarter last year, although still far below the billions it stowed away when the pandemic first hit. Similarly, Wells Fargo & Co.
\n WFC,
\n -0.34%<\/bg-quote>
\n on Friday set aside $1.7 billion for loan losses in this year\u2019s second quarter, nearly triple what it was a year ago. <\/p>\nThe figures underscore the anxiety over the second half of this year, when many economists expect the economy to tilt into a recession. However, for the 500 companies in the S&P 500 index, Wall Street analysts still expect profit growth.<\/p>\n
Any downturn could be exacerbated by the pressure investors have put on companies, potentially via more layoffs and money-saving technology, to keep prices high and cut costs to replicate the abnormally large profit-margin gains they put up in 2021 and 2022. Businesses have indeed kept prices high, at least for many basic necessities, in an effort to cover their own higher costs and to pad profits.<\/p>\n
When Bank of America
\n BAC,
\n -1.89%<\/bg-quote>
\n reports this week, the results will narrow the lens on lending and spending in the U.S. Results from Morgan Stanley
\n MS,
\n -0.50%<\/bg-quote>
\n and Goldman Sachs
\n GS,
\n -0.76%<\/bg-quote>
\n will fill in the gaps on trading and deal-making. American Express
\n AXP,
\n -0.49%<\/bg-quote>
\n will give a more detailed breakdown of what consumers are still spending their money on, after Delta Air Lines Inc.
\n DAL,
\n -2.35%<\/bg-quote>
\n \u2014 which has a partnership with AmEx \u2014 said that travel demand remained \u201crobust.\u201d<\/p>\nBanks shoveled more money into their reserve stockpiles in 2020 to bulk up against the pandemic\u2019s shutdown of the economy. A year later, they started releasing those funds as the economy reopened and recovered. FactSet expects the broader banking sector to plump up its cash cushion during this year\u2019s second quarter to account for more late loan payments or potential defaults. <\/p>\n
In a report on Friday, FactSet said the 15 banking-industry companies in the S&P 500 Index tracked by the firm were on pace to set aside $9.9 billion to cover losses from souring loans in the second quarter. That\u2019s more than double the amount set aside a year ago. And if that $9.9 billion figure, based on actual and projected financial figures, ends up as the actual figure at the end of the quarter, it would mark the highest since the beginning of the pandemic and the third highest in five years, according to FactSet data. <\/p>\n
\u201cThe U.S. economy continues to be resilient,\u201d Dimon said in a statement on Friday. \u201cConsumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong.\u201d <\/p>\n
However, he noted difficulties in JPMorgan\u2019s investment banking segment. And he said consumer savings were slowly eroding as inflation endures. <\/p>\n
As the nation\u2019s biggest bank, JPMorgan has flexed its financial muscle this year, swallowing up First Republic after that bank got into trouble. But as it consolidates power and influence, building thicker armor against shocks to the economy, its financial results might not always reflect the struggles of its smaller rivals, where difficulties are likely felt more acutely. Analysts at Raymond James said that while JPMorgan remained a \u201cbest in breed\u201d bank, its outlook pointed to \u201cheightened challenges for smaller banks.\u201d<\/p>\n
See also: <\/strong>Jamie Dimon says U.S. consumers are in \u2018good shape.\u2019 This evidence may prove otherwise.<\/p>\nThis week in earnings<\/h2>\n
For the week ahead, 60 S&P 500 companies, including five from the Dow, will report quarterly results, according to FactSet. Two big oil companies, Halliburton Co.
\n HAL,
\n -2.28%<\/bg-quote>
\n and Baker Hughes Co.,
\n BKR,
\n -0.95%<\/bg-quote>
\n will report, as oil prices fall from levels seen last year. Results from two transportation giants \u2014 trucking company J.B. Hunt Transport Services
\n JBHT,
\n -0.42%<\/bg-quote>
\n and railroad operator CSX Corp.
\n CSX,
\n -0.27%<\/bg-quote>
\n \u2014 will also be a proxy for how much people are buying things and having them shipped. United Airlines Holdings Inc.
\n UAL,
\n -3.42%<\/bg-quote>
\n and American Airlines Group
\n AAL,
\n -1.68%<\/bg-quote>
\n will also report. <\/p>\nThe call to put on your calendar<\/h2>\n
Netflix results: Hollywood shutdown, \u2018slow-growth\u2019 expectations.<\/strong> Hollywood\u2019s writers \u2014 and now its actors \u2014 have gone on strike, and Netflix Inc. reports second-quarter results on Wednesday. The streaming platform will likely face questions over how much content it has left in the tank, as the strike upends studio-production schedules and leaves viewers with vast expanses of reruns. Still, Macquarie analyst Tim Nollen said that the production standstill \u201cmay ironically drive even more viewers to streaming services.\u201d<\/p>\nThe writers and actors argue that the studio industry \u2014 increasingly consolidated, increasingly publicly traded, increasingly oriented around a handful of film franchises \u2014 has profited immensely while skimping on things benefits and streaming residuals. But after a decade-long rise, and a recent shift in investor focus from subscriber growth to profit growth, Netflix has emerged as one of the biggest production powerhouses in the business. And after years of flooding customers with new films and shows, it\u2019s trying to squeeze out sales via more boring ways: things like a password-sharing crackdown and ads. <\/p>\n
Daniel\u00a0Morgan, senior portfolio at Synovus Trust Co., said Netflix still faced a plenty of streaming competition amid \u201cmuted\u201d subscriber growth. But Wedbush analyst Michael Pachter said investors should look at Netflix as a profitable, albeit more mature company.<\/p>\n
\u201cWe think Netflix is well-positioned in this murky environment as streamers are shifting strategy, and should be valued as an immensely profitable, slow-growth company,\u201d Pachter said in a research note on Friday. <\/p>\n
\u201cEven while the ad-supported tier is not yet directly accretive (we think it will be accretive over time), the ad-tier should continue to reduce churn and draw new subscribers to the service,\u201d he continued.<\/p>\n
The number to watch<\/h2>\n
Tesla sales<\/strong>. Electric-vehicle maker Tesla Inc. also reports second-quarter results on Wednesday. And like streaming, some analysts say the fervor for EVs has faded. <\/p>\nHowever, they also said that Tesla
\n TSLA,
\n +1.25%<\/bg-quote>
\n had so far been immune from the malaise. And even though Elon Musk remains preoccupied with Twitter \u2014 which now faces competition from Meta Platforms Inc.\u2019s
\n META,
\n -1.45%<\/bg-quote>
\n Threads \u2014 Tesla\u2019s second-quarter deliveries were far above expectations. Sales are expected to be big. And one analyst said that price cuts, which Tesla has used to capture more of the auto market in China, were likely \u201cfairly minimal\u201d during the second quarter. But some analysts wondered what the blowout delivery figures would mean for margins. And the industry, broadly, has increasingly tested the patience of profit-minded investors. <\/p>\n\u201cWe\u2019ve now seen a market where demand is constrained, capital has been tighter, and there is less tolerance for EV related losses,\u201d Barclays analysts said in a note last week, adding that there was a \u201cstep back from EV euphoria.\u201d <\/p>\n
Claudia Assis contributed reporting. <\/em><\/p>\n<\/p><\/div>\nRead the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"JPMorgan Chase & Co. Chief Executive Jamie Dimon on Friday said the U.S. economy was basically doing OK, even if customers were spending \u201ca little more slowly.\u201d But with rivals like Bank of America Corp., Goldman Sachs Group Inc. and American Express Co. set to report quarterly results this week, recession agita still prevails. For […]<\/p>\n","protected":false},"author":1,"featured_media":36429,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-36428","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\n
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