Aurelia Butler

JPMorgan, Wells Fargo and Citigroup (NYSE:C)’s earnings indicated higher U.S. Federal Reserve interest rates had allowed them to charge more on loans while raising rates on deposits more slowly. Consumers were starting to deplete savings, the banks said, and Citibank and Wells Fargo noted that losses on credit cards and other debts were starting to rise. The Fed’s aggressive monetary policy has made it more expensive for consumers and businesses to borrow and repay debt, while banks are slowing the flow of credit and beefing up cash levels after Silicon Valley Bank and two other lenders collapsed earlier this year.Citigroup CEO Jane Fraser said she was seeing a continued deceleration in spending, indicating “an increasingly cautious consumer.” The third-largest U.S. lender said delinquency levels were still low compared to historical levels, but it set aside more money to cover souring loans. Wells Fargo said it was seeing charge-offs, or loans written off, increasing in its credit card portfolio. Average commercial and customer loans were down from the second quarter as higher rates and a slowing economy weakened loan growth, Wells Fargo CEO Charlie Scharf said on an analyst call. “While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly,” said Scharf in the bank’s press release.Regional lender PNC Financial (NYSE:PNC) Services, meanwhile, reported higher consumer loan delinquencies.Bank executives also reiterated worries that sweeping new capital rules proposed in July could crimp lending and cause them to exit some products. However, the outlook was not as negative as some banks previously thought. JPMorgan Chase (NYSE:JPM) said its economists had revised their outlook for the economy early this quarter to modest growth for a few quarters into 2024, rather than showing a mild recession, which fed into its decision to release net reserves of $113 million. Citi and Wells Fargo, meanwhile, reported lower provisions for bad loans than analysts expected. JPMorgan said in its earnings call that spending growth had now reverted to pre-pandemic trends, with consumers starting use up their savings. “Currently, U.S. consumers and businesses generally remain healthy, although consumers are spending down their excess cash buffers,” said JPMorgan CEO Jamie Dimon.HIGHER EARNINGS, LOWER DEPOSITS Banks generally reported higher net interest income (NII), or the difference between what they earn on loans and pay out on deposits, as they benefited from higher interest rates.JPMorgan, Citigroup and Wells Fargo, the first, third and fourth biggest U.S. lenders, respectively, also increased their outlook for NII.Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago, which owns JPMorgan shares, said “what you are seeing is the big banks with really diverse businesses had quite good earnings.”Dimon said the results benefited from “over-earning” on NII although that would normalize over time. Bank executives said they did not consider the current NII levels to be sustainable.By contrast, PNC’s NII declined. The bank said that higher yields on interest-earning assets were more than offset by increased funding costs.JPMorgan Chase, Wells, Citi and PNC all reported a decline in average deposits. The banks also cautioned about proposed bank capital hikes by regulators, which they said if could make a number of their products and services uneconomical.Shares of JPMorgan and Wells Fargo rose between 1% and 3%. Citi’s stock closed slightly lower, reversing an earlier gain, and PNC fell. The KBW index of bank shares, which includes regional lenders, slid 0.4%.”Bank stocks have been priced for nothing but bad news for a while and have significantly underperformed,” said Rick Meckler, a partner at Cherry Lane Investments, a family investment office. “Today is truly a relief rally where investors see the picture for the major money center banks is not as negative as they feared, particularly their outlook.” More

Earlier this week, Costa Rica’s science, technology and telecommunications minister told lawmakers that China represents a security threat for the emerging digital network, while another senior ministry official labeled its government “totalitarian.”The Chinese embassy in San Jose criticized the remarks in a statement.”These comments gravely affect the confidence and expectations of Chinese companies to undertake economic-trade activities in Costa Rica and they erode the good energy to develop bilateral relations,” the embassy wrote in a statement.The statement went on to say China deemed the comments “irresponsible and unfounded.”In August, Costa Rican President Rodrigo Chaves approved a decree aiming to regulate 5G mobile network development and banned firms from countries that have not agreed to an international cybercrime convention.The decree’s ban applies to tech companies from China, South Korea, Russia and Brazil, among others.Chaves issued the directive shortly after Laura Richardson, a senior U.S. military commander, visited Costa Rica, where she questioned growing Chinese investment in Latin American infrastructure development including ports and 5G networks. More

MARRAKECH, Morocco (Reuters) -U.S. Treasury Secretary Janet Yellen told Reuters on Friday that her plan for an “equi-proportional” increase in International Monetary Fund quota-based lending resources was “pretty likely to get done” despite concerns raised by China.Yellen was speaking in an interview on the sidelines of the IMF and World Bank annual meetings.”There’s a desire to see the IMF well-resourced with larger quota resources and less reliance on borrowing arrangements,” Yellen said.Under the U.S.-backed plan, IMF member countries would each contribute towards an increase in quotas in proportion to their current shareholdings to boost the Fund’s lending power. Decisions on how to shift the IMF’s shareholding formula would be left to a later date.China and other large, fast-growing emerging markets, including Brazil and India, have been clamoring for more shares and influence at the crisis lender, but would have to wait under the current plan.Yellen said she discussed the quota matter on Friday with People’s Bank of China Governor Pan Gongsheng.”I think they feel, based on China’s size and role in the global economy, they should have a larger quota share,” Yellen said. “We’ve made the point that we can’t support an ad-hoc realignment of quota shares, that we believe the formula needs to be revised.”The U.S. contribution towards the quota increase would require approval by the U.S. Congress, where anti-China sentiment is running high, and the Treasury plan would sidestep a difficult political fight.Indian Finance Minister Nirmala Sitharaman on Friday backed the U.S. plan as an “immediate, temporary solution” to the need to add quickly to boost IMF funding.”The equi-proportional quota seems to be the less contentious way of addressing it,” Sitharaman told an Atlantic Council event in Marrakech. “I from my side did openly say yes.” The money-now, shares later plan has been gaining support among IMF shareholders this week, but IMF Managing Director Kristalina Georgieva has called for a deadline to adjust its shareholding structure to give more weight to large emerging market economies.British Finance Minister Jeremy Hunt told reporters that while he had confidence the U.S. plan would succeed, shareholdings need to be adjusted to ensure the IMF’s credibility. More

MARRAKECH, Morocco (Reuters) -U.S. Treasury Secretary Janet Yellen on Friday told Reuters she heard “universal condemnation” at this week’s annual meetings of the International Monetary Fund and World Bank of the deadly attack on Israel by Hamas.The United States already had “lots of sanctions” on the militant Palestinian group, and was constantly working to find a way to strengthen those, Yellen said shortly before Israeli forces began their first ground operations inside the Gaza Strip to root out Hamas fighters.The United States has pledged robust solidarity with Israel and Prime Minister Benjamin Netanyahu as it works to stop any spillover from the war between Israel and Hamas.Yellen spoke shortly after top finance officials from the Group of Twenty (G20) economies published a communique that omitted any mention of the conflict between Israel and Hamas, raising new questions about the role of a forum split by Russia’s invasion of Ukraine last year.Last weekend’s assault by Hamas – designated a terrorist organization by the United States, European Union and other governments – on Israeli communities killed at least 1,300 people. Most were civilians, including women and children.Israel has since been hammering Gaza with air strikes and artillery fire, and more than 1,500 Palestinians have been killed. Yellen made no comment on Israel’s response, which some human rights groups and the United Nations say amounts to “collective punishment.”A senior Treasury official noted that the Group of Seven economies, a smaller group of like-minded countries, had condemned the attacks, and said the issue was “politically sensitive’ for the G20, which includes Russia and China.Critics said the failure to even mention the sudden outbreak of war in the Middle East revealed the depth of the divisions roiling the G20, especially given its potential economic impact.Yellen pushed back against criticism of the G20, saying, “I’ve talked to a wide range of people and there is universal condemnation of Hamas’s attack on Israel, adding clear concern over further large-scale civilian casualties in the conflict.”I’m not hearing anybody who was not appalled by the attack on innocent Israelis,” she said.Yellen said there was a widespread feeling that the G20 had been cooperating and responding well to issues facing developing countries, including through reforms of multilateral development banks and a likely agreement on a quota increase for the IMF.“We’ve accomplished a fair amount and there’s a level of satisfaction with what’s been accomplished in spite of the fact that Russia’s invasion of Ukraine has clearly created many adverse global consequences,” she said.Yellen said G7 countries expressed unanimous support for Ukraine, adding that she would discuss Ukraine with European finance ministers in Luxembourg next week.She also underscored Washington’s determination to continue to enforce a G7-led price cap imposed on Russian oil after Washington on Thursday imposed the first sanctions on owners of tankers carrying Russian oil priced above the $60 per barrel.The U.S., other G7 countries and Australia imposed the cap last year, seeking to reduce Russia’s revenues from seaborne oil exports as part of sanctions for its invasion of Ukraine. More

Under the terms of the order, Illumina (NASDAQ:ILMN) might extend the timeframe by three months and would be permitted to explore options which include, but are not limited to, a third-party sale or a capital markets transaction.If Illumina opts for a capital markets transaction, it would have to capitalize Grail at the time of the transaction with two-and-a-half years of funding based on the cancer test maker’s long-range plan.The order also provides for Illumina to retain up to a 14.5% stake in Grail and reestablish the royalty arrangement it previously had in place.Illumina had spun off Grail in 2016, and retained a 12% stake.EU antitrust regulators on Thursday ordered Illumina to divest Grail, after it completed the deal before securing their approval.The $7.1 billion deal was opposed on concerns that Illumina would have an incentive to stop Grail’s rivals from accessing its technology to develop competing blood-based early cancer detection tests.The San Diego-based genetic testing company last year challenged the EU watchdog saying it does not have jurisdiction over the acquisition of Grail. Its challenge remains pending at the European Court of Justice (ECJ).If Illumina wins, the divestiture order would be eliminated, it said.But if it is not successful with either its ECJ jurisdictional appeal or in a final decision of the U.S. Fifth Circuit Court of Appeals, Illumina will divest Grail.Illumina had in June appealed against the order by the Federal Trade Commission, which enforces antitrust law in the U.S., to divest Grail.The company is required to continue to fund Grail until it’s divested. More