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    Jeff Shell is about to lead Paramount. He may have runway to make bold changes he couldn’t at NBC

    Former NBCUniversal CEO Jeff Shell is primed to take over as president of Paramount Global after its merger with Skydance Media is complete.
    Shell developed a reputation at NBCUniversal for having big ideas and what one former coworker described as a “shoot first and aim later” mentality.
    Skydance chief David Ellison, who will be CEO of the combined company, may give Shell more runway to make bolder decisions at Paramount Global.

    Jeff Shell, CEO of NBCUniversal, speaks during a conference at the Cannes Lions International Festival of Creativity in Cannes, France, June 22, 2022. 
    Eric Gaillard | Reuters

    Less than two years after NBCUniversal fired Jeff Shell for alleged sexual harassment, the former CEO is close to finding himself back in the saddle leading a storied media company.
    The longtime media executive is primed to help run the day-to-day media operations of Paramount Global as president of the company when its merger with Skydance Media closes in the first half of 2025, assuming regulatory approval. He’ll report to current Skydance CEO David Ellison, who will take the top job as the combined company’s CEO.

    While neither Shell nor Ellison has publicly declared specific intentions for Paramount Global due to regulations banning “gun-jumping” in pending mergers, Shell’s recent tenure as the CEO of Comcast’s NBCUniversal, the parent company of CNBC, offers clues to what may be in store for Paramount.
    CNBC spoke with a dozen people who worked closely with Shell during his tenure as CEO from 2019 to 2023. They described Shell as a person with big ideas and a willingness to make bold moves but with a style that depends on those around him to talk him out of decisions that may not make sense. Some of Shell’s boldest ideas — such as giving NBC’s 10 p.m. hour over to affiliates, merging with a rival, and turning CNBC primetime into a Fox News facsimile — never played out.
    Comcast CEO Brian Roberts chose Shell to replace Steve Burke as NBCUniversal CEO in 2019. Shell had consistent success running a variety of different divisions within Comcast and NBCUniversal, including NBCU International and Universal Filmed Entertainment Group.
    Colleagues told CNBC they found Shell to be a good listener and a collaborative decision-maker with a predilection for sometimes saying too much. His departure from NBCUniversal was sudden. In April 2023, a Comcast investigation corroborated allegations from a former CNBC reporter of sexual harassment. Shell joined private equity firm RedBird Capital Partners in February. RedBird backed the Skydance-Paramount merger and will assume a minority equity stake.
    Soon, Shell, 59, will be at the helm of Paramount and paired with Ellison, who has already expressed his desire to transition Paramount into a more modern media company. That may set up a dynamic where Paramount’s CEO and president both want bold change.

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    RedBird executives praised Shell during a conference call in July announcing the merger, with RedBird Partner Andrew Brandon-Gordon saying Shell’s “long-term, results-oriented, proven track record at NBCUniversal” coupled with Ellison’s creativity and tech savvy make for the perfect leadership dynamic for the future of Paramount.
    Still, it’s possible the pairing could lead to rash decision-making, warned one executive who worked closely with Shell at NBCUniversal. Even the consideration of dramatic ideas can destabilize an organization if discussed openly without follow through, and Shell developed a reputation at NBCUniversal for what one former coworker described as a “shoot first and aim later” mentality — a sentiment shared by at least six others who spoke with CNBC.
    “What Paramount needs is blocking and tackling — mature leadership,” said the executive who worked closely with Shell. “Ellison is a blow-everything-up guy, and Shell needs someone who can minimize his mistakes.”
    Shell and Ellison both declined to comment for this story.

    The 10 p.m. hour

    At Paramount, Shell will be given an asset mix similar to what he oversaw at NBCUniversal — save the theme parks. He’ll have a major broadcast network with NFL rights (CBS), a movie studio (Paramount Pictures), a streaming service with tens of millions of subscribers (Paramount+), a large library of TV shows and films, and a slew of cable networks with dwindling audiences.
    It will be Shell’s mission to cut costs — Skydance has already identified $2 billion in cost efficiencies and synergies, the company said during a July conference call with investors about the merger — and transform Paramount Global into a modern media company. That likely means making bold changes to declining businesses while investing in technology.
    Shell may try to resurrect the idea of giving up the 10 p.m. hour — as he contemplated at NBC — for CBS, Paramount Global’s national broadcast network, people who spoke to CNBC suggested. Bailing on the hour would save CBS millions on content costs. Local affiliates would welcome gaining the hour as a way to boost advertising revenue.
    During a 2022 CNBC interview, Shell confirmed a Wall Street Journal report that he was considering ceding the hour to local affiliates to shift resources from linear broadcast TV toward streaming.
    “If we’re being prudent operators, which we try to be, if you’re allocating a bunch of resources to one side of the business, you have to look at the allocation of resources to another,” Shell told CNBC’s David Faber at the time. “We make a lot of money at 10 o’clock. We still have a lot of viewers at 10 o’clock. There’s no question throughout the day as linear declines, you’re going to have to make some tradeoffs, and we’ll be looking at that as our investors would want us to look at.”
    The 10 p.m. hour on broadcast networks still serves as a time slot for scripted dramas — a genre that’s largely gone to streaming and, in turn, has seen ratings struggle on traditional TV. CBS’ 10 p.m. programming includes “NCIS: Origins,” “FBI: Most Wanted,” “Elsbeth,” and “Blue Bloods,” which is in its 14th season.
    Paramount Global co-CEO George Cheeks, who runs CBS, told Deadline in late 2022 that he was “committed to 10 p.m. and continuing our ratings success in that time period.”
    Shell ultimately backed off giving up 10 p.m. for NBC after weighing the potential fallout with Hollywood creatives and agents, according to people familiar with the matter. Such a move at NBCUniversal would risk ruining relationships with TV titans such as “Law & Order” creator Dick Wolf, whose shows have occupied the 10 p.m. hour on NBC for years and have created a deep library for NBCUniversal’s flagship streaming service, Peacock. Irritating Hollywood would have run counter to Shell’s strategy to increase Peacock’s content catalog, as NBCUniversal needed strong relationships to fuel the service with new programming.
    Wolf’s shows were also significant moneymakers for NBCUniversal, according to a person familiar with the matter.

    Jeff Shell, CEO of NBCUniversal, speaks to the media at the Allen & Company Sun Valley Conference in Sun Valley, Idaho, July 7, 2021.
    Kevin Dietsch | Getty Images News | Getty Images

    Ceding the 10 p.m. hour would also have negatively affected the ratings of NBC’s storied late night show, “The Tonight Show.” CBS’ late night show, “The Late Show With Stephen Colbert,” is consistently the top-rated late night show, which could naturally give Shell pause on moving away from 10 p.m. once he’s overseeing Paramount assets.
    Still, all of the late night shows are losing audience, and a downsizing has already begun across the genre. Shell may feel it’s finally time to pull the rip cord.
    He is clearly aware that the status quo of linear TV needs to change.
    “Obviously a big chunk of the company is in the linear world, and we know that linear is challenged and declining,” Shell said during the July conference call. “I think a lot of us in the business know, we have got to run these businesses in a different way as they decline. And so, we’ve spent a lot of the last few months really building a bottom-up plan, and our goal is to manage the businesses, particularly the linear businesses, for cash flow generation.”

    Streaming partner

    Shell is also likely to examine the content windowing strategy at Paramount, he said in July. That could mean Shell has a desire to tier Paramount+ differently, with some popular content available on more expensive tiers, perhaps ad-free, that shift to less expensive tiers, including free ad-supported Pluto, over time.
    “I’m a big believer in windowing strategy, and I think there’s maybe a more efficient way to maximize the value of our content, and we’ll continue to be in the DTC [direct-to-consumer] business,” Shell said during the July conference call.
    Some media analysts, such as LightShed Partners’ Rich Greenfield, have argued Paramount Global should shut down Paramount+ and instead license Paramount content to other streamers with more scale. Paramount+ has consistently lost money since its inception and won’t be profitable until 2025, the company has previously said.
    That doesn’t appear to be in Ellison and Shell’s playbook for Paramount. The two have expressed their desire to partner Paramount+ with another streamer to add scale and content to the service, either through a merger or a bundle. Paramount Global has already held talks with a number of media companies about partnering on streaming, including NBCUniversal and Warner Bros. Discovery.
    “To be a winner in [streaming] really means being in the ultimate bundle that’s coming,” Shell said during the July conference call. “We’ve had a bunch of inbound calls from a number of people about partnerships that could involve a partnership with another player or players.”
    At NBCUniversal, according to people familiar with his thinking, Shell privately pushed the benefits of merging with another content company — again, something that never happened.
    He spoke up in meetings about the benefits of merging with Viacom, WarnerMedia and even Netflix to ensure Peacock would have staying power against larger streaming services, according to people who heard him speak.
    Ultimately, Comcast CEO Brian Roberts decided the moves weren’t in the best interest of shareholders or that it was too difficult to gain regulatory approval for them, though Roberts nearly approved a deal in 2022 for NBCUniversal to merge with video game developer Electronic Arts — a deal that, according to people familiar with the matter, would have seen Shell lose his job as NBCUniversal CEO. That role would have gone to EA CEO Andrew Wilson, the people said.

    Jeff Shell, Chairman of Universal Filmed Entertainment Group, and Brian L. Roberts, Chairman and CEO of Comcast Corporation, seen at Universal Pictures “Sing” after party at the 2016 Toronto International Film Festival on Sunday, Sept. 11, 2016, in Toronto.
    Eric Charbonneau | Invision for Universal Pictures | AP

    Changing cable

    Without a big merger, Shell pushed for NBCUniversal to flood Peacock with content, especially during the height of pandemic lockdowns, when Wall Street appeared to be heavily valuing media companies on their streaming subscriber numbers. He argued NBCUniversal should put most of its cable programming on Peacock, including regional sports networks, or RSNs, according to people familiar with the matter.
    Again, other executives talked him out of being too aggressive, arguing the company’s existing pay TV distribution relationships would be harmed if NBCUniversal made that content available outside the cable bundle, according to the people. Geolocation technology issues around regional sports also would have made the inclusion of RSNs difficult, the people said.
    While NBCUniversal has moved toward including more cable programming on Peacock, including hit Bravo franchises such as “The Real Housewives” and “Below Deck,” it has kept RSNs and news networks MSNBC and CNBC separate.
    One of Shell’s big decisions at Paramount will be what to do with a handful of cable channels that have effectively turned into zombie networks, largely airing reruns of the same shows to avoid spending on new content. This includes MTV, VH1 and Comedy Central.
    Shell wanted to combine some NBCUniversal cable networks to cut costs and push back on dwindling revenue, people familiar with the matter said, but ultimately decided not to.
    Shell also had ideas that didn’t come to fruition about changing programming on some of NBC’s cable networks. He initially wanted CNBC to adopt what he described to others as a center-right primetime lineup, according to people familiar with the discussions at the time.
    Then-CNBC chief Mark Hoffman argued the idea didn’t make sense for the network’s brand and likely wouldn’t have much of an audience, and Shell backed down, the people said. CNBC did hire former Fox News anchor Shepard Smith in 2020 to anchor a prime-time show that was canceled in 2022 just months after Hoffman retired. Hoffman declined to comment for this story.
    One of Shell’s first accomplishments upon taking the NBCUniversal job was to renew the network’s “Sunday Night Football” deal with the NFL, and one of the last things he did was support NBC Sports moving forward with a bid for NBA rights if it got an opportunity, according to people familiar with the matter. NBC did get the chance to bid, and it’s bringing back NBA games beginning in 2025 after agreeing to pay about $2.45 billion per season to the league.
    Both Shell and Ellison touted the importance of CBS Sports during their July conference call. When Paramount laid off hundreds of employees in September, none of them were part of CBS Sports, according to a person familiar with the matter.
    CBS owns a Sunday afternoon package of NFL games, part of NCAA March Madness, Big Ten football, UEFA Champions League, and The Masters, among other sports. It wouldn’t be surprising if Shell migrates away from CBS entertainment programming toward sports, even in prime time, if those opportunities present themselves.
    Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
    WATCH: Skydance has to prove over time it can change the future trajectory of Paramount More

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    Wells Fargo shares jump after earnings top Wall Street expectations

    Wells Fargo on Friday reported third-quarter earnings that exceeded Wall Street expectations, causing its shares to rise.
    Here’s what the bank reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

    Adjusted earnings per share: $1.52 vs. $1.28 expected
    Revenue: $20.37 billion versus $20.42 billion expected

    Shares of the bank rose more than 3% in premarket trading after the results. The better-than-expected earnings came even with a sizeable decline in net interest income, a key measure of what a bank makes on lending.
    The San Francisco-based lender posted $11.69 billion in net interest income, marking an 11% decrease from the same quarter last year and less than the FactSet estimate of $11.9 billion. Wells said the decline was due to higher funding costs amid customer migration to higher-yielding deposit products.
    “Our earnings profile is very different than it was five years ago as we have been making strategic investments in many of our businesses and de-emphasizing or selling others,” CEO Charles Scharf said in a statement. “Our revenue sources are more diverse and fee-based revenue grew 16% during the first nine months of the year, largely offsetting net interest income headwinds.”
    Wells saw net income fall to $5.11 billion, or $1.42 per share, in the third quarter, from $5.77 billion, or $1.48 per share, during the same quarter a year ago. The net income includes $447 million, or 10 cents a share, in losses on debt securities, the company said. Revenue dipped to $20.37 billion from $20.86 billion a year ago.
    The bank set aside $1.07 billion as a provision for credit losses compared with $1.20 billion last year.

    Wells repurchased $3.5 billion of common stock in the third quarter, bringing its nine-month total to more than $15 billion, or a 60% increase from a year ago.
    The bank’s shares have gained 17% in 2024, lagging the S&P 500.

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    Jamie Dimon says geopolitical risks are surging: ‘Conditions are treacherous and getting worse’

    JPMorgan Chase CEO Jamie Dimon sees risks climbing around the world amid widening conflicts in the Middle East and with Russia’s invasion of Ukraine showing no signs of abating.
    “We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,” Dimon said Friday in the bank’s third-quarter earnings release.
    Dimon also said that he remained wary about the future of the economy, despite signs that the Federal Reserve has engineered a soft landing.

    JPMorgan Chase CEO and Chairman Jamie Dimon speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023.
    Evelyn Hockstein | Reuters

    JPMorgan Chase CEO Jamie Dimon sees risks climbing around the world amid widening conflicts in the Middle East and with Russia’s invasion of Ukraine showing no signs of abating.
    “We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,” Dimon said Friday in the bank’s third-quarter earnings release.

    “There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history,” he said.
    The international order in place since the end of World War II was unraveling with conflicts in the Middle East and Ukraine, rising U.S.-China tensions and the risk of “nuclear blackmail” from Iran, North Korea and Russia, Dimon said last month during a fireside chat held at Georgetown University.
    “It’s ratcheting up, folks, and it takes really strong American leadership and western world leaders to do something about that,” Dimon said. “That’s my number one concern, and it dwarves any I’ve had since I’ve been working.”
    The ongoing conflict between Israel and Hamas recently hit the one-year mark since Hamas’ attack on Oct. 7, and there have been few signs of it slowing down. Tens of thousands of people have been killed as the conflict has broadened into fighting on multiple fronts, including with Hezbollah and Iran.
    At least 22 people were killed and more than 100 injured in Beirut, Lebanon, from Israeli airstrikes on Thursday. Iran launched more than 180 missiles against Israel on Oct. 1, and worries have risen that an Israeli retaliation could target Iranian oil facilities.

    Dimon also said Friday that he remained wary about the future of the economy, despite signs that the Federal Reserve has engineered a soft landing.
    “While inflation is slowing and the U.S. economy remains resilient, several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon said. “While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment.”  More

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    Berkshire slashes Bank of America stake to under 10%, no longer required to disclose frequently

    Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
    David A. Grogen | CNBC

    Warren Buffett’s Berkshire Hathaway has reduced its stake in Bank of America to below 10% amid a selling spree that started in mid-July.
    In a Thursday night filing with the U.S. Securities and Exchange Commission, Buffett disclosed the sale of more than 9.5 million shares, split between three transactions made from Tuesday to Thursday. The move brings his holdings down to 775 million shares, or a stake of about 9.987%.

    Since the holding is now under the key 10% threshold, Berkshire is no longer required to report its related transactions in a timely manner. The SEC requires shareholders who own more than 10% of a company’s equity securities to report transactions involving that company’s equity within two business days.
    Buffett watchers won’t find out the Oracle of Omaha’s next moves for a while. The next 13F filing in mid-November will only reveal Berkshire’s equity holdings as of the end of September. Berkshire remains BofA’s biggest institutional investor.
    Shares of the bank have inched up about 1% in the past month despite Berkshire’s selling. Bank of America CEO Brian Moynihan previously said the market is absorbing the stock, aided by the bank’s own repurchasing.
    Buffett famously bought $5 billion of Bank of America preferred stock and warrants in 2011 to shore up confidence in the embattled lender in the wake of the subprime mortgage crisis. He converted the warrants to common stock in 2017, making Berkshire the largest shareholder in the bank. Buffett then added 300 million more shares to his bet in 2018 and 2019.
    ‘Very cautious’
    The recent BofA sales came after Buffett spent the past few years dumping a variety of longtime holdings in the banking industry, including JPMorgan, Goldman Sachs, Wells Fargo and U.S. Bancorp. The Berkshire CEO struck a pessimistic tone last year when he opined on 2023’s banking crisis.

    “You don’t know what has happened to the stickiness of deposits at all,” Buffett said. “It got changed by 2008. It’s gotten changed by this. And that changes everything. We’re very cautious in a situation like that about ownership of banks.”
    Buffett believes bank failures in 2008 during the global financial crisis, and again in 2023, lessened confidence in the system, made worse by poor messaging by regulators and politicians. Meanwhile, digitalization and fintech made bank runs a simple matter at times of crisis. More

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    Wealthy millennials and Gen Z are redefining philanthropy

    Young wealthy donors are more likely to volunteer, fundraise and act as mentors for charitable causes than just give money, according to a survey from Bank of America Private Bank.
    Some of the differences between generations may be rooted in life cycles and wealth.
    But the implications of the generational shift in giving will be profound for wealth advisors and nonprofits, advisors say.

    Solstock | E+ | Getty Images

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Wealthy millennials and Gen Zers are redefining the world of charitable giving, seeing themselves more as activists than donors, according to a new study.

    Wealthy donors under the age of 43 are more likely to volunteer, fundraise and act as mentors for charitable causes rather than just give money, according to a new survey from Bank of America Private Bank. The survey of more than 1,000 respondents with more than $3 million in investible assets also found that young philanthropists want more public attention for their giving compared to Gen Xers and baby boomers.
    The shift in the way the next generations give, as well as the causes they favor, is likely to remake the charitable landscape. Rather than simply writing checks to causes they care about, the next generation of givers wants to be deeply involved in trying to fix the biggest social and environmental problems.
    “They view themselves as holistic social change agents,” said Dianne Chipps Bailey, managing director and national philanthropic strategy executive for philanthropic solutions at Bank of America Private Bank. “I think they have a better sense of agency in this world. They’re really looking to move their capital in a much more comprehensive robust way to achieve their social impact goals.”

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    Both younger and older multi-millionaires are highly charitable. According to the study, 91% of the respondents had given to charity in the past year. More than two-thirds of both older and younger respondents said they are motivated by “making a lasting impact.”
    Yet their reasons for giving and their methods vary widely by age. Donors under the age of 43 are slightly more likely to volunteer and are twice as likely to help raise charitable donations from friends or peers rather than just giving directly. They’re  more than four times as likely to act as mentors. And they’re more interested in serving on nonprofit boards rather than limiting their contributions to capital.

    Older donors give from of a sense of responsibility. Those over the age of 44 were more than twice as likely to give due to “obligation” than younger donors. Those under 43 were more likely to cite self-education and the influence of their social circle as drivers of their philanthropy.
    Some of the differences between generations may be rooted in life cycles and wealth. The younger wealthy are still building their fortunes and inheriting their wealth, so they’re more likely to give their time and help fundraise. Still, Bailey said the focus on peer networks and activism will likely endure even as they get older and wealthier.
    “You can think of philanthropy as the five T’s – time, talent, treasure, testimony and ties,” she said. “The older generation is focused on the treasure (giving funds). The younger generations are leaning into the other four.”
    The young wealthy also support different causes. They’re twice as likely to support efforts related to homelessness, social justice, climate change and the advancement of women and girls. Philanthropists over 44 were far more likely to support religious organizations, the arts and military charities.

    “When you think about what [the younger generation] has been through in recent years, 2020, where they saw it all exposed, they’re leaning into the response,” Bailey said. “And it’s sustained. So many people move their giving with the headlines, but they’ve really dug in deeply. It’s not a moment but a movement.”
    The implications of the generational shift in giving will be profound for wealth advisors and nonprofits, advisors say. Since many younger donors inherited their wealth, they’re far more likely to use giving vehicles created by their family. They were more than four times more likely to use charitable trusts, family foundations and donor advised funds.
    Bailey said the next generation wants to talk about philanthropy as part of an initial discussion with a wealth advisor — even before talking about their investment plan.
    “They have a hunger to know more, to learn more about philanthropy,” Bailey said. “They’ve already got these complex [giving] vehicles at the ready, so the education piece is critical both for nonprofits and for the advisors.”
    With charity increasingly dominated by wealthy donors, and with the next generations expected to inherited over $80 trillion in the coming decades, courting the young rich will be critical.
    “You need their perspective and you’re going to need their money,” Bailey said.
    Advisors to the young rich also need to be generous with their praise. Younger donors are more than three times more likely to gauge the success of their philanthropic efforts by public recognition, according to the survey. Nearly half say they are likely to associate their names with their philanthropic efforts, while more than two-thirds of older donors give anonymously.
    “Praise them, celebrate them, give them visibility,” she said.
    Just don’t call them “philanthropists.” A report from Foundation Source found that 80% of young donors want to be seen as “givers,” while 63% also like the terms “advocate” or “changemaker.” Only 27% accepted the label of “philanthropist.” More

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    The Fed is finally cutting rates, but banks aren’t in the clear just yet

    Falling interest rates are usually good news for banks, especially when the cuts aren’t a harbinger of recession.
    But the ride probably won’t be a smooth one: Persistent concerns over inflation could mean the Fed doesn’t cut rates as much as expected and Wall Street’s projections for improvements in net interest income may need to be dialed back.
    While all banks are expected to ultimately benefit from the Fed’s easing cycle, the timing and magnitude of that shift is unknown, based on both the rate environment and the interplay between how sensitive a bank’s assets and liabilities are to falling rates.

    Federal Reserve Board Chairman Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., September 18, 2024. REUTERS/Tom Brenner
    Tom Brenner | Reuters

    Falling interest rates are usually good news for banks, especially when the cuts aren’t a harbinger of recession.
    That’s because lower rates will slow the migration of money that’s happened over the past two years as customers shifted cash out of checking accounts and into higher-yielding options like CDs and money market funds.

    When the Federal Reserve cut its benchmark rate by half a percentage point last month, it signaled a turning point in its stewardship of the economy and telegraphed its intention to reduce rates by another 2 full percentage points, according to the Fed’s projections, boosting prospects for banks.
    But the ride probably won’t be a smooth one: Persistent concerns over inflation could mean the Fed doesn’t cut rates as much as expected and Wall Street’s projections for improvements in net interest income — the difference in what a bank earns by lending money or investing in securities and what it pays depositors — may need to be dialed back.
    “The market is bouncing around based on the fact that inflation seems to be reaccelerating, and you wonder if we will see the Fed pause,” said Chris Marinac, research director at Janney Montgomery Scott, in an interview. “That’s my struggle.”
    So when JPMorgan Chase kicks off bank earnings on Friday, analysts will be seeking any guidance that managers can give on net interest income in the fourth quarter and beyond. The bank is expected to report $4.01 per share in earnings, a 7.4% drop from the year-earlier period.

    Known unknowns

    While all banks are expected to ultimately benefit from the Fed’s easing cycle, the timing and magnitude of that shift is unknown, based on both the rate environment and the interplay between how sensitive a bank’s assets and liabilities are to falling rates.

    Ideally, banks will enjoy a period where funding costs fall faster than the yields on income-generating assets, boosting their net interest margins.
    But for some banks, their assets will actually reprice down faster than their deposits in the early innings of the easing cycle, which means their margins will take a hit in the coming quarters, analysts say.
    For large banks, NII will fall by 4% on average in the third quarter because of tepid loan growth and a lag in deposit repricing, Goldman Sachs banking analysts led by Richard Ramsden said in an Oct. 1 note. Deposit costs for large banks will still rise into the fourth quarter, the note said.
    Last month, JPMorgan alarmed investors when its president said that expectations for NII next year were too high, without giving further details. It’s a warning that other banks may be forced to give, according to analysts.
    “Clearly, as rates go lower, you have less pressure on repricing of deposits,” JPMorgan President Daniel Pinto told investors. “But as you know, we are quite asset sensitive.”
    There are offsets, however. Lower rates are expected to help the Wall Street operations of big banks because they tend to see greater deal volumes when rates are falling. Morgan Stanley analysts recommend owning Goldman Sachs, Bank of America and Citigroup for that reason, according to a Sept. 30 research note.

    Regional optimism

    Regional banks, which bore the brunt of the pressure from higher funding costs when rates were climbing, are seen as bigger beneficiaries of falling rates, at least initially.
    That’s why Morgan Stanley analysts upgraded their ratings on US Bank and Zions last month, while cutting their recommendation on JPMorgan to neutral from overweight.  
    Bank of America and Wells Fargo have been dialing back expectations for NII throughout this year, according to Portales Partners analyst Charles Peabody. That, in conjunction with the risk of higher-than-expected loan losses next year, could make for a disappointing 2025, he said.
    “I’ve been questioning the pace of the ramp up in NII that people have built into their models,” Peabody said. “These are dynamics that are difficult to predict, even if you are the management team.”

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    Delta says travelers are trading scorching summer Europe trips for fall getaways

    Delta’s president said traditional spikes in Europe bookings for July and August are becoming less pronounced.
    Other carriers have shifted their schedules to maintain shoulder-season European flights well into the fall.
    Peaks are occurring in September and October, Delta President Glen Hauenstein said.

    A woman uses an umbrella to protect herself from the sun as she passes past the Colosseum during an intensely hot day in Rome, Italy, on July 11, 2024. 
    Riccardo De Luca | Anadolu | Getty Images

    Summer trips to Europe are getting too hot for thousands of tourists.
    Delta Air Lines President Glen Hauenstein said travelers are opting out of flying to Europe during the traditional summer peak travel season. Instead, they are shifting trips to cooler months, a trend that airline officials have been noticing over the past couple of years as consumers look to escape crowds and record heat of popular destinations.

    “The weather in Europe in August is really hot, and that people who have choices when they can take their vacations are moving into let’s call it more temperate months,” Hauenstein said Thursday on an earnings call. Corporate [travel] we haven’t seen much change year over year but it’s continuing to shift travel to Europe in particular from July and August peak to a September and October peak.”
    Summer this year in the Northern Hemisphere was the hottest on record, according to the European Union’s climate monitor.

    Read more CNBC airline news

    Airlines have been extending robust trans-Atlantic schedules through much of the fall to cater to the shifting patterns.
    “What we’re doing at United is we’re extending the season,” Patrick Quayle, United Airlines’ senior vice president of global network planning and alliances, said in an interview earlier this year.
    He said the carrier opted to begin some European routes in March and April this year and will fly some of them through late October and early November. “What we’re seeing is, more and more, travelers are going in those shoulder seasons where you can get a bit more value, and I think the weather’s a bit better,” he added.

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    Here’s the inflation breakdown for September 2024 — in one chart

    The consumer price index rose by 2.4% in September 2024 on an annual basis, according to the Bureau of Labor Statistics.
    Inflation declined amid a pullback in gasoline prices and moderation in housing inflation.
    There were some trouble spots, however, such as groceries and car insurance.

    David Paul Morris/Bloomberg via Getty Images

    Inflation fell in September as lower gasoline prices combined with other waning price pressures in areas such as housing to bring relief to consumers’ wallets, according to the U.S. Bureau of Labor Statistics.
    The consumer price index, a key inflation gauge, was up 2.4% last month from September 2023, the bureau said.

    That figure is a decline from 2.5% in August, meaning price growth slowed. It’s also the smallest annual reading since February 2021.
    The September CPI figure was slightly higher than economists predicted, however.
    There were some trouble spots, such as an uptick in categories including clothing, car insurance and groceries. Most appear to be “one-off” increases, though, said Mark Zandi, chief economist at Moody’s.
    “The trend on inflation remains very positive,” Zandi said. “This month was a blip and I don’t think it will be sustained.”

    The CPI measures how quickly prices are rising or falling for a broad basket of goods and services, from car repairs to peanut butter and living room furniture.

    Inflation has pulled back significantly from its pandemic-era peak of 9.1% in June 2022. It’s moving toward policymakers’ long-term annual target, near 2%.

    “We have made substantial improvement over the past two years,” said Sarah House, senior economist at Wells Fargo Economics.
    That said, a slowdown in the labor market has concerned economists more than inflation in recent months.
    The U.S. Federal Reserve, which had raised interest rates sharply to combat high inflation starting in early 2022, began cutting them in September to take pressure off the labor market and economy.

    Prices fall at the gas pump

    Annual food inflation is ‘fairly tame’

    Frederic J. Brown | AFP | Getty Images

    Food inflation over the past year has also been “fairly tame,” House said.
    Grocery prices are up 1.3% since September 2023, according to the CPI.
    Prices for agricultural commodities — a “major input cost” for food — have either fallen or look “more stable,” House said. Examples of agricultural commodities include corn, wheat, coffee and soybeans.
    Wage growth has slowed, reducing labor costs to transport or prepare food, for example, House said. And grocery stores have offered more price incentives and promotions as consumers become more concerned about their spending, she said.

    That said, grocery inflation did see a large jump on a monthly basis from August to September, to 0.4% from 0%.
    “I don’t think that will be sustained going forward,” Zandi said.
    Individual food items have their own unique supply-and-demand dynamics that can affect pricing.
    For example, egg prices rose by more than 8% from August to September, and by 40% since September 2023, largely due to another outbreak of avian flu, a contagious and lethal disease that affects chickens and other birds, said economists.

    Housing inflation is declining

    Housing accounts for the largest share of CPI — and has been the biggest stumbling block in getting inflation back to its target level, economists said.
    “It’s a huge component,” House said. “What happens there can really move the dial when it comes to overall inflation and core inflation.”

    CPI shelter inflation — which includes rental prices and an equivalent measure for homeowners — has gradually declined but remained stubbornly high. That has puzzled many economists, since real-estate data shows that growth for average rents of new tenants has been muted for about two years.
    In September, shelter inflation throttled back on a monthly basis, to 0.2% from 0.5% in August.
    That’s among the most encouraging signals in the latest CPI report, economists said.
    “Shelter inflation is now definitively moderating,” Zandi said. “And that’s such a key part of the CPI.”

    ‘Slower to recede’

    Housing falls into the “services” category of the economy.
    Inflation for goods has largely throttled back from pandemic-era nosebleed levels as out-of-whack supply-and-demand dynamics unwind, economists said.
    But services inflation “has still been pretty slow to recede,” House said.
    Largely, that’s been because of shelter. But other categories also remain elevated.

    Many services “rely heavily” on prices in other parts of the economy, House said. For example, insurers are now raising car insurance premiums following an earlier surge in new and used car prices.
    Prices for motor vehicle insurance increased 1.2% from August to September and about 16% since September 2023, according to the CPI.
    It typically takes a while for such dynamics to filter through, on paper, to the services side, she said.
    “Services inflation was slower to peak on the way up and likely to be slower to recede on the way down,” she said. More