Raphael Stevens

Here are the numbers: Earnings of 80 cents a share vs 75 cents a share Refinitiv estimate.
Revenue:  $23.33 billion vs $23.2 billion estimate
Net loan charge-offs, an industry term for what happens when borrowers fall behind on their payments, dropped 52% from a year earlier to $392 million.

Brian Moynihan, chairman and chief executive officer of Bank of America Corp, speaks in New York City, September 25, 2019.
Shannon Stapleton | Reuters

Bank of America posted first-quarter profit on Monday that exceeded analysts’ estimates, helped by the better-than-expected credit quality of its borrowers.
Here are the numbers:

Earnings:  80 cents a share vs 75 cents a share Refinitiv estimate.
Revenue:  $23.33 billion vs $23.2 billion estimate

The bank said that profit declined 12% to $7.07 billion, or 80 cents per share, exceeding the 75 cent estimate of analysts surveyed by Refinitiv. Revenue climbed 1.8% to $23.33 billion, roughly matching expectations.
Shares of the bank climbed 1.3% in premarket trading.
Bank of America said that a run of strong credit at the second biggest U.S. lender by assets continued into the first quarter. Net loan charge-offs, an industry term for what happens when borrowers fall behind on their payments, dropped 52% from a year earlier to $392 million. That was less than half of the $848.7 million StreetAccount estimate.
The bank posted a mere $30 million provision for credit losses, which is tied to management’s view of potential future losses, far less than the $468 million expected by analysts. It also released $362 million in reserves the bank had previously set aside for expected defaults.
“First-quarter results were strong despite challenging markets and volatility, which we believe reflect the value of our `Responsible Growth’ strategy,” CFO Alastair Borthwick said in the release. “Asset quality continued to remain strong with net charge-offs about half of the year-ago quarter amount.”

Bank of America’s moves are in contrast to rival JPMorgan Chase, which disclosed last week that it took a $1.46 billion provision for credit losses, including adding to loan-loss reserves by $902 million, on concern over the increasing odds of a recession.
Bank of America, led by CEO Brian Moynihan, had enjoyed tailwinds as rising interest rates and a rebound in loan growth promised to boost income. But bank stocks got hammered this year amid concerns that higher inflation would help spark a recession, which would lead to higher defaults.
While longer-term rates rose during the quarter, short term rates rose more, and that flat, or in some cases inverted, yield curve spurred concerns about an economic slowdown ahead.
“The BAC story is about Main St. banking (strong) vs. Wall St. banking (weak),” banking analyst Mike Mayo of Wells Fargo said Monday in a research note. The company beat expectations “largely from credit” as loan losses were close to a record low, he added.
Bank of America’s trading operations didn’t generate as much outperformance as those at Goldman Sachs and JPMorgan in the quarter, which managed to take advantage of surging volatility created by the Ukraine war.
Bank of America’s fixed income traders posted revenue of $2.65 billion, roughly matching the $2.69 billon StreetAccount estimate. Equities revenue of $2 billion exceeded the estimate by almost $400 million, thanks to higher client activity and strong derivatives results.
Investment banking fees dropped by a steeper-than-expected 35% to $1.5 billion, beneath the $1.74 billion estimate, reflecting a slowdown in mergers and IPOs in the quarter.
Bank of America shares have fallen 15% this year before Monday, worse than the 11.6% decline of the KBW Bank Index.
Last week, JPMorgan said profit slumped as it posted losses tied to Russia sanctions and set aside money for future loan losses. Goldman, Morgan Stanley and Citigroup each topped expectations with stronger-than-expected trading results, and Wells Fargo missed on revenue amid a decline in mortgage lending.

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First-quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago, data released by the National Bureau of Statistics Monday.
Fixed asset investment for the first quarter rose by 9.3% from a year ago, topping expectations for 8.5% growth.
However, the unemployment rate for those in 31 major Chinese cities rose from 5.4% in February to 6% in March — the highest on record per official data going back to 2018.

A traffic police officer prepares to check a truck at a service station near Shanghai, which has ordered tighter restrictions on travel in and out of the city as China battles its most severe Covid outbreak since the early days of the pandemic in 2020.
Yin Liqin | China News Service via Getty Images

BEIJING — China’s first-quarter GDP grew faster than expected despite the impact of Covid lockdowns in parts of the country in March, according to data released by the National Bureau of Statistics Monday.
First-quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago.

Fixed asset investment for the first quarter rose by 9.3% from a year ago, topping expectations for 8.5% growth. Investment in manufacturing rose by 15.6% in the first quarter from a year ago, and infrastructure saw an 8.5% increase over the same period.
Industrial production in March rose by 5%, beating the forecast for 4.5% growth.
However, retail sales in March fell by a more-than-expected 3.5% from a year earlier. Analysts polled by Reuters anticipated a 1.6% decline.
Beginning in March, the country has struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Back then, lockdowns across more than half the country resulted in a 6.8% contraction in first quarter growth from a year earlier.
“We must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, the economic development is facing significant difficulties and challenges,” the bureau said in a statement.

Rising unemployment

The unemployment rate across 31 major Chinese cities rose from 5.4% in February to 6% in March — the highest on record according to official data going back to 2018.
“This indicates the unemployment problem in the large cities has become more severe than when the Covid Pandemic started in 2020,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“The Covid outbreaks only forced Shanghai and some other cities to enter lockdowns in late March and early April. Therefore the economic slowdown likely worsened in April,” he said.
As Covid stretches into a third year, China again faces the challenge of ensuring a record high number of graduates find jobs. This year, the number of higher education graduates are expected to rise by 1.67 million from 2021 to 10.76 million.
In March, the unemployment rate for those from 16 to 24 years old remained far higher at 16% — the highest since August 2020.
Overall, the national urban unemployment rate ticked higher in March to 5.8%, up from 5.5% in February.
That rise “reflects greater difficulties for businesses’ production and operations, and greater pressure on employment,” Fu Linghui, spokesperson of the National Bureau of Statistics, said at a briefing Monday in Chinese, according to a CNBC translation.
He noted that since March, some people have had a harder time finding jobs due to the impact of Covid domestically. That contrasts with a historical seasonal trend in which the unemployment rate tended to fall in March, after rising in January and February as workers changed jobs around the Spring Festival, Fu said.

Real estate’s role

“To achieve this year’s 5.5% economic growth target, consumption must not be dragged down by the pandemic, real estate investment must stop falling and stabilize as soon as possible, fiscal spending must be strong enough and imports and exports cannot contribute negatively,” Bruce Pang, head of macro and strategy research at China Renaissance, said in Chinese, translated by CNBC.
Since retail sales and trade have a limited ability to contribute to growth, the market has greater expectations for real estate to play a role, he said.

Although [the] Chinese economy will come under near-term pressure because of pandemic controls, we remain confident in China economy’s long-term resilience and vitality.

director of equities, Fidelity International

Real estate, which has struggled since Beijing’s crackdown on developers’ high use of debt, saw investment rise by 0.7% in the first quarter from a year ago. That’s despite double-digit declines in the floor space and total sales of commercial buildings sold.
Although economic figures released for January and February beat expectations, figures for March have begun to reflect the impact of stay-home orders and travel restrictions around economic centers like the coastal metropolis of Shanghai.
Exports, a major driver of China’s growth, rose by a more-than-expected 14.7% in March, but imports unexpectedly fell, down by 0.1% from a year ago, according to data released last week.

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“We must coordinate the efforts of Covid-19 prevention and control and economic and social development, make economic stability our top priority and pursue progress while ensuring stability, and put the task of ensuring stable growth in an even more prominent position,” the bureau said.
Retail sales grew by 3.3% in the first quarter from a year ago, but the apparel, autos and furniture subcategories still posted declines for the period.
Within retail sales, jewelry declined the most and was down by 17.9% in March from a year ago. It was followed by a 16.4% decline in catering and a 12.7% decline in clothing and shoes, the data showed.
“Although [the] Chinese economy will come under near-term pressure because of pandemic controls, we remain confident in China economy’s long-term resilience and vitality,” Monica Li, director of equities, at Fidelity International, said in a note.
Among signs of support for longer-term growth, Li noted how “the strong issuance of special local government bond since second half last year has set the stage for accelerating infrastructure investment in future.”

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Take a look at some of the biggest movers in the premarket:
Twitter (TWTR) – Twitter shares jumped 4.5% in the premarket after the company’s board of directors adopted a so-called poison pill to prevent Tesla (TLSA) CEO Elon Musk from increasing his stake in the company past 15%. That follows Musk’s $54.20 per share bid for Twitter last week.

Sirius XM (SIRI) – The satellite radio operator’s stock fell 2% in premarket trading after Morgan Stanley downgraded it to “underweight” from “equal-weight.” Morgan Stanley said auto market headwinds would negatively impact Sirius XM, and also noted the stock’s outperformance over the past year.
Nektar Therapeutics (NKTR) – The drugmaker’s shares cratered 24.4% in the premarket after it halted all trials involving its key cancer drug. The experimental treatment did not produce the desired results in multiple studies.
Bank of America (BAC) – Bank of America reported quarterly profit of 80 cents per share, 5 cents a share above estimates. Revenue also topped Street forecasts on strength in consumer lending. Bank of America shares rose 1.1% in the premarket.
Bank of New York Mellon (BK) – The bank beat estimates by a penny a share, with quarterly earnings of 86 cents per share. Revenue was essentially in line with analysts’ predictions. Its results were helped in part by higher interest rates.
Synchrony Financial (SYF) – The financial services company reported quarterly profit of $1.77 per share, beating the consensus estimate of $1.54 a share. Revenue came in above estimates as well.  Synchrony’s board also approved the addition of $2.8 billion to the company’s stock buyback plan as well as a 5% dividend increase to 23 cents per share.  Synchrony added 1% in the premarket.

Southwest Gas (SWX) – The utility said its board had authorized the review of a full range or strategic alternatives, after receiving what it called an “indication of interest” well in excess of investor Carl Icahn’s $82.50 per share offer.
Didi Global (DIDI) – Didi shares posted an 18.3% premarket loss after the China-based ride-hailing firm reported a 12.7% drop in fourth-quarter revenue compared to a year earlier. Didi also said a shareholding meeting would be held on May 23 to vote on delisting from the New York Stock Exchange.
Wendy’s (WEN) – Wendy’s fell 1.8% in the premarket after BMO Capital downgraded the restaurant operator’s stock to “market perform” from “outperform.” BMO said Wendy’s is less well-positioned for a tighter consumer spending environment than some of its industry peers.
Progressive (PGR) – Progressive was downgraded to “underweight” from “neutral” at Piper Sandler, which thinks the insurance company is likely to miss consensus earnings estimates due to too much optimism surrounding rising auto insurance rates. Progressive fell 1.6% in the premarket trading.

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Three people have died as of Sunday, the city said, attributing the deaths to preexisting health conditions.
The official announcement noted all three people were elderly and were not vaccinated against Covid-19.
The city also said it would begin another round of mass virus testing, set to end Thursday.

Shanghai, China’s largest city and the one hit hardest by the latest Covid outbreak, announced another round of mass virus testing that’s set to end Thursday, April 21.
Str | Afp | Getty Images

BEIJING — Shanghai city reported Monday its first Covid-related deaths since the latest wave of lockdowns began in earnest in late March.
Three people have died as of Sunday, the city said, attributing the deaths to preexisting health conditions. The official announcement noted all three people were elderly and were not vaccinated against Covid-19.

Beijing is trying to increase Covid vaccination rates among the country’s older population. As at April 11, about 224.8 million people over the age of 60 had been vaccinated, according to the National Health Commission.
That’s about 85% of the age category, based on a 2020 census that said the country has more than 260 million people over the age of 60. As at April 11, roughly 90.8% of the country’s 1.41 billion people had been vaccinated, according to the health commission.
Anecdotally, at least one neighborhood in the capital city of Beijing said anyone over the age of 60 getting the first Covid shot could receive a reward worth the equivalent of about $70 to $80.
The latest Covid wave in China — the worst since the initial shock of the pandemic in early 2020 — began in late February and stems from the highly transmissible omicron variant. The only other deaths officially reported in the latest wave were two in the northern province of Jilin on March 18.

For Sunday, Shanghai reported 2,417 new confirmed Covid cases with symptoms and 19,831 without.

Shanghai, China’s largest city, began a two-stage lockdown and mass virus testing in late March that was supposed to end after just over a week. But municipal authorities have yet to set a date for when widespread travel restrictions and stay-home orders will end.
On Monday, the city said it would begin another round of mass virus testing, set to end Thursday.
Outside of Shanghai, mainland China reported about 300 other new confirmed cases with symptoms for Sunday, in regions ranging from Jilin to the southern province of Guangdong. Beijing reported three such cases.

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For a sense of the economic scale on China’s latest Covid lockdowns, look at the numbers on Shanghai.
In terms of U.S. states, Shanghai’s population is between that of Florida (pop. 21.8 million) and Texas (pop. 29.5 million).
Shanghai is home to the world’s busiest port, followed by Singapore, according to Bernstein.

The Huangpu River splits the Chinese city of Shanghai between the older settlement on the west and the newer, financial center on the east.
Johannes Eisele | Afp | Getty Images

China’s latest wave of Covid restrictions has forced millions of people — roughly three times as many as live in New York City — to stay home and undergo mass virus testing in the metropolis of Shanghai.
As Covid cases began to spike in late February, Shanghai tried to control the outbreak with targeted, neighborhood lockdowns. But the city, a center for global transport, manufacturing, finance and trade, decided in late March to implement a two-stage lockdown that soon applied to all districts, generally forcing people not to leave their apartments.

Most people outside China know that Shanghai is big, but few realize just how big economically. The following numbers indicate the scale of Shanghai as an economic center — and may hint at the cost of the lockdown.

Size

GDP

Global trade center

Shanghai sits at the mouth of the Yangtze River, one of the two main rivers in China.
According to Bernstein:

Shanghai is home to the world’s busiest port, followed by Singapore.
Shanghai’s Pudong airport is the world’s third-busiest cargo airport, behind Memphis, Tennessee, and Hong Kong.

In all, Shanghai accounted for 7.3% of China’s exports and 14.4% of imports in 2021, according to Citi.

Manufacturing and corporate center

According to Citi, Shanghai is China’s:

Most important semiconductor manufacturing center, home to SMIC, Hua Hong and Universal Scientific Industrial.
Home to many auto producers: SAIC Motor, SAIC’s joint companies with Volkswagen and GM, Nio, Tesla and Ford.
Headquarters or a major center for multinational corporations’ China operations: Apple, L’Oreal, Samsung Electronics, P&G, L’Oreal, LVMH, Nike, Panasonic, Philips, Johnson & Johnson and General Electric, among others.
Base for ship producers: Jiangnan , Zhonghua and Waigaoqiao shipbuilding.

Finance

Consumer hub

In Shanghai, official figures for 2021 show:

Average disposable income of 78,027 yuan ($12,288) — more than double the nationwide average of 35,128 yuan ($5,531).
Average consumer spending of 48,879 yuan — also double the national average of 24,100 yuan.

U.S. wholesale chain Costco chose Shanghai for its first mainland China store in 2019.
And as of last year, Shanghai was home to the most coffee shops in the country, with nearly 3 shops per 10,000 people, versus a ratio of about 2 for Guangzhou, Shenzhen and Beijing, according to Meituan.

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Shanghai is home to three of the top 20 universities in China, according to U.S. News and World Report.
The number of foreigners living in Shanghai fell to 163,954 people in 2020, down by 21% versus a decade earlier, according to official censuses. The southern province of Guangdong is now home to the most foreigners in China, at more than 400,000.
The overall number of foreigners in the country rose during those 10 years by about 40% to 1.4 million people — or about 0.1% of China’s population.

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