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Bank Earnings Are In

Earnings, CPI, Oil

Good Morning!

TGIF! Here’s what is moving markets:

👉 Banks earnings season has arrived

👉 CPI on the rise

👉 Oil surges on strikes

Let’s get into it!

BANKS: Earnings Season

JPMorgan, Wells Fargo, Bank of America, and Citigroup kicked off bank earnings on Friday morning amid worries about shrinking bond portfolios and escalating loan losses. JPMorgan and Bank of America reported that regulatory fees associated with the regional banking crisis hurt their profits. Citigroup posted massive losses along with missed earnings. Wells Fargo beat on revenue but forecasted that profit would shrink.

Earnings breakdown:

  • JP Morgan's earnings came in at $3.04 per share vs $3.32 est., while their revenue was $39.94 billion vs $39.78 billion est.

  • Wells Fargo had a massive quarter with earnings per share of $0.86 vs $0.71 est. Sales landed at $20.48 billion vs $20.28 billion est.

  • Bank of America posted earnings per share of $0.70 cents vs $0.68 cents with revenue of $22 billion

  • Citigroup posted earnings per share of $0.84 cents vs $0.81 cents est. with revenue of $17.44 billion vs $18.74 billion expected

🎯 GRIT TAKE: It was fascinating to see…upgrade to VIP to read the full GRIT Take. 

CPI: Rose Unexpectedly

In December, consumer spending on various goods and services rose unexpectedly, indicating ongoing inflation in the U.S. economy. The consumer price index (CPI) increased by 0.3%, higher than the anticipated 0.2%. Annually, the CPI rose by 3.4%, exceeding the expected 3.2%. This contrasted with the 6.4% annual increase in December 2022.

Source: FXStreet

Excluding food and energy, the core CPI also rose by 0.3% monthly and 3.9% annually, slightly above estimates. The primary driver of this increase was rising shelter costs, which rose 0.5% for the month and 6.2% annually.

Food prices increased by 0.2%, with a notable 8.9% monthly surge in egg prices. Energy prices rose by 0.4%, and airline fares increased by 1%. Other notable increases included motor vehicle insurance, medical care, and used vehicle prices.

OIL: Rises On Strikes

On Friday, the US and UK conducted around 70 airstrikes on Houthi targets in Yemen to counter the group's attacks on Red Sea shipping. Despite these strikes, the Houthis vowed to continue targeting commercial vessels and declared all US and UK interests as legitimate targets. The military action, partly in response to the ongoing Israel-Hamas conflict, saw oil prices rise by over 4%, with Brent crude surpassing $80 a barrel.

Source: Reuters

The airstrikes, which began around 2:30 a.m. Yemen time hit Houthi-controlled areas, including Sanaa and the Red Sea port city of Hodeida. A total of 73 strikes were reported by the Houthis, with five fighters killed. The US and UK targeted airports, radar, and drone and missile sites, using jets from the USS Eisenhower and Tomahawk missiles, while the UK launched planes from a base in Cyprus.

Headlines You Need To Know: 🎙

  • Wholesale prices unexpectedly fell

  • Citigroup to cut 20,000 roles

  • Large backers of private equity are asking for their money back

  • Tesla shares drop on China price cuts

  • Costco’s new China store triggers shopping frenzy

  • Morgan Stanley to pay $153 million

A Big Fraud

This company became one of the biggest accounting frauds in American history. Enron was an energy trading and utility company based in Houston, Texas. They were formed in 1986 following a merger between two energy companies. After the merger, Kenneth Lay became Enron's CEO. At that time, Lay took a completely different spin on the company, rebranding it into an energy trader and supplier. During the 1990s, they became a Wall Street darling and were one of the most hyped stocks throughout the decade.

In 1992, they were the largest natural gas provider in North America. Everyone wanted to own or be associated with Enron. In fact, Enron had a very close relationship with Former President George HW Bush and future President George W. Bush. In the early 2000s, the ship began to sink, causing Kenneth Lay to resign from CEO and Jeffrey Skilling to take over.

Source: NBC

However, Skilling eventually resigned, causing Lay to take over. Within five days into Lay’s second tenure, a whistleblower reported that Enron was involved in massive accounting fraud. The stock price began to sink, and the feds swarmed in. Enron filed for a $65 billion bankruptcy, which was the largest then. Kenneth Lay was convicted on ten felony counts that would have put him in prison for 50 years. Unfortunately, he died of a heart attack six weeks after his conviction. Jeffrey Skilling is out of prison now after his 14-year prison sentence. You won’t believe this, but he wants to launch another energy company.

Chart of the Day

📊 The Rise of BRICS

Source: Statista

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Source: @wallstreetoasis

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