Morning Report – Bank Earnings 10/14/14

Stocks are higher this morning as bank earnings come in generally good. Bonds are flying on European weakness, and the 10 year hit an intraday low of 2.175 as Germany cut their 2014 – 2015 growth forecast by a pretty sizeable amount.

We had earnings from some big banks this morning. Citi and Wells beat numbers, while JP Morgan missed.  On the origination side, Wells reported an $48 billion in originations, an increase of a billion from the previous quarter. Gain on sale margins increased from 1.41% to 1.82%. JP Morgan announced the bank had gained market share in mortgages, however they cut 6,000 jobs in the space and will probably cut another 1,000. For JP Morgan, originations were 21.2 billion, down 48% from a year ago, but up 26% quarter-over-quarter.

The NFIB Small Business Optimism Survey came in at 95.3, a drop from the prior month and below expectations. On the plus side, firms added .24 workers on average during the month. On the downside, only 22% of owners expect to make capital expenditures over the next 3 to 6 months. They note that the Fed has indicated it will raise rates in 2015, however the Fed’s forecasts for GDP have been over-optimistic. Take a look at the chart below. This is the Fed’s forecast for 2014 GDP growth starting at the December 2012 FOMC meeting and continuing through the September 2014 meeting. You can see how they have consistently cut their forecast.

Speaking of GDP growth, consumption is the biggest driver. It is looking like the holiday shopping season could be weak, with PriceWaterhouseCoopers predicting average holiday spending per household will fall to $684 this year from $735 in 2013. The National Retail Federation is more optimistic, predicting growth of 4.1%. Blame rising healthcare, childcare, and housing costs versus a backdrop of stagnant wages. Offsetting that of course is energy, with oil slipping below $85 a barrel. FWIW, the Back-To-School shopping season was meh, which is usually a good predictor of holiday sales.

11 Responses

  1. The Nevada group that opposes re-defining marriage questions whether the 9th Circuit is assigning judges to SSM cases radomly as it is supposed to do, or assigning them in order to increase the odds of a specific outcome.

    Given the increasing politicization of the judiciary, it wouldn’t surprise me in the least.


  2. Scott, I say that as long as the Supreme Court wants to manipulate the process as they are doing, it doesn’t really matter what the lower courts do.

    The only thing that will make a difference would be a SCOTUS change.


    • jnc:

      Scott, I say that as long as the Supreme Court wants to manipulate the process as they are doing, it doesn’t really matter what the lower courts do.

      That’s a fair point. Still, it’s a black mark against the 9th if judges are getting assigned based on perceptions of how they are likely to rule in these controversial cases.

      BTW, not sure if you saw it, but I thought this was a refreshingly honest assessment of the current SSM situation from a SSM advocate.

      There is, then, much of what might fairly be characterized as cynicism coursing through the veins of same-sex-marriage advocacy and decision making, with little concern for larger political principles or intellectual integrity, and little interest in securing legal marriage for same-sex couples by convincing fellow citizens and their representatives, even among those with the power and responsibility to fix problems in state law by majoritarian decision making after public deliberation. The end result will be that same-sex marriage spreads throughout the United States on a tidal wave of unprincipled judicial fiat, culminating in a Supreme Court decision devoid of clear and intelligible rationale.

      Why care, if one supports same-sex marriage? Apart from pollyannaish concern for the rule of law, and without repeating all that others have said about likely backlash, there is the fundamental problem … that courts cannot deliver what LGBT persons seem to want most –dignity. Court victories are hollow victories for the LGBT community, failing to deliver the societal respect they seek, and in fact removing the opportunity for collective expression of such respect through voluntary legislative reform or popular referendum. What they get is not acceptance by the people with whom they share a neighborhood, a political community, a State, and a nation. Rather, they get the power to force something on those people. They deserve better.


  3. Doesn’t Mark Warner’s judgeship for staying in state Senatw prove it?

    My dreams are shattered.


  4. my +7 is looking good, as of today anyway.

    NC is going to be interesting. Hagan is suddenly heading the wrong way


  5. yep. i figured +8, minus an own goal. so +7
    Kansas is messing with it a bit. but i’ll stand with for now.


    • nova:

      i figured +8, minus an own goal.

      It’s the R’s…could be 2 or 3 own goals!


      • Ed Whelan points out that manipulating the assignment of judges in order to get preferred results goes back to the ’60s and civil rights rulings.

        He also says that Reinhardt’s “amazing propensity to be selected to sit on important cases” isn’t limited to SSM cases, a fact that has apparently concerned conservatives on the court for some time.


  6. “BTW, not sure if you saw it, but I thought this was a refreshingly honest assessment of the current SSM situation from a SSM advocate.”

    Agreed. I’d note that the disregarding of the “pollyannaish concern for the rule of law” in favor of immediate policy results isn’t just limited to SSM via judicial fiat. It’s been the methodology for years.

    It will be interesting to see when the next President to pull an Andrew Jackson and refuse to enforce the court’s decision comes along and over what issue that will be.


  7. “It’s the R’s…could be 2 or 3 own goals!”

    very true. but they seem to have avoided are unqualified candidates this cycle. Those seem to be on the D side. See Grimes. but she was a sacrifice from the get go.


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