Episode summary
US Banks Post Mixed Earnings Results | Bloomberg Intelligence
Bloomberg Intelligence
· · 23 min · Hosts: Scarlet Fu, Alexis Christoforous, Paul Sweeney · Guests: Herman Chan, Michael Halen, Deborah Aitken, Geetha Ranganathan
Summary
U.S. bank earnings pointed to another strong quarter for equities trading, while fixed-income trading was more mixed. A guest analyst said the longer-term trading backdrop still looks healthy, with Goldman Sachs and JPMorgan beating on equities, but rates and government trading were softer overall. Citigroup stood out on fixed income, with the analyst calling it an outlier versus peers. JPMorgan also lifted guidance for next year’s net interest income, which the analyst said came in above consensus and reflected loan and deposit growth.
Wells Fargo’s quarter was framed as a continuation of its post-asset-cap recovery, though balance-sheet growth was softer than expected, especially in commercial lending. The analyst said the bank is still gaining ground in markets and lending, but investors will want more detail on the call.
On consumer names, Domino’s Pizza was described as under pressure from value-conscious shoppers, lower average checks, and a difficult fourth-quarter setup. The analyst also said the company may not hit its U.S. store-growth goal and that franchise profitability concerns could slow unit expansion. By contrast, Jersey Mike’s was described as unusually well positioned because of strong same-store sales and heavy franchising.
Later, another analyst said LVMH’s U.S., Europe, and Japan businesses were solid, but China remained weak, and Netflix’s push into live sports was seen as strategically important but not yet big enough to move the overall needle unless it wins more valuable rights, especially in the U.S.
Key takeaways
- The guest said equity trading remained robust across the big banks, even as fixed-income trading slowed in the third quarter.
- Citigroup bucked the trend in rates trading, with the guest calling it stronger on fixed income than expectations but weaker on equities.
- JPMorgan raised next-year net interest income guidance above consensus, which the guest said supports margin and earnings power.
- The guest said Domino’s is facing weaker traffic, lower checks and pressure from lower-income consumers, making 2% to 3% same-store sales growth hard to regain.
- The guest said Jersey Mike’s is unusually attractive because of 8% to 10% net unit growth and 3% to 4% same-store sales growth.
- LVMH’s U.S., Europe and Japan trends were positive, but the analyst said China continued to decline in the mid-teens.
Notable quotes
“equity trading performance continues to be robust”
“we're in a sort of top quartile trading environment versus a top decile previously”
“discounting efforts to, you know, to to bring people in uh via discounting are boosting traffic, but they're hurting average checks”
How the episode opens
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Listen on demand wherever you get your podcasts or watch us live on YouTube. Given that we have just started earning season, banks kick things off. four big banks reporting this morning.
Um, their share prices are kind of all over the place. Alexis given the result to get a handle on what, you know, because initially JP Morgan had a big leg down, then it then it was up. Now it's sort of h, you know, meh, I guess, is the technical term.
So, yeah, it's hard to wrap our heads around it.
How do you quantify meh? — I think we should we should ask Herman Chan. — Let's do that. Herman Chan is our senior analyst covering US banks for Bloomberg Intelligence. He's here with us in studio. And Herman, if you had to kind of summarize everything, what's the takeaway from the four big banks' earnings reports this morning?
Yeah, takeaway is that equity trading performance continues to be robust. Uh recall the second quarter the banks really blew out the equity trading front. It did slow down from a quarterto quarter basis, but still uh David Sman mentioned um CEO Goldman Sachs, we're in a sort of top quartile trading environment versus a top decile previously.
So, you know, from a longer term view, trading results really look good. Uh, that being said, fixed income trading slowed down a little bit. Um, in the in the third quarter, uh, that is weighing on stocks like uh Wells Fargo, JP was down uh earlier in earlier reporting due to that fact of the thickness.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us bank earnings
- investment banking and trading revenue
- restaurant earnings outlook
- luxury goods china demand
- netflix sports rights
Companies and tickers mentioned
- GS
- JPM
- C
- WFC
- DPZ
- LVMUY
- NFLX
- Goldman Sachs Group Inc.
- JPMorgan Chase & Co.
- Citigroup Inc.
- Wells Fargo & Co.
- Domino’s Pizza Inc.
- Jersey Mike’s
- LVMH
- Netflix Inc.
Watch the episode
Watch “US Banks Post Mixed Earnings Results | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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