JPMorgan tops estimates after posting $2.3 billion benefit on better-than-expected loan losses

Business

CNBC 13 July, 2021 - 07:34am 40 views

JPMorgan Chase reported second-quarter profit and revenue that exceeded analysts' expectations as the firm released money set aside for loan losses.

Earnings: $3.78 per share, exceeding the $3.21 per share estimate per Refinitiv.

Revenue: $31.4 billion, topping the $29.9 billion estimate.

One key factor is that after the industry set aside tens of billions of dollars for loan losses last year, banks have been releasing reserves as borrowers have held up better than expected.

That happened at JPMorgan, the biggest U.S. bank by assets, in the second quarter. The firm posted a $2.3 billion benefit from releasing $3 billion in loan loss reserves after taking $734 million in charge-offs. The bank had a $5.2 billion reserve release in the first quarter.

"Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve," CEO Jamie Dimon said in the release. "In particular, net charge-offs, down 53%, were better than expected, reflecting the increasingly healthy condition of our customers and clients."

The bank said the improving U.S. economic outlook drove its decision to release money set aside for loan losses, which came mostly from retail credit-card and mortgage reserves.

Trading revenue was expected to decline from the year earlier period, which saw frenzied activity in the aftermath of Federal Reserve actions to bolster markets during the early stage of the coronavirus pandemic.

Fixed income trading produced $4.1 billion in revenue, just under the $4.16 billion estimate of analysts surveyed by FactSet. Equities trading generated $2.69 billion in revenue, topping the $2.31 billion estimate. The combined figure was in line with Dimon's guidance last month of "a little north of $6 billion" in trading revenues.

Investment banking helped offset the drop in revenue from trading. The firm posted $3.4 billion in investment banking revenue, topping the estimate by $300 million, on strength in mergers activity and acquisition financing.

Analysts may ask Dimon about the bank's succession planning after it named two senior executives, Marianne Lake and Jennifer Piepszak, to run the company's sprawling consumer bank. The changes led to the promotion of global research head Jeremy Barnum to CFO succeeding Piepszak; this is Barnum's first quarter handling the firm's earnings release.

Dimon may also be asked about his acquisition strategy after making the third purchase of a fintech start-up since December. Last month, the bank agreed to buy ESG investing platform OpenInvest, CNBC reported first.

JPMorgan dipped less than 1% in premarket trading after the earnings report. Shares of the bank have climbed 24% this year before Tuesday, exceeding the 17% rise of the S&P 500 Index.

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JPMorgan's profit spikes 155% as US economy booms

CNN 13 July, 2021 - 07:00am

Updated 7:24 AM ET, Tue July 13, 2021

JPMorgan Chase Reports Second-Quarter 2021 Financial Results

Business Wire 13 July, 2021 - 07:00am

NEW YORK--(BUSINESS WIRE)--JPMorgan Chase & Co. has released its second-quarter 2021 financial results. Results can be found at the Firm’s Investor Relations website at jpmorganchase.com/ir/quarterly-earnings.

JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America (“U.S.”), with operations worldwide. JPMorgan Chase had $3.7 trillion in assets and $286.4 billion in stockholders’ equity as of June 30, 2021. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and globally many of the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

Trading slowdown hits the brake on JPMorgan's results

Reuters 13 July, 2021 - 06:40am

The bank's shares fell 1.5% as overall corporate and investment banking revenues declined 19%, mainly due to a slump in bond trading.

The Wall Street behemoth, whose fortunes tend to reflect the health of the U.S. economy, released roughly $3 billion from the reserves it had set aside in anticipation of a wave of pandemic-related loan defaults.

As pandemic restrictions ease and the economy normalizes, the unprecedented volatility in financial markets that boosted revenues at the bank's trading outfit last year is also expected to drop. Analysts have pointed out that the levels of trading activity witnessed last year were unsustainable.

Overall trading revenue slumped 28% to $8.1 billion, hurt mainly by weakness in bond trading, which was down 44% from last year. Equity markets was a bright spot, with revenue up 13%.

The bank's net income rose to $11.9 billion, or $3.78 per share, in the quarter ended June 30, from $4.7 billion, or $1.38 per share, a year earlier. However, overall revenue fell 7% to $31.4 billion.

Analysts on average had expected earnings of $3.21 per share, according to Refinitiv.

"This quarter we once again benefited from a significant reserve release as the environment continues to improve, but as we have said before, we do not consider these core or recurring profits," said JPMorgan Chief Executive Jamie Dimon.

Excluding the boost from reserve releases, JPMorgan's net quarterly profit came in at $9.6 billion.

Last year, banks were forced to set aside billions for possible loan defaults. But accommodative monetary policy and stimulus checks kept the American consumer healthier than initially feared, allowing banks release more of their reserve capital.

Widespread vaccinations have led large parts of the United States to ease pandemic restrictions, setting the stage for a broader economic recovery.

Despite the trading slump, overall Wall Street banking remained strong during the first half of the year, on the back of a record volume of large deals.

Capital markets also remained active and a surge in IPOs more than made up for a slowdown in deals made through special purpose acquisition companies (SPACs).

While average loans in JPMorgan's consumer & community banking unit were down 12%, there were signs that spending was bouncing back. Combined debt and credit card spend was up 22% in the quarter compared to the same period in 2019, which is considered more reflective of normal spending patterns than last year's quarter.

Goldman Sachs (GS.N), Wall Street's premier investment bank, will report results later on Tuesday.

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Dow seen edging back from records as investors await inflation data, weigh quarterly results from banks

MarketWatch 13 July, 2021 - 06:37am

After clearing a fresh round of records on Monday, stock-market investors are seeking insights from fresh economic data and from the start of second-quarter earnings reporting season to push stocks to further gains.

Results from JPMorgan Chase early Tuesday came in better than expected early Tuesday, with the nation’s largest bank by market capitalization reporting second-quarter profit that more than doubled and revenue that beat expectations, even as trading revenue fell 30%, and net interest income came in below forecasts. Net income rose to $11.95 billion, or $3.78 a share, from $4.69 billion, or $1.38 a share, in the year-ago period, compared with FactSet consensus for earnings per share at $3.20.

“This quarter we once again benefited from a significant reserve release as the environment continues to improve, but as we have said before, we do not consider these core or recurring profits,” said Chief Executive Jamie Dimon. 

However, shares of JPMorgan were trading lower Tuesday premarket after running up more than 24% year to date through Monday’s close.

Investors aren’t just keying in on the performance of institutions over the three-month period, but are also what what bank bosses, like Dimon, reveal about the health of the economic recovery from the COVID pandemic.

Also on Tuesday, investors are watching for an update on consumer prices due at 8:30 a.m. Eastern Time, with forecasts for inflation to climb sharply again in June, as the economic recovery gains steam and demand outpaces the supply of labor and materials.

Economists surveyed by Dow Jones estimate that the CPI increased 5% in June from a year ago, matching May’s increase and continuing the highest 12-month rate since 2008. The so-called core price index, which excludes the often-volatile categories of food and energy, likely rose 4% from a year before, economists estimate.

Soaring inflation stems in large part from the reopening of the economy, but if prices pressure don’t ease in the near future it could put more stress on the U.S. recovery, some analysts fear.

Members of the Federal Reserve so far have insisted that inflation will wane soon once the U.S. and global economies regain a more normal footing, citing price pressures that have been mostly tied to temporary shortages that will fade away as supply catches up to demand.

Meanwhile, the president of the St. Louis Fed Jame Bullard said Tuesday the Federal Reserve should start reducing the stimulus it provides to the U.S. economy, though he added the reduction didn’t need to start immediately. “I think with the economy growing at 7% and the pandemic coming under better and better control, I think the time is right to pull back emergency measures,” he told the The Wall Street Journal in an interview published Tuesday.

Check out: MarketWatch’s column Need to Know

Many portfolio managers are increasingly bullish, even with the stock market trading around all-time peaks, according to Citigroup Inc.

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

JPMorgan earnings soar amid 'exceptionally strong' consumer balance sheets, credit release

Yahoo Finance 13 July, 2021 - 06:09am

Here are the key figures versus estimates, according to Bloomberg:

Adjusted earnings per share (EPS): $3.78 vs. $3.15 estimate

Excluding credit reserve releases: $3.03 per share

Revenue: $31.4 billion vs. $30.06 billion estimate

During the quarter, the largest U.S. bank by assets earned $11.9 billion in net income, up $7.3 billion from a year ago, driven by credit reserve releases of $3 billion compared to credit reserve builds of $8.9 billion a year ago. 

While not central to JPMorgan's operations or even recurring, CEO Jamie Dimon said the development reflected the underlying strength of the economy, and the health of consumers.

He noted that the consumer balance sheet "remains exceptionally strong," while the economic outlook "continues to improve." The CEO pointed out that net charge-offs were down 53%, which "were better than expected, reflecting the increasingly healthy condition of our customers and clients.” Dimon added that debit and credit card spending was up 45% from a year ago, and up 22% from the second quarter of 2019 pre-pandemic levels. 

Breaking the results down further, total markets revenue declined 30% to $6.8 billion in the quarter, with fixed income revenue falling 44%, but were offset by equity markets revenue climbing 13%. In recent weeks, Dimon suggested a "more normal" quarter for trading with revenue from trading fixed income and equities "a little bit north of $6 billion." 

Banking revenue rose 1% to $5.1 billion, with investment banking revenue also up 1% at $3.4 billion in the quarter on higher fees. 

Shares of JPMorgan were trading down 1.52% near $155.60. 

Top news and what to watch in the markets on Tuesday, July 13, 2021.

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Confidence among small businesses in the United States improved slightly in June after declining in May, despite owners worrying about a labor shortage and inflation, according to a survey released on Tuesday. The National Federation of Independent Business (NFIB) Optimism Index rose 2.9 points to a reading of 102.5 in June. “Small businesses' optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions," NFIB Chief Economist Bill Dunkelberg said in a statement.

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Flat open expected, as markets look to US inflation and bank earnings

CMC Markets 13 July, 2021 - 12:00am

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It was another record-breaking day for all three major US indices yesterday, with last week’s volatility seemingly a distant memory as investors chose to focus on the start of Q2 earnings season.

US banks JPMorgan Chase and Goldman Sachs get us underway today, with expectations tempered somewhat by recent comments from JPMorgan CEO Jamie Dimon, who warned in June that the bank's Q2 performance was unlikely to match that of Q1.

Trading revenue could be lower than the consensus estimates of $6.5bn, as lower yields and volatility impact turnover. Dimon also played down expectations over loan demand and income after a bumper Q1. The trend over loan demand was also notable in its Q1 numbers, which the bank said was likely to remain challenged, while deposits rose 24% year-on-year to $2.3tn. While having so much cash on its balance sheet is a nice problem to have, it also speaks to a difficult lending environment. It would appear that higher long-term rates are impacting on housing loan demand, a trend currently being reflected in the latest housing numbers, while small business lending was down 50% compared to the same quarter a year ago. This suggests that the bank's guidance could be a significant driver of where we head next after the gains of the last couple of days.

European markets had an altogether more subdued session, although we still managed to see marginal new record highs for the DAX and Stoxx 600, while the FTSE 100 lagged behind due to underperformance in travel and leisure stocks, despite the UK government confirming the ending of all Covid restrictions on 19 July.

After a similarly positive start on Monday, Asia markets picked up where they left off today with the latest China trade numbers for June showing a slowdown in imports, though exports unexpectedly rose from levels in May. For imports the slowdown wasn’t a surprise given that in May we saw a 51.1% rise from the year before, however we also have to acknowledge some of that rise was down to base effects from the weak numbers last year, when the Chinese economy was coming out of lockdown. The rest of the increase was driven by surging commodity prices, as reflation trade concerns drove up demand. Exports rose by 27.9% in May, slightly down from the 32.3% in April, in a sign that the global demand was still strong, albeit starting to slow.

Today’s June numbers were actually better-than-expected, with imports rising by 36.7%, while exports rose by 32.2%, part of the reason being the continued rise in commodity prices impacting both sides of the ledger. The main gains on the export side were mainly due to higher demand from the likes of South Korea and Japan, while US exports slowed to 17.8%.

Against this backdrop, markets in Europe look set to open broadly unchanged, with today’s focus on June CPI data from Germany, France and the US, while UK retail sales enjoyed their best quarter ever according to the British Retail Consortium. June saw a big jump in spending on clothing and footwear, as well as sales of TVs and food and drink sales with the start of Euro 2020. Spending on hotels and accommodation also rose as a result of the easing of restrictions in May. Later this morning Germany CPI is expected to be confirmed at 2.1%, while France CPI is expected to come in at 1.9%

With bond markets seemingly less concerned about inflationary pressures after last week's sharp fall in yields, and commodity prices starting to show signs of slowing, today’s latest CPI numbers from the US may well mark the high-water mark as far as the reflation trade is concerned. This of course assumes that bond markets are drawing the correct conclusions around recent events, and that we weren’t merely seeing a clear out of stale positions.

US 2-year yields are still higher now than they were a month ago, while 10-year yields are lower, suggesting that the Fed is right in thinking that the recent sharp moves higher in prices are transitory in nature. There were certainly a growing number of investors who feared that these upward price pressures might become more persistent, though these fears have subsided somewhat in the past few days. Over the last few months, we’ve seen US CPI jump sharply from 1.4% at the end of last year to 5% in May, significantly above expectations, with the threat that there could be more to come if PPI prices are any guide. Core prices have also surged to 3.8%, from a similarly low level.

A big component of the recent increases was a big rise in used car and truck prices, which have risen sharply, along with higher energy costs. In the aftermath of these increases, as well as a big rise in PPI prices, there has been much debate as to how much of these rises will drop out of the numbers and thus be transitory. If the recent May PPI numbers are any guide, this doesn’t look likely, which means we could get another increase today, given how much PPI tends to be a leading indicator for CPI. While Fed officials have admitted that inflation has been higher than initially anticipated, they still remain confident that these pressures will subside, and for now bond markets seem to agree.

As a reminder, May PPI jumped to 6.6%, its highest annual level in over 10 years. Expectations are for headline CPI to remain steady at 5%, with core CPI, which excludes food and energy, expected to rise to 4%, from 3.8%.  

EUR/USD – still below last week’s high at 1.1895 with little in the way of direction. We still have support at the 1.1780 area, while a break through 1.1900 targets 1.1975 and the 200-day MA.

GBP/USD – currently has resistance at 1.3920 with a break targeting the 1.4000 area. Major support remains down at the 1.3670 level and March and April lows, as well as last week’s low at 1.3730.  

EUR/GBP – the support at the 0.8530 area continues to hold, however the bias remains for a move towards the 0.8480 area, while below wider resistance at the 0.8640 level.

USD/JPY – last week’s break of the uptrend from the lows this year saw a big sell off after peaking at 111.70 earlier this month. The next support comes in at 109.20, and daily cloud support. The current rebound has resistance at the 110.70 area.

It’s been a steady start to the week for markets in Europe, with the DAX making a new record high, and the FTSE 100 once again the serial under-performer.

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The Week Ahead: US and UK CPI; ASOS, Burberry and US banks

It’s been a steady start to the week for markets in Europe, with the DAX making a new record high, and the FTSE 100 once again the serial under-performer.

Concerns about the global economic recovery created a significant amount of volatility in equity markets last week, as the Nikkei 225 posted its biggest weekly loss since May.

Concerns about the global economic recovery have weighed on equity markets this week, due to rising Delta variant cases in Asia, which has prompted Japan to implement a state of emergency

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Best and worst of the banking stocks ahead of second-quarter earnings season, according to Oppenheimer

CNBC 12 July, 2021 - 04:59pm

There's just one more sleep until the second-quarter earnings season kicks off, and the big banks are the headline event.

Goldman Sachs, JPMorgan, Citigroup and Bank of America will lead the charge with their reports over the next few days.

Ari Wald, head of technical analysis at Oppenheimer, said investors ought to be picky when it comes to banks. The firm advises a market weight on the group given "range-bound" interest rate expectations.

"For exposure to the industry, we're differentiating between them by those that have been able to rally back above their pre-Covid peaks. Those would be the ones showing relative strength in our work. For instance, we recommend JPMorgan over Wells Fargo as an industry neutral pair," Wald told CNBC's "Trading Nation" on Monday.

JPMorgan has rallied 24% in 2021, better than the rest of the market but below some of its peers. Wells Fargo, by comparison, has risen 46%.

"Many of the key components and fundamentals are lining up in the bank's favor," Bapis said during the same interview. "On the top six banks, the deposits are up roughly 30% since the start of 2020, you're seeing the dividend yields up roughly 40% on the banks, and they're very well capitalized."

The KBE bank ETF yields 2.24%, above the 1.34% yield on the S&P 500.

"They passed all the stress tests, their most recent stress tests, and they're trading anywhere between 11 and 15 times earnings, which is historically low for the banking stocks," he said. "I believe you own them and you keep them for the long term and I would almost overweight banks right now in financials."

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Bank Stocks Retreat From Rally on Doubt Profit Boom to Last

Yahoo Finance 12 July, 2021 - 03:15pm

The S&P 500 Banks Index, which has been one of the best performing segments this year, has slumped more than 6% over the past five weeks even as the broader market advanced.

The pullback began in early June after JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon signaled that the pandemic era trading boom could be drawing to a close, indicating that revenue from that business would drop in the second quarter by more than previously expected. Executives from Citigroup Inc. and Morgan Stanley also sought to temper expectations in recent weeks.

“Investors have begun questioning whether all the good news is currently priced in, which we believe contributed to banks’ underperformance,” Raymond James analysts including David Feaste wrote in a note.

Read more: Banks in U.S. Poised for Weaker Results After Pandemic Windfall

The effort to manage down expectations came as the S&P bank index surged 28% during the first half of the year, almost twice as much as the climb in the S&P 500 Index, with the financial system awash in cash and investors pouring into stocks of companies that stood to gain from the economic recovery.

That’s left analysts preparing for a weaker showing, with the combined revenue at the six largest banks expected to fall about 5% versus the same period last year, according to data compiled by Bloomberg.

The earnings reports, however, could be offset in part by the surge of cash banks have been sitting on that may start flowing back to investors.

With the exception of Citigroup, each of the other five major U.S. banks announced that they would be hiking their quarterly dividend after passing the Federal Reserve’s stress test. And share buybacks could also “temper stock reactions to potential misses,” according to BMO Capital Markets analyst James Fotheringham.

Some of the cash may be freed up to make loans. After setting aside $35 billion last year to cover possible losses triggered by the pandemic, the lenders are expected to continue releasing reserves including about $1 billion combined from JPMorgan, Bank of America Corp. and Wells Fargo & Co. alone.

“Although investors won’t pay-up for releasing reserves, it provides an earnings benefit to fund either loan growth or accelerate share buybacks,” said Wedbush analyst David Chiaverini.

Read more: Three U.S. Banks Seen Splitting $1 Billion Reserve-Release Boon

Here’s what analysts are saying about the biggest U.S. banks ahead of their earnings this week:

The second-quarter earnings season will kick off Tuesday morning with the release of JPMorgan’s results at 7:00 a.m. in New York. Shares of the largest U.S. bank have climbed more than 24% so far this year but trail all except Citigroup in terms of performance among the six largest lenders.

Jefferies (Daniel T. Fannon, buy): “A rising contribution from more durable revenue streams and more efficient internal capital allocation should drive sustainably higher returns and multiple expansion.”“While the 1Q21 ROTE of 33% is unsustainable, a longer-term path towards sustainably higher returns is underway.”

The bank will announce its second-quarter earnings at 7:30 a.m. in New York, about 30 minutes after JPMorgan. Goldman’s shares have surged 44% year to date and lag just Wells Fargo in terms of returns.

Credit Suisse (Susan Roth Katzke, outperform): “We expect constructive commentary with respect to the banking pipeline and the level of strategic dialogue in particular, confidence in the health of trading markets and the sustainability of market share gains, and incremental support from asset management inflows and fundraising, all of which support the forward look.”

Wednesday’s earnings flurry will commence with Bank of America releasing its results at 6:45 a.m. in New York. The lender has seen its shares rise 34% in 2021, putting it on pace for its biggest annual increase since 2019.

Morgan Stanley (Betsy L. Graseck, underweight): “Given the flatter forward curve today vs April and weaker loan growth, we think BAC will lower NII guidance at earnings.”“BAC is one of the most rate sensitive names in the group, and the forward NII guide will likely drive the stock on earnings day.”

Little more than an hour after BofA’s release, Citi will announce its second quarter earnings at 8:00 a.m. in New York. Shares of the bank have gained just over 12% so far this year, making it the worst performing of the six biggest lenders in the U.S.

BMO Capital Market (James Fotheringham, outperform): “We recommend C shares as our top pick among large-cap banks on valuation, with shares trading at the largest discount (by far) to its pro forma TCE among the big banks.”

Capping off Wednesday’s results will be Wells Fargo, with its results being released at 8:00 a.m. in New York. The bank has been the best performer among the big six, jumping 46% since the start of the year.

Baird (David George, outperfrom): “Expectations remain low but we believe the company’s franchise value remains intact despite near-term struggles, and valuation appears attractive at ~1.3x TBV given WFC’s unique opportunity to improve returns with the strategic reorganization.”

Rounding out the busy week of earnings for the biggest U.S. banks, Morgan Stanley will announced its results Thursday morning at 7:30 a.m. in New York. Shares of the firm have gained about 35% since the beginning of the year and are near the record high reached in early June.

Evercore ISI (Glenn Schorr, outperform): “MS has been a great stock but we think there’s still plenty left in the tank as organic growth and markets continue to produce a very favorable shift in the business mix.”

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Bank stocks were well positioned to rebound in 2021 after a tough year during the pandemic, and that's exactly what they did. The KBW Nasdaq Bank Index, a measure of 24 of the largest banks based in the U.S., climbed nearly 28% during the first six months of the year. The majority of the top 12 largest bank stocks managed to appreciate more than the S&P 500's 16% gain through the first half of 2021, with some beating it significantly.

U.S. stock index futures traded mixed on Tuesday, as investors awaited earnings updates from big banks and a reading on inflation data for early clues on the health of the domestic economy. JPMorgan Chase & Co and Goldman Sachs Group Inc fell 0.4% and 0.1%, respectively, in premarket trading, and were set to kickoff the second-quarter earning season. June-quarter earnings per share for S&P 500 companies is expected to rise 66%, according to Refinitiv data, with market participants questioning how long Wall Street's rally would last after a nearly 17% rise in the benchmark index so far this year.

The fourth-largest U.S. lender, Wells Fargo, is expected to report a profit in the second quarter after posting its first loss last year since the global financial crisis of 2008.

While energy companies have experienced a strong year, Lee continues to see upside in the sector. It remains his highest-conviction one.

The Dow Jones rose as Virgin Galactic stock plunged back to Earth. Disney stock was a top blue chip, while AMC stock took a dive.

JPMorgan earnings beat views, as released loan loss reserves offset weak trading. Goldman easily topped estimates.

Jim Cramer finished up his Mad Money game plan Friday for his viewers mentioning another earnings report due out this week. On Friday he noted we'll get a read on local economies from First Horizon National . The On-Balance-Volume (OBV) line has been stalled since March.

JPMorgan kicks off Q2 earnings results for the big banks.

India's retail inflation rose 6.26% in June from a year ago, government data released on Monday showed. The Reserve Bank of India (RBI) too has made its approach and stance clear in the coming months. "The RBI Monetary Policy Committee (MPC) is likely to stay focused on growth with an eye on the risks of a third wave, but members are likely to express discomfort on the recent bout of sticky inflation, in the absence of supply-side measures."

On July 15, taxpayers will start receiving monthly payments, depending on their income and the age of their children.

Goldman Sachs' results were boosted by a strong showing in investment banking.

These stocks look like solid buys because of one very important reason, according to strategists at Goldman Sachs.

The stock market was narrowly mixed Monday morning as Wall Street prepared for the first of hundreds of earnings reports for the second quarter.

The Dow Jones traded higher in today's market after shaking off losses from the opening bell. Meanwhile, the S&P 500 also closed higher.

Shares in the company rose 6.6% on Tuesday in Helsinki following the announcement.

If these ultra-bullish analysts are correct, shareholders in these fast-growing companies could be looking at big gains over the next year.

Warren Buffett stocks are famous for tight focus. And this year, the famed investor's concentrated play on top S&P 500 stocks is paying off.

Banks Struggled Last Year, but Now They Are Set for Big Profits

The Wall Street Journal 12 July, 2021 - 04:30am

Major players such as JPMorgan Chase & Co. and Citigroup Inc. are expected this week to report second-quarter profit gains, a U-turn from a year ago when they were girding for a wave of Covid-19-related loan defaults.

At the same time, there are obstacles. For example, the trading businesses that thrived in the chaos of the pandemic are slowing down.

JPMorgan and Goldman Sachs Group Inc. report results Tuesday, followed by Citigroup, Bank of America Corp. and Wells Fargo & Co. on Wednesday. Morgan Stanley releases results on Thursday.

A year ago, banks were socking away billions of dollars to prepare for soured loans. But as the economic outlook has brightened, banks have started releasing reserves, boosting their earnings. Banks could report second-quarter per-share profits that are 40% higher than the same period a year ago, according to analysts at Keefe, Bruyette & Woods.

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