Apr 16, 2019, by Cecile Gutscher
As U.S. bank reporting season kicks into high gear, better-than-expected results from Citigroup Inc. and Goldman Sachs Group Inc. are doing little to assuage qualms about the pace of revamps at underperforming units. At Goldman, investors are fretting about slumping equity-trading revenue. At Citi, it’s stalling growth in the consumer division. “We’re trying to balance the fact that you all want more, quicker,” Goldman Chief Executive Officer David Solomon, who took over as CEO in October, said on a call with analysts. Still, JPMorgan Chase & Co. had a better quarter than expected. Next up: Bank of America Corp. this morning and Morgan Stanley on Wednesday.
The four biggest economies in the world are in the throes of trade negotiations. Talks between U.S. and China are progressing with a compromise on key agricultural goods with soybeans, a slumping U.S. export, in the mix. No surprise there with the U.S. president eager to claim any eventual trade deal as a win for farmers ahead of the 2020 election. European negotiators got the green light this week to get started on trade negotiations with the U.S., targeting a deal by September.
Insult to injury
Managers at Deutsche Bank AG were dealt another blow as they battle opposition to a possible tie-up with Commerzbank AG – this time from Congress. Deutsche was among banks issued a subpoena by Democrats to obtain long-sought documents indicating whether foreign nations tried to influence U.S. politics. House Intelligence Chairman Adam Schiff said Deutsche Bank has been cooperative with the probe. Still, the German lender’s legal woes have been a boon for lawyers: It amassed the biggest tab in European finance over the past decade, running up $18.3 billion in fines and legal costs.
Overnight, the MSCI Asia Pacific Index climbed 0.3 percent while Japan’s Topix index closed little changed as traders spend the holiday-shortened week assessing the chances that stocks will sustain their rally. In Europe, the Stoxx 600 Index was up 0.2 percent at 5:54 a.m. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 2.551 percent and gold was lower.
Lower for even longer
The green light for the risk rally got some more wattage as Chicago Fed President Charles Evans said he can see the central bank keeping rates where they are until late 2020. And there are indications that as the Fed studies what it may have gotten wrong in its policy moves regarding inflation, the review is also starting to consider its employment mandate. The Federal Reserve raised rates four times in 2018, but has since paused, saying it will be “patient” as it assesses the need for any additional changes in the policy rate. Decidedly not patient is U.S. President Donald Trump, who wants still-easier Fed policy to juice stock market gains.