🏦 Main Street POV…JPMorgan Chase, Citibank, Bank of America, and Wells Fargo topped Q3 estimates as higher interest rates lifted bottom lines. Chase (America's biggest bank) saw profits soar 35% after record net interest income (what it earns from interest on loans and deposits, minus what it pays out for savings accounts). Wells Fargo’s revenue jumped 6.5% as higher interest rates helped offset cooling lending activity. As America’s debt balloons, WF set aside $333M in case of defaults on credit cards and commercial real-estate loans.
🏦 Wall Street POV… Investment-focused Morgan Stanley and Goldman Sachs topped expectations, though profits were down from a year ago as dealmaking slowed (fewer mergers, slumping IPOs). Morgan Stanley shares fell 6% after its wealth-management and investment-banking revenue came in short of analysts’ forecasts. Goldman Sachs balanced a slowdown in investment banking with revenue growth in equities and bond trading.
➡️ Forward POV… While banks could keep benefiting from high rates, surging Treasury yields could mean lofty unrealized bond losses. US consumer-spending growth smashed expectations last month, boding well for banks, but debt has also swelled, posing more risk. IPOs have started a comeback, but the biggest debuts of 2021 have shed over half their value.