London (CNN Business)JPMorgan Chase (JPM) told investors on Tuesday that it's put aside $6.8 billion to guard against an expected wave of loan defaults. Wells Fargo (WFC) is additionally bracing for trouble, earmarking $3.1 billion to guard against bad loans.
Jamie Dimon, the CEO of JPMorgan, said the primary quarter had presented the bank with "unprecedented challenges." The lender witnessed record demand for open-end credit facilities because the coronavirus crisis deepened.
Companies drew on their credit lines at "probably twice the speed than within the financial crisis [of 2008]," Dimon said on an earnings call . "I think companies are very rationally getting their liquidity so as before what might be a big downturn," he added.
JPMorgan's economists now predict US unemployment will soar to twenty within the second quarter before recovering within the final six months of the year, with annualized GDP contracting by 40% within the April-June period.
The reserve build at Wells Fargo "reflected the expected impact these unprecedented times could wear our customers," CFO John Shrewsberry said during a statement.
As we wrote on Tuesday, big banks have a superb viewpoint from which to watch the fallout from the coronavirus pandemic. they need real time data on credit use, also as business and consumer behavior.
As the global economy tailspins into what the IMF reckons are going to be the worst economic downturn since the 1930s, it's worth paying close attention to what bank executives say and do.
There's more bank earnings on tap Wednesday, with reports expected from lenders including Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).
Investors also will get another round of economic data. US retail sales for March are going to be published at 8:30 a.m. ET, along side the New York Manufacturing report covering April. Industrial production data for March are going to be released at 9:15 a.m. ET.
An 'unprecedented' decline for US oil
The us is facing an "unprecedented" decline in boring following a historic collapse that has pushed US crude prices below $20 a barrel, consistent with a replacement report from the International Energy Agency.
Analysts at the Paris-based agency think low prices and brimming inventories will sharply reduce US crude production, with output in December expected to be down 2 million barrels per day compared to an equivalent month in 2019.
That's despite an agreement by major oil producing nations including Saudi Arabia and Russia to slash their output by 9.7 million barrels each day in May and June with the aim of supporting prices.
Those cuts are unprecedented in size, but still not large enough to counter the destruction in demand for energy products caused by the coronavirus pandemic.
How bad is it? The IEA expects global demand in April to plunge by 29 million barrels each day , compared to a year ago, reaching A level last seen in 1995. For the year, demand will drop in a record 9.3 million barrels each day .
Another problem: the planet is running out places to store oil, and therefore the IEA warns that the build up "threatens to overwhelm the logistics of the refining industry -- ships, pipelines and storage tanks -- within the coming weeks."
The brutal market dynamics leave US oil companies in a particularly tough spot. Producers, which were already getting to cut spending this year, are slashing budgets for exploration and drilling.
Independent producers have already cut spending by up to 40%, consistent with the IEA, and oil majors like ExxonMobil, Chevron and BP are slashing their estimates for US production this year. Over the past four weeks, producers have idled 26% of active oil rigs within the us .
"While within the past, it's taken four to 5 months for a decline in prices to impact new drilling and an extra five to 6 months for output to start out declining, the speed at which the industry adjusts this point has been much faster," the IEA said in its report.
The big picture: US crude futures were down over 3% to $19.50 a barrel on Wednesday. Prices are likely to stay depressed until lockdowns are lifted and other people start traveling again.
Meanwhile, the expected drop by US production means tens of thousands of well-paid jobs are now in danger in states including Texas and North Dakota . Even more jobs are on the road when refineries are included.
Bank dividends are under attack as profits plunge
America's big banks paid out fat dividends to shareholders during the good Recession, leaving them with less capital to soak up massive losses.
Faced with another economic collapse, some players involved within the last crisis are urging regulators to force lenders to preserve cash by suspending dividend payouts, reports my colleague Matt Egan.
"Every dollar of capital that goes to shareholders may be a dollar not there to soak up losses and support their lending. Keep it!" Sheila Bair, who led the Federal Deposit Insurance Corporation during the 2008 crisis, told CNN Business.
The nation's eight biggest banks, seeking to urge before political pressure to lend to Americans hurt by the coronavirus pandemic, announced in mid-March they might all halt their generous share buyback programs. But that also might not be enough.
Former Federal Reserve System Chair Janet Yellen thinks America's banks got to halt dividends, too, due to the vast uncertainty facing the country.
"We need a banking industry that's ready to meet the credit needs of the economy," Yellen told
London (CNN Business)JPMorgan Chase (JPM) told investors on Tuesday that it's put aside $6.8 billion to guard against an expected wave of loan defaults. Wells Fargo (WFC) is additionally bracing for trouble, earmarking $3.1 billion to guard against bad loans.
Jamie Dimon, the CEO of JPMorgan, said the primary quarter had presented the bank with "unprecedented challenges." The lender witnessed record demand for open-end credit facilities because the coronavirus crisis deepened.
Companies drew on their credit lines at "probably twice the speed than within the financial crisis [of 2008]," Dimon said on an earnings call . "I think companies are very rationally getting their liquidity so as before what might be a big downturn," he added.
JPMorgan's economists now predict US unemployment will soar to twenty within the second quarter before recovering within the final six months of the year, with annualized GDP contracting by 40% within the April-June period.
The reserve build at Wells Fargo "reflected the expected impact these unprecedented times could wear our customers," CFO John Shrewsberry said during a statement.
As we wrote on Tuesday, big banks have a superb viewpoint from which to watch the fallout from the coronavirus pandemic. they need real time data on credit use, also as business and consumer behavior.
As the global economy tailspins into what the IMF reckons are going to be the worst economic downturn since the 1930s, it's worth paying close attention to what bank executives say and do.
There's more bank earnings on tap Wednesday, with reports expected from lenders including Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).
Investors also will
get another round of economic data. US retail sales for March are going to be p
US banks steel oneself against a flood of bad loans https://ift.tt/34DmVIh JPMorgan Chase told investors on Tuesday that it's put aside $6.8 billion to guard against an expected wave of loan defaults. Wells Fargo is additionally bracing for trouble, earmarking $3.1 billion to guard against bad loans. https://ift.tt/eA8V8J April 15, 2020 at 02:15PM CNN.com - RSS Channel - US https://ift.tt/2BjRaUg
Jamie Dimon, the CEO of JPMorgan, said the primary quarter had presented the bank with "unprecedented challenges." The lender witnessed record demand for open-end credit facilities because the coronavirus crisis deepened.
Companies drew on their credit lines at "probably twice the speed than within the financial crisis [of 2008]," Dimon said on an earnings call . "I think companies are very rationally getting their liquidity so as before what might be a big downturn," he added.
JPMorgan's economists now predict US unemployment will soar to twenty within the second quarter before recovering within the final six months of the year, with annualized GDP contracting by 40% within the April-June period.
The reserve build at Wells Fargo "reflected the expected impact these unprecedented times could wear our customers," CFO John Shrewsberry said during a statement.
As we wrote on Tuesday, big banks have a superb viewpoint from which to watch the fallout from the coronavirus pandemic. they need real time data on credit use, also as business and consumer behavior.
As the global economy tailspins into what the IMF reckons are going to be the worst economic downturn since the 1930s, it's worth paying close attention to what bank executives say and do.
There's more bank earnings on tap Wednesday, with reports expected from lenders including Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).
Investors also will get another round of economic data. US retail sales for March are going to be published at 8:30 a.m. ET, along side the New York Manufacturing report covering April. Industrial production data for March are going to be released at 9:15 a.m. ET.
An 'unprecedented' decline for US oil
The us is facing an "unprecedented" decline in boring following a historic collapse that has pushed US crude prices below $20 a barrel, consistent with a replacement report from the International Energy Agency.
Analysts at the Paris-based agency think low prices and brimming inventories will sharply reduce US crude production, with output in December expected to be down 2 million barrels per day compared to an equivalent month in 2019.
That's despite an agreement by major oil producing nations including Saudi Arabia and Russia to slash their output by 9.7 million barrels each day in May and June with the aim of supporting prices.
Those cuts are unprecedented in size, but still not large enough to counter the destruction in demand for energy products caused by the coronavirus pandemic.
How bad is it? The IEA expects global demand in April to plunge by 29 million barrels each day , compared to a year ago, reaching A level last seen in 1995. For the year, demand will drop in a record 9.3 million barrels each day .
Another problem: the planet is running out places to store oil, and therefore the IEA warns that the build up "threatens to overwhelm the logistics of the refining industry -- ships, pipelines and storage tanks -- within the coming weeks."
The brutal market dynamics leave US oil companies in a particularly tough spot. Producers, which were already getting to cut spending this year, are slashing budgets for exploration and drilling.
Independent producers have already cut spending by up to 40%, consistent with the IEA, and oil majors like ExxonMobil, Chevron and BP are slashing their estimates for US production this year. Over the past four weeks, producers have idled 26% of active oil rigs within the us .
"While within the past, it's taken four to 5 months for a decline in prices to impact new drilling and an extra five to 6 months for output to start out declining, the speed at which the industry adjusts this point has been much faster," the IEA said in its report.
The big picture: US crude futures were down over 3% to $19.50 a barrel on Wednesday. Prices are likely to stay depressed until lockdowns are lifted and other people start traveling again.
Meanwhile, the expected drop by US production means tens of thousands of well-paid jobs are now in danger in states including Texas and North Dakota . Even more jobs are on the road when refineries are included.
Bank dividends are under attack as profits plunge
America's big banks paid out fat dividends to shareholders during the good Recession, leaving them with less capital to soak up massive losses.
Faced with another economic collapse, some players involved within the last crisis are urging regulators to force lenders to preserve cash by suspending dividend payouts, reports my colleague Matt Egan.
"Every dollar of capital that goes to shareholders may be a dollar not there to soak up losses and support their lending. Keep it!" Sheila Bair, who led the Federal Deposit Insurance Corporation during the 2008 crisis, told CNN Business.
The nation's eight biggest banks, seeking to urge before political pressure to lend to Americans hurt by the coronavirus pandemic, announced in mid-March they might all halt their generous share buyback programs. But that also might not be enough.
Former Federal Reserve System Chair Janet Yellen thinks America's banks got to halt dividends, too, due to the vast uncertainty facing the country.
"We need a banking industry that's ready to meet the credit needs of the economy," Yellen told
London (CNN Business)JPMorgan Chase (JPM) told investors on Tuesday that it's put aside $6.8 billion to guard against an expected wave of loan defaults. Wells Fargo (WFC) is additionally bracing for trouble, earmarking $3.1 billion to guard against bad loans.
Jamie Dimon, the CEO of JPMorgan, said the primary quarter had presented the bank with "unprecedented challenges." The lender witnessed record demand for open-end credit facilities because the coronavirus crisis deepened.
Companies drew on their credit lines at "probably twice the speed than within the financial crisis [of 2008]," Dimon said on an earnings call . "I think companies are very rationally getting their liquidity so as before what might be a big downturn," he added.
JPMorgan's economists now predict US unemployment will soar to twenty within the second quarter before recovering within the final six months of the year, with annualized GDP contracting by 40% within the April-June period.
The reserve build at Wells Fargo "reflected the expected impact these unprecedented times could wear our customers," CFO John Shrewsberry said during a statement.
As we wrote on Tuesday, big banks have a superb viewpoint from which to watch the fallout from the coronavirus pandemic. they need real time data on credit use, also as business and consumer behavior.
As the global economy tailspins into what the IMF reckons are going to be the worst economic downturn since the 1930s, it's worth paying close attention to what bank executives say and do.
There's more bank earnings on tap Wednesday, with reports expected from lenders including Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS).
Investors also will
get another round of economic data. US retail sales for March are going to be p
US banks steel oneself against a flood of bad loans https://ift.tt/34DmVIh JPMorgan Chase told investors on Tuesday that it's put aside $6.8 billion to guard against an expected wave of loan defaults. Wells Fargo is additionally bracing for trouble, earmarking $3.1 billion to guard against bad loans. https://ift.tt/eA8V8J April 15, 2020 at 02:15PM CNN.com - RSS Channel - US https://ift.tt/2BjRaUg