The largest banks in the world announced profits last week.
JPMorgan’s Jamie Dimon warned of impending “thunderclouds” for the US economy.
“I take the current into account [bank] problems as nowhere near comparable to 2008,” said Morgan Stanley’s James Gorman.
The world’s largest banks reported earnings last week and all eyes were on CEOs of the Wall Street giants for clues as to how markets will weather the current economic conditions.
Several are seeing a downturn, albeit a mild one, as consumers remain generally in good shape and the prospect of inflation cooling further.
Here’s what some top bank CEOs are saying about the US economy in their earnings calls this season.
1. JPMorgan CEO Jamie Dimon
The Wall Street vet warned investors of impending “thunderclouds” ahead.
“The U.S. economy remains generally healthy. Consumers are still spending and balance sheets are strong, and companies are in good shape,” said Dimon. “However, the storm clouds we’ve been eyeing over the past year remain on the horizon and the unrest in the banking sector adds to these risks.”
2. Brian Moynihan, CEO of Bank of America
On an earnings call, Moynihan warned of a recession in the US but said inflation is showing signs of cooling.
“Everything points to a relatively mild recession given the amount of stimulus people have been paid and the money they have left over,” he said. “Ultimately, we don’t see activity on the consumer side slowing at a rate that would indicate it, but we see commercial customers being more cautious.”
He added: “The fact that the unemployment rate is still 3.5% [shows] full employment plus. And then wage growth slows and tilts, so the signs of inflation are falling. And it’s still there, but that translates into relatively good activity. So we see a slight recession.”
3. Jane Fraser, CEO of Citigroup
She also predicted that the country is on the brink of a mild recession in 2023, but the many bank failures have only added to these concerns.
“We are in a strong position to navigate whatever environment we face, which is especially relevant given the level of uncertainty today,” Fraser said during an investor call this week. “We expect recent events to be disinflationary and credit to contract.”
She added: “We now think it is more likely that the US will slip into a superficial recession later this year.”
4. James Gorman, CEO of Morgan Stanley
Gorman told analysts that the US economy is in much better shape than it was during the Great Financial Crisis. He allayed fears of a full-blown banking crisis and ended the turmoil created last month by the collapse of specialist banks such as the SVB.
“We have had, and may still have, a crisis with some banks. I believe that strong regulatory intervention, on both sides of the Atlantic, has seared the damage,” Gorman said. “I consider the current problems not comparable to 2008.”
5. Ron O’Hanley, CEO of State Street
In an earnings review, O’Hanley noted how macro conditions have changed the bank’s performance in the past quarter, commenting on the efforts institutions have made to “stabilize the US banking system.”
“Our first quarter results reflect the resilience of our business model, notwithstanding continued interest rate hikes and subsequent significant market movements, volatility and disruption in other parts of the banking industry,” he told investors.
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