π¦π Banks are Quietly Booming
Happy Sunday,
I am currently in New York for the week! Got here Friday and have some meetings with some creators + creator economy people. So far, I am enjoying my time walking around the city and attempting to up my fashion sense (lol). Iβll probably do some work from here, check out some museums, and eat my way through the good restaurants here.
We have a packed Sunday newsletter for you today!
β Humphrey, Tim, & Rickie
Market Report
What Banking Crisis? There's a quiet global banking boom underway. (Axios)
Despite several major banks facing challenges and headlines filled with negative news for the banking industry in the past couple of years, global banking overall has performed exceptionally well.
Banks worldwide garnered profits of $1.3 trillion in 2022 and are expected to exceed that in 2023, marking the best period for global banking since 2007.
The surge in global interest rates has generally been beneficial for banks, which haven't relayed these higher rates to their depositors.
Banks had been grappling with the challenge of generating profit in a zero-interest environment, alongside dealing with potential disruptors and strict regulations.
JPMorgan on Friday reported that Q3 revenue was up 21% and net income was up 35%, thanks in part to its acquisition of First Republic.
Wells Fargo's revenue and income were up 20% and 57%, respectively.
Even Citi had a pretty healthy third quarter.
Consumer prices rose 0.4% in September, more than expected (CNBC)
The consumer price index (CPI) rose by 0.4% in September, marking a 3.7% increase from the previous year, exceeding analyst estimates.
Notably, shelter costs were the primary drivers of the inflation uptick, with the shelter index, which constitutes about one-third of the CPI weighting, rising by 0.6% for the month and 7.2% from the prior year.
Excluding food and energy prices, the core CPI increased by 0.3% monthly and 4.1% annually, in line with projections.
Energy costs surged by 1.5%, with gasoline prices rising 2.1% and food costs climbing 0.2%.
Despite the consistent inflation rates in recent months, September's CPI exhibited the same annual increase rate as August's, at 3.7%.
This is an improvement from the pandemic's peak of 9.1% in June 2022 β the highest since November 1981.
Although inflationary pressures have been evident worldwide, driven by supply-demand imbalances, economic disruptions, and geopolitical events, they have started to wane.
Big Techβs Profit Machine Is Propping Up S&P 500 Earnings (Bloomberg)
Amidst growing market concerns, investors are looking to Big Tech, including giants like Apple, Microsoft, Alphabet, Amazon, and Nvidia, to provide a boost during the earnings season.
These companies, which constitute around a quarter of the S&P 500 Index's market capitalization, are expected to see a 34% average rise in earnings from the previous year.
In contrast, the S&P 500's overall profits are anticipated to remain flat.
Consumer sentiment drops as Americans feel worse about the economy (Axios)
Consumer sentiment in the U.S. took a downturn in October, with the University of Michigan consumer sentiment survey indicating a drop in confidence regarding current economic conditions and future expectations.
The index declined to 63 in October from 68.1 in September, with concerns about inflation being a significant factor, as expectations for the next year's inflation rose from 3.2% in September to 3.8%.
This declining sentiment might be influenced by recent increases in gasoline prices and volatility in Wall Street, and although consumer confidence was even lower in 2022 due to high inflation, it remains considerably below the typical levels seen in the 2010s.
Exxon to Buy Pioneer for $60 Billion to Dominate Shale Oil (Bloomberg)
Exxon Mobil is set to acquire Pioneer Natural Resources Co. in a monumental $59.5 billion all-stock deal, representing Exxon's most significant takeover since its merger with Mobil Corp. in 1999.
With a purchase price of $253 per share, this move is anticipated to solidify Exxon's dominance in shale oil production, especially in the prolific Permian Basin of Texas and New Mexico, expanding its daily production to nearly 4.5 million barrels of oil equivalent.
The strategic acquisition comes as major oil corporations increasingly recognize the advantages of shale oil production.
Shale wells, which are low-cost and easy to drill, offer companies the flexibility to rapidly increase production when required, a stark contrast to traditional offshore mega projects that demand vast resources and extended planning periods.
After nearly two years of antitrust negotiations, Microsoft has successfully acquired gaming behemoth Activision, following concessions made to the U.K.'s Competition and Markets Authority.
Key to the resolution was the divestment of Activision's cloud-streaming rights to Ubisoft rather than Microsoft acquiring them.
The initial acquisition announcement in January 2022, valued at $68.7 billion, places Microsoft as the third-largest global gaming company by revenue, behind Tencent and Sony.
Big Number: 35%
Since March 2022, the WatchCharts Overall Market Index has fallen more than 35%. The index is comprised of 60 watches taken from the top 10 luxury watch brands by transaction value.
Overcome the Sunday Scaries
Memes of the Week
Partnerships
If you are a brand looking to reach thousands of business leaders and investors through our two weekly newsletters, we would love to hear from you!