Your Tuesday Blip 10/13/20

Your Tuesday Blip 10/13/20

As earnings season got underway the markets pulled back with the Dow falling 157 to 28,678 on heavy trading volume. JP Morgan, Citigroup, Johnson & Johnson and Delta Airlines all reported results today. IBD continues to list markets in rally mode.
JP Morgan Chase reported better than expected earnings as the bank set aside less for loan losses. Both top and bottom lines beat guru estimates as revenue came in at $30.5 billion down 15% while net income grew 9% to $9.4 billion. During the first half of the year the bank grew loan loss reserves aggressively but this quarter they actually reduced reserves by $569 million. This is significant because it could signal that banks might be largely done setting aside money for loan defaults as the economy slowly gets back to work. JP Morgan still has ample reserves of $34 billion which it feels is needed given today’s level of uncertainty.
Delta Airlines posted Q3 numbers which, as you might expect, reflected a rough environment for air travel. CFO Paul Jacobson summed it up when he said “Our results this quarter were underpinned by a strong focus on costs” meaning they are trying to reduce cash burn. The load factor for Delta was 41% and the company improved its daily cash burn from $27 million to $18 million. Revenue was down 76% and the net loss was $3.30 per share vs a profit of $2.33 per share last year at this time. Delta is also predicting a recovery period of at least 2 years.

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