Stocks pulled back 115 points to 27,219 on mixed trading volume. Earnings reports are hitting the wires and the gurus are digesting the information like scouts eating at a potluck. IBD and BTS continue to be positive on market trends.
Bank of America posted a revenue gain of 7% while profits were up 17%. As we saw with Citigroup and JP Morgan, consumer banking activity was the main driver for the better than expected profits. CEO Brian “Money” Moynihan noted that spending by B of A consumers grew 5% from the second quarter last year. Deposits at B of A rose to $1.375 trillion.
Wells Fargo also reported an increase in earnings of 20% on 6% revenue growth. The bank had higher cost of deposits due to promotional activity, but it paid off as deposits grew 6.9% to $1.3 trillion. Wells also saw strength in its consumer banking segments. The combined deposits of Citi, JP Morgan, Wells and BofA now stand at over $5 trillion! That’s a lot of wampum or as they say in the halls of Oxford: “that is a significant accumulation of pecuniary emoluments”.
Brian Wesbury, chief economist at First Trust, honorary member of the Westport Mafia and University of Montana grad, commented on the recent release of the June industrial production numbers. The readings came in flat for the months suggesting a slowdown in the US economy but Brian (aka Mr. Sunshine) said the reason for the flat reading was that utility output was down 3.6% due to cold weather. It appears that this June, in the lower 48, was the coolest on record since 2009. So, there you have it…..we are either headed for a recession or it’s just plain cold outside.