Wall Street Breakfast: What Moved Markets

Stocks rose on Friday as the market’s three main indexes posted their best weekly percentage gains since November, after companies began reporting fourth-quarter earnings results, which were kicked off by several major banks. Bank of America, Citigroup, JPMorgan and Wells Fargo closed higher even as some predicted a mild recession. Investors initially had a poor reaction to the numbers, focusing on higher expenses and provisioning losses, along with a cautious outlook. However, banking stocks reversed course during the day and eventually closed higher. On the economic front, the University of Michigan’s January consumer confidence index rose to a nine-month high, which followed Thursday’s December consumer price index data that showed prices fell slightly, boosting hopes that the Federal Reserve may slow the pace. his attention soon. Rising prices. Over the course of the week, the Nasdaq Composite climbed 4.8% while the S&P 500 jumped 2.6% and the Dow Jones rose 2%.

Let go of control

Alibaba shares (Baba) up 8% on Monday after founder Jack Ma revoked his de facto majority control of sister company Ant Group. The subsidiary’s effort to go public again in 2020 collapsed when Ma’s criticism of Chinese regulators landed the two companies in a bind, scuppering what could have been the world’s largest initial public offering. At the time, Ant was planning a dual listing on the Shanghai and Hong Kong stock exchanges, which would have raised $34.5 billion (Alibaba owns 33% of Ant).

the background: And the 58-year-old Ma, whose estimated $34 billion fortune makes him one of China’s richest people, has long served as the poster child for the Asian country’s market economy. Co-founder of Alibaba – the Chinese version of Amazon (AMZN) – in his apartment in 1999 and has grown into one of the largest companies in the world. Alibaba’s mobile payment platform Alipay is China’s answer to PayPal (PYPL), and grew so large that Ma eventually created it with other Alibaba fintech units as a separate company known as the Ant Group.

Ma’s fortunes collapsed days before Ant went public after he publicly criticized China’s communist bank regulators during a speech. Ant’s Shanghai IPO deal was quickly canceled by the regulators – on the personal orders of Chinese President Xi – and the company soon canceled its Hong Kong IPO as well. China continued a broader crackdown on tech companies, and ended up fining Alibaba a record $2.8 billion for alleged anti-competitive business practices.

By leaps and bounds? Ma’s relinquishing control of Ant Group could now pave the way for regulators to reduce scrutiny of the company and other Chinese technology companies such as Alibaba. It could also open the door for Ant to try to revive the IPO, which should act as a positive catalyst for BABA. Take a look at a New article From the search for alpha contributor Jonathan Weber, who looked at why Alibaba did it already rebounded more than 75% from its lowest level in just two months. (39 comments)

The New Mortgage Guide

It was previously one of the largest mortgage lenders in the United States, Wells Fargo (WFC) unveiled plans this week to roll back the housing market. Instead of going after the entire industry (his previous goal was a 40% to 50% market share), the bank is shrinking its mortgage portfolio by restricting loans to bank customers and minority borrowers only. While the business has been one of the company’s biggest sources of profit over the years, things have gotten tougher amid regulatory pressure and higher interest rates.

That’s not all: Wells Fargo is shutting down the correspondent lending business, in which the bank lends capital to other companies that sell mortgages as premium providers. It’s a big deal, as the division accounted for nearly 40% of mortgage volume as of the third quarter of 2022. Wells Fargo is also reducing the size of its servicing portfolio by selling billions of dollars in mortgage servicing rights to other players in the sector.

“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” said Kleber Santos, CEO of Consumer Lending. “A mortgage is an important relationship product…and we’ve been very aware of the history of Wells Fargo ever since [the cross-selling scandal in] 2016 and the work we need to do to win back public trust. As part of this review, we determined that our home lending business was very large, both in terms of overall size and scope.”

prospects: In August, the search for alpha Covered Reports indicate that Wells Fargo will significantly reduce the size of its mortgage unit and back away from its commitment to being No. 1 in the business. It has also taken other steps to streamline the mortgage division over the past three years, such as cutting back on massive mortgage refinancing in 2020. As traditional banks continue to pull out of the industry (JPMorgan)JPM) and BofA (Buck(mortgage share assignment after the financial crisis), and non-banking entities such as Rocket Mortgage (rkt) and the United Wholesale Mortgage Company (UWMC) filled the void, although it is not regulated and some say it may expose borrowers to additional risks. (55 comments)

travel problem

Operations of major US airlines including Delta (NYSE:DAL), Southwest (NYSE:luv) and the United (NASDAQ:UAL) on Wednesday after the crashes cut off Traveling all over the country. When all was said and done, nearly 12,000 flights were delayed or canceled – in, in or out of the United States. It also appears to be the first nationwide halt to local traffic in more than two decades, the last after the terrorist attacks of September 11, 2001.

What happened? The FAA traced the outage to a Corrupt database file On the computer system that generates alerts called NOTAMs or Notice to Air Missions. These notifications must be reviewed by pilots and airline dispatchers before takeoff, as they include details about bad weather, runway closures, or nearby airspace activity. Officials also indicated that the outage was not the result of a cyberattack, despite a similar outage in the system took place in Canada in the same day.

Tim Campbell, former CEO of Air Operations for American Airlines (NASDAQ), explained:AAL).

cloudy sky: The US airline sector was still struggling Thursday, with 216 cancellations and nearly 7,000 delays, but many hope things will clear up over the weekend. This disruption came after another turbulent period for the air travel industry, which resulted in Government investigations. Over the holidays, Southwest Airlines canceled thousands of flights over several days, citing problems with an outdated system that couldn’t keep up with crew schedule changes. Also this week, Airbus (OTCPK: EADSY( topped by Boeing )Bachelor’s) in the annual aircraft delivery competition For the fourth year in a row.

Getting to the core?

Major averages posted modest gains on Thursday, extending a rally seen in the previous session, as investors bet that new inflation statistics will allow the Federal Reserve to slow the pace of interest rate hikes. nasdaq composite (COMP. IND) and daw (DJI) Both rose 0.6%while the S&P 500 (SP500) ended today 0.3% higher. Eight of the 11 S&P sectors also finished with gains led by more than 1% advances in real estate and energy.

quotes: “Market participants are now pricing in only two more rate hikes of 25 basis points, which means the market thinks the Fed will change its view soon,” the analyst said. Leo Nelesen He told Search for Alpha, but said predictions were a “dangerous game”. Inflation is falling only in select categories, such as energy and vehicle prices, while other areas, such as wages and housing, remain major issues the Fed will have to address to avoid a 1970s-style inflation rebound. “Any hawkish comments from the Fed or a repeat of its forecasts could be bad news for the bulls.”

Specifically, the headline CPI slowed to an annual increase of 6.5% in December, compared to 7.1% in the previous reading. The core figure, which excludes the volatile food and energy sectors, showed a gain of 5.7%, exactly matching expectations. However, some “extreme” estimates, such as those that exclude things like medical insurance and airfare, still show an annual pace of 6.5%.

what do you mean: With everyone talking about eggs, markets are now pricing in a 96% chance of a 25 basis point increase at the end of the month, compared to the 77% chance seen before the data was released, according to CME’s FedWatch tool. (16 comments)

No more pajamas

Less than two months into the job, Disney (disCEO Bob Iger seems to think the office is the happiest place on earth. This is because he tells employees that they need to be back at their workplaces four days a week. The new requirement will go into effect March 1, with access for employees Monday through Thursday.

quotes: “As you’ve heard me say many times, creativity is the heart and soul of who we are and what we do at Disney,” Iger wrote in an email to all employees. “In a creative business like ours, nothing can replace the ability to connect, observe, and create with peers that comes from being physically together, nor the opportunity for professional growth through learning from leaders and mentors.”

While other companies have also been tightening back-to-office requirements, Egger’s demands are on the heavier side of those restrictions. Most major media companies have opted to force hybrid workers back to work two to three days a week, and Disney’s policy has also been three days for most of last year.

deepen: Iger took back the CEO position from Bob Chapek in a pre-Thanksgiving surprise Advertising. With a two year period planned, he decided to make some profound changes including Restructuring Disney Distribution Operations. High-level proxy war It also erupted at Disney this week as activist investor Nelson Peltz tries to join the company’s board of directors. (81 comments)

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