The major averages enter the final hour mixed on little real news. Since Monday the Standard and Poors 500 Index is up 25 points or .9% while the NASDAQ has gained 88 points or 1.1%. Based on the last 2-weeks the markets seem convinced that trade wars are winnable, and that we are winning. Personally I’m not so certain and as this quarter progresses will see the effects of tariffs on not only the economic data but corporate earnings and revenues as well. This will be where the rubber hits the road and frankly I don’t see tariffs being positive to either category.
Import prices fell .4% in June, on broad based but primarily energy related declines, after oil fell sharply last month. Export prices advanced .3% last month. On a year ago basis export prices advanced 5.3%, import prices increased 4.3%.
One of the things that always shocked me about the Great Financial Crisis and its aftermath was that the major banks failed to see large numbers of customers walk out the front door due to their egregious behavior. In particular I was amazed at Wells Fargo’s ability to shrug off scandal after scandal with seeming impunity. Perhaps that is starting to change as the latest results from Wells Fargo suggest that in fact it’s customers have had enough and are beginning to vote with their feet. The bank reported declining earnings and revenues for the 2nd quarter and both missed expectations. Moving to loans and deposits and they also fell for the period in question. That said it wasn’t all bad news as credit quality and profitability of the banks loan portfolios improved slightly in the 2nd quarter.
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