 Hello and welcome to the CFC markets webinar covering the US banking earning season Today's date is Wednesday the 17th of July 2019 and the time has just gone 1300 British summertime or 1 p.m. Here in the UK I'll just start off as always by leaving the risk warning on screen It's a very standard morning Essentially, it'll keep the archipelagic department happening and all of these states is that any of the kind of commentaries live and fight today are Just merely kind of you know my own thoughts and opinions and views and whatever is covered in today's webinar shouldn't be construed as explicit trading advice or trading recommendations. So if you could just have a quick read through of the Slides for those of you who are recently regularly check out our live webinars or watch the videos you post to YouTube You'll realize it's all fairly standard stuff And it's all very very simple and straightforward and once the slides are out of the way You can then press ahead with the actual webinar itself So this webinar is going to be covering The quality figures from the major US banks that have been reported so far We have to be fair the bulk of the updates the bulk of the figures have been revealed so far But obviously we do have all the Stanley one of the big mostly players you report the numbers tomorrow essentially what we're going to do in the webinar is Janet about about the About the kind of common themes all through the the report season for US banks so far Look at what's being compared that how they've been doing versus market expectations Compare that haven't have they've been doing to get a preview how they've been doing to think how they've been doing in comparison With the kind of this how the banking sector has been performing and there has been a few changes in the banking is operated the last two years And also we can talk about This the topics and the ideas that we cover for US banks Could be in some ways Be used as a comparison for whenever we get the European banks the UK banks of the euro some banks support their figures at the end of the day They're all in the same game and we look about What what what what arose in the US banks? Could we see something similar in the in the European banks there via their figures? I'm happy that you have any questions feel free to kind of fly away for the time being at least could we just keep it in relation to the banking sector the US bank sector at least for the first while Towards the end of the webinar as we approach half past one set of a 25 minutes time I'm happy then to actually be spare time talk about The markets in general, but if you can just keep it focused on the US bank sector for the time being We start off with with city group They were the first ones the major banks to have to report their figures and if you take a look at the kind of headline figures from city group We're actually quite decent. I'm pretty well received. So if you take a look at the city group numbers in relation to the earnings and what have you The earnings per share Earnings per share came in at $1.95. That was better expected because markets were expecting Movement a EPS of $1 really Revenue also came in slightly better expected came in at $18.7.6 billion US dollars I think it's an estimate for something in the region of around 18.5 So that was slightly better expected But it's also worth remembering that revenue actually slipped by 2% So what a slight decline in revenue for city group, but it managed to beat expectations One of the areas some of the trade departments at city group were bits of Jude paracol various different trading departments be it across The financial markets was a bit subdued but city city group has a bit for a Wall Street Bank is a bit more of a retail Assizable retail division at the global consumer bank posted a 3% decrease in revenue And so if you could consider that to think about that The overall revenue actually declined by 2% but the global consumer bank showed a 3% rise in revenue So it really kind of shows you that that was essentially kind of main One of the better performing departments in the bank. So if it was more investment back in focus It was more trading focus. It's likely we could have had We've worth numbers from the city group. It's also worth pointing out that unfortunately It's also what we're pointing out There was it was a gain of a few hundred million dollars 350 million dollars in relation to the the sale of of trade web So that was sort of a one-off one-off number But what was interesting about about this is that the city group numbers show show Kind of a brute blueprint for what is going on and to get a wider banking sector post post credit crisis Banks are be ever taking on far less risk. They've been trimming down the size of their proprietary trading desks So essentially what we're traders are looking to trade the financial markets with the bank's money That's deemed to be too risky. They're spending much more on compliance and auditing and in relation to regular regulations And they're also kind of going back to kind of bread-butter stuff or buy if they have a retail bank I said if it does focus more and actually can every day retail banking It isn't as glamorous as you know as the trading departments, but guess what it's actually lower. It's lower risk and it's actually kind of really much getting to get it back to basics and For organizations, which don't have any or a very small retail bank They've been focusing more on things like wealth management Investing banking advisory advisory fees through investment banking and advice Merging acquisition advice IPO bond issues and issuances. So things whereby investment banks or banks in general receive Charge of fee for for their services as opposed to actually risking their own money. So it was a quite large is a good set of numbers from city group and But now that The sentiment has changed a bit in relation to what's going on with the with the prospect of the federal of the Federal Reserve cutting rates In relation to all the chatter about rate cuts, you know There's still about a 27% chance of a rate cut of 0.5% from the Federal Reserve this month And it's quite a high probability of a rate cut of 0.25% this month Essentially banks perform better in a high in higher interest rate environment, so if the interest rates are about to be high and the perception is you're going to get even higher that bodes well for banks in terms of how they actually How they kind of structure their lending or by what they borrow from the market or from other banks what they dole out To consumers in terms of actual in terms of lending rates That in itself is actually a key area for the bank Is that essentially it's collecting the net interest income is that is the name of it Provides it essentially the difference between how much you pay out and how much how much you pay on deposits and how much you charge on loans and in the environment of higher interest rates and Possible and the possibility of even higher rates that usually bodes well But now when we're seeing up the prospect of low rates in the Federal Reserve that compresses bond yields The kind of the gaps between say the two-year yield and the 10-year yield Pressure gets pulled on that it narrows and therefore banks usually have fewer opportunities I have a less of an opportunity to make money. So kind of going forward For a city group if we do have rate cuts from the Fed A break cut from the Fed later this month and prospect of more rate cuts That's likely to get impact future earnings So if you take a look at the share price action of city group for the last 21st 2019 major rebound and start the beginning of the year It's broadly traded sideways for a few weeks Then a push down higher to a multi-month high in April followed by another another sell-off but notice how with the highs notice how the the lows of May and June failed to take out the lows of March then the market pressed on higher yet again So we can see here is in around the kind of 72 dollars range for for a city group It seems to be a bit of an area of resistance if you fail to fail to break up of that area properly At the end of April and we see if you're running into that resistance level yet again Turning our attention to the MACD histogram the MACD indicator. We can see there's a steady decline in positive momentum And because of that it could suggest that the kind of buying pressure is running on a bit of steam So we might see the market drift a bit lower If you do see the stock drift a bit lower support could be found on this blue line here the 50 moving average Which comes in the play at sixty seven spot 30 spot 37 And even if you drop below that support could be found from this red line here in round 64 It's about 67 which is a 200 day moving average a bearing in mind It's been brought in a bullish trend throughout 2019 So if you manage to press on higher from here, we could be looking at our in this area here Level last seen in late September 2018. I brought the kind of 75 dollars for a share mark Just take a quick look at some of the questions that have been coming through Yes, as I think as you got a question curious about the possibility of rate cuts Yes, I think if you do have rate cuts a bit of a rate cut in July on the prospect of further rate cuts for 2019 We could see we could see we could see That impact bankings the banks net interest income Metric which is a very important metric because as I said it's it's it's it's essentially the difference between what banks pay you And the balls in versus the charge you in loans if that percentage gets squeezed We could see lower profit margins and one of the one of the banks did it end up going lower on it In relation to how much the potential movements in the banks of the S&P We've had how the impact big indices to be honest not a whole lot and other very I know They're obviously big Big corporate stories, but we haven't seen much of a move given that a lot of the move on C I was driven US stocks higher in recent weeks and months has been the slight improvement between US China trade relations but more so The the belief that the Fed reserve are going to loosen monetary policy It's been the big kind of probably the largest driver of of the Dow Jones the S&P 500 And everything kind of got brought up along with that So I think at the moment it's fair to say what the Fed do or what goes on between the US and China It's probably got a bigger impact If we do see obviously, you know traders often like to often go right We've had a good run Let's look to take some profits and if it's at the numbers aren't good That could be an excuse to actually look to take profits from there But you know so far most of the big most of the big numbers you've seen out from the US banks have been fairly positive But we didn't really see that kind of massive surge come along Take a look now at Goldman Sachs Check your luck once again by large these numbers were quite good If you take a look at Goldman Sachs numbers earnings should be shared came in at $5.81 Top in the forecast comfortably because the forecast was $4.89 Revenue for the period came in just shy of 9.5 billion dollars Once again, it was ahead of expectations What is what is useful is the fact that The investment banking revenue So once again, we're talking about how banks want to spend money through fees rather than actually risking their own money more So that can be better expected to keep it at 1.8 billion dollars and if you look and also Probably because some of the trading departments are being kind of beating up quite badly major banks could say Expectations were lower going into it but the but the equity but the revenue drive from equity trading Top forecast, but at the same time and the revenue from the fixed income currency and commodity trading I came in Below it below forecast. So goes to show you the kind of in comparison would say the euro's on that crisis and the credit crisis All those kind of years ago Volatility in the financial markets has dropped off considerably person to what it was. It's 2011 or 2008 And because of that some of these banks are she some of these banks particularly Goldman Sachs who had disappointed in large amount of their revenue copy from the trading departments They've seen they've seen Their business being impacted by that and they've been pushing away from the trading more towards what I mentioned the investment banking side So even though, you know fixed income currencies and commodities are thick is the acronym that that of analysts and traders have been using recently Even though that can be low expectations It's sort of a bit of a kind of old a sort of not as important as it once was just because Fear has got used after a few quarters got used to the idea of having not so impressive Fixed income currency commodity numbers but focusing on investment banking and the fact that Even though the bank has you're making a conservative effort to gain more fees on the investment banking side the advisory side The fact that the top those numbers tells me that the banker are kind of content to get move in that direction and The top figure which is already going into it Traders would have had higher expectations now for take a look at the share price here comments It's just very similar. We've across the board. We obviously in a big sell-off in US equity markets at the back end the last year and a push higher Throughout 2019 major set up for the back end the last year the market rebounded in early January Kind of coming off stage in a relatively small trading range Essentially between say late January and also up until April Drifted lower and those how does the sell-off in late late March did manage to take off the sell-off take up the lows of Merge, but when the market did much you can hit up a trend highs here have taken off the highs of April and only Yesterday to be a level last seen since November last year, so it's a so we're multi So we're actually you know heading towards you know multi-month highs on Goldman Sachs share price You're the solid upward trend It's looking it's looking as if we're going to be heading up towards this region here in around 220 And if you take out 220, you could be looking at this area here a level last seen In early November last year at 234 dollars What's interesting about the Goldman Sachs chart is this red light here the 200 a moving average and the 20 moving average by some traders We follow technical analysis often view that as kind of a good benchmark of whether a market is Stronger week bullish or bearish, and you can see here that you go back to We go back as far as A couple of years ago October last year we can see that once the market managed you Trade above the tour the moving average in September last year held above it for quite a few months And then when sentiment turned a trap back below it Struggle to get back above it so the previous support of the tour the moving average then became Resistance and this is pretty common We're by all support people do resistance notice how in the market drop below it The sentiment turned it create a multi-month low bike by moving down here It took out those lows create a multi-month low And I went up in the market pushed higher ran into resistance after removing average created another multi-month low Market tried to retest the tour the moving average up here failed to do so And it's been holding below it for much of 20 late 2018 and 2019 We can see here on a few occasions In 2019 on April and May it tried to get back above it, but it failed to do so But once it did matter to break above it It made it kind of it made a sizable jump above it as you push it higher from it, so This is a good example of how previous Result of all support became new resistance and the new resistance could potentially become all support so Keep an eye out for the tour the moving average in common sex It's only really if you can a drop below that metric because they would be good But then we'd be getting Begin I think you know the wider naked of trend from from last summer from July 18 is actually going to be in play Take a look now at JP Morgan Chase So I'm taking your look at Jeff Morgan Chase I put a look at the figures Jeff Morgan Chase were buying allergic goods had numbers, but the outlook Was a bit was it lowered slightly so I take a look at the numbers revenue increased by by by 4% To 29.57 billion top in the expectations of 28.9 billion so a bit better expected on the number on the review in terms of actual EPS earnings per share increase it is a 16% increase on the year Came out of two two dollars and 82 cents a share Top in the estimate comfortably because it because the estimate was two dollars and 50 cents per share, but What was concerning about this are a bit disappointing rather? The net interest income I want to mention before the gap how much money the bank earns on lending You know difference between a pay-as-you in deposits versus what it charges you for lending Essentially the the forecast was the issue and the produced the forecast ever so slightly by about 500 million To so that it's a going forward. They expect to make about 500 million less on interest and this could be the sign of Of banks actually feeling the effects of the changes in the bond market We've seen in the US government bond market We've seen whereby rates are reels have been driven lower the kind of the gap between say that the short-term yield short-term yield and say the two year year year yield versus the 10-year yield That's getting compressed. It's making it's probably make it's likely to make it more difficult for banks to earn money in the future quarters of the fact that they had good numbers in the quarter just gone, but they Slightly lower their guidance on terms of how much money they're going to make and loans That the future quarter then in the past you weighing on the share price on that day That being said a massive knock on impact on the stock It's just by and large in good shape. I'm still by alert and an open trend throughout 2019 But you will notice at the highs here that are recorded in July Haven't yet taken out the highs in May where we haven't seen other banks at Goldman Sachs Go on to press on multiple highs if you do continue to press on higher from here And we take off this level here the highs that were achieved in late in April and around $116.70 in the region here. We could be like the attractor in this year here up at $119.25 Moves the downside might find the sport from this balloon out here the fifth movie averaging at one hundred and ten spot 83 And even if you go below that the truly moving average at hundred and seven spot 19 might act as support Take a look at the last one of the other kind of mate of the The last one of the banks are out yesterday at Wells Fargo And what's the thing about Wells Fargo is that it's actually a major Thing is Wells Fargo is one of if not the biggest Mortgage lender in the United States. So it's very much focused on what's going on in the US mortgage market And as we can see here on like the other ones such as Goldman Sachs which drive money from trading and and and also investment banking fees There's the share price action of more Stanley's been very Wells Fargo rather has been very much to the downside And we can and explain why here with the figures so the earnings for share yesterday $1.30 country beating the estimate of $1.15 revenue came in at 21.58 billion Topping the forecast of 20.93 billion, but In terms of net net interest interest income It came in slightly below expectations and talked about a lower in lower interest rate environment And that's kind of a bit of a forewarning that we could be looking at Future future declines in that department for the bank that put a bit of pressure on the share price Very large move to the downside You know that the wider trend has been very much to the downside We can see here that the grass is set off to the downside we could see here on the on the On the momentum you look at the momentum here It swung the positive momentum to negative momentum if you do press on lower from here We could be lucky targeting this early here in a 42 Apologies 40 spot 20 and a move below that could be looking at retesting the December lows been around $43 a share Notice how on a few occasions this Yellow line here the one already moving average which comes into play at 47 spot 59 on a few occasions Did manage to act as resistance and once again actually this is here here and along here And what do you know only a few weeks ago? Well, it's really slightly above it, but you know the area didn't really really get it didn't really get a proper break Above it so we can see here that the one of the moving average is likely to be another Resistant point should the market push on higher from here Is it this comment here from a cure? Yes, I fully agree Clear is upper trend and like us and like I said This is no no especially in light of the fact that the federal look are looking at cutting rates It really is gonna no surprise and I just as you as you rightly is widely I'm pointed out it's one the clearest examples of the downward trend So if you do press on lower from here, we could be looking at retesting The may lows and the possibly even blow that December lows, and I think if you go below that We could be looking heading down towards 40 bucks for 40 40 bucks per share I'll take a look now at a box you through Bank of America's numbers they come out only a couple of hours ago So take a look now at the these figures here So if you look at the Yeah, the back America shares along here Apologies, my motor system isn't as working as fast as I would like it So back America was reported earnings per share 74 74 cents a share we can see that the The thick revenue the fixed income currency commodity revenue is down eight sound over sound eight percent as it's hardly a surprise They're given that the a lot of the banks who go through the situation We could see that their revenues revenues for the trading on equity trading was down 13 percent We could see there was a nice increase in a quarterly net interest income So once again the bank we can see that the trade departments aren't doing so well But the issue of net interest income Size a nice increase in that and this is probably gonna be where banks are gonna be focusing more on back to basics Do things like mortgages and loans As opposed to actually being overly dependent on the financial markets for money Obviously the shares that the markets open in about an hour's time So we obviously haven't seen any price action movements or any price action so far I'm just taking a look now I can see here Some of the headlines saying that in the free market it dips after the quarter after the quarter of a quarter results But then again Bank of America did not this is be claimed to boost its dividend by 20% And increase the pace of share buyback. So that should act as a bit of a buffer to the to the numbers So we can see that was it that was a considerable beat EPS can be a 70 74 cents per share and where this you will whereas the Consensus was 63 cents a considerable beat on the earnings front That interest income rose by 3% So by and large we think obviously the numbers out of the in relation to the The numbers in relation to the fixed income currency and Commodities division were impressive and neither were the equity numbers But overall it seemed to be actually a fairly decent set of numbers so take a look at Chart for Bank of America. It's obviously not going to be open yet Be open in about a one hour time so Bank of America Reason the similar situation whereby decent bounce back to the beginning of the year There's a sell-off Between basically throughout the month of May But the market has been creeping higher but notice how the then highs of July haven't taken off highs Of May so we're suddenly kind of shaking off a kind of wider downward trend If you do measure going to press on higher from here and take out the levels the highs of August we could really come be heading towards 71 dollars and 16 cents here at this region here I should go beyond that we're coming like I'm heading up towards the 32 dollars per share region If we do manage to drift lower and we had head back below the tour to moving average in a 28 dollars and 18 cents We could take us back down to this region here and the lows of June which are around 26 dollars and 41 cents Just actually out of curiosity This was something that relatively new that we tried holding a webinar in the middle of the day We were fully aware that at the at the US markets We're going to be open for another 60 minutes But we figured as it's in the daytime individuals might be easier to find easier to log in One o'clock rather than sit, you know half half two or three p.m But out of a quick poll any it is any end of a kind of preference we're to have another similar webinar What time would would work would work for them? There's ha there's a one o'clock start work for them or they prefer more of a 215 to start feel free to Add your comments in there Just see I see a comment here I just get the comments here Looks like it went up with your cynicism from the end of years. Yes Yes, it was in terms of in terms of the last few months absolutely But I was told you can be more confident that the upper trend was going to get it was going to continue if if If the share price managed to take out the the highs if the highs of July took out the highs of May when I was referred to the the wider dollar trend I was talking about say Late basically most of 2018 was a pretty bad year for them for the bank So we have regained most of the ground But you know if you've taken out if you take out the April highs We they'd be looking at highs that's seen since August last year, and then you can be more confident I think that that recent trend with that wider trend we could play out It's just gone half past one Any any just before we look to kind of wind things up I don't it comes you like to make in relation to When is a good time for you to hold a webinar in the daytime and also any comments in relation to you know The financial markets in general being indices or currencies or commodities. I do have time for a couple of questions For those of you who commented on in relation to the feedback to answer you what is okay for you? What would would be good for you? Thank you for that all feedback is welcome You are most welcome For those of you who thanked me absolutely No worries my pleasure who will be recording of this video on our YouTube channel It also be posted to our trading platform under the insights section You're welcome here. No problem. Happy to help Bye to you So seeing seeing as everyone seems to be wrapping up there I would like to look to finish up the webinar I do appreciate your time for logging in if any comments to make on this webinar or any of the events that we look to actually Cover any of the other events we actually look to cover Any of the business we've been produced feel free to leave a review on Google views if you look to For those of you that are going to be visiting the office feel free to give me a shout That's where the contact me is probably via Twitter Or else if you have a contact at the company feel free in terms of sales trade or a broker that that takes care of your Account just give him or her a heads up I've got a sign off now. Thank you very much for tuning in and speak soon. Have a good day