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Hi Reader, here's what you need to know for October 17th in 3:08 minutes.

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Today's big stories

America’s big banks reported a bumpy quarter of peaks and troughs
Here’s how to time your trades with the flawless instinct of a politician – Read Now
China reported mild inflation last month, and that could have knock-on effects for the whole world

Big Banks Are In Stormy Seas

What’s Going On Here?

Big banks JPMorgan, Wells Fargo, Citigroup, and Morgan Stanley reported a mixed bag of earnings on Friday.

What Does This Mean?

The US's biggest banks reported their results on Friday, and they were full of ups and downs. On the one hand, big banks boasted of plush consumer businesses: after all, they’re still making money from credit and debit card fees as folk keep spending despite the worsening economy. On top of that, higher interest rates helped balloon JPMorgan’s “net interest income” – that’s money it makes from lending minus the interest it pays – by 34%, and that helped America’s biggest bank grow its overall revenue by 10% versus this time last year.

On the other hand, though, the banks’ investment banking (IB) revenues plummeted as cautious companies stepped back from things like big mergers – which banks advise on for a fee – in this wearisome economic climate. In fact, Morgan Stanley’s IB revenue was 55% lower than the same time last year, which pulled its overall revenue down by 12%.

Why Should I Care?

Zooming out: Run for cover.
Banks build up cash reserves to cover themselves in case hard-up borrowers default on their loans, and adding to those cash piles took a massive bite out of their bottom-line profit last quarter. In fact, JPMorgan topped up reserves by a chunky $800 million, and its CEO blamed a dismal combination of sky-high inflation, rising interest rates, war in Ukraine, and a few other factors for the bank’s cautious move.

The bigger picture: Deep breaths.
Despite all the talk of a recession, we’re not actually doomed to repeat 2008’s financial crisis. Regulators learned a harsh lesson back then, and they’ve kept financial institutions on a short leash ever since, making sure their reserves are plump enough to cushion the blow a recession might bring. So if you’re looking for the smoke that comes as a crisis kindles, you probably won’t find it in the US banking system.

You might also like: Three hard truths about the next financial crisis.

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Analyst Take

How To Trade Like A Politician

By Luke Suddards, Analyst

I’ve been brooding over the controversy surrounding major politicians’ trading patterns lately.

Nancy Pelosi and her husband, to name a couple, have raised eyebrows with their impeccably-timed trades – especially given her very prominent position in US politics.

Now I think about it, a more fitting name could be Nostradamus Pelosi.

And while you might not have access to the private information that politicians are privy to, you may soon be able to copy their latest moves via two brand-new ETFs.

So that’s today’s Insight: how politicians time their trades so perfectly, and how you can do the same.

Read or listen to the Insight here

Beat the billionaires at their own game

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Time to show the billionaires how it’s really done with Holdfolio.

Find Out More

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