Finimize - 🤞 Earnings season, baby

What’s going on here?

JPMorgan kicked off earnings season on Friday, with results that breezed through any threat of danger.

What does this mean?

JPMorgan isn’t optimistic: the big bank’s CEO declared on Friday that “this is the world’s most dangerous time in decades”. That said, Friday the 13th still proved lucky for some, with JPMorgan reporting danger-defying third-quarter results. More folk and firms wanted loans, and higher interest rates meant they were more lucrative than usual too. That drew net revenue up 15% from the same time last year, and a tight grip on costs meant profit came in above analyst expectations too. And despite the firm’s doomsaying, JPMorgan released some of the cash it had stored up to cover loans, in case hard-up borrowers couldn't repay what they owe. That’s a reassuring sign that the economy and consumers are holding up alright, at least for the time being.

Why should I care?

Zooming out: This isn’t a solo act.

Not to be left out, Citigroup reported a better-than-expected 9% uptick in revenue last quarter versus the same time last year. Most of the bank’s departments held their own, but the banking division – which makes money by lending to companies and netting fees from corporate deals – stood out by bringing the segment's revenue up 17% after a long bout of sleepiness.

For you personally: Smoke and rearview mirrors.

Bank earnings can indicate the current state of the economy, but they don’t give much away about what to expect next. That’s because the dynamics that decide big banks’ profit switch up really quickly: market volatility, for example, can completely transform a trading division’s results. So while they can make for an interesting read, banks’ books are by no means a magical crystal ball for investors.

What’s going on here?

Data showed that inflation in China is hovering around zero, but you know what they say, the economic situation isn't always brighter on the other side of the fence.

What does this mean?

Countries like the US and UK, weighed down by rising prices and the hefty interest rates designed to tackle them, might look at economies with zero inflation as a modern-day utopia. But China’s in that exact situation, and the country’s hardly thriving. According to the National Bureau of Statistics, Chinese consumer prices were the same this September as they were last year, putting the country on the brink of deflation – potentially a much more threatening foe.

Why should I care?

The bigger picture: It’s everyone else’s fault.

Mind you, China might be able to place some of the blame outside its own borders. See, prices in the country’s services sector were actually 1.3% higher than the same time last year, which means it’s the manufacturing sector dropping the ball. And because a lot of that sector’s activity is focused on producing goods to export, weaker demand from abroad is clearly taking a toll. Maybe, then, China’s economy will reap the benefits when inflation-embroiled countries manage to get their ducks in a row.

For markets: Two out of three ain’t bad.

China’s lackluster economy and long-struggling property market have been subject to a lot of scrutiny. But actually, the government’s not too far behind the three targets it set itself back in March. The International Monetary Fund’s projections see the country’s economy nearing its 5% growth target, while official unemployment figures in urban areas are 0.3% ahead of the goal. Only inflation – sitting at 0% despite a 3.3% target – is behind schedule. So despite cries for the Chinese government to firehose more cash into the economy, the country may be more on track than it seems.