What we’re reading (7/16)
“Goldman’s Traders, Bankers Keep Profit Steady While Rivals Falter” (Wall Street Journal). Traders like volatility (especially traders’ on banks so-called “FICC”—or, fixed income, commodities, and currencies—groups). But the piece of the story about GS’s stock price bouncing back better than other banks’ doesn’t necessarily mean GS’s traders’ performances have been stratospheric or anything. In fact, the bounce back may have little to do with the trading desks at all. Unlike the other mega-banks, GS does not actually do all that much actual “banking” (credit origination). Given the economic climate and the worries that a lot of personal and corporate loans are about to go bust, it’s not that surprising that true creditor-banks have been slower to rebound.
“Bank of America Profit Falls 52% As It Prepares For Coronavirus Defaults” (Wall Street Journal). Speaking of the credit origination side of the banking business being under massive pressure, BAC’s profit “tumbled” in the Q2 after the bank “set aside billions of dollars to prepare for soured loans.”
“A Brazen Online Attack Targets V.I.P. Twitter Users In A Bitcoin Scam” (New York Times). “It was about 4 in the afternoon on Wednesday on the East Coast when chaos struck online. Dozens of the biggest names in America — including Joseph R. Biden Jr., Barack Obama, Kanye West, Bill Gates and Elon Musk — posted similar messages on Twitter: Send Bitcoin and the famous people would send back double your money.”
“Dividend Cuts May Mean Rethinking Your Retirement Strategy” (CNBC). 63 S&P 500 constituents cut dividends in Q2. Historically, high-dividend stocks have offered somewhat bond-like characteristics (regular stream of cash flow with relatively low volatility) but in a non-bond asset class (equities). But companies have needed the liquidity in the weaker-cash flow environment brought on by Covid, so they’re paying out less of it.
“Retail Sales Rise For Second Straight Month” (CNN). Retail sales up 7.5 percent month-over-month. BUT, there were also over a million new unemployment claims just last week, symptomatic of the mixed bag that the traditionally salient macroeconomic data has been lately.
