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- Daily Scoop 22-10-17
Daily Scoop 22-10-17
👋 Your Monday Scoops - AT&T political bribes & Nikola's founder fraud
Today's Scoop:Bounce
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Big Picture
Consumer spending is still slowing.
Consumers are feeling more confident about the economy.
The United Kingdom completely reversed its recent economic stimulus.
The Market:
⬆️
+2.7%
S&P 500: 3,677.95
1Mo:
-6%
| 1Yr:
-18%
| 5Yr:
+45%
Markets surged today as investors celebrated increased consumer confidence, strong 3rd-quarter corporate financial updates, and the UK reversing its recent economic stimulus policy.
Consumers feel better about the economy, but inflation is still eating into their spending.
The Commerce Department on Friday said US retail sales were unexpectedly flat last month as people cut back on big-ticket items like cars and furniture. The University of Michigan consumer survey showed sentiment broadly increased in October, but inflation expectations rose.
The more people expect inflation to continue, the longer it will stick around
. If businesses expect higher costs, they'll raise prices.
The British pound is recovering from its collapse
after the new UK prime minister reversed her recent economic stimulus policy that sent financial markets into a frenzy. Investors didn't think it was the right time for her policy to cut taxes for the highest-income individuals and provide benefits to help citizens cover rising energy costs.
Company Scoops 👥🌎💰
(Click to dig in & vote your reaction, see how others feel)
Nikola's
-
AT&T
-
JPMorgan
-
Bank of America
-
Kroger
(These links only work for 24 hours while the story is live)
🤓 Inside Scoop...
When there's a lot of economic uncertainty, changes in
banks'
loan loss reserves
can be an important part of their quarterly reporting. The traditional banking business model entails taking deposits, paying some interest to the depositor, then lending that money to someone else at some higher interest rate, profiting from the spread between. Corporate and personal borrowers often can't pay their loans, but banks keep cash on the side to safeguard their financial stability just in case. As banks expect
higher defaults
, they might take a
loan loss provision
to increase their
loan loss reserves
in anticipation of future losses. The provision counts as an
expense
and decreases
profit
initially, but if banks release some reserves in anticipation of better economic conditions, that adds back to profit.
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