Today's Scoop:

Hey friends, hope you enjoyed the long weekend.  Here's what you need to know today...

1. Big banks think consumers are doing fine for now.

2. Investors are really pessimistic on the stock market.

3. Consumers are feeling more confident.

S&P 500: 3,990.971Mo: -5% | 1Yr: -13% | 5Yr: +42%

The market wavered today on mixed messages from corporate 4th-quarter financial reports.

Big banks think consumers are doing fine. Rising living costs and higher interest rates have slowed spending but not stopped it. Banks see a mild recession or economic slowdown ahead. Last week's inflation report showed more evidence that we're past the worst of the price spikes.

Consumer confidence is growing as inflation cools. The University of Michigan reported a big jump in its consumer sentiment index this month as participants indicated less concern about rising living costs. Consumers power the economy.

Investors are still pretty pessimistic. Bank of America's Fund Manager Survey showed investors holding the lowest allocation to US stocks since 2005. The percentage expecting a recession decreased, though.

Click to dig in & vote your reaction, see how others feel

• Johnson & Johnson abandons its covid vaccine efforts

• JPMorgan prepares for a mild recession

• Exxon Mobil makes first major oil production expansion in a decade

• Delta profits soar on high prices and fewer flights

• Goldman Sachs' profits tank as investment banking stalls [🤓]

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Wall Street business model

Wall Street bank business models can be opaque and confusing. They mainly earn revenue from lending, managing investments, executing trades, and brokering corporate deals.

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. Banks profit from the spread between the rate they pay the depositor and what they earn from their loans.

Investment banking isn't actually the investing arm of the bank. Investment banks assist companies with large transactions, making fees for their advice. In the same way that a real estate broker earns a commission for helping sell your house. Investment banks earn a hefty commission for helping you value and sell your company to other companies or public investors (an IPO).