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Sunday, 17 October 2021

Wall street banks report stellar 3Q2021 earnings, diverge on investment strategies

Wall Street sails through global headwinds to post blockbuster 3Q2021 earnings: Goldman Sachs looks set to post its best year ever after reporting a 59% yearly increase in earnings to hit USD 5.4 bn in the third quarter, rounding off a week of stunning results from US investment banks, the FT reports. Concerns that higher expenses could squeeze earnings as other sectors face cost-related pressures proved unfounded, with Goldman’s third-quarter earnings (pdf) per share of USD 14.93 described by Oppenheimer analysts as “quite literally off the charts.” JP Morgan Chase (pdf), Morgan Stanley (pdf), Bank of America and Citigroup also posted impressive Q3 results last week, as the Fed’s easy-money policy spurred a boom in transactions.

Those big banks also saw USD tns of deposits flow into their balance sheets on the back of pandemic-era stimulus. When it comes to deploying those funds into good use, however, they seem to be pursuing different strategies when it comes to interest rates, with JPMorgan Chase, America’s biggest bank, content keeping them idle rather investing in what it sees as overpriced government bonds and BofA, the second-biggest, growing its treasuries portfolio some 77% over the past year, according to the Financial Times. The latter strategy will prove wise if rising inflation nudges interest rates higher, thereby making bonds worth less.

First US BTC ETF set to start trading this week: Exchange-traded fund manager ProShares will launch Amreeka’s first ETF for Bitcoin futures on the NYSE Arca Exchange as soon as Monday, according to a bourse filing. BTC prices surpassed USD 60k to approach all-time highs on Friday following reports of the listing, which is expected to widen access to crypto trading among retail investors, Bloomberg reports. The fund is set to be tacitly approved by the Securities and Exchange Commission (SEC), signaling increasing institutional acceptance of cryptocurrencies, with other similar securities expected to be launched in its wake. The move marks the end of a near-decade-long lobbying campaign from the sector, after Cameron and Tyler Winklevoss — yes, the twins who sued Mark Zuckerberg — first applied to launch a BTC ETF in 2013.

Up

EGX30

10995.59

+1% (YTD: 1.4%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,699.11

+0.6% (YTD: 34.6%)

Up

ADX

7,811.60

+0.3% (YTD: 54.8%)

None

DFM

2,789.51

– (YTD: 11.9%)

Up

S&P 500

4,471.37

+0.8% (YTD: 19%)

Up

FTSE 100

7,234.03

+0.4% (YTD: 12%)

Up

Brent crude

USD 84.86

+1%

Down

Natural gas (Nymex)

USD 5.41

-4.9%

Down

Gold

USD 1,768.30

-1.7%

Down

BTC

USD 60,648.26

-1.2% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 1.1% at Thursday’s close on turnover of EGP 1.08 bn (28% below the 90-day average). Foreign investors were net sellers. The index is up 1.4% YTD.

In the green: MM Group (+6.3%), Egypt Kuwait Holding (+4.8%), and Abou Kir Fertilizers (+4.0%).

In the red: Gadwa Industrial Development (-4.1%), Pioneers Properties (-4.1%) and CIRA (-2.5%).

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