Big Banks Rise As Earnings Kicks Off; Abortion Pill Battle Reaches Supreme Court | NTD Business

Thanks for joining us. Coming up on NTD Business. Bank earnings out today. JP Morgan beating estimates. Seems like big banks are showing resilience despite recent bank collapses. We'll tell you what's the common theme in the earnings reports. U.S. manufacturing output falls unexpectedly. What headwinds are producers facing? We get an on-the-ground perspective. The abortion pill legal battle goes to the Supreme Court. President Biden calling on the courts to restore full access to Mifepristone. The drug is used in half of abortions in the U.S. Could the pill be banned? Twitter continues its move toward being an everything app. What's their latest offer to users? That and much more coming up on NTD Business. Great to have you with us. Don Ma here. On Wall Street, stocks ended lower today. Mixed economic data seems to hint at another rate hike, stamping investor enthusiasm. The Dow fell 143 points or 0.4%. S&P lost 9 points or 0.2%. Nasdaq dropped 43 points or 0.4%. Big profits from the big banks. JP Morgan, Chase, Wells Fargo and Citigroup posted results today that topped estimates for first quarter earnings. It's signaling resilience through the banking crisis in March. Consumer and corporate spending held up in the face of interest rate hikes by the Federal Reserve, though the financial giants are building up rainy day funds as fears of an economic slowdown mount. JP Morgan Chief Executive Jamie Dimon warned that while the U.S. economy remains robust, the sudden collapse of Silicon Valley Bank and Signature Bank last month could make lenders more conservative and at the same time impact consumer spending. While Wells Fargo's financial chief pointed out the bank expects some slowing in the economy given the increase in interest rates, but so far it has been strong, boosted by the labor market. Joining me is Stuart Plesser, Senior Director at S&P Global Ratings. Now, we had some major bank earnings this morning. We can go into the nitty-gritty, but first let's get some broad strokes. What kind of picture does this paint for the economy? The earnings itself were good. These were the large banks that are reporting. And based on preliminary data that the Fed had released coming into earnings, it seemed that large banks were gaining some of the deposits in the system. But overall, it seemed that a couple of points. One is, you know, the rate hikes, net interest income, which is the way the banks are able to earn off of rate hikes, either went up or stabilized. They're kind of peaking out at this point, but they'll still be higher than last year, which is a good thing. Credit quality got a bit, deteriorated a bit, but nothing to be alarmed about. Deposits at these large banks seem to be okay. J.P. Morgan certainly had an increase in deposits, while others decreased, but in terms of, you know, nothing outsized. I think just on that point, you know, we had expected some deposits to leave some of the banks as well. So it's a matter of, you know, some depositors are looking for higher rates and moving to money markets and treasuries. And so, you know, there were some expectations before the recent bank volatility of where deposits were going. And consumer credit, consumers seem to be okay. They were spending. There seemed to be a little weakness as the quarter tailed down. Deposits from consumers were declining. That's been the trend since there was a huge increase in deposits from, you know, the pandemic to now where there was a lot of programs that boosted deposits for consumers. They seem to be weaning, but nothing of a serious nature as of yet. Right. I mean, we're seeing massive deposit outflows this year. I mean, why is that not a concern? Sure. Well, last year, deposits left the banking system. It was about 2 percent decline in overall deposits. This year, before the March events, things, deposits started to continue to flow out. And then, of course, when these deposits were leaving some of the regional banks or smaller regional banks moving towards larger banks, the points of why it's not a concern for most banks is they had a lot of excess deposits moving into the year. And so it wasn't unexpected that this would leave where the deposit is going. They're going to money market funds. They're going to treasuries. These are higher yielding assets. So basically, the banks were not offering that high of a yield for their deposits. What the banks are starting to do and what you'll see as earnings progresses, they'll start to offer higher yields than they did, which will impact their earnings. But there should be enough for the better situated deposit banks, which are the larger banks, to have enough deposits to continue lending. OK, let me just step back for a moment. Is there any any common theme that we're seeing across the bank numbers today? Well, I mean, I think the theme is that net interest income probably has peaked either in the fourth quarter or the first quarter, meaning that the higher rates go, the banks will not continue to earn more money on their net interest income than they than they already have. But still, because of the run rate, they'll probably have a higher amount of net interest income this year than last year, because some of the quarters last year had much lower interest rates embedded in it. The other one that we're looking at is is these unrealized losses in the securities portfolio. We expected it to come down because medium to long term rates have come down since March. And that is the case. And so those unrealized losses that were problematic and certainly an eye of the industry look better at the end of March than they did at the end of December. And it's something that we'll continue to watch as rates go higher. That could reverse. But so far, liquidity, unrealized losses, net interest income look good and credit quality, you know, ticked lower, more normalization towards more problematic than it was last quarter. But again, nothing to be alarmed about as of yet. I see. Thanks for pointing that out, Stuart. I think that's all for today. Thanks for speaking to me and pleasure having you on the show. Thanks. Pleasure to be here. Consumers are reining in their spending amid recession fears. This is according to data out today from the Commerce Department. Retail sales fell by 1 percent in March compared to February. Economists were expecting a drop of only four-tenths of a percent. The recent banking crisis has only fueled concerns about a recession. Last month, two large U.S. banks collapsed. The Fed says that banking crisis is likely to push the nation into a mild recession later this year. And U.S. manufacturing output falls unexpectedly in March. Production fell 0.5 percent last month. Year-on-year production fell by 1.1 percent. Manufacturing makes up 11 percent of the entire economy. But it's struggling as higher interest rates undercut demand for goods. We talked to the head of a manufacturing company to get an underground view. President of HM Manufacturing Nicole Walter says that demand is weakening to a degree. I will say, you know, a lot of my customers, their demand has fallen slightly, not to the point of being concerned. A lot of sectors of manufacturing has tailed off a bit. So for us, we're very heavily involved with food processing, beverage, packaging, those OEMs. We're seeing a kind of a tail off on that. However, e-mobility has gone up. The automation and robotics side has gone up tremendously. They're going gangbusters. And so we're seeing kind of a shift in where we're seeing the demand. Businesses are also holding excess inventory as demand slows. This is reducing the incentive to place more orders with factories. Walter says that her customers did a lot of overbuying as well because they were concerned about running out of stock. Now, demand waning and overstocked inventories may have contributed to the drop in PPI inflation. But when you do have too much on your shelves, you know, there's not enough demand. They're not taking it as quickly. And so that's where you're starting to see a lot of the sale prices that then comes back to the manufacturers and they start looking for a lot of rebates as well. It seems like now inflation is no longer the main concern for some businesses. After the banking collapses in the U.S., credit conditions started tightening. Meanwhile, the Fed continues its interest rate hike campaign. This is now more of a concern. Walter gave an example. For a million-dollar machine, the interest rate is 8 to 9 percent, whereas before it was around 5 and 3 quarters. She says this is eating into your bottom line. Montana lawmakers moved one step closer Thursday to passing a bill to ban TikTok in the state. The move serves as the test for the TikTok-free America that many national lawmakers have envisioned. Montana's proposal is more sweeping than the bans in place in nearly half of the states. The bill is also more expansive than the government's ban of TikTok on federal devices. A final House vote will likely take place today before the bill goes to Republican Governor Greg Gianforte. TikTok is owned by Chinese company ByteDance. U.S. legislators have recently expressed concerns that the company could hand over user data to the Chinese regime or could push pro-Beijing propaganda and misinformation. In Elon Musk's long march to make Twitter an everything app, the CEO is announcing a new monetization offer. NTT Char-Marshall has more details. Twitter owner Elon Musk said on Thursday users with a social media platform will be able to offer their followers a monetization for subscriptions to content. He also announced long-form text and hours-long videos. I spoke with Dr. Mark Collins for his take. He's a professor, author, and marketing strategist for Beyonce, Budweiser, Bud Light, and other notable brands. It's sort of like a club that was once hot and then is that the hot club anymore if you go to another club now and for the club to sort of regain its appeal is difficult. As an incentive to users, Twitter says it won't take a cut for the first 12 months. An option the social media firm can do as it's now roughly breaking even, as Musk said on Wednesday. Collins told me his suggestion for Twitter's marketing. Where maybe we should think we should reassess what Twitter actually is. The Twitter is a public square. It's a place where people enter discourse or we negotiate and construct meaning, right? And if that be the case, then maybe Twitter should be not a for-profit entity. Maybe it should be a public utility to do what it does best. Twitter users will be able to offer a subscription through the monetization tab in settings. Once it's activated, they'll get all the money subscribers pay, except for any fees charged by the platforms like Android and iOS and by Twitter after the first year. Sean Marshall, NTD News. Senate Majority Leader Chuck Schumer has a plan to create new rules for artificial intelligence. It's to address concerns with national security and education. The proposal would require independent experts to test AI ahead of public release. They would share the findings with the public. According to Schumer's office, time is of the essence to get ahead of this powerful new technology to prevent potentially wide-ranging damage to society and national security. Schumer's proposal includes guardrails to ensure AI is developed and used responsibly. He cited the Chinese Communist Party's recent release of its own approach to regulating AI as a wake-up call for America. President Biden recently stated that it's still uncertain whether AI poses a threat. The Supreme Court is temporarily letting abortion pill Mifepristone stay on the market. This is after President Biden today called on the court to restore full access to the pill. Mifepristone is used in over half of the abortions in the US. It's at the center of a big legal battle in the lower courts. And its fate is currently at stake. Safety concerns over the pill have been brought up. The Supreme Court will come to a final decision later on what to do. It all began in Texas when conservative group Alliance Defending Freedom sued the FDA for approving Mifepristone as being safe. The Alliance Defending Freedom argued it was not safe and that the FDA did not properly follow its own approval process. This is a claim that former FDA Commissioner Jane Henney disagrees with. Now conservative groups don't believe it's safe. We spoke to the President of National Right to Life Carol Tobias. She's been studying abortion-related matters all her life. She questions the studies that show Mifepristone is safe. So in the end, Alliance Defending Freedom won that particular case. Trump-appointed Judge Matthew Kaczmarek made a ruling that could have taken Mifepristone off the market. But a higher court stopped this from happening. Though it did impose heavy restrictions on its use. For example, only women who have been pregnant for seven or fewer weeks can use it. They have to visit a doctor three times before using it, and they can't have it sent to them by mail. These are the restrictions Biden is trying to get rid of by asking the Supreme Court to step in. We spoke to Attorney Michael Jaffer who's been analyzing the case. He believes Alliance for Defending Freedom wanted the Supreme Court to look at this from the very beginning because there's a conservative majority on the court. The conservative organization that filed their original lawsuit in Texas, they did it not only to shop for the forum, but to shop for that specific judge. They wanted that specific judge to enter a ruling because they knew what his ruling would be. They want to go to the Supreme Court. This is the same Supreme Court that overturned Roe v. Wade. So it's not exactly going to be a shock, a surprise if they agree with the judge in Texas. Jaffer believes the Supreme Court will enter a ruling that solves the issue instead of punting the decision back to the lower courts. This is because the lower courts may not be able to come to a single conclusion. They're going to end up limiting the applicability of this drug. I think there might be a chance. I think there might be a chance. There might be a chance that they might not do that and they might take it to the states and say every state has to make their own decision based on the public health of their women. This is similar to what the courts decided when they overturned Roe v. Wade. They didn't make abortion illegal. They just returned the decision to the states. Moving on. The Justice Department today announced charges against more than two dozen defendants in a massive fentanyl trafficking investigation. Among those charged are three sons of the notorious drug lord Joaquin El Chapo Guzman. Chinese citizens accused of supplying precursor chemicals required to make fentanyl are also facing charges. Attorney General Merrick Garland announced the charges at a news conference in Washington D.C. Today the Justice Department is announcing significant enforcement actions against the largest, most violent, and most prolific fentanyl trafficking operation in the world. That operation is run by the Sinaloa cartel and fueled by Chinese precursor chemical and pharmaceutical companies. The PRC government must stop the unchecked flow of fentanyl precursor chemicals that are coming out of China. The fentanyl trafficking weapons and money laundering charges in the three indictments involve the total of 28 defendants. 23 are based in Mexico, 4 in China, and 1 in Guatemala. They include alleged chemical suppliers, lab managers, fentanyl traffickers, financiers, and weapon traffickers. Chat app Discord is at the center of an investigation into the leak of classified documents regarding the war in Ukraine. Jack Teixeira, who was arrested yesterday in connection with the leak, reportedly posted on Discord for years about guns, games, and according to someone who chatted with him, closely guarded U.S. secrets. Teixeira is 21 years old and a member of the Massachusetts Air National Guard. The breach has raised questions about the U.S. government's ability to safeguard its most sensitive information. Some of the leaks are believed to have started on Discord. Discord started in 2015 as an online hangout for gamers. According to its CEO, it has more than 150 million users, and they skew young and male. It allows users to create invite-only groups called servers. The company hosts nearly 21,000 of these servers, most of which are about gaming. Others are focused on topics like AI, entertainment, or music. In a chat group called Thug Shaker Central, a user known as The OG posted what he said was classified material. He did this for months. Discord said it's cooperating with law enforcement's investigation of the leak. Summer just around the corner, and already Americans are gearing up, in potentially record numbers, to take those summer vacations. The rising demand and inflation means it will probably cost you more to get there. In this next story, we take a look at the summer travel forecast and what it could mean for your plans, and more importantly, for your wallet. It's only April, but summer travelers are already eager to take to the skies. On Thursday, Delta Airlines reported record advance bookings for this coming summer. And in its travel forecast released this week, Expedia noted a 25 percent increase in online flight searches for the June through August period. I thought last summer was going to be the sold-out summer because of this pent-up demand for travel, but people clearly didn't get it out of their systems. They're ready to go again this summer. People are not going to give up on their travel. Airlines say they're prepared for the summer travel surge, but fears of meltdowns like those that crippled air traffic last year has the FAA allowing some major airlines to reduce their flight schedules at a few of the nation's busiest airports due to a shortage of air traffic controllers in an effort to reduce flight delays. Let's remember those lessons we learned last summer, bring them into this summer, book those early flights when possible, direct flights when possible, and keep it all in a carry-on. The surge in demand for flights also means vacationers are likely to pay more. Airfares are up over last year, increasing by more than 17 percent according to the latest federal inflation data. Yet higher prices don't seem to be deterring future flyers, and there are still deals to be found. Book on Sundays, travel on Wednesdays, and the sweet spot to get the best deal on domestic airfare is 21 to 60 days out. The Phantom of the Opera is closing on Sunday after 35 years on Broadway. New York City Mayor Eric Adams presented Phantom composer Andrew Lloyd Webber with the key to the city today as a thank you. Mayor Adams said Webber, quote, keeps the lights on in our hearts as we keep the lights on in Broadway. Webber said he's loved musicals since he was a young boy and that Broadway was a dream for him. Broadway is just really thriving. It's an economic boom for our city. When you look at the number of dollars that Phantom of the Opera brought to this city as part of our economy and the vibrancy of what's great about this city. Broadway is the reason that so many people come to New York. And I felt very, very much a part of the community, even though I'm British. I still feel that this is the home of musicals and where I want to be. The Phantom of the Opera debuted on Broadway on January 26, 1988. Since then, it has grossed over 675 million dollars, making it the highest-grossing show in Broadway history. The show has gone on to play over 8,000 performances, the only show in Broadway history to do so. Its final performance at Manhattan's Majestic Theatre slated for Sunday. A years-long mission by the European Space Agency to explore Jupiter and its three largest moons is underway. The spacecraft launched this morning from Europe's spaceport in French Guiana. It's called the Jupiter Icy Moons Explorer Mission, or JUICE. JUICE will be the first spacecraft to ever orbit a moon in our outer solar system. For 17 days, JUICE will deploy its solar arrays, antennas, and other instruments. Then there will be three months of testing and preparing the instruments. It will take eight years for JUICE to reach Jupiter, the largest planet in our solar system. JUICE will arrive in July 2031, and the spacecraft will spend about three and a half years orbiting the gas giant. It's going to be doing flybys of the moons. The moons are covered with ice and may contain subsurface oceans potentially habitable for life. And that's it today from the NTD Business Team. I'm myself Don Muang. If you have any news tips, please email us at business at ntd.com. Thanks for watching. We'll see you next week.