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Friday September 25, 2020



Delta’s Earnings Rise

Delta Air Lines (DAL) released its latest quarterly and full-year earnings on Tuesday, January 14. The airline reported strong financial results for the fourth quarter.

The company reported $11.4 billion in revenue for the quarter, up 6% from $10.7 billion in revenue at this time last year. For the full year, Delta reported $47.0 billion in revenue.

"2019 was a truly outstanding year on all fronts – the best in Delta's history operationally, financially and for our customers,” said Delta CEO Ed Bastian. “Our people, and their commitment to bringing best-in-class travel experiences to our 200 million customers, are the foundation for our success. I'm pleased to recognize their outstanding performance with a record $1.6 billion in profit sharing for 2019.”

Delta reported net income of $1.1 billion, up 8% from $1.0 billion in revenue during the same quarter last year. The company’s full-year net income was $4.8 billion.

Delta’s bottom line benefitted from lower fuel costs during the quarter. Fuel prices fell from an average of $2.39 per gallon in the prior year’s fourth quarter to $2.01 per gallon. This caused fuel-related expenses to fall 14% compared to the same quarter last year. The company burned through 999 million gallons of fuel during the quarter and 4.2 billion gallons for the full year.

Delta Air Lines (DAL) shares ended the week at $62.01, up 5.0% for the week.

JPMorgan Chase Reports Earnings

JPMorgan Chase & Co. (JPM) reported quarterly earnings on Tuesday, January 14. The bank posted increased revenue and profits.

Revenue for the quarter was $29.2 billion. This was up 9% from $26.8 billion in revenue during the prior year’s quarter.

“JPMorgan Chase produced strong results in the fourth quarter of 2019, capping off a solid year for the Firm where we achieved many records, including record revenue and net income,” said Jamie Dimon, CEO of JPMorgan Chase. “While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year.”

The bank posted net income of $8.5 billion for the quarter. This was a 21% rise from the same quarter last year, when net income was $7.1 billion.

JPMorgan Chase’s Consumer & Business Banking segment led the way with $6.4 billion in quarterly revenue. The Card, Merchant Services & Auto segment followed with revenue of $6.3 billion for the quarter. The bank’s Home Lending business brought in revenue of $1.3 billion.

JPMorgan Chase & Co. (JPM) shares ended the week at $138.17, up 1.5% for the week.

Citigroup Releases Strong Earnings Report

Citigroup Inc. (C) posted its latest quarterly earnings on Tuesday, January 14. The bank reported strong earnings for the quarter.

The company reported revenue of $18.4 billion for the quarter. At this time last year, Citigroup posted revenue of $17.1 billion.

“Our earnings of $5 billion for the fourth quarter marked a strong finish to 2019,” said Citi CEO Michael Corbat. “Our full year Return on Tangible Common Equity of over 12% exceeded our target. Due to good client engagement, we drove balanced growth across our products and geographies, closing the year with 16 consecutive quarters of loan and deposit growth.”

As Corbat noted, Citi’s net income for the quarter was $5.0 billion. This was up from $4.3 billion during the same quarter last year.

The bulk of Citi’s revenue is based in North America, which generated $8.6 billion in revenue for the quarter. This is followed by Asia, which produced quarterly revenue of $3.9 billion. Latin America and EMEA (Europe, the Middle East and Africa) each accounted for $2.7 billion in revenue.

Citigroup Inc. (C) shares ended the week at $81.11, up 2.0% for the week.

The Dow started the week of 1/13 at 28,869 and closed at 29,347 on 1/17. The S&P 500 started the week at 3,271 and closed at 3,330. The NASDAQ started the week at 9,214 and closed at 9,389.

Treasury Yields Rise

Yields on U.S. Treasurys rose this week following strong retail and housing reports. Higher-than-expected new housing starts and rising retail sales pushed yields upward.

On Friday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development released their monthly joint report on new residential construction. The report revealed a 16.9% rise in residential housing starts for December, reaching an annual rate of 1.608 million starts and beating analysts’ expected rate of 1.375 million.

“While there are reasons to be optimistic about the housing sector, December’s stellar performance appears to be mainly the result of unseasonably warm weather generating a pickup in construction activity amid heightened demand,” said Bloomberg economists Yelena Shulyatyeva and Eliza Winger. “Seasonal activity usually slows in the winter; housing starts typically decline in December.”

The 10-year Treasury note yield reached 1.828% during early trading on Friday after opening the day at 1.812%. The yield on the 30-year Treasury bond was at 2.289% on Friday after opening at 2.260%.

Friday’s rosy housing numbers followed a report Thursday by the Census Bureau that U.S. retail sales rose 0.3% in December. This marks the third consecutive month of rising retail sales.

“This was a healthy holiday season,” said Jack Kleinhenz, Chief Economist with the National Retail Federation. “Despite a late Thanksgiving and worries about tariffs, the consumer didn’t go away.”

The 10-year Treasury note closed at 1.84% on 1/17, while the 30-year Treasury bond yield was 2.30%.

Mortgage Rates Rise Slightly

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 9. The report revealed a small uptick in rates.

The 30-year fixed rate mortgage averaged 3.65% this week, up from last week's average of 3.64%. At this time last year, the 30-year fixed rate mortgage averaged 4.45%.

This week, the 15-year fixed rate mortgage averaged 3.09%, up from an average of 3.07% last week. During the same week last year, the 15-year fixed rate mortgage averaged 3.88%.

“Mortgage rates inched up by one basis point this week with the 30-year fixed-rate mortgage averaging 3.65%,” said Sam Khater, Chief Economist at Freddie Mac. “By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months.”

Based on published national averages, the savings rate was 0.09% for the week of January 13. The one-year CD finished at 0.49%.

Published January 17, 2020

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