Bank of America beats expectations / Goldman's to cut jobs / Delta to buy 100 new planes

Plus, gas price drops at fastest rate in a decade

Inside.com Part of   Network July 18, 2022

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Bank of America. Reuters. Bank of America beat Wall Street's expectations after seeing revenue climb by 5.6%, according to the firm's Q2 financial results announced today. CEO Brian Moynihan attributed BofA's recent performance to "solid client activity across our businesses." He also cited higher interest rates as having helped the bank achieve strong net interest income growth.  More: Despite its better-than-expected revenue, BofA's results showed profits dropping by 32% from the same time last year. The decline in profits resulted in earnings of 78 cents per share, still beating prior estimates of 75 cents per share.  The company reported $425M in costs relating to regulatory issues, more than half of which related to a series of fines totaling $225M over the bank's handling of unemployment benefits during the COVID-19 pandemic.  BofA's fixed income trading revenue increased by 19%, meeting expectations.

Goldman Sachs CEO David Solomon has warned that the Wall Street giant will take on fewer hires and begin eliminating staff who do not meet performance expectations. Solomon cited geopolitical uncertainty surrounding the war in Ukraine, rising inflation, and monetary policy as the reasons for the company's decision. More: Solomon's statements came as a surprise considering that Goldman recently posted revenue of $3.61B from its fixed income operations, shattering analysts' expectations. The market reacted positively to Goldman's unexpectedly strong results, with morning trading seeing its share price rise by 2.6%.  The increase in buying and selling activity caused by recent market volatility benefitted the bank's trading division, which saw revenues reach $6.5B, well ahead of analysts' expectations of $5.8B The collapse in equity underwriting has been particularly damaging for investment banks and has likely weighed on Goldman's decision to begin reducing staff expenses.

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An engineer works on the engine of a Boeing 737 Max. AP. Delta Air Lines has agreed to make its largest purchase from Boeing in over 10 years. The deal is valued at around $13.5B and will see Delta purchase 100 Boeing 737 Max 10 planes and receive options for 30 additional aircraft.  More: Morning trading saw shares in Boeing and Delta jump by 2% and 5%, respectively. Delta usually favors purchasing planes from Airbus. The airline is one of the four largest carriers in the country and is the only member of that elite club that had not purchased from Being in the last few years. Delta announced that it intends to modernize its fleet of wide-bodied aircraft on Monday in the hopes that it can capitalize on the recent increase in air travel in the U.S. after the unprecedented drop during the height of the COVID-19 pandemic. Delta may have to wait to use its new purchases, as the 737 Max 10 has not received regulatory approval. The entire 737 line is likely to face scrutiny after the 737 Max resulted in two deadly crashes in 2018 and 2019.

The price of gas in the U.S. has dropped at its fastest rate in over 10 years, sliding to a nationwide average of $4.52 per gallon and looking to head even lower. The drops continue a trend established last week when Brent crude dropped below $95 a barrel for the first time since March. More: U.S. gas prices declined by 10% since recent highs but remain extremely elevated. Analysts expect the recent drop to be temporary. Despite the recent price dip, data released by the U.S. Energy Information Administration last week showed fuel consumption dropping to its lowest since 1996 for this time of year. The change in fuel consumption indicates that drivers are struggling to afford the cost of running vehicles and are opting instead to reduce the amount that they drive. The White House has been actively addressing gas prices, with President Biden taking measures to increase the oil produced by Saudi Arabia during a recent diplomatic mission to the Middle East. The Biden administration previously ordered the release of 1 million barrels a day for 180 days from the Strategic Petroleum Reserve, but U.S. refineries are still struggling with capacity issues.

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87% of respondents in a recent poll of McDonald's franchisees expressed a lack of confidence in McDonald's CEO Chris Kempczinski. The poll was run by The National Owners Association, an independent group that advocates on behalf of McDonald's franchisees.  More: The company informed restaurant owners that starting in 2023, it would no longer give preferential treatment to the relatives of current franchisees.  The company also announced that it would separate the process of deciding on which 20-year leases to renew from the process that determines which owners can operate more than one restaurant.  Almost 100% of franchisees believe that the company's management should have consulted with franchise owners before making the decision, according to the recent poll. Despite the company's tensions with its franchisees, is business fundamentals remain strong. The fast food giant's earnings in Q1 topped Wall Street estimates, announcing earnings of $2.28 per share in its first quarter earnings report.

'Bierwang' gas storage facility of the 'Uniper' energy company near Munich, Germany. AP Photo/Matthias Schrader. Uniper, Germany's largest energy firm, has exhausted a €2B ($2B) credit line with the country's state-owned investment bank. The firm has applied for more financing as it struggles with daily losses in the tens of millions due to Russia cutting its gas flow last month. More: Uniper's credit line was initially opened after Russia's invasion of Ukraine led to a rapid spike in gas prices.  Gas flows from Russia to Germany ceased as a result of routine maintenance, but ongoing political tensions surrounding Russia's invasion have led to concerns that the supply will not be reactivated. Uniper needed to counteract the fall in Russia's gas supply by sourcing alternatives at higher prices, resulting in major losses. The German parliament recently passed a bill that allows the government to bail out firms that are deemed to be essential for the country's energy security.

Quick Hits Ransomware attacks grew by 485% in 2020. This multi-pronged approach can help organizations respond to and recover from ransomware attacks.* Chart analysts believe the stock market is showing signs of nearing a bottom, despite a period of volatility that will likely follow the Federal Reserve's meeting next week.  A recent poll conducted by Primerica found that 75% of those who earn between $30,000 and $100,000 believe the U.S. will be in a recession by the end of 2022. 39% of the respondents thought they would be financially worse off in a year. Shares in crypto-trading platform Coinbase rose by 17% on Monday in response to a recent rally in the price of Bitcoin. The company's stock remains 83% below its high on Nov. 9, 2021. Netflix is expected to show a loss of 2 million subscribers when it announces its Q2 earnings results on Tuesday. Spencer Neumann, the company's CFO, said that even if the projected loss is realized, it does not mean that losses will continue going forward. How's your current digital marketing strategy? Make it even stronger with our new interactive worksheet.* *This is a sponsored post.

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Gregory Bridgman is a writer and researcher with an academic background in politics and the philosophy of science and technology. He holds a BA from the University of Cape Town, an MS from University College London, and is currently completing a PhD at the University of Cambridge. He is interested in climate issues, technological changes, and the implications of the fourth industrial revolution. Please feel free to contact me at gregory@inside.com! Editor Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford.

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