As more big bank earnings are released it's increasingly apparent that the Wall Street side of the business - that is, M&A and trading teams - are stepping up to generate more revenue than the Main Street side - that, being consumer banking and lending.
But Jamie Dimon sees "positive macroeconomic data" and he sounds more bullish on the US economy than other bank CEOs. This isn't the first time he's been out touting the return of economic activity in the US.
Retail sales up 7.5% mom, 1.1% yoy, better than expected, as stores reopen across the country.— Lauren Thomas (@laurenthomas) July 16, 2020
Furniture, electronics, sporting goods and clothing showing strong gains month-over-month. (But apparel still down 23% from last yr.) Non-store retailers (e-commerce) were down. pic.twitter.com/YVlt0cI7Nr
Some macroeconomic data does, in fact, support Dimon's optimism. Consumer retailer numbers for the month of June showed some optimism that brick-and-mortar companies badly needed: increases in sales for furniture, appliances and sporting goods.
Even as he cheers on the US economy, Dimon's bank packed away billions in prospective loan loss reserves, and its M&A team's outperformance contributed in an outsized way to the big beat this week. Outside Wall Street, things are looking less rosy. A broad survey of alternative data points as it relates to other titans of American industries isn't reflecting this big bounce-back, at least, yet.
For starters, it isn't Dimon's bank that has returned to posting more jobs - that would be Bank of America. Lately, Bank of America ($BAC) has turned on the spigot, so to speak, and added about 1,500 job postings to its website. In fact, the job posting numbers at Dimon's JPMorgan Chase ($JPM) are down 57% (not shown) from their 2020 peak, and not showing much in the way of a rebound either. Perhaps that is why other bank CEOs aren't as bullish as Jaime - and some are sounding the alarm.
“I don't think anybody should leave any bank earnings call this quarter simply feeling like the worst is absolutely behind us and it's a rosy path ahead.” - Citigroup CEO Michael Corbat https://t.co/KEQOwDja7i— Sam Ro 📈 (@SamRo) July 14, 2020
Even among the companies leading markets' rebound, job postings remain scant. The NASDAQ was virtually bulletproof, leading the market's charge and fostering the narrative that the US economy - just like so many COVID-closed states - would quickly bounce back. Now, California is shuttering businesses and locking back down after repeated outbreaks - and technology giants don't look anywhere near ready to reopen their doors.
Washington-based Microsoft ($MSFT) job postings are down more than 50% and Silicon Valley-based Google ($GOOG) job postings are down more than 60% - if the US can't count on the tech sector to step up hiring, with its remote-work opportunities, precisely which industry should out-of-work Americans turn to next?
Recipients of federal bail-out cash are still so strapped they're already telling tens of thousands of staffers to gird for job cuts the very moment they're allowed to do so, per regulatory requirements - other industry leaders, like United ($UAL), captured in the data above, appear nowhere ready to resume hiring. Jobs are continuing to be sucked out of the US economy, in many industries. And it isn't clear when they'll return.
Still, yet other forms of economic pain have yet to been realized - in Florida, which is currently failing to contain the pandemic, unemployment claims have begun to rise. Should the state take the likely necessary steps of a lockdown similar to what contained New Yorkers in spring, odds are this figure would grow substantially in late 2020. For many industries, it remains to be seen how long a meaningful portion of their business will be locked down.
Financial services stocks have always served as a forward-looking indicator for other US industries, and banks' beats, combined with reduced earnings expectations and ballooning loan loss cushions, paints a complex picture that Dimon's comments may not have fully captured.
And that's with the potent market cocktail of continued US federal government bailouts for businesses and residents, along with the Federal Reserve's unprecedented shopping spree, plus emergency rate cuts. At some point, when these market stimulants shift, the entire US economy is likely to feel it - and that's probably why some of Dimon's CEO contemporaries aren't seeing eye-to-eye with him just yet. The data, for now, is on their side.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.