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Business is booming at big banks. The biggest banks in the US started earnings season off with a bang yesterday, with JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup all beating Q3 profit forecasts, as dealmaking, trading, and corporate lending all surged. Goldman is headed toward its best year ever for its main investment banking unit, the Wall Street Journal reports, and JPMorgan took in $8.9 billion in trading revenue last quarter, a record for Q3. But even with the stock market soaring and businesses diving back into mergers and acquisitions, choppier waters may lie ahead. JPMorgan CEO Jamie Dimon noted that recent auto industry bankruptcies flashed a red flag for the private credit market, saying, “When you see one cockroach, there are probably more.”
Bodies of some deceased hostages returned to Israel as ceasefire is tested. Yesterday, Hamas released the bodies of four hostages under the first stage of a peace agreement that had previously seen the release of all 20 living Israeli hostages in exchange for nearly 2,000 Palestinian prisoners. However, with the next steps still needing to be worked out, both sides accused the other of violating the ceasefire. Earlier, Israel said it would only allow half of the agreed-upon humanitarian aid into Gaza in a bid to push Hamas to release the remains of the rest of the deceased hostages as promised. Meanwhile, Hamas said Israeli troops had killed several people in Gaza, in violation of the ceasefire deal. One issue that remains is whether Hamas will disarm—something the group has not publicly agreed to but President Trump said yesterday they would do or “we will disarm them.”
JPow hints at more interest rate cuts to come. While Fed Chair Jerome Powell didn’t outright say the central bank would continue to chop interest rates, his remarks at an economic conference in Philadelphia suggested that the weakening labor market will require further cuts despite inflation. Although the government shutdown precludes new official economic data, Powell said “the outlook for employment and inflation does not appear to have changed much since our September meeting,” which is when the Fed cut rates for the first time this year. The speech left economists anticipating a rate cut at the Fed’s next meeting on Oct. 28–29, with another cut to follow. Powell also suggested the Fed may soon stop shrinking its portfolio of assets, a move that could also slightly lower borrowing costs.—AR
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