Charles Scharf, CEO, Wells Fargo speaks at the 2021 Milken Institute Global Conference in Beverly Hills, California, U.S. October 18, 2021. REUTERS/David Swanson/File Photo
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NEW YORK, April 14 (Reuters) – Wall Street’s big banks and money managers were cautious about the economy as they detailed how both consumers and institutional clients were struggling amid sky-high inflation and the threat of interest rate hikes.
Big US banks are reporting results at a time of rising inflation, which could prompt the Fed to hike rates more aggressively this year. Continue reading
While this may benefit big lenders by boosting their income from loans, rapid rate hikes could slow the economy and scuttle any incipient recovery from the pandemic.
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“All of our customers are feeling the effects of inflationary pressures across the board,” Mike Santomassimo, Wells Fargo’s chief financial officer, told reporters on a call.
While Santomassimo said inflation has not yet emerged as a risk to the bank’s loan portfolios, the bank said higher interest rates would hurt mortgage volumes.
Low-income consumers have been hit hardest by rising energy and food prices, Wells CEO Charles Scharf later said in a conference call.
Scharf said that while the bank was likely to see loan losses rise from historic lows, “we should be a net beneficiary as we will also benefit from rising interest rates.” Continue reading
JPMorgan Chase & Co (JPM.N) Chief Executive Officer Jamie Dimon on Wednesday warned of economic uncertainties partly due to rising inflation. Continue reading
Many Wall Street analysts and investors believe the Federal Reserve has acted too slowly to combat high inflation and are now forecasting even more aggressive rate hikes as the central bank catches up.
On Wednesday, Dimon said he sees more rate hikes ahead than the market is pricing in, currently 3% by the end of 2023. read more
“These are storm clouds on the horizon that may or may not disappear,” Dimon said. “That’s a fact. And I’m well aware of that fact, and I expect that alone will create volatility and concern.”
Dimon said that the Fed’s quantitative tightening, as it reverses its pandemic-induced bond-buying bonanza, “will be a lot more important than other people think because the huge change in cash flows will come as people Change investment portfolio. “
Goldman Sachs CEO David Solomon, meanwhile, said when announcing the company’s results that he was monitoring inflation, supply chain stress, commodity prices and how US households are coping with rising costs. Continue reading
“We’ve also seen an increased risk of stagflation and mixed signals on consumer confidence,” Solomon said. “These opposing currents are sure to further complicate the economic outlook.”
BlackRock Inc (BLK.N) described how clients are grappling with the changing economic landscape and adjusting their fixed income portfolios. Continue reading
“Our clients are trying to understand the implications of the rapidly changing investment environment,” said Laurence D. Fink, Chairman and Chief Executive, who noted that Russia’s invasion of Ukraine is “causing a commodity supply shock that further increases inflation.” .
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Reporting by Elizabeth Dilts-Marshall and David Henry and Megan Davies; writing by Megan Davies; Editing by Alison Williams
Our standards: The Thomson Reuters Trust Principles.
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