Hot CPI, Decent Bank Earnings, and My Margin Problem

Colin Santucci (0:00)

Welcome to the RigatoniCapital Podcast. I'm your host, Colin. It is pre-market Wednesday, October 14th. Very sunny day here on Wall Street.

It is September CPI Day, so we'll get CPI reading here any minute. And by the time you are watching this, you would have already known what CPI would have been. We also had Bank of America miss earnings, and I don't know if that has anything to do with the big fine they got smacked down with on yesterday that we heard about at least. BlackRock did beat on a record 15.49 trillion in assets and $205 billion of net inflows. I think the stock is up this morning. And I believe we have ASML which came out. The stock seems to be flat though. They raised its 2026 sales guidance for the third time. I definitely see that they have customers that are trying to order as far out as 2029 and 2030 A lot of capacity constraints over there trying to meet demand, right? And that's ASML. So we won't really review those three stocks, Bank of America, BlackRock, ASML. We're not going to do that because the earnings just came out. So how am I supposed to give you some kind of analysis when they just came out? The earnings calls probably aren't even happening yet. We just got the reports maybe for some of these. I do see that we have yields now in the green. You know, the 10 year was at 5.22 last time I checked. It's now at 5.26 and that's because September CPI just came out. It must be a little hot, must be a little hot. But once I have a little more information, I will share that with you guys. It was nice to see the 10 year and interest rates kind of pull back. It's nice to see that we have all this trouble in the Middle East and we have even oil kind of pull back slightly. That's always a relief because, you know, it seems to be pretty bearish out there. You know, there's so much uncertainty because of the Middle East issues we have. There's so much. September Consumer Price Index came in at 3.7% versus 3.6 estimate. Much hotter than we all were hoping for. I mean, I was hoping for 3.5%, you know.

I do see that food may have been up slightly, and that would make sense. What have we been trying to discuss here every freaking day?

So let's try to speed through this and CPI is out, and we can all run. Oh, sorry. CPI X food and energy was actually up 0.3% versus 0.2% estimate.

So there you go. That's not a great sign. Are they going to blame it on memory chips or cell phones? What are they going to blame it on? Verizon or Verizon Wireless? How about Xfinity or Comcast Bills?

I mean, the price increases are relentless.

Hey, let's get into what we want to talk about, guys. Rising interest rates threaten to spoil the party for big banks. Goldman and JPMorgan post higher profit, but the mood on Wall Street is becoming more cautious. JPMorgan, Chase, Goldman Sachs, Citigroup and Wells reported third higher quarter profit and revenue from a year earlier.

Yeah, year over year numbers look fine. Quarter over quarter numbers don't look like they're as good only because quarter to such a great quarter SpaceX IPO, etc. We also didn't have as much uncertainty around yields. It was only a quarter ago that, you know, there was a little more calmness in the bond market, and we just have had a relentless bond selling globally, if you recall, since. And, you know, that's not you would think that it's good for higher interest rates are typically especially in a steepening yield curve are good for banks, right? However, there's so much uncertainty out there. Let's be honest. And if you're looking, if you're on Substack, Spotify or YouTube, obviously you can see the screen, and I'm showing you banks third quarter profit, seeing just how well they're doing year over year, but it's not like crazy blowout stuff, but it's impressive. It's impressive. I mean, JPMorgan always impresses Goldman Sachs, very impressive. Citigroup, even more impressive over looking year. And this is profit. Remember, it's profit. I also want to show you what everybody was freaking out about, which is the fixed income currencies and commodities revenue. That's when they say FICC, as you can see, down from the last two quarters, but it's still up from quarter four last year. And, you know, it's really kind of flat versus the same quarter last year. And that's where some of the stocks seem to get hit, you know, not perfection across the line.