Breakingviews - COMMENTARY: Wall Street's doomsayer is discordantly optimistic
- JPMorgan slashed consumer loan-loss reserves by 91% year-over-year, adding just $50M vs $575M—a bet that the American consumer is swimming in cash.
- Despite Dimon's doom-laden chatter about deficits, inflation, and global chaos, JPMorgan's Q3 net income jumped to $15.3B, with double-digit revenue growth across the board.
- Wells Fargo and Citigroup follow the same script: booming profits, muted consumer loss provisions, but a curious $500M spike in corporate reserves at JPMorgan.
- With 30-year mortgage rates at 7.4% and gas prices soaring, banks' sunny consumer outlook clashes with public sentiment and Citi's own $207M consumer reserve increase.
- Wall Street's new mantra is 'durable growth'—but the corporate vs. consumer reserve split smells like a hedge that Main Street's pain is just getting started.
Brief Summary
JPMorgan, Wells Fargo, and Citigroup all posted fat third-quarter earnings, with net income up anywhere from 6% to 16%. But the real story is the staggering disconnect: Jamie Dimon, the eternal pessimist, spent his earnings call bemoaning the deficit, sticky inflation, and global tensions, while his bank slashed consumer loan-loss reserves to a paltry $50 million—a 91% drop from a year ago. Wells Fargo echoed the sentiment, slowing provisions even as its loan book grew 11%.
Why This Matters
For the average American drowning in 7.4% mortgage rates and sky-high gas prices, this is a stark warning. Banks are betting your wallet is bulletproof, but they're quietly padding corporate reserves—suggesting they see trouble brewing in the business world, not in your credit card statement. The result? They're still borrowing from Peter (consumers) to pay Paul (shareholders), and when the music stops, you're likely holding the bag.