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Monday October 3, 2022



Delta Air Lines Posts Quarterly Results

Delta Air Lines (DAL) reported third quarter earnings on Wednesday, October 13. The major airline company reported its first profitable quarter since the pandemic, but its stock prices fell as the report indicated rising fuel costs may lead to a loss in the fourth quarter.

The company's revenue came in at $9.2 billion, which was above analysts' expectations of $8.4 billion. Revenue is down 27% from the $12.6 billion in revenue reported at this time pre-pandemic in 2019.

"Our September quarter marked an important milestone in our recovery, with our first quarterly profit since the start of the pandemic," said Delta CEO Ed Bastian. "Our revenues reached two-thirds of 2019 levels thanks to the industry-leading operational performance our people delivered through a busy summer, once again showing why they are the best in the business. While demand continues to improve, the recent rise in fuel prices will pressure our ability to remain profitable for the December quarter."

Delta posted earnings of 1.2 billion, or $1.90, per share for the quarter. At this time in 2019, the company reported net income of $1.5 billion.

The Atlanta-based airline's earnings report focused on comparable earnings figures between the years 2021 and 2019 as the industry recovers from the effects of the COVID-19 pandemic on travel. For the fourth quarter, the company expects passenger capacity to be restored to 80% of pre-pandemic levels. Revenue is expected to be 70% of that reported in 2019.

Delta Air Lines (DAL) shares ended the week at $41.02, down 4.6% for the week.

JPMorgan Chase Reports Earnings

JPMorgan Chase & Co. (JPM) posted third quarter earnings on Wednesday, October 13. The global financial institution reported earnings that exceeded analysts' expectations due to a reserve release.

JPMorgan Chase reported quarterly revenue of $30.44 billion. This was up from revenue of $29.94 billion reported at this time last year and above analysts' expectations of $29.8 billion.

"JPMorgan Chase delivered strong results as the economy continues to show good growth - despite the dampening effect of the Delta variant and supply chain disruptions," said JPMorgan Chase CEO Jamie Dimon. "We released credit reserves of $2.1 billion, as the economic outlook continues to improve and our scenarios have improved accordingly."

JPMorgan Chase reported net income of $11.69 billion or $3.74 earnings per share. This is up from net income of $9.44 billion at this time last year and above the $3.00 per share anticipated by analysts.

In the release, Dimon stated that earnings were $9.6 billion, not including the net reserve release and an income tax benefit. The bank does not consider the $2.1 billion reserve release which was set aside at the beginning of the pandemic to be part of its core or recurring profits. The investment side of JPMorgan brought in $3.0 billion, up 45%, with fees up 52%, due to a surge in Mergers and Acquisitions along with strong performance in Initial Public Offerings.

JPMorgan Chase & Co. (JPM) shares closed at $166.61, down 2.4% for the week.

Domino's Pizza Serves Up Earnings

Domino's Pizza, Inc. (DPZ) released its latest quarterly earnings on Thursday, October 14. The restaurant company, which sells a global average of 3 million pizzas a day, reported strong earnings.

Revenue came in at $997.99 million during the third quarter. This was up from revenue of $967.72 million during the same quarter last year.

"We are pleased with our results this quarter, with robust store and sales increases internationally, while rolling over our highest quarter of 2020 in the U.S.," said Domino's CEO Ritch Allison. "On a two-year basis, our U.S. same store sales were up 15.6% over the 2019 baseline, with our international same store sales up 15.0% during that time, marking significant growth in our brand. We are proud of our franchisees who continue to focus on providing great products at a great value to our customers around the world."

Domino's reported net income of $120.4 million, or $3.24 earnings per share. This was up from $99.1 million in net income, or $2.49 earnings per share, last year at this time.

The 3.1% increase in the company's revenue was primarily attributed to higher global retail sales due to international same store sales growth. The 21.5% increase in the company's net income was attributed to higher income from global franchises. In the United States, same store sales decreased 1.9%.

Domino's Pizza, Inc. (DPZ) shares ended the week at $454.91, down 4.8% for the week.

The Dow started the week at 34,724 and closed at 35,295 on 10/15. The S&P 500 started the week at 4,385 and closed at 4,471. The NASDAQ started the week at 14,540 and closed at 14,897.

Treasury Yields Fluctuate Amid Rising Prices and High Demand

Yields on U.S. Treasurys dropped midweek as reports revealed higher-than-expected consumer price inflation, but lower-than-expected wholesale inflation. Yields rose Friday morning after the release of a stronger-than-anticipated retail sales report.

On Wednesday, bond yields dipped after the Labor Department reported the consumer price index (CPI) rose 0.4% for the month of September, higher than the 0.3% expected by analysts. Yields continued to drop on Thursday after the release of the producer price index revealed wholesale prices increased 0.5% for the month of September, just below the 0.6% anticipated by analysts.

"This is one more data point to say, 'Fed, your trying to convince us that inflation is transitory is just not believable,'" said chief investment officer at Crossmark Global Investments Bob Doll of the CPI numbers. "If you know anybody who doesn't have to live somewhere, doesn't eat any food and doesn't use energy, then inflation is maybe not a particular problem. But come on."

The 10-Year Treasury note opened the week of October 11 at 1.613%, hit a low of 1.511% on Thursday, and was at 1.569% during trading on Friday morning. The 30-year bond opened the week at 2.166%, reached a low of 2.013% on Thursday, and was at 2.064% on Friday morning.

On Friday, the Census Bureau reported retail sales increased by 0.7% during the month of September. Analysts had expected spending to wane as supply chain issues, the Covid-19 Delta variant and an end to enhanced government benefits would ostensibly keep consumers at bay. However, consumer spending grew 13.9% from this time last year. Part of that increase reflects the higher prices for goods as retail sales numbers are not adjusted for inflation.

"Students heading back to school and workers returning to the office are likely the catalysts for the increased retail sales," said national leader of BDO's retail and consumer products practice Natalie Kotlyar. "People who are back to working in a downtown office may be taking more shopping trips on their lunch break or after work. With school back in session and many teens vaccinated, parents may also be more comfortable allowing their teens to take shopping trips to the mall."

The 10-year Treasury note yield closed at 1.58% on 10/15, while the 30-year Treasury bond yield was 2.05%.

30-Year Mortgage Rates Climb Above 3%

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 14. Rates rose along with the national rate of inflation.

This week, the 30-year fixed rate mortgage averaged 3.05%, up from last week's average of 2.99%. Last year at this time, the 30-year fixed rate mortgage averaged 2.81%.

The 15-year fixed rate mortgage averaged 2.30% this week, up from 2.23% last week. At this time last year, the 15-year fixed rate mortgage averaged 2.35%.

"The 30-year fixed-rate mortgage rose to its highest point since April," said Freddie Mac's Chief Economist Sam Khater. "As inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing."

Based on published national averages, the savings rate was 0.06% as of 9/20. The one-year CD averaged 0.14%.

Published October 15, 2021
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