1. Big banks: New York might be the financial capital of the world, but China is home to the planet’s mightiest banks.
The top four banks in the world are from China, according to the latest annual rankings by S&P Global Market Intelligence.
Despite the trade war and currency troubles, China’s “Big Four” banks grew their total assets by 1% in 2018 to $13.8 trillion, S&P said.
The list is led by Industrial & Commercial Bank of China, which retained its title as the world’s biggest bank. ICBC is the only lender that has amassed more than $4 trillion in assets — or roughly the size of Citigroup (C) and Wells Fargo (WFC) combined.
The next three biggest Chinese banks are each north of $3 trillion: China Construction Bank, Agricultural Bank of China and Bank of China. All four banks are state-owned.
American banks have only gotten bigger since the financial crisis, but they’ve still got some growing to do to catch up to their peers in China.
Just two US banks — JPMorgan Chase (JPM) and Bank of America (BAC) — crack the top 10 in S&P’s rankings of the world’s largest banks. JPMorgan, which sports $2.6 trillion in assets, cemented its role as the king of American banks Friday by posting record profit and revenue.
Wells Fargo, on the other hand, continues to struggle to move past two-and-a-half years of scandal. Citigroup (C) has surpassed Wells Fargo to become the No. 3 bank in the United States by assets.
Big banks will be in the spotlight again this week as earnings season continues.
Goldman Sachs (GS) and Morgan Stanley (MS)are under pressure to show their trading arms withstood the tranquility in global financial markets that started 2019.
While excess volatility like the storms that struck Wall Street in late 2018 can punish investment banks, a lack of turbulence can hurt as well. Stock trading often dries up when volatility vanishes, sapping Wall Street firms of lucrative trading fees.
Consumer banks, on the other hand, are navigating two other forces.
The big positive is the health of American households. JPMorgan CEO Jamie Dimon credited “robust” consumer spending with driving his bank’s record quarter. Loans and deposits grew at JPMorgan and Dimon cheered rising employment and wages.
Spending by consumers should pad the results of Citi, Bank of America, US Bancorp (USB), BB&T (BBT) and M&T Bank (MTB), all of which are set to report earnings this week.
But investors will be listening nervously for signs that banks are getting hurt by the gyrations of interest rates.
Wells Fargo spooked Wall Street on Friday by warning of a drop in net interest income — how much banks make from lending minus what they pay on interest. That key source of profitability falls when the yield curve flattens.
The yield curve, the gap between long and short-term rates, evaporated in recent months because of global growth worries and bets that the Federal Reserve will have to cut interest rates.
2. Boeing’s (BA) 737 Max crisis: United Continental Holdings (UAL) reports earnings Tuesday. Investors may be looking to see whether the airline has anything to say about how issues with Boeing’s (BA) 737 Max have affected United’s business. United doesn’t have any Max 8s — the type of plane involved in two fatal crashes since October. But it does have more than a dozen Max 9s, which are a larger version of the Max 8.
Delta (DAL), the only major US airline that doesn’t fly any 737 Max jets, reported solid earnings last week. But executives said that factor had little impact on the airline’s market share. Boeing, meanwhile, recently released data that showed airlines are holding off on orders for the 737 Max.
3. Netflix (NFLX) has new competition: Wall Street loved Disney’s new streaming service, which debuts in November and will cost roughly half as much as a standard Netflix (NFLX) subscription. This week, Netflix (NFLX) will have a chance to respond when it reports earnings Tuesday. Last quarter, the company announced that it would raise its monthly fees.
4. PepsiCo (PEP)’s new CEO hits his stride: When PepsiCo (PEP) reports its first quarter earnings Wednesday, investors will have a chance to see how CEO Ramon Laguarta is executing his vision for the company.
Laguarta stepped into the role in October, and was able to share good news during the company’s fourth quarter earnings call: “We met or exceeded each of the financial targets we outlined at the beginning of the year.” Laguarta also said that he’d spent his first four months as chief executive figuring out ways to improve the business. His plan? To accelerate revenue growth by strengthening and expanding PepsiCo’s portfolio and packaging. Investors seem to be pleased so far. Shares of the company have popped more than 10% so far in 2019.
5. US Retail sales: The Census Bureau reports retail sales for March on Thursday. Wall Street will look to the data to see how consumers are feeling about the economy and which retailers stand to benefit.
6. Coming this week:
Monday -—- Aphria (APHA), Citigroup, Goldman Sachs, M&T Bank earnings; US tax day
Tuesday — Bank of America, BlackRock (BLK), Johnson & Johnson (JNJ), Netflix, United Continental Holdings earnings
Wednesday — PepsiCo, Morgan Stanley earnings; Fed Beige Book
Thursday — American Express (AXP), Skechers earnings; US retail sales
Friday — US markets are closed
– CNN Business’ Jill Disis, Nathaniel Meyersohn and Danielle Wiener-Bronner contributed to this report.
