Bank of England Monetary Policy Decision

Business affected by uncertainties

“Business investment is being affected by uncertainties around Brexit, but it continues to grow at a moderate pace, supported by strong global demand, high rates of profitability, the low cost of capital and limited spare capacity…. Uncertainties associated with Brexit are weighing on domestic activity, which has slowed even as global growth has risen significantly.”

Rates raised, QE continues

“…the MPC voted by a majority of 7-2 to increase Bank Rate by 0.25 percentage points, to 0.5%. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion. The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.”

Miscellaneous Quotes for Week to 10.20.2017

Janet Yellen, Fed Chair at the G30 summit 

US growing moderately 

“Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen…

Hurricanes to have modest long-term effect

“While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly…The hurricanes will likely result in some hit to GDP growth in the third quarter but a rebound thereafter, and smoothing through those movements, I’m expecting growth that continues to exceed potential in the second half of the year.”

Soft Inflation

“Inflation readings over the past several months have been surprisingly soft, however, and the 12-month change in core PCE prices has fallen to 1.3 percent….this year’s low inflation could reflect something more persistent than is reflected in our baseline projections. ”


Office of National statistics. UK

UK inflation at record high

“The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate was 2.8% in September 2017, up from 2.7% in August 2017….All else being equal, the depreciation of sterling seen in 2016 and particularly following the outcome of the EU referendum would increase the prices producers pay for imported goods….The inflation rate for a range of goods has, however, picked up since the start of the year and the overall rate in the UK is higher than in most other EU countries, including all of the larger western European nations.”


Mark Carney, Bank of England Governor on CNBC

It´s an adjustment period

“Its a period of adjustment, and we have been willing to tolerate inflation being an over the target, where in a relatively rare economy with having inflation higher than target among the major central banks, we are tolerating inflation being over target for longer in order to crowd in unemployment during a time of big adjustment in the uk economy.”

The world economy is growing

“The big picture here right now is the global economy is firing on most cylinders. We have 75% of the world economy growing above potential. The quality of that growth has gone up.”


Mario Draghi, ECB President via CNBC

On cryptocurrencies

“With anything that’s new, people have great expectations and also great uncertainty. Right now we think that especially as far as bitcoins and cryptocurrencies are concerned, we don’t think the technology is mature for our consideration… One of the lessons of the great financial crisis is that financial innovation, in this case it’s financial and technology innovation… should be embraced with lots of attention to its potential risks”


Steve Mnuchin, Treasury Secretary via Fortune

On Tax reform

“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done…To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done, you’re going to see a reversal of a significant amount of these gains.”

Johnson & Johnson (JNJ) Q3 2017

Dominic Caruso – EVP and Chief Financial Officer

They want a reform of the tax system

“To level the playing field with other industrialized countries, tax reforms should include three fundamental elements, a lower corporate income tax rate in line with other industrialized countries, the adoption of a modern, globally competitive International tax system allowing U.S. companies to manage their cash without tax penalty and of course greater incentives for innovation in the U.S”

Wells Fargo’s (WFC) 3Q17

Tim Sloan – President and Chief Executive Officer

The scandal continues to have an impact

“There is a little bit of impact on some municipalities they have put us on probation or just said they are not going to use as much for a period of time. Though we had some municipalities that have taken us off that because we’ve executed on everything we said we are going to execute over the last year….I can’t commit to you Matt that we’ve finished everything because things are still in progress but we are very far along but I think it’s also important to reinforce — our review of all of our policies, procedures, practices is going to continue for a long time meaning that we got to continue to ask more of ourselves everyday”

John Shrewsberry – Chief Financial Officer

On rates

“…the benefit from higher rates increased average loan yields 5 basis points in the quarter, the seventh consecutive quarter of increasing loan yields…We’ve not made material changes in rates paid on consumer and small business banking deposits within our retail bank with the majority of our peers also holding these rates steady. We have implemented some incremental deposits repricing for commercial and wealth and investment management customers as market rates have increased.”

Harley-Davidson’s (HOG) 3Q17

Matthew Levatich – President, Chief Executive Officer

Little residual tarnishing crossover between brand USA and American products

“…there’s actually a lot of really good research on this very topic generally that suggests that the connection between brand U.S.A., if you will, or political or foreign policy interpretations around the world versus American product brands and whether there is any sort of residual tarnishing crossing over, or whatever you might think, there doesn’t seem to be, and there’s some really very smart research on the topic that we’re paying a lot of attention to because clearly the Harley brand is inextricably linked with the ideals of America, which are freedom, independence and strength.

John Olin – Senior Vice President, Chief Financial Officer

The impact of hurricanes

“…the hurricanes adversely impacted the industry in Q3. While it is very difficult to isolate, we estimate the impact of the hurricanes accounted for approximately 1.5 to 2 percentage points of Harley Davidson’s retail sales decline during the quarter.”

Tight inventory levels

“when we look at shipments versus retail sales next year, there is an opportunity to ship in at a little bit higher rate just because of the way we’re taking the inventory out this year…..overall inventory levels will remain tight through the fourth quarter and into 2018.”

Calling the industry has been difficult

“I don’t know anyone that has called the industry right at this point. It’s an industry that has grown 28 out of 33 years, and there’s only been two periods in three decades where it’s been down – one was in the recession in 2009 and ’10, and then over the last two years here, so we’re doing our best to forecast it.”

Bank of America’s (BAC) Q3 2017

Brian Moynihan – Chairman and Chief Executive Officer

Moderate economic growth projected

“We expect moderate economic growth to continue this year and we expect the US to grow a little faster next year above 2% and outside of US is growing in the mid-3s.”

Consumers are spending

“in our consumer payments we are seeing consumer activity pickup. Consumers are spending, whether it is checks written, cash taken out of the ATM’s, P2P payments, and all the debit and credit cards, 5% more through the first nine months of 2017 than they did in the first nine months of 2016. That’s up faster growth rate than it has been in prior years.”

Optimism persists

“Our commercial clients continue to perform well. They continue to remain optimistic. They continue to look forward to continue implementation of a pro-growth agenda, particularly focused on meaningful tax reform. Housing starts home prices continue to remain on positive trends. Employment is strong and employers continue to search for skilled workers. So that leads to a solid atmosphere and we see no near-term indications of any change to it.”

Paul Donofrio – Chief Financial Officer

A rate hike would be beneficial

“If we get a late 4Q hike, as expected by the market, this should mostly benefit NII in Q1 2018. With respect to asset sensitivity as of 930 [ph] an instantaneous 100 basis point parallel increase in rates is estimated to increase NII by 3.2 billion over the subsequent 12 months. This is largely unchanged from June 30 and continues to be predominantly driven by our sensitivity to short-end rates.”

Miscellaneous Quotes for Week to 10.13.2017

Richard Thaler, Nobel Prize in Economics Winner on Bloomberg. (Here and here

“We all need a lot of humility, and especially about the economy…Surely it can’t be based on the certitude that there will be a massive tax cut, given the seeming inability of the Republican Congress to get their act together. So I don’t know where it’s coming from.”

Risky times

“We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping. I admit to not understanding it. I don’t know about you, but I’m nervous..”

David Bernier, Chief EU negotiator

Deadlock on Brexit Bill

“we have reached a state of deadlock which is very disturbing for thousands of project promoters in Europe and it’s disturbing also for taxpayers…We worked constructively. We clarified certain points. Without making massive steps forward””

LVMH (LVMHF) Q3 2017

Chris Hollis

Growth everywhere

“Organic revenue is up in the double digits across all of our business groups in the third quarter and nine-month period with the exception of Wines & Spirits.”

Jean-Jacques Guiony – CFO

But is not expected to continue in cognac

“…the type of growth we have had over the last two years, I would say is not something that we can replicate forever; the more normalized growth in volumes for cognac is more something like 3% to 4%, exceptionally 5% but nothing really more than that….we have had two tough years in terms of supply. We had hail in 2016 and we have drought in 2017. So, altogether, what we put in our sellers at cognac was lower than what we anticipated. So, all in all, this created a little bit of constraint for the business for the quarters to come I would say. It’s hard to quantify and to know exactly what will happen, but it’s pretty sure that the type of growth we have had for a number of quarters will not be replicated in the future.”

Price influence on growth negligible

“as in the preceding quarters, if not all but a big, big chunk of the growth was made of mix and volume numbers, the price increases were negligible. So the bulk of it was mix and volumes.”

But this may change next year

“…we will probably be able to pass limited price increases to customers. But as you know, we do it end of Q1, early Q2. So, it’s way too early to discuss. But obviously, we’ll think about it and that will be an element of our policy for next year.”

Delta Air Lines’ (DAL) Q3 2017 Earnings Call

Ed Bastian – CEO

Recovered quickly from hurricane irma

“We generates 6% topline growth, a 16% operating margin and $1.6 billion of operating cash flow while facing pressure from rising fuel prices and $120 million headwind from Hurricane Irma. We rebounded quickly from Irma and were the first airline to resume service in most of the key airports in Florida”

Glen Hauenstein – President

Businesses expected to increase corporate travel

“Based on advance bookings, leisure yield, and demand strength continues and we are seeing further improvements in business fares. Indeed our last survey of corporate travel managers showed more than 85% project their spend will be maintained or increased in the fourth quarter and into 2018. This is a 9 point improvement from last year’s numbers and the best fourth quarter result since our survey debuted in 2011. It is also consistent with the trend we’ve seen in our corporate contracted revenues where fares and volumes have recently been in positive territory concurrently for the first time in three years”.

Business and leisure travel outlook

“I think the transatlantic has been on the strength of business demand and really that plays to our strong suit, given our concentration in the business centers in Europe. Leisure has been a different story. It’s been more about incremental traffic and lower yields and I think that will continue through the fall and winter….Europe is coming out of a multi-year recession. US economy is strong and people are traveling for business, which plays to the strength of carrier that’s embracing the business model as opposed to the leisure model.”

Tesco’s (TSCDF) Q2 2018

Alan Stewart – CFO

Inflation is back in the UK

Moving to the headline results of our UK and Irish segment. We’ve seen positive like-for-like of 2.1% for the half. Market conditions have been challenging with the return of inflation, but we’ve been able to protect our customers from more of this pressure than others by working closely with our supplier partners.

Bad debts way below pre-crisis levels

“Our bad debt-to-asset ratio has increased slightly to 1.3% but remains well below pre-financial crisis levels of 3% to 4% and is something that we continue to monitor very closely.”

Dave Lewis – CEO

They have increased prices by less than the market

“we have to keep the ability to flex as we need to. But clearly, we inflated by 1% less than the market, so that’s sharped our pricing and we continue to look for opportunities how we can sharpen the pricing.