Company Notes Digest 10.12.17

Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

Earnings season just started to trickle, but it was still a light week for conference calls. The story remains largely the same as it has been for a while now. The global economy is strong.

The Macro Outlook:

The market environment has improved considerably in the past year

“Over the past year, the market environment has improved considerably. We’ve seen greater political stability in Europe. China is continuing to show economic strength, and after a long period of stagnation, we’re seeing consistent growth in Japan. Overall, the world has become much more resilient. However, large cash balances remain on the sidelines.” —Blackrock CEO Laurence Fink (Asset Management)

The consumer is healthy

“not just in the U.S. but as we look around the world we would rate the health of the consumer right now is pretty good…as you look across the world unemployment is low, employment is high. Probably the bigger challenge to the consumer or to the worker has been the lack of wage growth…And we’re beginning to see some of that and again that’s helping to the consumer.” —Citigroup CFO John Gerspach (Bank)

Business travel is strong

“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…Europe is coming out of a multi-year recession. US economy is strong and people are traveling for business” —Delta President Glen Hauenstein (Airlines)

Credit quality is so good it’s hard to believe

“although we absolutely expect at some point that we’re going to see normalization of credit, we haven’t seen that yet – I just want to make that clear. We are appropriately cautious and staring at everything, but we’re not seeing any deterioration or any thematic fragility in our portfolio that we’re concerned about at this point.” —JP Morgan CFO Marianne Lake (Bank)

“Obviously we are a long way or we’re a long way from the last credit cycle and so we’re always challenging ourselves in terms of where we are. But a lot of the signs we looked for in terms of the deterioration of the consumer I got to say right now, we just don’t see” —Citigroup CFO John Gerspach (Bank)

Some still see risk

“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.” —Nobel Prize Winner Richard Thaler (Economist)

Geopolitical tensions always lurk

“geopolitical tensions don’t seem to have weighed on growth at least as of yet, I don’t know how long that can continue. And while tax reform remains a question mark we do like the direction the administration is going in terms of regulation ” —Citigroup CEO Mile Corbat (Bank)

Tax reform is uncertain but it’s not a factor in most business decisions

“at this point [tax reform] is not front and center in the dialog we’re having with our clients about whether they should or shouldn’t do a strategic deal or take an action, so I would say it is neither holding up business nor spurring business, but that could change. So at this point, I’d say it’s a factor but not a driving factor, and that could change.” —JP Morgan CFO Marianne Lake (Bank)

There is still inflation; that hasn’t changed

“There is still inflation; that hasn’t changed…if at some point we determine that we can’t protect our level of profitability without resorting to some sort of price action, then we will take that step…But we didn’t do anything along those lines in the third quarter.” —Fastenal CEO Dan Florness (Industrial Distributor)


Brexit negotiations appear to have reached a deadlock

“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” —EU Chief Brexit Negotiator David Bernier (Government)


Banks are constantly under attack from a cyber security perspective

“not to diminish the importance of any individual breach or situation, is that we are honestly under constant attack, both in a more general side but also from a fraud perspective, and so while we always react and learn lessons from every individual situation, this is not the first breach nor will it be the last breach” —JP Morgan CFO Marianne Lake (Bank)

Full transcripts can be found at