Wells Fargo 1Q17 Earnings Call Notes

Tim Sloan

Became concerned about used car values starting last year

“We saw and became concerned about where used car values and where competitive pressures were going back to the middle of last year. We have been very transparent about that. And we think that we have gotten ahead of any significant issues. And that’s why you are seeing originations be down in the double-digits year-over-year. And that’s not just something that happened this quarter. It’s been the last few quarters. I don’t know exactly where auto losses are going to go. They certainly could go a bit higher. But I think that the changes and the decision that we made over last 6 months has reinforced kind of the long-term view of how we manage credit at this company.”

John Shrewsberry

Tax reform and stimulus are inflationary in an economy with full employment

“I think the market was discounting for a while what the possibility was of meaningful tax reform, some form of infrastructure stimulus. And if both of those things get dropped on an economy with relatively full employment, that’s inflationary. And if that happens, there is a very reasonably expectation of higher long-term rates. ”

Stimulus still hasn’t occured so long term rates have fallen

“So, because that stimulus hasn’t occurred, it still may, but certainly is lower probability today than it was in November and December. They were back down in lower 10-year rates, lower mortgage rates than we were there for a while. And now we have to ask ourselves again, are we going to be lower for a while, lower for longer or are we still awaiting for a shoe to drop in for there to be a big backup in rates? “