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Bank of America joins peers in improving economic outlook

Bank of America joins peers in improving economic outlook

A stabilising US economy helped Bank of America report a bounce in third-quarter earnings, as credit costs fell towards pre-pandemic levels.

Net income of $4.9bn, or 51 cents per share, compared with $3.5bn in the second quarter, and $5.8bn in the same period in 2019. Wall Street analysts had expected 49 cents a share.

The key factor in the rebound was a big decline in provision for bad loans, at $1.4bn, down from $5.1bn the quarter before, following a trend set by JPMorgan Chase and Citigroup when they reported results on Tuesday.

Total revenue at the bank, at $20.3bn, was slightly short of what analysts had expected, and reflected continued pressure on margins as a result of falling interest rates. Net interest margin — the difference between the bank’s funding costs and its lending yields — was 1.7 per cent in the quarter, down from 2.4 per cent the year before.

The bank’s capital markets operations showed softer growth than JPMorgan and Citigroup, with fixed-income trading revenues increasing slightly from the year before and equities trading rising by 6 per cent. Investment banking fees were up 15 per cent from the year before.

BofA shares have fallen by 29 per cent year to date, slightly outperforming US banking indices.

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Oil Dips Near $40 With IEA Warning of Fragile Market Outlook

Oil Dips Near $40 With IEA Warning of Fragile Market Outlook

(Bloomberg) — Oil slipped near $40 a barrel in New York as the IEA cautioned on a fragile outlook and Russia indicated OPEC+ may stick with its current plans to lift output.

The group’s plans to boost production in January will leave the market in a precarious balance, and potentially unable to handle higher supply from elsewhere or a drop in demand, the International Energy Agency said. Russia’s energy minister said his nation expects to be able to gradually raise production without harming the market.

Though prices edged lower, there were bright spots. A Chinese mega-refiner is snapping up barrels of Middle Eastern crude to feed trial runs of its expanded plant. At the same time India’s refiners have cranked up processing to meet higher demand during a festive period.



graphical user interface: WTI close to 50-, 100- and 200-day moving averages


© Bloomberg
WTI close to 50-, 100- and 200-day moving averages

A lot of traders’ attention is turning to plans by OPEC+ to raise supply next year in line with its agreement earlier this year. While some producers inside the group are said to be having doubts, the United Arab Emirates and now Russia have said that, for the time being, the group will proceed as scheduled. Saudi Arabian Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin on Tuesday urged the alliance to comply with agreed cuts as virus infections rise again.

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“OPEC+ could provide a silver bullet by not tapering cuts at the start of next year as planned,” said PVM Oil Associates analyst Stephen Brennock. “But such a proposition will be hard to swallow by some of the group’s members.”

Prices
West Texas Intermediate for November delivery fell 0.4% to $40.05 a barrel at 12:10 p.m. London timeBrent for December settlement lost 0.2%, to $42.38

Despite its cautionary outlook, the IEA said that the

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Stock market outlook switches to bullish as S&P 500 breaks through a barrier

Stock market outlook switches to bullish as S&P 500 breaks through a barrier

LAWRENCE G. MCMILLAN



a group of cattle standing on top of a grass covered field


© AFP via Getty Images


It appeared Sept. 23 that the bears had control of the stock market.

But they fumbled it badly.

Beginning with a modest oversold rally Sept. 24, the broader market has staged a strong advance — backed by some of the widest breadth in a while. Now the S&P 500 Index (SPX) has broken out over what had been resistance around 3,425-3,430 points. That has changed the S&P 500’s chart’s designation to “bullish” (in my opinion), and the next target is the all-time highs at 3,588. A reversal back below 3,400 could alter this bullish outlook, but that doesn’t appear likely.



chart


Equity-only put-call ratios have rolled over, and so to the naked eye, this cancels out their recent sell signals. However, they are still on “sell,” according to the computer-analysis programs that we employ. The computer is using a statistical average, and by that measurement, there are still some very low numbers coming off the 21-day moving average.

There are even lower numbers coming on right now, as call buying has been huge over the past week or so. The problem is, we are not getting “average” readings, and until we do, the sell signals should be held in abeyance.

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G20 to say economic outlook less negative, vow to sustain, strengthen support if needed

G20 to say economic outlook less negative, vow to sustain, strengthen support if needed

BRUSSELS (Reuters) – The world’s financial leaders will say on Wednesday that the outlook for the pandemic-ravaged global economy is less negative as steps already taken are paying off, and will vow to do more if needed to support the recovery, their draft statement said.



a close up of a green building: FILE PHOTO: A man on a bicycle rides past containers at an industrial port in Tokyo


© Reuters/Kim Kyung Hoon
FILE PHOTO: A man on a bicycle rides past containers at an industrial port in Tokyo

Finance ministers and central bankers from the world’s 20 biggest economies will hold virtual meeting on Wednesday to discuss the main global economic challenges as the COVID-19 pandemic will cause a global economic contraction this year.

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“The outlook is less negative with global economic activity showing signs of recovery as our economies have been gradually reopening and the positive impacts of our significant policy actions started to materialize,” the G20 financial leaders’ draft statement, seen by Reuters, said.

“We will sustain and strengthen as necessary our policy response, considering the different stages of the crisis, to secure a stable and sustainable recovery,” it said.

The G20 financial leaders, who have clashed in the past about the international trade — a key motor of global growth — said they would not set up new barriers to it.

“We will continue to facilitate international trade, investment and to build resilience of supply chains to support growth, productivity, innovation, job creation and development,” the draft said.

(Reporting by Jan Strupczewski)

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AM Best Assigns Stable Outlook to Indonesia’s Non-Life Insurance Market

AM Best Assigns Stable Outlook to Indonesia’s Non-Life Insurance Market

Despite a bleak macroeconomic picture, Indonesia’s non-life insurance market is well-diversified and underpinned by solid capitalisation, supporting a stable outlook assigned to the segment, according to a new AM Best report.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Indonesia Non-Life Insurance,” states that the non-life insurance market’s overall robust return on equity, supported by stable historical underwriting performance and strong balance sheet fundamentals, along with good government support including infrastructure plans and economic stimulus, are factors in the stable outlook.

The Indonesia non-life insurance market expanded by 14% year over year, to IDR 79.7 trillion (USD 5.4 billion) in 2019 from IDR 69.9 trillion (USD 4.9 billion) in the previous year, supported mainly by strong growth in credit insurance. Gross premium written (GPW) for credit insurance, the market’s third largest business line, increased by 86.2% to IDR 14.6 trillion in 2019. Property insurance, the largest business segment, also posted solid GPW growth of 9.7% to IDR 20.9 trillion. However, motor insurance GPW recorded muted growth of 0.3%.

AM Best believes that the non-life market in Indonesia benefits from a good business mix that will help to cushion any negative impact from the COVID-19 pandemic. Unlike other markets, which feature motor and health as the largest lines of business, Indonesia’s non-life segment is dominated by property and motor insurance, while credit, personal accident and health lines account for significant portions of total non-life GPW. Collectively, these five lines make up over 80% of the country’s non-life insurance premiums.

However, the decline in economic activity has had a direct impact on the non-life insurance segment. Non-life GPW in the first half of 2020 declined by 6.1% year over year, with the steepest falls in premiums were seen in the property and motor lines of business. Property insurance GPW

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