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Lower Interest Income to Mar PNC Financial (PNC) Q3 Earnings

Lower Interest Income to Mar PNC Financial (PNC) Q3 Earnings

PNC Financial PNC is scheduled to report third-quarter 2020 earnings, before the opening bell, on Oct 14. The company’s revenues and earnings are likely to have witnessed a year-over-year decline.

In the last reported quarter, the company reported loss on higher provisions due to the coronavirus pandemic’s crippling impact on the economy. Lower revenues on decline in fee income and decrease in loans were undermining factors.

The company’s activities in the to-be-reported quarter were adequate to win analysts’ confidence. As a result, its Zacks Consensus Estimate for earnings of $1.99 has moved up 11.8% in the past seven days. Nevertheless, the figure indicates a 32.3% decline from the year-ago reported figure. The consensus estimate for sales is pegged at $3.96 billion, suggesting a decline of 11.8% year over year.

The PNC Financial Services Group, Inc Price and EPS Surprise

The PNC Financial Services Group, Inc Price and EPS Surprise

The PNC Financial Services Group, Inc price-eps-surprise | The PNC Financial Services Group, Inc Quote

Now let’s discuss the factors that are likely to have impacted the company’s third-quarter results:

Lower Net Interest Income (NII): The Fed continued to keep interest rates at near zero in order to shield the U.S. economy from the coronavirus outbreak-related mayhem. This is likely to have substantially hurt net interest margin and NII.

Also, per the Fed’s latest data, the loan balance is likely to have been affected by a fall in commercial & industrial and consumer loans on a sequential basis.

The Zacks Consensus Estimate for average interest earning assets of $397.3 billion for the quarter indicates 1.2% sequential fall. The consensus estimate for net interest income is $2.47 billion, suggesting 2.1% fall sequentially.

Notably, management expects average loans to decline in the low-single-digit range on a sequential basis in the third quarter and NII to be down 1%.

Muted Non-Interest Revenues: The quarter

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NASCAR’s upcoming economic model spurs interest in new teams

NASCAR’s upcoming economic model spurs interest in new teams

CHARLOTTE, N.C. (AP) — Justin Marks tried three times to buy the NASCAR equivalent of a franchise license that guarantees a car a spot in each week’s race. Twice he was outbid, he said, and a third deal fell apart.

Without that charter, Marks had almost no chance to get his team on track in 2021. He ultimately had to lease one from another organization to become the second new NASCAR owner to announce a team in the last month.

As NASCAR plans for the 2022 cost-cutting introduction of the “NextGen” new car, the demand for charters has soared. At least three have been sold since August — ownership records of each charter are not updated by NASCAR until the start of a new year — and the bidding process has been frenzied.


“It was much more difficult for us than I anticipated it being,” Marks said this week after announcing Trackhouse Racing. “There are a lot of charter buyers out there and unfortunately there are not a lot of charter buyers out there that are trying to build championship-caliber race teams.”

The environment has dramatically changed in the three years since Furniture Row Racing folded its team and put its championship-winning charter up for sale. Barney Visser struggled to find even a single bidder and Spire Sports + Entertainment, the agency Visser was using to broker a sale, gambled and bought it themselves.

The charter system debuted in 2016 to create tangible worth for team owners who in the previous independent contractor market had only inventory, equipment and possibly real estate to show for their NASCAR participation. If they went out of business, there was little recourse to recover any investments.

The 36 charters guarantee entry into every Cup race, and therefore a portion of the purse. The charters

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Years of low interest rates made the current economic crisis worse, Fed’s Rosengren says

Years of low interest rates made the current economic crisis worse, Fed’s Rosengren says

  • Boston Fed President Eric Rosengren said years of low interest rates that encouraged risk-taking are making the current economic downturn worse.
  • He specifically cited “low rates persisting for an extended period even after the economy has made progress in the recovery” that can create problems.



Eric S. Rosengren wearing a suit and tie smiling and looking at the camera: The Federal Reserve Bank of Boston's President and CEO Eric S. Rosengren


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The Federal Reserve Bank of Boston’s President and CEO Eric S. Rosengren

Years of low interest rates led to excessive risk taking in commercial real estate and will make the current economic downturn even more severe, Boston Federal Reserve President Eric Rosengren said Thursday.

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The central bank official said he expects a wave of defaults and bankruptcies to hit that will aggravate an unemployment problem that has hit lower-wage workers disproportionately.

Regulatory authorities, he added, should have been able to see conditions building up that would make any unexpected crisis worse.

“Clearly a deadly pandemic was bound to badly impact the economy,” Rosengren said. “However, I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult.”

The Fed has been at the center of the coronavirus pandemic crisis response, slashing already-low interest rates and implementing a slew of programs to ensure market functioning and lend money to areas of the economy in need.

In recent days, it has adapted an even more dovish approach to monetary policy, pledging not to raise rates even if inflation runs above the Fed’s preferred 2% target.

Former Goldman Sachs CEO Lloyd Blankfein on monetary policy

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A loose Fed also often finds itself the target during times of excess, like the financial crisis and the dotcom bubble. Rosengren’s remarks reflected concern about the consequences of the low rates that

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Lufax Holdings Looks To Capitalize On Ant Group’s Fintech Interest With An NYSE Listing

Lufax Holdings Looks To Capitalize On Ant Group’s Fintech Interest With An NYSE Listing

Key News

Asian equities were largely higher on light volumes, though the 50 stock Hang Seng Index was off a touch/-0.2% after rising off its intra-day low of -0.9%. The broader Hang Seng Composite gained +0.3% and the 204 Chinese companies listed in Hong Kong within the MSCI
MSCI
China All Shares Index gained +0.35%. Volumes have been anemic during the Chinese holiday, though things should pick up tomorrow as Shanghai & Shenzhen come back online. US-listed Chinese A-share ETFs are anticipating a healthy +3% open for the Mainland market tonight.

There was another quiet night in Hong Kong as the US focuses on the election and stimulus. Hong Kong volume leaders were Alibaba
BABA
Hong Kong, which gained +0.49%, Tencent, which was unchanged, Xiaomi, which fell -3.92%, Meituan Dianping, which fell -0.37%, BYD, which rose +5.94%, Sunny Optical, which rose +2.87% on the coming Apple
AAPL
release, Ping An Insurance, which gained +0.38% after Lufax Holdings, backed by Ping An Insurance, filed for a US listing, and JD.com Hong Kong, which was off a James Bond -0.07%. Macau gaming stocks were off as the Golden Week was less than Golden, based on weak visitor data due to coronavirus travel restrictions. Things should pick up tonight with Stock Connect, Shanghai, and Shenzhen reopening, though I predict volumes will really pick up next week. 

Mid-day yesterday, we had the announcement that the US would target Chinese mobile

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