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3 takeaways from big banks’ latest financial reports.

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3 takeaways from big banks’ latest financial reports.

Buyers have been sifting by the primary batch of firm earnings this quarter to observe the probabilities of a recession, the state of client spending and the outlook for the markets. Studies from the nation’s greatest banks firstly of “earnings season,” as Wall Road calls it, despatched blended indicators.

Second-quarter earnings in any respect the banks have been down from a 12 months earlier. The final two to open their books have been Financial institution of America, the place quarterly revenue fell by a 3rd, and Goldman Sachs, the place revenue fell by half.

However in some circumstances, the decline in revenue wasn’t as extreme as analysts anticipated. Shoppers continued to spend and borrow. Markets have been risky, however there was cash to be made in buying and selling. And financial institution leaders struck a tone of warning, however none thought a recession was underway.

“It’s a difficult market, however I believe you will need to say that it’s not 2008 sophisticated,” James Gorman, Morgan Stanley’s chief govt, informed analysts.

Financial institution chiefs mentioned they anticipated the financial system to gradual however not slip into outright contraction.

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“Nothing within the knowledge that I see indicators that the U.S. is on the cusp of recession,” Jane Fraser, Citigroup’s chief govt, mentioned on a convention name. “Whereas a recession might certainly happen, it’s extremely unlikely to be as extreme as others we now have seen.”

Executives at JPMorgan Chase additionally mentioned there have been no clear indicators of a recession but. Retail banking clients are nonetheless spending cash on discretionary purchases like journey and eating places, they mentioned.

“We’ve appeared loads very rigorously into our precise knowledge,” Jeremy Barnum, JPMorgan’s chief monetary officer, mentioned on a name with reporters. “There may be basically no proof of precise weak point.”

Michael Santomassimo, Wells Fargo’s finance chief, mentioned the financial institution’s administration was making ready for a variety of eventualities however flagged that “issues will in all probability worsen.”

Lending was up at practically all of the banks, in a optimistic signal for the financial system. Shoppers and firms elevated their borrowing from the most important banks by a median of 6 % within the second quarter in contrast with the identical interval final 12 months.

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The most important positive aspects have been in company loans, which rose practically 20 % from a 12 months earlier at each JPMorgan and Financial institution of America. Dwelling mortgages slowed within the quarter, a mirrored image of upper rates of interest, however have been nonetheless up at a lot of the banks. And for essentially the most half, shoppers and enterprise clients continued to pay their money owed on time. As an illustration, at JPMorgan, simply 0.5 % of shoppers’ bank card loans have been late by 90 days or extra.

Practically all of the banks, citing financial uncertainty, mentioned they anticipated a rise within the variety of debtors, notably people, who would fall behind on their loans. The six greatest banks collectively anticipate practically $2 billion extra in mortgage losses over the approaching 12 months than they did three months in the past.

Most traders misplaced cash of their funding accounts within the second quarter, however market volatility was a boon for the banks. That was notably true at Goldman Sachs, the place buying and selling income rose 31 %, outpacing its rivals. Citigroup additionally reported better-than-expected outcomes pushed by elevated buying and selling commissions and market positive aspects.

Within the wake of the monetary disaster a decade in the past, the massive banks, pushed partially by regulators and modifications within the regulation, vowed to draw back from making dangerous bets out there. Now, a lot of them are producing an rising portion of their income from buying and selling, although banks nonetheless say they’re taking fewer dangers than they did earlier than.

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Video: How Staffing Shortages Have Plagued Newark Airport

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Video: How Staffing Shortages Have Plagued Newark Airport

What’s causing major flight delays and disruptions at Newark Liberty International Airport? Niraj Chokshi, a reporter at The New York Times covering transportation, explains how a staffing shortage has contributed to the chaos and what’s being done to address it.

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L.A. council members were told a vote could violate public meeting law. They voted anyway

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L.A. council members were told a vote could violate public meeting law. They voted anyway

When Los Angeles City Council members took up a plan to hike the wages of tourism workers this week, they received some carefully worded advice from city lawyers: Don’t vote on this yet.

Senior Assistant City Atty. Michael J. Dundas advised them on Wednesday — deep into their meeting — that his office had not yet conducted a final legal review of the flurry of last-minute changes they requested earlier in the day.

Dundas recommended that the council delay its vote for two days to comply with the Ralph M. Brown Act, the state’s open meeting law.

“We advise that the posted agenda for today’s meeting provides insufficient notice under the Brown Act for first consideration and adoption of an ordinance to increase the wages and health benefits for hotel and airport workers,” Dundas wrote.

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The council pressed ahead anyway, voting 12-3 to increase the minimum wage of those workers to $30 per hour by 2028, despite objections from business groups, hotel owners and airport businesses.

Then, on Friday, the council conducted a do-over vote, taking up the rewritten wage measure at a special noon meeting — one called only the day before. The result was the same, with the measure passing again, 12-3.

Some in the hotel industry questioned why Council President Marqueece Harris-Dawson, who runs the meetings, insisted on moving forward Wednesday, even after the lawyers’ warning.

Jackie Filla, president and chief executive of the Hotel Assn. of Los Angeles, said the decision to proceed Wednesday gave a political boost to Unite Here Local 11, which represents hotel workers. The union had already scheduled an election for Thursday for its members to vote on whether to increase their dues.

By approving the $30 per hour minimum wage on Wednesday, the council gave the union a potent selling point for the proposed dues increase, Filla said.

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“It looks like it was in Unite Here’s financial interest to have that timing,” she said.

Councilmember Monica Rodriguez, who opposed the wage increases, was more blunt.

“It was clear that Marqueece intended to be as helpful as possible” to Unite Here Local 11, “even if it meant violating the Brown Act,” she said.

Harris-Dawson spokesperson Rhonda Mitchell declined to say why her boss pushed for a wage vote on Wednesday after receiving the legal advice about the Brown Act. That law requires local governments to take additional public comment if a legislative proposal has changed substantially during a meeting.

Mitchell, in a text message, said Harris-Dawson scheduled the new wage vote for Friday because of a mistake by city lawyers.

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“The item was re-agendized because of a clerical error on the City Attorney’s part — and this is the correction,” she said.

Mitchell did not provide details on the error. However, the wording on the two meeting agendas is indeed different.

Wednesday’s agenda called for the council to ask city lawyers to “prepare and present” amendments to the wage laws. Friday’s agenda called for the council to “present and adopt” the proposed changes.

Maria Hernandez, a spokesperson for Unite Here Local 11, said in an email that her union does not control the City Council’s schedule. The union’s vote on higher dues involved not just its L.A. members but also thousands of workers in Orange County and Arizona, Hernandez said.

“The timing of LA City Council votes is not up to us (sadly!) — in fact we were expecting a vote more than a year ago — nor would the precise timing be salient to our members,” she said.

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Hernandez said Unite Here Local 11 members voted “overwhelmingly” on Thursday to increase their dues, allowing the union to double the size of its strike fund and pay for “an army of organizers” for the next round of labor talks. She did not disclose the size of the dues increase.

Dundas’ memo, written on behalf of City Atty. Hydee Feldstein Soto, was submitted late in Wednesday’s deliberations, after council members requested a number of changes to the minimum wage ordinance. At one point, they took a recess so their lawyers could work on the changes.

By the time the lawyers emerged with the new language, Dundas’ memo was pinned to the public bulletin board in the council chamber, where spectators quickly snapped screenshots.

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Epic Games says Apple blocked 'Fortnite' in U.S. app store

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Epic Games says Apple blocked 'Fortnite' in U.S. app store

Epic Games on Friday said that its popular game “Fortnite” will be offline on Apple devices because the iPhone maker blocked its recent app update.

The dispute comes just weeks after Epic Games and other app developers cheered a judge’s ruling that limited the commissions that Apple makes through third party apps distributed through its app store.

Apple received a scathing rebuke from U.S. District Judge Yvonne Gonzalez Rogers, who sided with Epic Games, which alleged that the Cupertino, Calif., tech giant ran afoul of an order she issued in 2021 after finding the company engaged in anticompetitive behavior.

Under the ruling, Apple can’t collect commissions on purchases U.S. customers make through links inside iPhone apps that direct them to outside websites. Developers, which make money by selling digital goods and services via their apps and games, want to avoid giving Apple a cut of their revenue by sending customers to other websites.

“That [Apple] thought this court would tolerate such insubordination was a gross miscalculation,” the judge wrote in her ruling.

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Many developers applauded the court’s ruling, which limits what they call the Apple tax, and said they would pass on the savings to customers.

Epic Games’ Chief Executive Tim Sweeney earlier this month said “Fornite” would return to the App Store in the U.S. and possibly worldwide if Apple extends “the court’s friction free, Apple tax-free framework” globally. But on Friday, the “Fortnite” X account said that Apple blocked its submission.

“Now, sadly, Fortnite on iOS will be offline worldwide until Apple unblocks it,” the account posted. Epic Games did not return requests for further comment.

Apple said on Friday that it asked that “Epic Sweden resubmit the app update without including the U.S. storefront of the App Store so as not to impact Fortnite in other geographies.”

“We did not take any action to remove the live version of Fortnite from alternative distribution marketplaces,” Apple said in a statement.

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Rob Enderle, principal analyst with advisory services firm Enderle Group, said the recent ruling applies to the U.S. and Apple wants to retain the rest of its control worldwide. Apple makes significant money through apps.

“Apple is using their … strength to prevent ‘Fortnite’ from benefiting globally from their core win,” Enderle said.

Epic Games filed its lawsuit against Apple in 2020. “Fornite” generates revenue by letting people buy digital goods, such as “skins,” in the game, and Epic wanted to let users buy items outside the Apple system to avoid the company’s commission.

While the judge ruled that Apple did not have a monopoly in the mobile gaming market, the court ordered Apple to let app developers put links in its apps so customers could make outside purchases and bypass the company’s commission fee. Apple, however, defied the order, the court said.

Apple limited the ways that developers could communicate with its customers about out-of-app purchases and used wording that discouraged users from clicking on those links, the judge wrote. Apple would charge a commission fee for any goods or services purchased within seven days of a consumer clicking on a link that took them out of the app, the ruling said.

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Apple is appealing the ruling and has said it strongly disagreed with the judge’s decision.

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