Finance
We’re not headed for another global financial crisis, top UBS economist says after recession warning
Despite indicators like U.S. credit card debt pointing toward financial and economic pressures, another global financial crash is not imminent, UBS chief U.S. economist Jonathan Pingle believes.
U.S. credit card debt soared to $1.08 trillion in the third quarter of 2023, data from the Federal Reserve Bank of New York showed earlier this month. This has sparked concerns about what rising debt levels, brought on at least in parts by higher prices, could mean for the overall economy.
However, Pingle told CNBC’s Joumanna Bercetche on Wednesday that it is difficult to view the data as a systemic risk.
“I don’t think we’re facing the next GFC [global financial crisis],” he said on the sidelines of the UBS European Conference.
Credit tightening does play a role when it comes to the lag of Federal Reserve monetary policy filtering through to the economy, Pingle suggested. “We are still waiting to see those credit headwinds dampen activity in 2024,” he said.
Credit tightening tends to precede loan growth by several quarters, so the full impact is not yet clear, he explained.
Several other factors also come into play, Pingle noted. This includes concerns about regulation in the wake of the collapse of Silicon Valley Bank, which raised alarms about the health and stability of the banking sector and prompted a crisis in regional banking, and “rapid” interest rate hikes, he said.
The Federal Reserve began hiking interest rates in March 2022 in an effort to ease inflation and cool the economy. Eleven rate hikes have been implemented since then, with the target range for the fed funds rate rising from 0%-0.25% to 5.25%-5.5%.
The Fed chose to leave rates unchanged at both of its last two meetings, and Tuesday’s lower-than-expected reading of the October consumer price index prompted traders to all but erase the chances of rates being hiked at the central bank’s December meeting.
The CPI was flat compared to September and reflected a 3.2% rise on an annual basis, while the so-called core-CPI, which excludes food and energy prices, came in at 4% year over year. This marked the smallest rise since September 2021.
“It’s great news for the Federal Reserve in their quest to restore price stability,” Pingle told CNBC on Wednesday. Still, they are “not out of the woods yet” he added, saying that there was “still a ways to go” before the Fed reached its 2% inflation goal.
A trend of disinflation is however in place, Pingle said, and if the Fed can slow the economy, it could make strong progress toward its inflation goal.
“We think its probably going to get to 2 next year. It’s already falling faster than the Fed expects,” he said.
However the economy including the labor market will have to weaken further for inflation to steadily remain around 2%, Pingle expects.
“The path to two and a half we think is pretty clear, but sort of that last leg down we do think is going to take some weakening in the labor market,” he said.
In its 2024-2026 outlook for the U.S. economy, which was published Monday, UBS said it expected unemployment to rise close to 5% next year and for the economy to enter a mild recession. UBS is anticipating a contraction of the economy by around half a percentage point in mid-2024, its report suggested.
A looming recession has been a key fear among investors throughout the Fed’s rate-hiking cycle as many have been concerned about rates being hiked too high, too quickly.
They have therefore been hoping for an imminent end to rate hikes and hints about when the Fed may start cutting rates again.
UBS foresees significant rate cuts for 2024, predicting that rates could be cut by as many as 275 basis points throughout the year.
Rates would be cut “first to prevent the nominal funds rate from becoming increasingly restrictive as inflation falls, and later in the year to stem the economic weakening,” the Swiss bank said.
Rate cuts will therefore be a two-step process Pingle explained, and could start relatively early in the year.
“As early as March they should probably start at least calibrating the nominal funds rate,” he said, whereas the second stage would likely begin when unemployment starts rising.
Finance
Vallourec SA (VLOUF) Q3 2024 Earnings Call Highlights: Strategic Moves and Financial Resilience …
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EBITDA Margin: Maintained a healthy margin similar to previous quarters.
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Full Year EBITDA Outlook: Reiterated at EUR800 million to EUR850 million.
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Cash Generation: EUR130 million in Q3, reducing net debt for the eighth consecutive quarter.
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Net Debt Reduction: Over EUR1.2 billion reduction since 2022.
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Q3 Group EBITDA Margin: Close to 19%.
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Tubes Volumes: Reduced to 292 kilotons in Q3.
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Mine & Forest Segment EBITDA: Expected slightly below EUR100 million for the full year.
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Net Debt Reduction in Q3: EUR124 million.
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Full Year Mine Production Expectation: Approximately 5 million tonnes, down from 6 million tonnes.
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Q3 Cash Flow: Total cash generation of EUR130 million.
Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Vallourec SA (VLOUF) maintained a healthy EBITDA margin in Q3 2024, driven by strong international OCTG market performance.
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The company generated significant cash flow, reducing net debt for the eighth consecutive quarter, totaling a reduction of over EUR1.2 billion since 2022.
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Vallourec SA (VLOUF) announced its first strategic acquisition in nearly a decade with Thermotite do Brasil, enhancing its position in the offshore line pipe market.
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The company is progressing well with its optimization program in Brazil, which is expected to significantly contribute to closing the profitability gap.
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Vallourec SA (VLOUF) plans to announce a dividend proposal for its 2025 AGM, marking the first dividend in 10 years, reflecting strong financial health.
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The US OCTG market experienced softness, impacting Vallourec SA (VLOUF)’s overall performance.
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The global iron ore market softened in Q3, leading to lower prices and sales volumes in the Mine & Forest segment.
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Vallourec SA (VLOUF) lowered its full-year mine production expectations to approximately 5 million tonnes, down from 6 million tonnes.
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Q3 2024 saw a reduction in tonnage sold and a slight decrease in average realized prices, leading to a year-over-year decline in revenues and EBITDA.
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The company faces potential challenges from the new tax environment in France, which could impact shareholder remuneration strategies like share buybacks.
Q: Is a share buyback still an option for shareholder remuneration given the new tax environment in France? A: Philippe Guillemot, CEO: While we never exclude any ways to return excess cash to shareholders, the potential tax implications in France make share buybacks less attractive. We plan to return cash to shareholders with a payout ratio of 80% to 100%, starting from Q3. The dividend proposal will be announced in February, based on Q3 cash generation.
SHEPHERDSTOWN, W. Va., November 15, 2024–(BUSINESS WIRE)–JSB Financial Inc. (OTCPink: JFWV) reported net income of $2.0 million for the quarter ended September 30, 2024, representing an increase of $1.3 million when compared to $643 thousand for the quarter ended September 30, 2023. Basic and diluted earnings per common share were $7.64 and $2.33 for the third quarter of 2024 and 2023, respectively. The third quarter results include the recognition of an interest recovery totaling $1.3 million, a recovery to the allowance for credit losses on loans totaling $252 thousand and a recovery of legal fees totaling $17 thousand on prior nonperforming loans. Excluding the impact of these notable items, pre-tax income of $959 thousand for the third quarter of 2024 was $187 thousand more than the same period in 2023.
Net income for the nine months ended September 30, 2024 totaled $3.4 million, representing an increase of $1.1 million when compared to $2.3 million for the same period in 2023. Basic and diluted earnings per common share were $13.33 and $8.46 for the nine months ended September 30, 2024 and 2023, respectively. Annualized return on average assets and average equity for September 30, 2024 was 0.87% and 17.65%, respectively, and 0.66% and 13.17%, respectively, for September 30, 2023. Excluding the impact of the notable items in the third quarter of 2024, pre-tax income of $2.7 million for the nine months ended September 30, 2024 was $96 thousand lower than the same period in 2023.
“We are pleased with our performance for the third quarter, which includes one-time recoveries on nonperforming loans totaling $1.5 million. Additionally, our team continued to create, deepen and expand our customer relationships which resulted in an increase in total deposits of 10% when compared to the second quarter and 17% year-over-year,” said President and Chief Executive Officer, Cindy Kitner. “During the third quarter, we saw stable loan growth, which was funded through loan maturities and deposit growth, and we continue to have strong credit quality metrics including past dues, nonaccruals, charge offs and nonperforming loans, all of which remained at historically low levels.”
Finance
Interested In Manulife Financial’s (TSE:MFC) Upcoming CA$0.40 Dividend? You Have Four Days Left
Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Manulife Financial Corporation (TSE:MFC) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Manulife Financial investors that purchase the stock on or after the 20th of November will not receive the dividend, which will be paid on the 19th of December.
The company’s next dividend payment will be CA$0.40 per share. Last year, in total, the company distributed CA$1.60 to shareholders. Looking at the last 12 months of distributions, Manulife Financial has a trailing yield of approximately 3.5% on its current stock price of CA$46.23. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Manulife Financial can afford its dividend, and if the dividend could grow.
View our latest analysis for Manulife Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Manulife Financial paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we’re encouraged by the steady growth at Manulife Financial, with earnings per share up 4.5% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Manulife Financial has increased its dividend at approximately 12% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
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