Corporate News

(New York)

There has been a lot of sideline-type talk from Trump’s team about the possibility of bringing back Glass-Steagall, the rule that separated retail from investment banking in the US for most of the 20th century. However, President Trump himself has now made clear this was a priority. “I’m looking at that right now … there’s some people that want to go back to the old system, right?”, said Trump in a recent Oval office interview.


FINSUM: Rumors and backstage comments from Trump’s team are one thing, but on-the-record comments in the Oval Office from the president are another. Given how big of a shakeup Trump is seeking in many areas, we think he is going to go ahead and try to put in place a new form of Glass-Steagall. This could be a major threat to big US universal banks like JP Morgan (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC).

Source: Bloomberg

(Detroit)

Auto stocks like GM and Ford have gotten hammered recently. The big reason why was horrible earnings reports for the first quarter. The pair saw their quarterly sales drop 5.8% and 7.2% respectively, much worse than was expected. The losses in revenue seem to point out that the peak has been reached in this auto sales cycle. Investors are also worried about the companies’ exposure to subprime auto loans, as that sector boomed in recent years. Now, used car prices are plunging as tons of inventory floods the market, which puts many borrowers under water.


FINSUM: This article points out that auto manufacturing may touch 5% of the US work force in some way, so the economy could actually be significantly weighed down by problems in Detroit.

Source: Barron’s

(Detroit)

Some are growing worried about the US auto industry and perhaps they should be. The country’s car industry is likely to announce a fourth straight month of falling vehicle sales for April. However, the companies remain bullish and did deliver good earnings. This may be because even if sales fall, they are doing so from a record level. “Total sales are still strong from a historical perspective and the decline is very gradual”, says an auto industry analyst cited in the piece. GM, Ford, and Chrysler are all seen to be in a better positon than rivals because of their lower reliance on sedans. SUVs and other more popular styles offer higher profit margins.


FINSUM: The US auto industry has been strong for a few years, but it does seem conceivable there could be a lull now before another move higher as electrics and self-driving cars catch on.

Source: Wall Street Journal

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