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Cultivate an Air of Unpredictability
Sean H. & Jocelin A.
June 27, 2024 • Estimated Reading Time: 10 minutes
TLDR
MARKET RECAP → The S&P 500 posted a slight gain on Thursday as Wall Street anticipated new inflation data, seeking hints on when the Federal Reserve might start lowering interest rates.
WALGREENS BOOTS ALLIANCE Q3 2024 RESULTS→ 📉 Walgreens' Q3 earnings dipped to $0.71 per share due to rising costs, despite a slight sales boost to $36B, as they aim for $1B in savings with a strategic overhaul.
JPMorgan Chase Stress Test Glitch → 🔧 JPMorgan Chase stumbled in the Fed's stress tests, resulting in a capital buffer hike that might cramp their stock buyback plans, especially with commercial real estate losses looming larger than a CFO’s worst nightmare.
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TODAY’S TOP NEWS
Walgreens Boots Alliance Q3 2024 Results
📉 Profit Squeeze: Walgreens reported a decline in adjusted earnings to $0.71 per share, down from $1.00 the previous year. This was attributed to rising operating costs and increased competition, reflecting ongoing pressures in the retail pharmacy sector.
📈 Sales Stability: Despite the earnings drop, sales saw a modest increase to approximately $36 billion, demonstrating resilience amidst a challenging retail environment. The company's focus on expanding its e-commerce platform and improving customer experience played a crucial role in maintaining sales.
🛠️ Strategic Overhaul: Walgreens is undergoing a strategic review aimed at streamlining operations and boosting efficiency, with a target of $1 billion in cost savings for the fiscal year. This includes initiatives to enhance omnichannel capabilities and introduce more private brands, positioning the company for long-term growth.
TODAY’S TOP NEWS
JPMorgan Chase Stress Test Glitch
🛠️ Stress Test Snafu: JPMorgan Chase faced unexpected difficulties in the recent Fed stress tests, resulting in a higher-than-anticipated increase in their stress capital buffer (SCB). Analysts noted a 90 to 100 basis point rise, impacting the bank's capital planning and possibly constraining stock buybacks.
📉 Impact on Buybacks: The increased SCB means JPMorgan, along with Bank of America and Citigroup, might need to curb stock buybacks to maintain their common equity Tier 1 ratios. This move is crucial to meet regulatory capital requirements despite the projected higher loan loss rates under the severe adverse scenario.
💼 Sector-Specific Losses: The stress test highlighted significant potential losses in commercial real estate (CRE), particularly in office spaces affected by remote work trends. Despite these challenges, large banks, including JPMorgan, maintained sufficient capital to operate above minimum regulatory levels.
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