Bank Earnings Show U.S. Economy Is Holding Up

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0:33Earnings from America's biggest banks show the U.S. economy is still going strong. Plus, U.S. stocks continue their gains with the Nasdaq hitting its longest winning streak in years. And why Amazon is buying a rival to Elon Musk's satellite network Starlink. Starlink is way ahead of Amazon in the satellite connectivity business. When Amazon gets control of Global Star, they'll get a pretty big boost on the way up towards competing with Starlink. It's Tuesday, April 14th. I'm Alex Osalev for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:15The biggest U.S. banks are reporting earnings this week, and they've got good news. American households and businesses are holding up. Today, JPMorgan Chase, Citigroup and Wells Fargo said customers continued to spend, borrow and invest in the first quarter, even as war broke out in the Middle East and investors worried about risks from inflation, AI and turmoil in private credit funds. The three banks earned a collective$27.5 billion in the first quarter, up 17 % from a year earlier. In his most recent newsletter, WSJ investing columnist Spencer Jacob says there's reason to think that these good results won't just be limited to the banking sector, even though consumers are showing some signs of strain.

1:57Spencer, where might we be seeing these strong earnings? It was generally a good quarter for Wall Street banks, for sure. But overall, it's likely to be a very good earnings season. Probably the best quarter for growth since 2021, which to put that in perspective, that's when we were still rebounding from the pandemic contraction in the economy. While a blowout quarter, a very good quarter for a company, can definitely lift its stock, People are very nervous about what lies ahead, and they listen very carefully to what executives say to analysts and investors on the call. And that's a bit of a mixed bag looking forward.

2:31Are we expecting there to be some differences in different sectors and industries as they're reporting their earnings? We definitely are. The really interesting thing is looking at consumer-facing companies. Look at McDonald's or look at Walmart or look at Darden Restaurants that owns Olive Garden. Talk to a cruise line. Those are companies that are directly affected by the energy shock and the shock to confidence. Last week, you had the University of Michigan put out the most pessimistic report on consumer sentiment in its entire 74-year history. Of course, sentiment doesn't necessarily translate to dollars, but that's not a great sign.

3:04That was WSJ investing columnist Spencer Jacob. In other earnings news, BlackRock, the world's largest asset manager, says net income rose by 46 percent to$2.2 billion on higher investment fees, beating analyst expectations. Johnson & Johnson reports that revenue grew almost 10 percent to about$24 billion. The health care company's strong cancer drug sales offset a steep decline from one of its best-selling drugs, Stellara. J &J lifted its forecast for the year. And BP said today that it expects an exceptional oil trading result for the first quarter, with the war in the Middle East fueling market volatility.

3:45It will report its full earnings later this month.

3:50Amazon has agreed to buy satellite operator Globalstar in a roughly$11 billion deal. Amazon wants to build a business connecting consumer smartphones via satellite internet. And Patience Hagen, who covers telecoms for the journal, says this acquisition should help Amazon compete with the dominant satellite internet network, Elon Musk's Starlink. Starlink is way ahead of Amazon in the satellite connectivity business. Starlink already powers broadband internet today by satellite. It also provides cell service by satellite through a partnership with T-Mobile. Amazon is buying GlobalStar to boost this business.

4:27Global Star is already providing this kind of connectivity for Apple, services that let you text emergency services for help when you're in an area with no cell service. When Amazon gets control of Global Star, they'll get a pretty big boost on the way up towards competing with Starlink. The owner of the Pittsburgh Post-Gazette is selling the newspaper to the nonprofit that owns the Baltimore banner. Ohio-based Block Communications had planned to close the Post-Gazette next month because of financial losses. Terms of today's deal weren't disclosed. Coming up, what's driving a market rally and the strategy that's got the biggest teams in basketball competing for last place.

5:09That's after the break.

5:20U.S. Central Command said no ships out of Iranian ports have gone through the U.S. blockade within its first 24 hours. Meanwhile, the United Nations Secretary General said that the talks between the U.S. and Iran are likely to resume. And in Washington, Israel and Lebanon have agreed to launch direct negotiations for a comprehensive peace deal after rare face-to-face talks. Hezbollah's chief has called the discussions pointless and said just talking to Israel is a surrender. Major U.S. indexes climbed broadly today. The Nasdaq led the gains and closed up 2 percent. Journal Markets reporter Hannah Aaron-Laying says investors may be getting immune to changing headlines on tensions with Iran.

5:59We are now solidly in the green for 2026. The Nasdaq is now up for 10 consecutive trading days, which is its longest winning streak since 2021. The S &P 500 actually closed really close to an all-time high, which is pretty remarkable given the swings in markets that we've seen over the last few weeks. And this is a pretty stark vibe shift on Wall Street. It may just be that investors are focusing on earnings from America's biggest companies. And earnings expectations are actually pretty high. The U.S. and Iran have also signaled that they see room to continue talking. So investors may be clinging on to that piece of good news as well.

6:38And oil prices are in retreat. U.S. crude was down 7.9 percent to about$91 a barrel. And Brent crude, the international benchmark, fell 4.6 percent to just under$95 a barrel. But the International Monetary Fund is warning that if the disruptions to the energy market last into 2027, world economic growth could slow to about 2 percent. That's a rate seen only during the deepest recent downturns.

7:07The Senate Banking Committee says it will hold confirmation hearings for Kevin Warsh, President Trump's choice to lead the Federal Reserve in a week. Some Senate Republicans have said that they wouldn't vote for any nominee until the Justice Department ends its probe of the current chair, Jerome Powell. Ahead of the hearing, Warsh has disclosed details of his finances. His financial interests are worth more than$100 million, and they include stakes in Elon Musk's SpaceX and prediction market firm Polymarket.

7:38The NBA just wrapped up its regular season this week. But some of basketball's most ambitious franchises weren't going all out to win. Instead, they were the league's worst teams trying to notch as many losses as they could. In fact, it was the first season in the league's history where eight teams lost at least two-thirds of their games. Robert O 'Connell covers basketball for the Journal and is here to discuss. Robert, what is the incentive for these teams to lose just in general? Well, the worse you do one season in the NBA, the better your chances the next season at getting the number one pick in the rookie draft.

8:11So having the top selection of all the amateur players from college and internationally entering the NBA, a certain level of superstar like LeBron James or Victor Weminyama can take a franchise from the seller of the league, the bottom of the standings, to championship contention in a couple years. Three college freshmen who will be entering the draft from BYU, Kansas, and Duke who are considered very high prospects. They sort of incentivize tanking a little more than you might see in other years. NBA Commissioner Adam Silver has pledged to fix this incentive to lose. Incentives need to be fixed, and we will fix them, and I'm looking forward to that.

8:50How can he actually do that? There are a few levers the league is looking at pulling on here. Two of the variables they might look at, one is smoothing out those lottery odds, making the five worst teams all have the same odds at winning the lottery. And then another option is not only looking at the previous season's record, So it's not as simple as having one down year and you can boost your chances. Presumably the idea is that a team wouldn't be willing to suffer through two terrible years to pursue the number one pick. The league wants a situation where, simply put, it's less beneficial in the short and long term for a team to lose than to win.

9:29That was WSJ reporter Robert O 'Connell. And that's What's News for this Tuesday afternoon. Today's show is produced by Pierre Bien-Aimé and Danny Lewis with supervising producer Tali Arbel. I'm Alex Osula for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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