>> Deals with the value->> The case for a December rate hike just got stronger thanks to the returning might of the US consumer. Government data out Friday showing retail sales bouncing back in September following a two month slump. Americans bought more of everything, from cars to home furnishings.
And they also weren't shy about eating out. Affirming expectations for the Federal Reserve to lift rates later this year, affecting the so-called debt yield curve, pushing long-term borrowing costs higher at a faster pace than short-term ones. And that's good for the banking business, says Reuters markets and economics editor Dan Burns.
>> You know, banks, they acquire the money that they're gonna lend to you and me and businesses>> They acquire that at short term rates and then they lent it out at longer term rates and the difference is their profit margin, right? So when the yield curve is steeper, that difference is bigger, and their profits are bigger.
>> The prospect of bigger profits from more lending should be a boost to financial stocks in the long run after being largely shunned by investors this year. But better than expected earnings to kick off the third quarter reporting season from JP Morgan Chase, Citi Group, and even scandal plagued Wells Fargo, not enough to shake off investors' immediate concern.
The discovery of two million bogus accounts at Wells Fargo casting a dark cloud over the industry's sales practices. Politicians and regulators threatening to dig into post-financial crisis behavior, and who knows what they'll uncover? So instead of sharing signs that a strengthening economy will finally bring in some more money, bankers are worrying about getting caught up in a political witch hunt.