Wall Street Journal
Netflix blamed the shift to EMV credit and debit cards for its 10.2% year-over-year decline in U.S. subscribers. Card firms are having none of that talk. One unnamed card industry executive said Netflix is the only subscription-based business complaining about such a problem, so the problem must be Netflix.
Some merchants have participated in programs offered by MasterCard and Visa to automatically update expiration dates and account numbers. Netflix is sticking to its claim that EMV is causing its problems. Netflix said about half of its users must update billing information when their cards are upgraded.
Citigroup avoided big mistakes in the third quarter, beat profit estimates and emerged relatively unscathed in its international businesses. But Citi is still destroying shareholder value, says the “Heard on the Street” team. Citigroup isn't earning its cost of capital. Its return on equity declined to 8% and its return on assets fell to 0.94%.
Financial Times
Strong balance sheets and weak income statements: That's the formula, thus far, for banks' earnings reports for the third quarter. Banks have built fortresses of capital, post-financial crisis. Liquidity worries? Nothing to see here. If only profit was as easy to come by. Retail banking and trading are both lackluster-to-mediocre.
Analysts may be forced to lower profit estimates for the rest of this year and next year. Portales Partners' Charles Peabody said. It's getting to the point where everyone's sick of waiting on the Fed to raise rates. “We’ve been at this point, expecting rates to go up, for two or three years now,” said Oppenheimer analyst Chris Kotowski. “It’s like waiting for Godot.”
New York Times
First Data raised $2.56 billion from its IPO this week. But its shares ended the day on Thursday trading at the lower end of its projected range: the shares closed at $15.75, down from the offering price of $16. It's a wonder the payments processor got its IPO off the ground in the first place. The IPO market has been sluggish, with Digicel aborting its planned $2 billion offering and Albertsons postponing the pricing of its IPO.
Elsewhere ...
The Economist: The “mysteriously named 'repo' market” seems to have become the main provider of liquidity to banks, argues Michael Howell of Crossborder Capital. The repo market has replaced central banks in this role. “Global liquidity should not be measured merely by the size of central banks’ balance-sheets but by the availability of acceptable collateral as well,” according to the Economist summation. The danger is a shortage of collateral, he argues. Central banks should be mindful of this as they withdraw from monetary stimulus programs.
Business Insider: A waiting list of 56,000 has emerged for a smartphone app that lets users open a bank account anywhere in Europe in no longer than three minutes. The Monese app can check the identity of anyone within the European Economic Area. Monese's target market: migrants. “When you arrive in the U.K. from another country it's incredibly difficult to open a bank account,” said Mulenga Agley, Monese's vice president of growth.
San Francisco Chronicle: And then there's the startup that wants to be the bank for freelance workers, Clearbanc. Clearbanc gives Uber drivers, for example, what its CEO describes as “essentially a cash advance” and deposits drivers' earnings onto a Visa debit card. Lyft introduced its own version of this product last week, called Express Pay. Intuit also has a competing product, called Self-Employed Solutions.
