From CNBC · Jeff Marks,Kevin Stankiewicz · · 2m
Wells Fargo's margin finally beats the bar
A small net interest margin win, a Berenberg upgrade for Lilly's spending spree, and a Fed meeting hanging over it all.
In brief
A small net interest margin win, a Berenberg upgrade for Lilly's spending spree, and a Fed meeting hanging over it all. Wells Fargo cleared a low bar on margin after missing nine of ten quarters, and Lilly's $60 billion deal run is worth more than the market is pricing. Originally reported by CNBC.
Oil and yields squeeze stocks
West Texas Intermediate crude jumped about 5% Tuesday to $106 a barrel on Middle East uncertainty. The inflation worry pushed the 10-year Treasury yield to its highest level since 2007.
A rate decision lands Wednesday
The Fed wraps its two-day September meeting Wednesday afternoon. The market is priced for a 25 basis point hike.
Wells Fargo's margin holds up
CFO Michal Santomassimo said quarter-to-date net interest margin is flat to one basis point below the 2.43% Q2 rate. Guidance had called for a 3 to 4 basis point decline.
Why a tiny beat matters
NIM is the spread between what a bank earns on loans and pays on deposits. Wells Fargo has missed on it in nine of the past ten quarters, so even flat counts as progress.
“The bank's NIM has missed in nine of the past 10 quarters.”
The better yardstick is fees
Non-interest income is the truer read on Charlie Scharf's turnaround, but the market still grades banks on rate-driven metrics. So a slight Q3 beat on NIM is worth taking.
Lilly upgraded on more than obesity
Berenberg moved Eli Lilly to buy from hold, arguing the market underrates what this year's acquisition spree could add beyond GLP-1s.
“Many of the resulting new pipeline entrants have multibillion-dollar sales potential and offer important diversification optionality.”
Sixty billion in deals
Lilly has committed roughly $60 billion across more than 25 deals in 2026, with room to spend more. AtaiBeckley in psychedelics cost $2.8 billion up front; Centessa in sleep disorders cost $6.3 billion.
Obesity is still the thesis
Zepbound and the daily pill Foundayo are on the market, with retatrutide and eloralintide in late-stage work. Leerink expects eloralintide-plus-Zepbound data on Sept. 30 and calls it mega-blockbuster potential.
Don't over-read the dot plot
The Fed also releases updated projections showing where each official sees rates through 2028. Those expectations shift as data arrives, so treat the dots as a snapshot, not a promise.
What matters most
Wells Fargo cleared a low bar on margin after missing nine of ten quarters, and Lilly's $60 billion deal run is worth more than the market is pricing.
