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JPM | Another Rate Cut May Not Help India | Bloomberg Opinion It s almost universally expected in India that the central bank s monetary policy committee will lower interest rates this week Many expect it to keep cutting until the policy rate hits 5 by the end of the year it was 6 in June and the committee cut it by an unexpected 0 35 percentage points in its last meeting to bring it down to 5 4 The arguments for a cut are manifold The Indian economy is clearly spluttering with growth coming in at a shocking 5 in the last quarter for which data is available consumer price inflation stands at 3 2 well below the Reserve Bank of India s mid point target of 4 and industry is loudly complaining that high real rates are depressing investment
Even the hawkish monetary policy committee which critics complain has consistently over estimated inflation in the past is unlikely to be able to ignore that combination of factors RBI Governor Shaktikanta Das told the Bloomberg India Economic Forum last month that there s room for a rate cut especially when growth has slowed down The bond market has already been given reason to cheer this week after the government kept its target for borrowing in the second half of the financial year constant at Rs 2 7 trillion
But the RBI would be wise to be cautious The government in New Delhi won reelection in May by throwing money at the electorate particularly rural voters More recently panicked by the sharp slowdown in growth it has responded with fiscal measures that are likely to stress its finances including a big cut in corporate income tax rates last month though the eventual fiscal stress of that cut might be less than originally feared given that exemptions are also being phased out
The larger problem here is that government finances are already in a hole that would be a problem even if the tax cut were the best designed in history The budget India s finance minister presented to Parliament in July was swiftly undermined when a senior government adviser pointed out that the tax receipts seemed outdated and that in fact revenues in the last financial year were Rs 1 7 trillion less than advertised
One big reason is that India s new indirect tax regime is misfiring Evasion of a nationwide goods and services tax may be up and compliance down according to government auditors That s the exact opposite of what the tax reform was supposed to accomplish And the government has cut indirect taxes arbitrarily on a number of goods in the past 18 months in order to keep businesses and voters happy
When a government cuts taxes even after a shortfall in the previous year it s hard to see how it will keep from borrowing more regardless of its stated borrowing targets As my fellow columnist Andy Mukherjee wrote at the time New Delhi has unilaterally launched the money helicopter and keeping it aloft is now the RBI s job The members of the monetary policy committee will have to think very hard about whether they really want to sign up to being dominated by fiscal policy in this manner
India and its central bank are both caught in a bind All the macro figures look stable But simultaneously every predictive gauge is flashing red Enough people are convinced that India s historically high inflation has been brought permanently under control that calls for a demand side stimulus are deafening JPMorgan NYSE JPM argued this week that the growth slowdown is being driven by a sharp drop off in domestic demand because consumption which was increasingly financed by running down savings and taking on debt has recently slowed sharply But the real problem is this India s total public sector borrowing requirement is close to nine percent of GDP consuming all household financial savings
If the government is eating all of India s savings anyway it doesn t matter what the RBI tries to do to help investment and growth We ve seen this in past RBI cuts They haven t been as effective as hoped investment didn t seem to recover But everyone blamed banks which were reluctant to pass on the rate cut for this
After trying several different and increasingly elaborate prescriptive approaches the authorities have now denied banks the freedom to set rates on their loans and ordered them to adopt a uniform external benchmark This reverses a hard fought past victory for sensible economics which took two decades from 1990 to 2010 And it will hurt more than help because of course no growth revival is possible without healthy market oriented banks
The problem isn t that banks are reluctant to pass on the RBI s rate cuts it s that the government leaves little enough for the private sector to borrow anyway The worst part about being the RBI right now may be the feeling of irrelevance |
JPM | Vanguard Group Tests Blockchain Platform for Trading Currencies | The Vanguard Group is testing a blockchain powered platform that will allow asset managers to trade currencies while avoiding the big investment banks
On Oct 3 Bloomberg reported that the United States registered investment advisor group Vanguard is going after a piece of the global currency market that handles 6 trillion each day and is dominated by firms such as JPMorgan Chase NYSE JPM and Deutsche Bank AG DE DBKGn |
JPM | ETFs To Grab Amid Increased Odds For Fed Rate Cut | Investors can rejoice on indication about the interest rate cuts should the need be They are slash in interest rates after a stronger jobs report curbed projections for a rate cut by 50 basis points Notably the Fed s benchmark rate presently stands What Drove the Rate Cut Slowdown in global economic growth lower factory activity and instability surrounding the trade tension between the United States and China are the prime reasons behind Fed s inclination for a rate cut for the first time in a decade As a matter of fact factory activity has also been decelerating in Europe and Asia compelling the central banks across the globe to roll out more incentives In this regard uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U S economic outlook The step is expected to who might be under an impression that the Fed might consider cutting interest rates if the global economy further weakens ETFs to ConsiderIf the Fed lowers interest rates investors should grab some ETFs in order to gain from the future trend Here are some funds that could prove enormously beneficial to ETF investors in the coming months Asia Pacific ETFsAsian markets have been on a rally since the Fed s announcement about its intent to reduce the interest rates In this regard local equity markets are reveling in the best of both worlds this morning as local investors love nothing more than lower U S interest rates and a weaker U S dollar Accordingly Japan s rose 0 51 Hong Kong s inched up 0 74 as of Jul 11 at 3 13 pm HKST and climbed 0 08 Indices in South Korea Taiwan Australia and Southeast Asia also moved up While there are several options in this space the most popular are Vanguard FTSE Pacific ETF Schwab Fundamental International Large Company Index ETF NYSE FND and JPMorgan NYSE JPM Diversified Return International Equity ETF BO JPIN Gold ETFsDovish Fed view and global growth downturn concerns are two major positive factors which having been driving an uptick in the funds weighted heavily on the yellow metal The latest development is going to boost this upside further SPDR Gold Trust TSXV GLD iShares Gold Trust and Invesco DB Gold Fund NZ DGL are some popular funds in this space Homebuilders ETFsDovish comments from the Fed officials have led to a dip in mortgage rates which is providing support to the real estate sector Rate cut usually results in decreased mortgage rates which makes it cheaper for consumers to buy homes and bump up home sales Investors can snap up some popular ETFs like SPDR S P Homebuilders NYSE XHB ETF Invesco Dynamic Building Construction ETF andiShares U S Home Construction ETF WA ITB to make the most of this opportunity High Yield ETFsThe falling rates will facilitate investors drive for higher yields thus raising the craze for dividend investing While there are several dividend ETFs picking up the top ranked high yielding products seems a good choice Some of these are Vanguard High Dividend Yield ETF iShares Core High Dividend ETF andSPDR Portfolio S P 500 High Dividend ETF Growth ETFsGrowth investing is basically a momentum play which makes for a great strategy in a trending market Growth funds generally comprise stocks with higher price to book ratios and estimated growth than other stocks Powell s testimony has led to stock markets rallying to an all time high The S P 500 also crossed the 3000 mark for some time Investors can opt for iShares S P 500 Growth ETF IVW Schwab U S Large Cap Growth ETF KL SCHG iShares Core S P U S Growth ETF andSPDR Portfolio S P 500 Growth ETF to benefit from the bountiful opportunities in the market Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | Citigroup And JPMorgan Chase 2 Banking Stocks To Watch Next Week | With the second quarter earnings season getting into full swing in the next couple of weeks the nation s largest banks are the first to show whether their earnings have been affected by signs of economic weakness trade war escalation and the falling interest rates
Investor sentiment toward banking stocks hasn t been as positive as it has been for other sectors of the market The Settle KBW Nasdaq Bank is down more than 7 over the past 12 months compared with an 8 jump in the S P 500 despite the fact that bank earnings have been generally healthy
Investors are fearing that the U S economy is at the late stage of a bull cycle and may be close to a downturn That would hit banks in numerous ways from slower lending to higher defaults
In the coming week investors will be looking for trouble spots as the biggest U S banks start reporting In this domain we re focusing on the following two big names for possible buying opportunities after their earnings reports next week
1 Citigroup
If you re looking to reenter this sector we think Citigroup NYSE C is one of the best banking stocks to own right now We derive our optimism from the lender s sustained cost cutting during the past decade and re balancing of its portfolio
These efforts are beginning to pay off and the bank is seeing improvement in both its revenue and profit After going through a sharp correction in the last quarter of 2018 Citigroup shares are back in the game rising 38 this year more than double the gains of the KBW Bank Index that rose 15 in the same period The stock was up almost 1 on Thursday to close at 71 61
Citigroup which reports on Monday is expected to post 1 85 a share profit on revenue of 18 71 billion according to analysts consensus estimate
One potential risk to banks earnings in the past quarter is coming from reduced trading volumes Citigroup warned in late May that trading revenue had declined in Q2 due to a burgeoning trade war between the U S and China the U K s planned exit from the European Union and escalating tension between the U S and Iran
Even with this weak macro backdrop Citigroup is one banking stock that could perform better than the others due to the company s sustained efforts at cutting costs during the past decade These efforts are reflected in the lender s rapidly improving efficiency ratio or expenses as a percentage of revenue This metric has come in at less than 60 for the past four years making Citi the only major bank able to maintain such a winning streak
2 JPMorgan Chase Co
Wall Street s powerhouse commercial and investment bank JPMorgan Chase Co NYSE JPM is another stock to watch closely when it releases its Q2 earnings on Tuesday Analysts on average expect 2 53 a share profit on sales of 29 02 billion
Driven by strong loan growth and robust business in the lender s flagship investment banking division 2018 proved a great year for JPMorgan The bank posted record net income even when you take out the benefits from U S tax reforms
The story was also quite encouraging in the first quarter specifically the crucial net interest income figure which measures the spread between revenue from customers loan payments and what it pays depositors The income from that division jumped to a record 14 5 billion in the first quarter
This earnings momentum has kept JPM shares well supported this year Trading at 114 10 at yesterday s close they are up almost 18 since the start of 2019 against the 15 gain in the benchmark index
Though a low interest rate environment going forward may not help the lender in the second half of this year it may fuel more loan expansion helping JPM to increase its lending activity That s what JPM s Chief Executive Officer Jamie Dimon pointed out early this year when he told analysts that the near term outlook for credit is relatively rosy
Bottom Line
Both Citi and JPMorgan stocks are trading close to their 52 week highs after a powerful rally this year It may not be a perfect time to buy these stocks at these levels but the coming week s earnings reports could provide a good entry to long term investors if their numbers disappoint Wall Street Both names are good buy on the dip candidates |
MS | 2018 Echoes 1987 as Central Banks Shift Toward Tighter Policy | Bloomberg A new Federal Reserve chairman is looking to push up interest rates as the U S economy outpaces the rest of the world following a Republican president s tax cuts
2018 No 1987 according to a report from strategists at Morgan Stanley NYSE MS on Tuesday
The history lesson for investors is that they should perhaps prepare for tighter monetary policy than they now anticipate Thirty one years ago Germany s Bundesbank surprisingly withdrew liquidity against a similar economic backdrop and now the risk is that the European Central Bank and Bank of Japan prove more hawkish than financial markets are betting said strategists led by Hans Redeker
Of particular concern to Morgan Stanley is that easy money from the ECB and BOJ helped suppress U S bond yields since 2013 and so any reversal may lead to sales of Treasuries
Just this week ECB Governing Council member Klaas Knot said policy makers may consider speeding up the process of removing their extraordinary stimulus if the euro area economy meets their projections
Risky asset markets may head toward troubled waters said Redeker and his team |
MS | Japan Aug core machinery orders point to more capex gains | By Stanley White TOKYO Reuters Japan s core machinery orders unexpectedly rose in August after robust gains in the previous month in a sign that capital spending is set to grow as companies invest in new equipment and software to manage labor shortages The 6 8 percent increase in core machinery orders a highly volatile data series regarded as a leading indicator of capital spending compared with the median estimate for a 4 0 percent decline in a Reuters poll In July core orders rose 11 0 percent the fastest increase since January 2016 Japanese companies capital expenditure plans remain strong for the current fiscal year a Bank of Japan tankan survey showed last week as companies increase investment in automation and labour saving technologies The trade war between the United States and China poses a risk to the outlook because it could indirectly reduce sales from China making some Japanese manufacturers less likely to buy new equipment Japanese companies are following through on their bullish capital expenditure plans said Shuji Tonouchi senior market economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities There were concerns that companies would reign in capital expenditure due to worries about trade friction but this isn t happening Capex will continue to rise as long as trade friction doesn t become more intense than it is now Orders from manufacturers rose 6 6 percent in August following an 11 8 percent increase in the previous month due to increased orders from auto manufacturers and the steel sector Service sector orders rose 6 0 percent in August versus a 10 9 percent increase in the previous month as orders from companies in freight shipping Orders from financial services companies also rose as they install automatic reception systems because of labor shortages The Cabinet Office upgraded its assessment of machinery orders saying they are in recovery Big companies plan to increase capital expenditure by 13 4 percent in the current fiscal year ending in March 2019 the BOJ s tankan survey for September showed last week a shade lower than the previous tankan s 13 6 percent increase But the International Monetary Fund cut its forecasts on Tuesday for global economic growth partially due to the Sino U S trade war Japanese manufacturers are sensitive to developments in global trade because they export large numbers of machines and parts to China where they are used to make finished goods for the United States and other markets
Machinery orders from overseas rose 7 8 percent in August faster than a 6 0 percent increase in the previous month which may temporarily ease concerns about export demand |
MS | LVMH and luxury shares slide as China concerns linger | PARIS Reuters Shares in LVMH PA LVMH fell in early trading on Wednesday even as its all important fashion and leather goods unit did better than expected in the third quarter with the broader luxury sector also rattled by lingering fears of a Chinese slowdown Concerns over an ebbing in demand for branded goods among Chinese consumers have hit luxury stocks in recent days as a trade war between Beijing and Washington simmers Falls in the yuan have also added to concerns that shoppers will lose purchasing power LVMH on Tuesday reported a 14 percent rise in comparable sales in its key handbags and fashion division home to its Louis Vuitton and Christian Dior brands beating forecasts and overall revenues were in line with expectations But that was not enough to reassure investors with LVMH shares down 4 7 percent by 0725 GMT I think the market is in sell the news mode anticipating a looming slowdown due to the trade war a trader in Geneva said Brokers at Morgan Stanley NYSE MS downgraded the luxury goods sector to underweight on Wednesday also adding to pressure on industry stocks
Shares in Gucci owner Kering PA PRTP were falling just over 4 percent on Wednesday morning with those in Britain s Burberry L BRBY down 2 7 percent and French handbag market Hermes PA HRMS down around 3 percent |
MS | A Decade After Lehman Investors Hunt Clues for Next Crisis | Bloomberg It s something that happens every five to seven years is how JPMorgan Chase Co NYSE JPM CEO Jamie Dimon once defined a financial crisis to his daughter Queen Elizabeth II asked why did nobody notice the seeds of the last one
Stung by their failure to spot the turmoil of 10 years ago and two decades since Asian markets were roiled policymakers traders and economists are looking at the clock as they wonder when and where the next meltdown will hit
As it holds its annual meetings in Bali Indonesia this week the International Monetary Fund is already warning investors may be underestimating the risk of a financial shock
One of the axioms of financial history though is that no two crises are the same so the search is on for potential triggers in the world economy and markets A policy mistake by the Federal Reserve such as raising rates too fast or for too long could sideswipe the U S economy and disrupt markets around the world
Here is a rundown of potential hot spots including some you may not have thought of
China
Credit fueled China s rapid rise as an economic power Lately Beijing has been taking steps to slow the rate of corporate debt growth but total debt outside the banking sector continued to rise last year and remains on an unsustainable path according to the IMF
The odds are against a soft landing Of 43 cases of rapid growth in debt to GDP similar to China s only five ended without a major slowdown or financial crisis according to the fund Many economists still think Beijing has several factors in its favor including a strong current account position and room to ramp up government spending But the trade war with the U S could force China to slow its debt reduction driving financial risks even higher
While a China hard landing still remains a low probability scenario if it did in fact occur it would likely unleash a tsunami of contagion across the Asia Pacific region according to Rajiv Biswas chief economist for the Asia Pacific at IHS Markit
Emerging Markets
Interest rate hikes by the Federal Reserve coupled with a rising greenback have sent shock waves through emerging markets making it harder for companies that borrowed in dollars to pay their debts Argentina is borrowing 57 billion from the IMF the largest in the fund s history to stem the nation s currency crisis The Turkish lira plunged as investors questioned the ability of Recep Erdogan s administration to contain inflation
Emerging markets that are over leveraged on U S dollar debt and large oil importers are probably the most vulnerable said Hak Bin Chua senior economist at Maybank Kim Eng in Hong Kong
Some emerging markets such as Mexico and Colombia have avoided being sucked into the maelstrom But as central banks raise interest rates investors may not be so discerning
Emerging market risks will likely be confined to idiosyncratic cases but the potential for contagion is there said Mark Sobel former U S executive director at the IMF and now U S chairman of the Official Monetary and Financial Institutions Forum
Corporate Debt
Surging private debt has been the driving force behind the steady rise of global debt since 1950 according to the IMF In the last crisis U S household debt was the ticking time bomb Consumers have since tightened their belts but U S companies have picked up the slack
Taking advantage of low rates and strong demand American companies have issued record amounts of debt pushing key debt ratios to near 30 year highs according to Morgan Stanley NYSE MS chief cross asset strategist Andrew Sheets
It may be harder for the world to respond this time to turbulence because central banks still haven t raised rates back to normal levels leaving them less ammunition if and when they need to provide stimulus said Jerome Jean Haegeli group chief economist at Swiss Re Institute
Crisis Survivors
In some advanced economies housing prices never crashed despite the 2008 crisis and the buildup of household debt is now raising red flags In its latest global financial stability report the IMF put Australia Canada and Nordic countries in this category Australia s 27 years of recession free economic growth helped fuel a property boom with Sydney house prices leaping fivefold National prices are now in decline and have fallen for 12 straight months
Italy Euro Zone
The risk of an ugly exit from the euro zone has a new name Quitaly
Fears that Prime Minister Giuseppe Conte will push debt to unsustainable levels by bloating the nation s budget deficit have driven up Italian bond yields to levels not seen since the euro debt crisis
Italy s public debt tops 2 trillion euros more than any other European Union country and the equivalent of around 130 percent of its economy Its government though is planning a wider budget deficit next year a push which has taken a toll on its bond and equity markets
Oil
Rising crude prices are stirring talk of a return to 100 per barrel for the first time since 2014 hitting countries that rely heavily on imports including India China Taiwan Chile Turkey Egypt and Ukraine Prices have gained more than 15 percent since mid August and oil traded above 74 a barrel in New York on Wednesday
While higher prices is a positive for exporters paying more for oil will put even more pressure on emerging markets vulnerable to rising U S interest rates
Bad Brexit
Markets are bracing for the risk that the U K won t reach a deal on the terms of its divorce from the EU causing a disorderly exit at the end of March when Britain is scheduled to leave The fallout could be ugly for the financial sector British banks will lose their passport rights in the EU which may force them to beef up capital for example The IMF is warning central banks to stand ready to provide emergency liquidity
An earlier version of this story was corrected to change the name of Sheets firm
Updates with oil prices in first paragraph under Oil subhead |
MS | European shares fall as uncertainty prevails tech luxury hit | By Julien Ponthus LONDON Reuters European shares fell on Wednesday as investors assessed whether worries about global growth warranted the caution that led Wall Street and Asian markets to trade sideways the day before The tech sector was the worst performer with Austrian chipmaker AMS S AMS falling close to 7 percent and STMicroelectronics PA STM down about 4 percent Luxury stocks were rattled by fears of a Chinese slowdown and a Morgan Stanley NYSE MS underweight call on luxury stocks We are seeing more investors opting to wait and see how risks surrounding rising U S treasury yields global growth and China play out Jasper Lawler of LCG wrote in a morning note Shares in France s LVMH PA LVMH fell 4 2 percent even though its fashion and leather goods unit did better than expected in the third quarter Concern over ebbing demand by Chinese consumers for branded goods have hit luxury stocks in recent days as a trade war between Beijing and Washington simmers The pan European STOXX 600 index STOXX was down 0 36 percent by 0819 GMT Germany s DAX GDAXI retreated 0 52 percent and France s CAC 40 FCHI lost 0 7 percent Britain s FTSE FTSE dropped 0 27 percent as reports of progress in Brexit negotiations led to gains by sterling which would hit the overseas revenues of British companies Luxury group Burberry L BRBY fell 4 4 percent In Italy Milan s FTSE MIB FTMIB recovered after an initial fall and rose 0 1 percent despite heavy losses from luxury clothing company Moncler MI MONC down 5 2 percent Italian banks FTIT8300 jumped 1 6 percent as yields on the country s sovereign debt fell after Italian Economy Minister Giovanni Tria confirmed budget forecasts and said he expected a collaboration with the European Union over the budget Shares in VAT Group S VACN posted the worst performance overall on the STOXX 600 down 10 2 percent The Swiss industrial valves manufacturer said it would shorten work for some employees as demand softened in certain markets |
MS | Singapore Housing Curbs Won t Cool Prices Morgan Stanley Says | Bloomberg Singapore home prices may rise as much as 10 percent by the end of next year and are on track to double by 2030 as faster income growth overpowers recent property curbs and higher interest rates according to according to Morgan Stanley NYSE MS
Home prices rose in four of the five previous rate hike cycles Morgan Stanley analysts said in a note to clients Faster economic growth the city state s attraction as a global hub and demand from buyers flush with cash from en bloc redevelopments will underpin the housing market they said
The bullish outlook came after the latest property curbs prompted the analysts to revisit last year s forecast that home prices would double by the end of next decade
Contrary to common perception we believe housing supply demand dynamics remain favorable and we anticipate a wave of capital inflows into the housing market Wilson Ng and his colleagues said Housing supply is still below historical averages and set to fall
The government has emphasized the goal of the property curbs is price stability and sustainable growth in line with economic fundamentals Morgan Stanley expects policy interventions to apply equally to both up and down cycles so if prices decline the government could relax some of the property curbs the analysts said
The government rolled out eight rounds of policy tightening for the housing market as home prices surged 60 percent between 2009 and 2013 It partially removed seller stamp duties in 2017 before re embarking on curbs in 2018 Because most of the measures from the previous tightening cycle remain in place this leaves a much wider toolkit to stimulate the housing market should the need arise Morgan Stanley said
Singapore will also stay relevant as a global hub which will help attract capital inflows into the property market analysts at the New York investment bank said A wave of mega flagship projects such as a new terminal at Changi Airport highlight government efforts to enhance Singapore s competitive edge as a vibrant global city in attracting foreign capital and talent |
JPM | Fitch cuts Saudi credit rating citing risk of further attacks | By Davide Barbuscia
DUBAI Reuters Rating agency Fitch downgraded Saudi Arabia s credit rating to A from A on Monday citing rising geopolitical and military tensions in the Gulf following an attack on its oil facilities and a deterioration of the kingdom s fiscal position
The Saudi finance ministry said it was disappointed by the swift downgrade and urged Fitch to reconsider it arguing the move did not reflect the kingdom s response to the Sept 14 attack or its capacity to handle adversity
The move which places Saudi Arabia one notch above the assessment of peer rating agency S P Global is a blow to the largest Arab economy as it seeks investment to diversify away from oil and prepares a potential international sale of U S dollar denominated Islamic bonds
It follows an unprecedented attack on Saudi oil plants which initially halved the crude output of the world s largest oil exporter Riyadh blamed adversary Iran a charge Tehran denies
In our view Saudi Arabia is vulnerable to escalating geopolitical tensions given its prominent foreign policy stance including its close alignment with U S policy on Iran and its continued involvement in the Yemen war Fitch said on Monday
It saw a risk that the United States and Saudi Arabia could be drawn into a deeper conflict with Iran or its allies
Although oil production was restored fully by end September we believe that there is a risk of further attacks on Saudi Arabia which could result in economic damage
The finance ministry said the kingdom had shown restraint and careful consideration in its response and had acted immediately and effectively to maintain global oil supplies
Saudi officials have said the Sept 14 strike would not affect state finances or growth but investors and analysts said it could have a long term impact on ambitious plans to diversify the Saudi economy and attract foreign capital
We have revised our assessment of the vulnerability of Saudi Arabia s economic infrastructure to regional military threats as a result of the most recent attack Fitch said
Fitch is the first agency to change Riyadh s credit rating used by investors to assess the risk associated with a debt issuer since the attacks the most dramatic of several incidents this year raising Iranian Saudi tensions
S P Global Ratings last week affirmed its A minus rating saying however that its rating could come under downward pressure should Saudi oil infrastructure be attacked repeatedly
IPO PLANS
Fitch said it was forecasting a widening of the Saudi fiscal deficit to 6 7 of GDP from last year s 5 9 due to a loosening of fiscal policy and lower average oil prices and production
The finance ministry said the deficit was well within the parameters it had set for the 2019 budget and that financial assets substantially exceed liabilities
Ratings agency Moody s cut its 2019 forecast for Saudi economic growth to 0 3 from 1 5 after the attacks though said it was largely due to an overall decline in oil production
Fitch s downgrade comes ahead of a planned issue of international Islamic bonds by the kingdom and the rating move could potentially affect the cost of Saudi Arabia s debt issue
The dollar sukuk would be a good test to see if pricing has been impacted albeit slightly given that S P last week kept its rating untouched sad John Sfakianakis chief economist at Gulf Research Center
The downgrade also comes as state oil giant Aramco presses on with its initial public offering IPO plans a pillar of Crown Prince Mohammed bin Salman s diversification drive
Dollar denominated bonds issued by the Saudi government didn t move much in the wake of the downgrade The 2047 issue was down 0 5 cent at 113 50 cents in the dollar according to Tradeweb data little changed from earlier in the trading session The 2046 issue was 0 3 cent lower at 111 55 cents in the dollar
People are focusing on the returns and how low the debt is and the fact foreign assets are large said Giyas Gokkent of JPMorgan NYSE JPM Securities when asked why there hadn t been a large bond market reaction
In an environment where the Fed is easing there s appetite among investors for strong names in the Gulf of which Saudi Arabia is one
Fitch rated Aramco A in April when the company for the first time disclosed its finances before an inaugural bond issue The rating agency said at the time it put Saudi Aramco s standalone credit profile at AA adding that its rating was capped by that of Saudi Arabia in view of strong linkage between the state and the sovereign |
JPM | JPMorgan Doubles Down on Pound Short After Unexpected Rally | Bloomberg The pound s dominant September rally is flashing a sell signal to JPMorgan Chase NYSE JPM Co
The British currency gained against all of its Group of 10 peers this month as traders reduced odds of a no deal Brexit at the end of October That s made the pound s valuation no longer as cheap as Britain hurtles toward an Oct 31 deadline to leave the European Union strategists including Meera Chandan wrote in a Sept 27 note
The bank recommends selling the British currency against the Swiss franc given that the odds of an exit deal by end October are very low and the odds of a hard Brexit by January have increased Additionally Bank of England policy maker Michael Saunders s unexpected dovish shift last week adds conviction to the short sterling view according to the analysts
Against this backdrop not so cheap valuations ongoing political uncertainty with risks of no deal still lingering and a more dovish BOE we view risks to GBP tilted to the downside Chandan wrote
The pound s gained over 1 against the dollar in September and has climbed roughly 1 9 against the Swiss franc to trade near 1 2270 JPMorgan recommends selling pound franc at 1 22 with a stop at 1 2450
Recommended trades against the pound have been light since early August given the magnitude of bearish positioning against the currency the analysts wrote However after sterling s September rally speculators are the least bearish on the pound since late July according to the latest Commodity Futures Trading Commission data |
JPM | Brexit delay probability raised to 85 from 60 JPMorgan says | LONDON Reuters U S investment bank JPMorgan N JPM raised the probability of an extension to Brexit to 85 from 60 and cut the likelihood of a no deal departure from the European Union
The bank cut the probability of a no deal Brexit to 10 from 25 and cut the probability of an exit on the terms of the Withdrawal Agreement to 5 from 15
The big increase in probability goes to Article 50 being extended JPMorgan analyst Malcolm Barr said in a note to clients
With the Benn law having been passed and looking Boris proof at this stage we mark the odds of a no deal Brexit down sharply compared to early September the bank said |
JPM | JPMorgan Chase JPM Reports Next Week Wall Street Expects Earnings Growth | Wall Street expects a year over year increase in earnings on higher revenues when JPMorgan Chase JPM reports results for the quarter ended June 2019 While this widely known consensus outlook is important in gauging the company s earnings picture a powerful factor that could impact its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on July 16 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This biggest U S bank by assets is expected to post quarterly earnings of 2 53 per share in its upcoming report which represents a year over year change of 10 5
Revenues are expected to be 28 64 billion up 3 2 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 1 01 higher over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out This insight is at the core of our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for JP Morgan
For JP Morgan the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 0 92
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that JP Morgan will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
While calculating estimates for a company s future earnings analysts often consider to what extent it has been able to match past consensus estimates So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that JP Morgan would post earnings of 2 32 per share when it actually produced earnings of 2 65 delivering a surprise of 14 22
Over the last four quarters the company has beaten consensus EPS estimates three times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
JP Morgan doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
JPM | Bitcoin Breakout May Be Ahead As Technicals Show Rally Extension | Bitcoin bulls looking for a catalyst that could extend its colossal rally may want to turn to technical analysis favored by some traders for a dose of good news
Following an increase in prices over the last two days Bitcoin has surged above its upper Vera band limit which identifies upward or downward trends The move indicates a sharp rise could be on the horizon as the token continues to trade above that limit
Bitcoin s followed a similar trend since mid February and has breached yearly highs at least once every month since then The cryptocurrency broke above its upper band limit for the first time this year in early February for instance and reached a fresh yearly high shortly afterward It happened again in mid June and Bitcoin hit its 2019 high of 13 851 just three days later Overall Bitcoin is up more than 220 this year
Bitcoin looks like it could be coiling for a big breakout as institutional interest for blockchain technology shows no signs of slowing down said Edward Moya chief market strategist at Oanda Corp in New York The bubble like gains this time are driven on solid institutional interest and while security is still a big risk it appears Bitcoin has overcome many of its initial growing pains
It s a drastic turnaround from where it was just six months ago when prices languished around 3 500 and many left the space for dead following its spectacular 2018 crash But excitement over wider mainstream acceptance among other things has heightened the buzz around cryptocurrencies and prices have skyrocketed since then
The revival has been a natural reaction to changing crypto friendly atmosphere in mainstream finance and pro market forces said Christel Quek chief commercial officer at Bolt Global a mobile streaming platform and wallet adding that the entry of companies including Facebook Inc NASDAQ FB and JPMorgan Chase Co NYSE JPM into the cryptosphere has contributed to that wider acceptance The support from mainstream entities will propel digital tokens forward
Bitcoin rose 7 9 to 11 899 as of 11 53 a m in New York on Monday Rival coins also gained with Ethereum up nearly 8 and Monero rising more than 13
Original Post |
JPM | Bitcoin Reaches For Fresh 2019 Highs | Scandinavian Capital Markets
Bitcoin entered a fifth consecutive day of gains in early trading on Wednesday nearing its 2019 high of 13 887 The dramatic recent price surge saw bitcoin rallying by 500 in under 10 minutes on Monday
Altcoins Etherium and Litecoin were little changed with the world s largest cryptocurrency by market cap taking the spotlight
According to CoinMarketCap bitcoin currently represents 64 of the crypto market the highest level since April of 2017
Mainstream Endorsements
Bitcoin s price has been boosted by cryptocurrency related news from corporate giants including JP Morgan NYSE JPM and Facebook NASDAQ FB
A report released in June by JP Morgan strategists suggested that the importance of the bitcoin futures market has been significantly understated
Another bullish driver has been the news that Facebook s Libra cryptocurrency is expected to launch in the first half of 2020 lifting hopes that cryptocurrencies are gaining wider acceptance
ECB Comments
Elsewhere in a Twitter Q A session AskECB on July 9th the European Central Bank adopted their usual disparaging stance after being asked if the bank had plans to add bitcoin to its reserves
Officials confirmed that they had no such plans and stated
Bitcoin is not a currency it rather is an asset and it is very volatile
Technical Outlook
After dipping as low as 9 628 on July 2nd bitcoin bears came out of the woods Economist Nouriel Roubini went as far as tweeting
Still a long way to less than zero as its true value is negative not zero given its toxic externalities It will get to zero in due time
However bullish analysts suggest that the bounce back from the July 2nd lows and subsequent rally above 13 000 has opened the door to a retest of the 2019 high near 14 000
The Bottom Line
The crypto bear market of 2018 saw bitcoin lose 70 of its value However it has now quadrupled in value since the start of the year A rally above 14 000 will embolden the bulls and bring the December 2017 all time high of 19 783 back into view |
MS | Race bias lawsuit against Morgan Stanley sent to private arbitration | By Brendan Pierson NEW YORK Reuters A black former Morgan Stanley NYSE MS broker who filed a lawsuit accusing the bank of racial bias must pursue his claims in private arbitration a federal judge ruled on Wednesday U S District Judge John Koeltl in Manhattan ruled that the former broker John Lockette was bound by a company policy requiring employees to arbitrate all claims including discrimination claims We are pleased with the court s decision in this case Morgan Stanley spokeswoman Susan Siering said in an email The firm is strongly committed to non discrimination and looks forward to addressing this dispute on the merits Linda Friedman a lawyer for Lockette could not immediately be reached for comment Lockette who was hired by Morgan Stanley as an assistant vice president in wealth management in 2013 sued the company in February The New Jersey resident said he was given negative performance reviews denied raises and bonuses deemed too verbose and subjected by a supervisor to the nickname Johnny because of his race Lockette also said one supervisor insisted that he join a special program to prepare for the Series 7 broker examination because blacks intellectual weakness left them inherently less capable of passing the complaint said He said the discrimination culminated in his firing in August 2016 He sought compensatory and punitive damages back pay and an injunction against further discrimination Morgan Stanley filed a motion seeking to send the case to private arbitration pointing to a May 20 2015 email in which Morgan Stanley employees were told that the company was expanding its arbitration policy The email said that employees could opt out but would be deemed to have agreed to the policy if they did not do so before a given deadline and continued working for the company Lockette said he never got the email and so never agreed to arbitration but Koeltl ruled that his mere denial of receipt was not enough to escape the policy under New York law
The case is Lockette v Morgan Stanley et al U S District Court Southern District of New York No 18 00876 |
MS | Analysts see more risks than hope in Italy budget plan | By Gavin Jones ROME Reuters Italy s expansionary multi year budget plan published late on Thursday may backfire on the populist government according to several analysts who see a risk of rising borrowing costs a bruising battle with Brussels and ratings downgrades The budget raises the target for the fiscal deficit to 2 4 percent of gross domestic product next year tripling a 0 8 percent goal left by the previous center left administration The deficit is projected to ease gradually in the following two years to 2 1 percent and then 1 8 percent while remaining far above targets previously agreed with the European Commission Officials in Brussels fear it will increase Italy s huge public debt already the highest among large European economies at around 131 percent of GDP The government bets that by raising domestic demand through investments welfare hand outs and tax cuts stronger economic growth will enable the debt to fall as a proportion of GDP It targets growth at 1 5 percent next year which is strong by Italy s chronically sluggish standards 1 6 percent in 2020 and 1 4 percent in 2021 Many analysts are skeptical Lorenzo Codogno head of LC Macro Advisors and a former chief economist at the Italian Treasury said the growth forecasts were unrealistically high and noted that the budget plan was miles away from complying with EU rules The EU s Fiscal Compact requires countries structural deficits adjusted for economic growth fluctuations to fall steadily each year towards zero whereas Italy s targets its structural deficit to rise next year by 0 8 percentage points We re concerned that the government debt path is over reliant on strong growth thus making it more vulnerable than the fiscal plan implies Morgan Stanley NYSE MS said in a research note It predicted Italian growth would average just 1 percent between 2019 and 2021 and the debt would rise marginally to 131 5 percent of GDP in 2021 rather than fall to 126 7 percent as the government targets In the near term the European Commission will request extra belt tightening and Italy s sovereign debt rating will be downgraded before the end of this month the bank warned MOODY S VERDICT Moody s which has a negative outlook on Italy s Baa2 rating has been waiting for Rome to announce its fiscal plans and said it would pass judgment some time in October Barclays LON BARC Capital analyst Fabio Fois said next year s 2 4 percent deficit target was based on an overly optimistic growth forecast Using Barclays 1 1 percent growth projection the deficit would end up close to 3 percent of GDP he said The hike in the deficit target means Italy will have to issue some 43 billion euros of fresh debt next year increasing the vulnerability of public accounts to any worsening of market sentiment Yields on Italian state bonds have already climbed steeply since the government took office in June While most market analysts are concerned about the budget plan some economists welcomed the change of direction Gustavo Piga economics professor at Rome s Tor Vergata university said that by rejecting the straitjacket of EU rules the government had created an enormous opportunity to increase growth through public investments These are projected to increase to 2 3 percent of GDP by 2021 from 1 9 percent this year Giovanni Dosi an economics professor at Pisa s Sant Anna University applauded the 10 billion euros to be spent next year on a so called citizen s income for the poor saying it could have a major impact on consumer spending and economic growth If the government transfers money to the poor they spend it all If it transfers money to the rich they only spend a bit of it he said |
MS | China Traders Digest PBOC Cut Last Week s Turmoil After Holiday | Bloomberg Chinese investors face a complicated outlook for markets as they return after a week long holiday
They ll be reconciling last week s turmoil in Hong Kong where equities just had their worst week since February with increasingly supportive measures from China s central bank Looser monetary policy may help stem some of the losses expected onshore after the five day break indicated by a slump in a U S fund tracking A shares as well as pressure on China s currency and government bonds from the surging dollar and higher Treasury yields
The People s Bank of China cut the amount of cash lenders must hold as reserves for the fourth time this year effective Oct 15 The move followed last week s long list of bleak news including weak manufacturing data a close call between a U S and a Chinese destroyer in the disputed South China Sea a North American trade deal that s set to sideline China accusations of election meddling and a Bloomberg News report that the country spied on U S companies
We are not surprised to see the RRR cut given mounting economic growth pressure sizable seasonal liquidity demand and weak investor sentiments Jerry Peng a strategist at Citigroup Inc NYSE C in Hong Kong wrote in a note We reckon the authorities will step up intervention to support RMB in view of the RRR cut Overall we believe the RRR cut should be regarded as a positive move
The offshore yuan weakened as much as 0 3 percent Monday to near a seven week low
Hong Kong stocks lost 4 4 percent in the four days through Oct 5 after a holiday Monday some of the worst declines in the world A prediction of a full blown trade war next year by JPMorgan Chase Co NYSE JPM strategists added to the gloom One victim was Lenovo Group Ltd down as much as 23 percent Friday on concern that the PC maker was tied to the Beijing hack Lenovo later denied it was supplied by the manufacturer featured in the Bloomberg article
All eyes will be on where the PBOC decides to fix the currency At stake is whether policy makers allow it to weaken in line with the offshore rate or whether it opts for a stronger than expected fixing to signal support for the yuan Traders dumped the yuan in Hong Kong as the dollar surged sending it past the 6 9 level for the first time since August
Surging Treasury yields have set the tone for China s bond market The past week s moves mean that Chinese 10 year government debt which hasn t traded since Sept 28 yields only slightly more than the U S benchmark 10 year rate shrinking the spread to the narrowest since 2011 Rising inflation concerns in China suggests government debt is unlikely to be a haven for the risk averse in the fourth quarter
JPMorgan was the latest brokerage to turn more cautious on Chinese stocks saying the trade conflict will only escalate as the U S maxes out tariffs on Chinese imports the dollar strengthens and the yuan weakens further That follows similar moves by strategists at Morgan Stanley NYSE MS Nomura Holdings Inc and Jefferies Group earlier this year
Things don t look so good Hao Hong Bocom International Holdings Co s chief strategist in Hong Kong said before the PBOC cut the required reserve ratio Depreciation pressures on the yuan will persist bonds probably won t work as a shelter for risk and the national team s influence on the equity market is waning Stocks are of secondary concern for the top when there are bigger fish to fry |
MS | Investors Flee China Stocks as Foreigners Dump 1 4 Billion | Bloomberg Chinese stocks worst October start in a decade has scared off the last remaining bulls
Foreigners dumped 9 7 billion yuan 1 4 billion of A shares through exchange links with Hong Kong on Monday just short of a record hit eight months ago as mainland markets reopened after a week long break Ping An Insurance Group Co Kweichow Moutai Co and Hangzhou Hikvision Digital Technology Co old favorites that jumped at least 97 percent last year were the most sold by overseas traders Monday
The China A50 Index of large caps which includes stocks that overseas investors are more likely to own sank almost 5 percent for its biggest selloff since January 2016 The yuan slumped as much as 0 78 percent onshore to 6 9260 per dollar amid speculation the central bank will give up defending the 6 9 level further hurting the outlook for A shares
Some traders said the apparent absence of the national team as China s state backed funds are known helped accelerate declines in the afternoon Supportive measures from the People s Bank of China didn t ease the pain following a recent barrage of negative news including weak manufacturing data and accusations of election meddling The slump followed losses of a similar magnitude by Chinese shares in Hong Kong last week
Foreign investors turned bearish unlike their previous optimistic buying of Chinese A shares said Steven Leung executive director at Uob Kay Hian Hong Kong Ltd The massive northbound selling is a sign of growing concern over the relationship between the U S and China
Testing Demand
International investors had started to load up on Chinese shares as global index compilers increased weightings of yuan denominated shares on their benchmarks and a slump made valuations more compelling relative to global peers The nation s equity market had already lost 2 4 trillion in value since January before Monday amid signs that deleveraging and a trade spat with the U S is hurting economic growth
Foreign demand for another type of Chinese assets will be tested later this week when the nation markets a sale of dollar bonds
Bulls Turn
Brokerages are giving up their bullish calls on China s equities JPMorgan Chase Co NYSE JPM s cautious turn last week followed similar moves by Morgan Stanley NYSE MS Nomura Holdings Inc and Jefferies Group earlier in the year Contrarians include HSBC Holdings Plc LON HSBA whose strategists are sticking to the overweight rating they ve had on China throughout 2018 It s been a painful call though they said in a note Monday
The selloff has spread to stocks in Hong Kong among the world s worst performers this year
Mainland markets may struggle to find a floor if foreigners continue fleeing as domestic investors are unlikely to jump back in after being battered in this year s selloff Policy makers previous attempts this year to stem declines in stocks haven t lasted
The reserve requirement cut was within expectations and far from sufficient to counter the negatives on all fronts during the China holiday said Zhang Gang Shanghai based strategist with Central China Securities Co Even China s state funds won t be able to prop up the market until the systemic risks are all factored in |
MS | Morgan Stanley Says It Was Wrong About Treasury Yields Scraps Call on Curve Flattening | Bloomberg Morgan Stanley NYSE MS has thrown in the towel on one of its high profile predictions for 2018 a call that the U S Treasury yield curve from the two year to the 30 year would flatten completely
The forecast was based on expectations for gradual monetary policy tightening by the Federal Reserve and deterioration in the forward growth outlook Morgan Stanley s global head of interest rate strategy Matthew Hornbach broadened it in June adding a two to 10 year flattener and a bet that the 10 year yield had peaked for the year at 3 12 percent in mid May Investors should go long at the prevailing level of 2 90 percent with a view toward a mid 2019 level under 2 75 percent he said at the time
Last week the pain threshold or at least the end of Hornbach s patience was reached as the 10 year yield climbed to fresh year to date highs north of 3 20 percent The two to 30 year curve spread which fell as low as 32 9 basis points in September topped 50 basis points On Friday Hornbach canceled the long recommendation as well as the flatteners
We were wrong to expect Treasury yields to be capped at previous year to date highs Hornbach said in a note titled Our mea culpa Morgan Stanley s inclination to be long duration ended the moment yields broke those levels
What changed A second straight month of strong U S economic data has caused investors to reevaluate the prospects for both Fed policy and future economic growth That trend could continue Hornbach said
Steepening could go further as well whether yields rise or fall But it s too soon to bet on it because if the economic data keep surprising to the upside investors will start expecting Fed policy makers to become even more hawkish into year end and the curve will find it tough to trend steeper |
JPM | JP Morgan managers agreed to help prosecutors in Australian cartel case to avoid charges court told | By Byron Kaye
SYDNEY Reuters Two former executives of JPMorgan Chase Co N JPM in Australia agreed to co operate with regulators on condition of immunity in a criminal cartel case by the state against Citigroup N C and Deutsche Bank DE DBKGn a Sydney court heard on Friday
The three global banks worked on an A 3 billion 2 03 billion stock issue for Australia and New Zealand Banking Group Ltd AX ANZ in 2015 Citi Deutsche ANZ and their staff were charged last year with withholding crucial information from shareholders about the sale
State prosecutors have accused the banks of forming a criminal cartel to either directly or indirectly restrict the supply of ANZ shares or maintain the price of ANZ shares according to court documents
Four phone calls in August 2015 which prosecutors say involved bankers from all the companies are at the heart of the case brought by the Australian Competition and Consumer Commission ACCC
Deutsche s defense lawyer Murugan Thangaraj told the court on Friday that former JPMorgan capital markets managers Jeffrey Herbert Smith and Richard Galvin were given immunity which added to questions over the credibility of their witness statements
Thangaraj said JPMorgan had only sought immunity to save it being at this bar table
The former JPMorgan managers gave witness statements about the calls after being shown transcripts and other bankers notes of the conversations Citi lawyer Dean Jordan told the court
Quite obviously we have a circumstance where the recollection of a key witness would appear to have been contaminated by the process by which the statement was taken Jordan said
Two of the phone calls were recorded without the consent of all the participants and it is an offence to do that Jordan said
Recordings and transcripts of the calls should therefore not be allowed as evidence he added
A JPMorgan spokesman declined to comment
None of the accused companies or people have entered formal pleas and no trial date has been set but all have said they would plead not guilty
The case could have major implications for the underwriting business and lead to increased scrutiny from regulators worldwide
The defense lawyers argued on Friday for the right to question four officers from the competition regulator who worked on the case
State prosecutors have opposed allowing the officers to testify saying it may violate legal privilege and inappropriately expose the regulator s private workings
The next hearing is Nov 8 when the magistrate Jennifer Atkinson said she will rule on whether the defense can cross examine the ACCC officers |
JPM | Barclays pays 6 3 million to settle U S SEC s Asia Pacific hiring probe | By Jonathan Stempel Reuters Barclays L BARC has agreed to pay about 6 3 million to settle U S charges it violated a federal anti bribery law by hiring family and friends of foreign officials in the Asia Pacific region to help win or retain investment banking business The U S Securities and Exchange Commission on Friday said the civil settlement resolves charges that the British bank s hiring practices in the region including China Hong Kong and South Korea violated the Foreign Corrupt Practices Act Without admitting or denying wrongdoing Barclays agreed to pay a 1 5 million civil fine plus 4 8 million of disgorgement and interest A bank spokesman Mark Lane declined to comment According to the SEC Barclays hired 117 people between April 2009 and August 2013 who had been referred by or connected to government officials or non government clients and placed them in permanent jobs its graduate program its formal internship program or an unofficial work experience program The SEC said Barclays lacked internal controls to ensure that its employees were not engaged in bribery with respect to these relationship hires It also said some Barclays employees falsified records to conceal who was requesting specific hires and the reasons for those requests Settlement papers describe several hires including in Sept 2011 when a Barclays banker in Hong Kong told colleagues that a senior executive at a private Korean bank would guarantee business as a quid pro quo if he could find the executive s daughter a job
The SEC announced the Barclays settlement nearly three years after JPMorgan Chase Co N JPM agreed in November 2016 to pay 264 million to settle U S regulatory charges into its hiring practices in China known as the Sons and Daughters program |
JPM | JPMorgan Says It s Time to Switch From U S to Euro Area Stocks | Bloomberg There s been a significant change of heart from JPMorgan NYSE JPM equity strategists U S stocks are no longer preferred to Euro area equities
There is a tactical opportunity opening up for Euro zone to catch up strategists led by Mislav Matejka wrote in a note
The 20 underperformance of the region s stocks in dollar terms over the past 18 months combined with investment outflows amounting to 20 of assets under management are part of the reason the strategists upgraded the Euro area region to overweight while downgrading the U S to neutral
The valuation discount has widened and the relative price earnings ratio is now close to outright cheap territory JPMorgan says Value stocks have shown some signs of revival this month and the continuation of a sector rotation from growth into value is also likely to support Euro area outperformance against the U S according to the strategists
That s not all The poor macro backdrop in Europe is likely to change in the next few months Matejka writes Money supply which tends to lead PMIs by two to three quarters is accelerating while the European Central Bank is starting a new round of quantitative easing Additionally the weak economy trade tensions and Brexit uncertainty are helping build the case for a fiscal stimulus
There are still some risks though particularly Brexit with a no deal outcome likely to weigh on European stocks generally Matejka prefers to see the glass half full not only is the U K crashing out of the European Union not in his base case scenario he also wouldn t ignore the possibility of a deal being signed by the Oct 31 deadline which would be very bullish for U K stocks but would also support the case for Euro area equities |
JPM | Repo Turmoil Lets Banks Pump Low Risk Profits | Bloomberg The turmoil that s gripped repo markets this month leaving hedge funds and small broker dealers scrambling for cash has turned into a stream of low risk profits for some of the world s biggest banks
When the low profile system for short term secured lending sputtered for lack of funding sending borrowing costs to the highest in a decade banks flush with cash were slow to step forward reined in by new rules and lacking traders with expertise But behind the scenes lenders such as JPMorgan Chase Co NYSE JPM have begun offering more money lured by much higher returns than they get parking it at the central bank according to executives in the market
The result banks have offered enough to burnish their earnings Yet it s too little to let the market function as quietly and smoothly as it has for the much of the past decade The dysfunction has kept the Federal Reserve pumping in money to ease the pain of hedge funds and broker dealers that need to finance their Treasury holdings
Large U S banks grew hesitant to respond to swings in repo markets for a variety of reasons including post crisis liquidity and capital rules that constrain their flexibility to act and a reduction of desks that handle such deals
It all came to a head suddenly in mid September when a confluence of factors left an unusually severe shortage of cash in a critical part of the global financial system s plumbing The money that big banks were willing to lend fell out of balance with the volume of securities that dealers hoped to finance far beyond the crunches more typically seen at the end of financial quarters The Federal Reserve has been intervening ever since pumping in cash to keep funding markets working
The situation cast a spotlight on how thoroughly the environment for short term funding has changed since the 2008 credit crisis according to bank executives traders and observers of the market They said that s even created a generational gap Big banks and regulators have seen so little repo market turmoil in recent years that they have lost some of their reflexes
Volatility in the market isn t new It s just that it s been so long since it was a problem In the 1990s rates would sometimes spike to as high as 50 when funding was tight according to Glenn Havlicek a former bank executive who was in charge of JPMorgan s liquidity management at the time The Fed began a campaign to reduce swings in the 2000s and then after the 2008 crisis quantitative easing meant there was no shortage of funds Now after the Fed shrunk its balance sheet the shortages are reemerging
There are no more fed funds desks at the big banks and the Fed staff who used to keep the wheels of the market greased are no longer there said Havlicek who now runs his own firm providing technology solutions to repo market participants So when there was a funding spike nobody remembered what to do
What spooked the Fed and led to fears that it had lost control of monetary policy was when the effective federal funds rate rose above the central bank s target Yet back before the crisis that rate would veer from the Fed s target quite often whenever banks demanded significantly more or less when lending to each other The fed funds desks Havlicek mentions were staffed to handle those transactions creating what he estimates was a roughly 1 trillion market at its peak Now it s below 50 billion
As quantitative easing flooded the system with cash after the crisis banks parked as much as 2 7 trillion in excess reserves at the Fed That number has since declined by half restricting the firepower that big banks have to shift to the repo market They have stayed active in that market for their clients even though it typically offered only limited chances to generate significantly higher returns
More Aggressive
Over the past year JPMorgan executives have said they re being more aggressive in deploying spare cash to snap up short term securities rather than park it at the Fed The firm spotted an opportunity to make more money in the repo market during last year s fourth quarter after interest rates rose above what the Fed offers banks former Chief Financial Officer Marianne Lake said in January That trend continued in the first half of this year executives said on earnings calls in April and July
The potential to earn more at times of unusual stress is significant
When rates recently peaked at 10 the gap with fed funds was 8 percentage points A bank providing 40 billion could make 8 8 million in a day That would exceed 60 million in a week That s still dwarfed by the profits they generate quarterly in other businesses
Big banks won t start reporting quarterly results until mid October and in the meantime there s no way to estimate specific profits But market participants point to figures that they reckon illustrate the opportunity banks enjoyed
The first involves the bid ask spread the difference between the price a buyer is willing to pay versus the lowest price a seller would accept In short term lending markets the gap is typically slim One hedge fund trader said he usually negotiates hard for banks to reduce their prices by just a few basis points But as markets gyrated he said it became obvious banks were scoring fatter spreads with some shaving initial offers by 100 basis points
Other participants pointed to the tri party repo market where banks borrow from money market funds and lend to other clients One repo trader who works in that market described the spreads he saw as the craziest he s witnessed in three decades
In addition to the new rules there are long held and newer stigmas attached to short term funding markets The banks generally eschew the Fed s discount window where they can easily borrow at 0 5 percentage points above the target rate because it carries the stigma of having funding problems More recently banks have worried about the stigma of using the Fed s overdraft facilities where they can borrow or temporarily carry a negative balance as long as they pay it back at the end of the day That hasn t been used since the crisis
No bank will ever go negative at the Fed any more JPMorgan Chief Executive Officer Jamie Dimon told reporters last week In the old days you would go negative during the course of the day by huge sums So these things just change the nature of the money markets
Forgetting those stigmas would help alleviate troubles in markets now some executives say Or the Fed could stick with past practices that smoothed markets such as the daily repo operations it resumed last week Or if as Chairman Jerome Powell recently stated it plans to keep its current policy schema it has to expand its balance sheet back to a level where there will be ample cash to never squeeze the market
Alternatively financial players could endure the spikes and bet that big banks and others with extra cash will be lured in to provide funding making profits That would be a healthy market solution eventually creating a system that clears faster some executives and observers say They argue such spikes would be temporary and unlikely to filter into the economy by affecting wider borrowing costs for companies or consumers
Effectively nothing cures high prices like high prices said Joseph Abate money market strategist at Barclays LON BARC Do I think we re going to see more volatility yes And the volatility will be potentially more unpredictable |
JPM | Are You Looking For A High Growth Dividend Stock JPMorgan Chase JPM Could Be A Great Choice | Whether it s through stocks bonds ETFs or other types of securities all investors love seeing their portfolios score big returns But for income investors generating consistent cash flow from each of your liquid investments is your primary focus
While cash flow can come from bond interest or interest from other types of investments income investors hone in on dividends A dividend is that coveted distribution of a company s earnings paid out to shareholders and investors often view it by its dividend yield a metric that measures the dividend as a percent of the current stock price Many academic studies show that dividends account for significant portions of long term returns with dividend contributions exceeding one third of total returns in many cases
JPMorgan Chase in Focus
Headquartered in New York JPMorgan Chase JPM is a Finance stock that has seen a price change of 16 57 so far this year The biggest U S bank by assets is paying out a dividend of 0 8 per share at the moment with a dividend yield of 2 81 compared to the Banks Major Regional industry s yield of 2 84 and the S P 500 s yield of 1 88
In terms of dividend growth the company s current annualized dividend of 3 20 is up 29 from last year JPMorgan Chase has increased its dividend 5 times on a year over year basis over the last 5 years for an average annual increase of 15 18 Future dividend growth will depend on earnings growth as well as payout ratio which is the proportion of a company s annual earnings per share that it pays out as a dividend JP Morgan s current payout ratio is 35 This means it paid out 35 of its trailing 12 month EPS as dividend
JPM is expecting earnings to expand this fiscal year as well The Zacks Consensus Estimate for 2019 is 10 03 per share which represents a year over year growth rate of 11 44
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages investors like dividends for a variety of different reasons It s important to keep in mind that not all companies provide a quarterly payout
High growth firms or tech start ups for example rarely provide their shareholders a dividend while larger more established companies that have more secure profits are often seen as the best dividend options Income investors have to be mindful of the fact that high yielding stocks tend to struggle during periods of rising interest rates That said they can take comfort from the fact that JPM is not only an attractive dividend play but is also a compelling investment opportunity with a Zacks Rank of 2 Buy |
JPM | German Factory Accelerate To The Downside | The European slump had been a combination of several transitory factors At least that s what they had kept saying ECB officials and staff Economists didn t use that specific word so far that s the exclusive domain of the Federal Reserve Regardless of semantics the message was clear the 2018 economy ended on a sour note but that was nothing to be worried about soon to be forgotten
In January 2019 various private Economists pitched in One working for JP Morgan Greg Fuzesi estimated that the low level of water in the Rhine and other waterways was responsible for taking 0 7 percentage points away from 2018 German GDP
The implication was clear in theory Dissipating also temporary shocks in the auto and pharmaceutical industries along with a little more rain and Germany would be right back at its familiar place as the engine of Europe s accelerating inflationary breakout
Except
Fuzesi notes that not all of Germany s weakness can be explained by such one off events and the cause of the rest is a puzzle
To end 2018 on such a worrisome note German factory orders in December had been 4 less than they were in December 2017 It was the largest decline since 2012 the last time all of Europe Germany included had been subjected to an official recession declaration A quick turnaround wasn t just desirable
If not rainfall and emissions tests then Germany and therefore all of Europe would be in for some serious trouble Hopefully then not the puzzle
According to estimates released today the German factory sector is still shrinking Updating data through the month of May 2019 DeStatis believes new orders in that month were nearly 9 less than they were in May 2018 Rather than get any better factory orders are accelerating on the downside
May s decline was the largest since September 2009 Given that the contraction in them began last August with the downturn starting last January nearly a year and a half ago the words temporary or transitory just don t apply
Nor does the word puzzle
From June 2011 to November 2012 factory orders slid for sixteen months falling by a total of around 9 5 Going back to the very start of 2018 factory orders are lower seasonally adjusted for now seventeen months and counting The overall decline so far reaching more than 11 in total Already worse than what was an outright recession before
Seven years ago Economists wouldn t have cited a puzzle for the European economy s shocking recession They did claim it was unexpected of course but once it happened they all pinned the thing on Greece and Club Med or PIIGS There isn t an obvious Greek problem today thus either rainfall or a puzzle
If however 2011 12 had less to do with southern sovereign debt and was instead due to much the same thing as what Europe and the rest of the world is confronting today then we are left to first worry about how this time is already much worse than that time with bond yields and curves telling us there s still a lot more of this to come
A slow motion train wreck is still a train wreck Whether it ever gets categorized as a recession by officials is immaterial
All throughout last year it should be noted the US jobs report remained elevated at least compared with 2017 s These were characterized as representing a strong American labor market for the world economy to latch onto At the very least the US system would be left immune to overseas turmoil
And yet the global economy throughout 2018 continued to grow weaker as did as we see now the US economy and labor market
In other words Germany s manufacturing problems were forward looking in a way the US payroll figures absolutely were not This year it is the latter which are moving in the former s direction rather than the other way around The Germany factory estimates have been telling us which way this thing is going the US labor data confirming it that way later on including the numbers today
Though still a puzzle for them as to why even the Economists are finally giving up on transitory not that they have any choice in the matter
German factory orders slumped in May in the latest sign that global trade uncertainty is turning Europe s temporary slowdown into a more serious downturn
ING said the report wraps up a week to forget and JPMorgan NYSE JPM now predicts that Germany may have contracted in the second quarter If that happens it would be the third time in a year that Europe s largest economy posted no growth at all
For now the American payroll report is being talked about as if it offsets or contradicts this clear German gloom Given recent history however it is much more likely that no one will remember the June payroll numbers
Things are pointing down and both data points Germany s factories and the US jobs market actually are in agreement The only difference what last year was called decoupling is timing The Germans are leading the way and unfortunately that suggests a very real probability Euro 4 is nastier than either 3 or in Europe even 2
Rather than rainfall or a trade truce being able to solve the puzzle is the only thing which could prevent those comparisons And time is running out not just in Germany but everywhere |
MS | Russian central bank rate seen on hold until end of third quarter 2019 due to sanction risks Reuters poll | By Zlata Garasyuta and Polina Nikolskaya MOSCOW Reuters Russia s central bank will keep its main interest rate at 7 50 percent until the end of the third quarter of 2019 with international risks such as any more sanctions seen as the biggest threat to the economic outlook a Reuters poll showed on Friday The central bank raised rates for the first time since late 2014 on Sept 14 and indicated that a rate cut is unlikely for the next year due to higher inflation risks driven by rouble volatility and a planned tax increase from 2019 A monthly Reuters poll of 24 analysts and economists suggested the central bank will keep its main rate unchanged at 7 50 percent until the end of the third quarter of 2019 But some respondents did not rule out a rate increase because of the risks of new U S sanctions In case of more material U S sanctions we would see the central bank being forced to hike by more in response to the rouble depreciation and inflation pressures analysts at Morgan Stanley NYSE MS said According to the poll the central bank may cut its key rate in the fourth quarter of 2019 by 25 basis points to 7 25 percent The market is closely watching the progress of a draft bill in the U S Congress that includes a ban on holding new Russian sovereign debt and restrictions on dollar transactions involving several Russian state banks Inflation a key indicator for the central bank is expected to be at 3 8 percent by the end of this year below the central bank s target of 4 percent according to the poll But it will accelerate to 5 0 percent in the first quarter next year before slowing down to 3 7 percent in the first quarter of 2020 according to the poll Analysts saw economic growth in Russia slowing down next year after reaching 1 8 percent in 2018 due to changes in monetary policy the risk of new sanctions and increases in value added tax from next year Gross domestic product is forecast to grow by 1 4 percent in 2019 and another 1 6 percent in 2020 according to the poll Expectations about the rouble s future became more positive over the past month and it is seen trading at 62 31 against the dollar in 12 months compared with 64 50 forecast by the previous poll The Russian currency has gained more than 6 percent versus the dollar in the last two weeks helped by higher oil prices and the central bank s decision to halt purchases of foreign currency for state reserves until the end of the year But anti Russian rhetoric could escalate in the United States ahead of the midterm election in November said Vladimir Miklashevsky an economist at Danske Bank
The geopolitical premium in the rouble remains high despite rising oil price he said |
MS | European shares lower as pressure builds on Italian banks | By Danilo Masoni MILAN Reuters European shares fell on Tuesday as anti euro rhetoric from a senior Italian lawmaker spooked investors sparking a sell off in the country s sovereign bonds and sending shares in their banks to a 19 month low Italian banks FTIT8300 whose large government bond holdings makes them sensitive to political stress fell as much as four percent after the head of the lower house s budget committee said Italy would be better off out of the euro zone Banks SX7P were the biggest sectoral fallers in Europe helping drag the pan European STOXX 600 STOXX index down 0 4 percent by 0807 GMT after hitting its lowest lowest level in more than two weeks Germany s DAX GDAXI fell 0 5 percent The lawmaker s comments came after euro zone officials warned Italy that its plan to borrow billions of extra euros to fund spending pledges could tip the bloc back into crisis In response Deputy Prime Minister Luigi Di Maio said Italy would not change its budget deficit targets We expect months of scrutiny on the budget by Italian institutions the European Commission and rating agencies said Matteo Ramenghi CIO for Italy at UBS Global Wealth Management Investors are likely to retain a cautious approach until further visibility on fiscal policy emerges he added Shares in Italy s biggest banks Intesa Sanpaolo MI ISP and UniCredit MI CRDI both fell around 1 8 percent Morgan Stanley NYSE MS said the increase in Italian government bond spreads could impact banks CET1 capital adequacy ratio by 8 basis points on average in the third quarter Based on size of the bond portfolios and starting levels of CET1 Banco BPM MI BAMI UBI MI UBI and BMPS MI BMPS are most vulnerable here analysts at the U S bank said Strength among oil stocks SXEP up 0 4 percent on the back of rising crude prices helped limit the losses while autos SXAP also rose as the Paris auto show got underway Among heavyweight companies Siemens DE SIEGn fell 2 1 percent after a downgrade from HSBX while Philips AS PHG also dropped more than 2 percent after a Credit Suisse SIX CSGN downgrade Shares in Royal Mail L RMG hit an all time low down 6 9 percent as brokers cut their price targets on the stock following a surprise profit warning on Monday due to worse than expected pressures on letter volumes and productivity
The STOXX 600 has fallen 1 7 percent so far this year due to worries over a trade war between the US and China and concerns over political stability in the region as worries over Italy and Brexit mount Banks have fallen 16 percent year to date |
JPM | Singapore Bank Giant OCBC Joins JPMorgan s Blockchain Network | OCBC has become the first Singapore based bank to join JPMorgan NYSE JPM Chase s interbank blockchain network
According to a Business Times Singapore report on Sept 20 a total of 134 banks from the Asia Pacific region are now participants in JPMorgan s blockchain powered interbank information network IIN |
JPM | SoftBank mulls bringing 40 companies to Brazil | By Aluisio Alves
SAO PAULO Reuters Japan s SoftBank Group Corp is considering bringing around 40 companies with high growth potential to Brazil and expects to announce a large investment in the country in around two weeks time the group s head in Brazil Andr Maciel said on Friday
We have around 40 companies that fit in Brazil he said during an event at Cubo a technological hub funded by Ita Unibanco the largest private bank in Latin America
SoftBank has been investing in many companies around the world including some that are already operating in Brazil such as U S office sharing startup WeWork
Maciel a former director at JPMorgan NYSE JPM in Brazil added Softbank plans to disclose a large investment in the country in the next two weeks He did not elaborate
The Japanese group has been leading multimillion dollar investments in Latin America since March when it announced the creation of a 5 billion fund targeting technological projects in the region
SoftBank has invested 1 billion in Colombian delivery startup Rappi 150 million in the app based startup Loggi and 250 million in the rental platform Quinto Andar It has also acquired a 15 stake in Banco Inter
Brazil still has room to create more unicorns said Maciel referring to startups worth more than 1 billion He added SoftBank sees opportunities in Brazil in health logistics transportation and agribusiness among other areas |
JPM | Gold Rides New Wave of Risk Aversion to Two Week High | Investing com Gold prices broke out to their highest levels in more than two weeks as negative economic data out of Europe and another stop in the stop start U S China trade talks reignited demand for haven assets
By 11 00 AM ET 15 00 GMT gold futures for delivery on the Comex exchange were up more than 17 or 1 2 at 1 532 65 a troy ounce while spot gold was up 0 5 at 1 525 12
Silver futures popped even more dramatically rising 4 6 to 18 66 an ounce amid perceptions that it still has room to catch up to its more expensive rival
We don t see silver s industrial linkages holding its price back as we are confident in our view that investor appeal for alternative precious metals particularly when the long gold trade gets crowded will ultimately drive prices higher JPMorgan NYSE JPM analysts led by Natasha Kanteva said in a research note Kanteva s team see silver peaking at nearly 22 an ounce by the end of next year with prices averaging around 20 91 an ounce over the year as a whole
Earlier IHS Markit s monthly purchasing manager indexes had suggested the eurozone economy was close to stalling at the end of the third quarter as months of weakness in manufacturing started to spill over into the services sector German manufacturing a regional bright spot for the last decade contracted at the steepest rate since 2009
IHS s survey of U S manufacturing also discerned a further slowdown in both activity and hiring but the index reading of 51 0 was still better than the 50 3 expected and an improvement from August
Even so the company pointed to clear signs of a weakening dynamic
Jobs are now also being cut across the surveyed companies for the first time since January 2010 as firms have become more risk averse and increasingly eager to cut costs IHS said
The J P Morgan analysts said they see gold s recent moves as quite reminiscent of the early stage onset of a recession when courtesy of their anti cyclical safe haven characteristics gold bonds and the U S dollar tend to rally in the dying days of the expansion and into a recession
They said they still don t think a recession is fully priced into gold yet and see prices hitting 1 780 an ounce by the end of next year
Elsewhere platinum futures also rose by 2 0 to 950 61 an ounce as the yield on the 10 Year Treasury note fell eight basis points to 1 67 |
JPM | Ex Wall Street banker Sean Stewart guilty in second insider trading trial | By Brendan Pierson
NEW YORK Reuters Former Wall Street investment banker Sean Stewart was found guilty on Monday of insider trading a second time for passing tips about healthcare industry mergers to his father
The verdict was handed down by a Manhattan federal jury according to a spokeswoman for federal prosecutors less than a year after an appeals court overturned Stewart s earlier conviction and ordered a retrial
A lawyer for Stewart 38 could not immediately be reached for comment He is scheduled to be sentenced on Jan 29
Prosecutors said Stewart who worked at JPMorgan Chase Co N JPM and Perella Weinberg Partners passed tips to his father Robert from 2011 to 2015 They said the tips yielded 1 16 million of profit for Robert Stewart and his friend Richard Cunniffe to whom he had forwarded some of them
Stewart was convicted of the charges for the first time in August 2017 In Feburary 2017 U S District Judge Laura Taylor Swain sentenced him to three years in prison
The 2nd U S Circuit Court of Appeals last year overturned his conviction and ordered a new trial He had served about a year of his sentence
The appeals court ruled that Stewart should have been allowed to challenge a crucial piece of evidence a recorded conversation between his father and Cunniffe
In the conversation the elder Stewart recounted that his son complained about his failure to act on a tip by saying I handed you this on a silver platter and you didn t invest in this
Swain barred Sean Stewart from introducing evidence about his father s later statements to investigators suggesting that Stewart did not intend to commit insider trading and had been drinking when he made the silver platter comment
U S District Judge Jed Rakoff who oversaw the second trial barred any mention of the silver platter comment altogether
Robert Stewart pleaded guilty to a related conspiracy charge and Cunniffe to fraud and conspiracy charges Both were sentenced to probation |
JPM | Russian man pleads guilty in U S to role in hacking scheme that targeted JPMorgan | By Brendan Pierson
NEW YORK Reuters A Russian man pleaded guilty on Monday to U S charges he took part in a massive computer hacking scheme that targeted JPMorgan Chase NYSE JPM Co and other financial services companies
Andrei Tyurin 36 pleaded guilty in Manhattan federal court to six counts including wire fraud and computer hacking conspiracy admitting that he illegally obtained the personal information of the companies customers to find potential victims for fraudulent investment schemes
He is scheduled to be sentenced on Feb 13 by U S District Judge Laura Taylor Swain in Manhattan He has agreed to forfeit more than 19 million as part of his plea
His lawyer Florian Miedel declined to comment on the case
Tyurin was arrested in the country of Georgia at the request of U S authorities last year the latest of several people to be charged with taking part in the scheme
JPMorgan disclosed that it had been hacked in 2014 saying it had exposed information associated with about 83 million customer accounts
Other victims included E Trade Financial Corp Scottrade Inc and News Corp s Dow Jones Co publisher of the Wall Street Journal Prosecutors said a total of more than 100 million customers of the hacked companies were affected
Prosecutors had previously charged two Israeli citizens Gery Shalon and Ziv Orenstein along with an American resident of Israel Joshua Samuel Aaron in connection with the scheme
Members of the conspiracy made hundreds of millions of dollars through criminal schemes using stolen information prosecutors said |
JPM | JPMorgan invests 25 million in fintech start ups | By Elizabeth Dilts
NEW YORK Reuters JPMorgan Chase Co N JPM is investing 25 million to support fintech start ups that help low income Americans be more financially healthy bank executives said on Tuesday
JPMorgan s head of global philanthropy Karen Keogh said the investment in the Financial Solutions Lab will help early stage fintech companies products that could help people in communities like Harlem
We ve long believed that fintech coupled with in person coaching and behavioral nudging is critical to financial health Keogh said This is how economies are built strong vibrant healthy households
The investments come on the heels of JPMorgan Chief Executive Jamie Dimon s comments that a company s responsibility is to all stakeholders not just its investors
The investment also shows that the bank is betting that supporting finance apps and having meeting spaces for community groups in its branches could result in more new customers
A newly renovated Harlem branch bank on West 125th Street is passed more than 1 million pedestrians weekly and the bank redesigned it to have several meeting rooms that can be reserved for free by people and businesses in the community
This is a new take on a trend started by other banks like Capital One which converted several of its branches into cafes in a bid to drive more people into the bank s costly brick and mortar locations
JPMorgan s location has a storefront where local entrepreneurs can hold pop up shops as local retailer and hat maker Flamekeepers Hat Club did in August
The bank plans to open five more branches like the Harlem branch next in Los Angeles |
JPM | Ex JPMorgan Australia executives named as prosecution witnesses in bank cartel case | By Byron Kaye
SYDNEY Reuters Two former senior executives of investment bank JPMorgan Chase Co N JPM in Australia were named on Wednesday as prosecution witnesses in a criminal cartel case by the state against rivals Citigroup N C and Deutsche Bank DE DBKGn
A senior investigator at antitrust regulator the Australian Competition and Consumer Commission ACCC was also named in a court hearing as a witness in the country s biggest prosecution of alleged white collar crime
The investment banks are accused of colluding over a A 3 billion 2 billion capital raising
The local units of JPMorgan Citi and Deutsche all worked on a share issue for the country s then third largest bank Australia and New Zealand Banking Group Ltd AX ANZ in 2015
Last year the ACCC brought charges against Citi Deutsche ANZ and several of those companies top employees alleging they colluded to keep from regular shareholders the fact that the issue was undersubscribed
The previously undisclosed involvement of witnesses who worked at JPMorgan which was not charged raises the chances the case will involve global investment banks testifying against each other when it goes to trial as well as defending themselves against government prosecutors
The lawyer for Citi s former Australia head Stephen Roberts named as witnesses Richard Galvin JPMorgan s former head of equity and derivative capital markets and Jeffrey Herbert Smith JPMorgan s former managing director and head of markets in an application to be allowed to cross examine them
Roberts lawyer Robert Dick told the court he wanted to question the two ex JPMorgan people on written statements about Roberts participation in a phone call at the time of the capital raising
Herbert Smith s statement gave only limited detail about Roberts involvement in the phone call while Galvin s statement made no reference to Mr Roberts saying anything at all Dick told the court
Is this a case that says by silence Mr Roberts is said to have consented to something Dick said
We should be entitled to know
Between the two witness statements there s not a shred of material that explains to us what that involves Dick said
A JPMorgan spokesman declined to comment while Galvin and Herbert Smith did not respond to requests for comment on LinkedIn NYSE LNKD Both left the bank in 2016
Lawyers for Citi Deutsche and ANZ also said they want to cross examine the ACCC s general manager of financial services competition Leah Won also named publicly as a witness for the first time An ACCC spokeswoman declined to comment on Won s behalf
Prosecution lawyers said they would respond to requests to allow their witnesses to be cross examined when the matter returns to court on Sept 27
All the people and companies charged in the case have said they will plead not guilty but no trial date has been set |
JPM | Dimon Echoes Trump China s Broad Slowdown Fed Focus Eco Day | Bloomberg Welcome to Thursday Asia Here s the latest news and analysis from Bloomberg Economics to help get your day started
Jamie Dimon is sounding a bit like Donald Trump on China The JPMorgan Chase NYSE JPM CEO says Trump s trade fight is simply about fair trade not part of some larger ideological struggleChina s economy continued on a slower trajectory in September with weakness in manufacturing and retailing combining with the trade war to undercut growthOne of the Fed s more dovish policy makers doesn t see the need to cut interest rates again because two recent reductions should be enough Meantime recent turbulence in U S money markets has cast light on a big problem hidden at the root of the Fed s conduct of monetary policyPresident Donald Trump and his Japanese counterpart Shinzo Abe touted a limited trade agreement as the U S withdrew the threat of imposing auto tariffs for now Meantime the WTO will authorize the U S to impose tariffs on nearly 8 billion of European goodsIndia s economic growth showed little signs of a recovery from a six year low with investment and consumption activity in August remaining fairly subduedBulgarian economist Kristalina Georgieva secured the top job at the IMF continuing the tradition of a European holding the role while also becoming the first leader from an emerging marketBundesbank President Jens Weidmann hasn t yet declared himself in favor of a fiscal boost in Germany but his predecessor hasGreece s new prime minister wants to reduce taxes and improve the investment climate in his country as he attempts to turn the page on the crisis eraECB board member Sabine Lautenschlaeger unexpectedly resigned more than two years before her term ends amid dissent over Mario Draghi s latest stimulus drive Italian central banker Fabio Panetta is poised to replace Benoit Coeure as one of the ECB s top policy makersJust when it seemed U S stocks would sleepwalk back to a record bulls got derailed by a new worry rising odds that Donald Trump will be impeached |
JPM | What To Consider Watching In July Geopolitics Fed Tone Earnings | Though it s unclear how the U S China trade relationship tension in the Persian Gulf or earnings season might evolve in July the market does seem pretty certain about one key metric in the month ahead Rates could be going down
That s what futures prices tell us anyway As of late June Fed funds futures showed no chance of the Fed standing still in July They showed a 100 chance of the Fed easing rates by at least 25 basis points which would erase the hike last December that caused so much anxiety back then
Some investors expect an even more dramatic move as CME futures are currently signaling a 43 chance of a 50 basis point cut That kind of move would erase the last two rate hikes of 2018 and it would put rates back where they were roughly a year ago It s not unprecedented to see a 50 basis point cut by the way The Fed did that as recently as 2008
Expectations of the Fed moving toward easier policy have really picked up since the June Federal Open Market Committee FOMC meeting The market arguably got what it wanted Hints at a future rate cut while at the same time the Fed removed the word patient from its statement It had started talking about being patient back in January but now it s apparently ready to make a move if needed to help keep the economy growing However we will have to wait and see if a rate cut actually happens
Stocks rose to new record highs in late June as the Fed got more dovish but before throwing a party investors might want to remind themselves that lowering rates something the Fed seems to be hinting at is a panacea and could signal that the economy is slowing Long term this is not a good sign Also it seems like a lot of the Fed s more dovish signals had already been built into the market during the recent rally
Earnings And Trade First Then Fed
We won t know what the Fed decides until the very last day of July but there s plenty to keep investors occupied between now and then First of all we have earnings season Second there s the saga of U S China trade tensions as both countries begin the month coming out of a fresh meeting between President Trump and President Xi We also have plenty of data to watch including a June jobs report that might carry some extra significance considering the surprising employment growth slowdown in May
The stock market s recent rally to new record highs could reflect investors hopes for a more dovish Fed However you could argue that earnings season is where the rubber meets the road
Potential rate cuts might help jumpstart the ignition but earnings are what usually drives the market Unfortunately for anyone who wants the rally to continue many analysts look for earnings to be light again in Q2 That includes some forecasters who expect overall S P 500 earnings to fall year over year
One of those forecasters is FactSet FactSet most recently said it expects S P 500 earnings to fall 2 6 in Q2 led by a 14 drop in the Materials sector and a 12 drop in Technology FactSet sees S P 500 revenue growth of 3 9 the lowest since a 2 7 bump in Q3 2016
The earnings growth outlook is a bit skewed if you look at it by sector The double digit drops that FactSet forecasts for Materials and Technology weigh a lot on the overall prediction but FactSet expects six of the 11 S P 500 sectors to post earnings gains led by Utilities Healthcare and Energy
Things get started in a big way the week of July 15 with six of the biggest U S banks reporting in a three day span Investors could be listening to big bank executives for their views of the latest economic developments and where they think things are headed both for the industry and the world outlook as a whole Their words might get an even closer listen this time around especially with rates potentially tumbling and divisive issues like Brexit and China trade still dominating the news
If investors need any more proof that bank executives have expressed concern about the possible ramifications of trade wars look no further than headlines from mid June when JP Morgan Chase NYSE JPM CEO Jamie Dimon had a meeting with President Trump to discuss trade issues including China and the proposed new deal between the U S Canada and Mexico It s not every day that you see a CEO having the direct ear of the president of the United States
Quick Trade Breakthrough Unlikely But At Least They re Talking
Speaking of the president a lot of the market s path in July could depend on how Trump s meeting with Xi turns out at the G 20 meeting at the end of June A major breakthrough seems unlikely but some analysts say it might cheer the market if there s a handshake and the promise of more talks It would also help to hear that the U S plans to postpone any additional tariffs Those aren t necessarily the outcomes of course but they re arguably the most positive takeaways to consider hoping for
Don t discount the possibility of a negative outcome either If the two leaders meet and can t get on the same page both countries follow up remarks might put trade talks in a negative light and dampen investor enthusiasm There s also the possibility for a repeat of last year s conference in South America when a statement came out a week later contradicting everything we heard out of the meeting With so much riding on this meeting investors might want to consider caution
Caution has definitely been the theme over the month heading into July even as the SPX drove to all time highs When you look at the sectors behind a lot of the recent run up it s been the defensive ones like Utilities and Real Estate Some of the so called cyclicals like Energy Financials and Tech did roll up gains in the late part of June but so did Treasuries By the time the Fed met 10 year U S Treasury yields were below 2 for the first time since November 2016 When you see yields this low it s often a sign that people are buying bonds for their perceived protection
Volatility also stayed up as July got underway The Cboe Volatility Index VIX remained elevated above 15 despite the stock market s gains which is a bit unusual and might mean we could see hair trigger responses to any kind of news especially around tariffs and the increasing Persian Gulf tensions
The hair trigger responses could start as soon as July 5 when the June jobs report is due Arguably this could be one of the most important jobs reports in a while and it s one of those that could send the market either spiraling or rocketing Any market reaction could be more dramatic than usual with so many investors away from their desks for the long weekend so it might be prudent to take extra care if you re considering making any trades around that time
What potentially makes the June jobs number so influential is that it comes after a weak report in May showing just 75 000 jobs created The Fed came out soon after that and said it sees signs of slowing in the economy so another weak jobs report for June might reinforce worries that a slowdown is underway We ll see
Disclaimer Charts For illustrative purposes only Past performance does not guarantee future results TD Ameritrade commentary for educational purposes only Member SIPC Options involve risks and are not suitable for all investors Please read Characteristics and Risks of Standardized Options |
JPM | JP Morgan Bullish Break Out Ahead | I have posted several times before charts on JPMorgan Chase Co NYSE JPM on Twitter and my last tweet was the following
My small short position got stopped on Friday as price broke above recent highs I had 110 as stop and my short position from 108 50 was closed this is not necessarily a bad thing Why Because we now have a clearer view of what the bull s stop is and since the market has shown that price is supported between 105 108 a break out above 111 could open the way for a move towards 117 or even higher Why not take advantage of this
Daily
Price remains above the red trend line support This is crucial for the longer term trend Price is breaking above cloud resistance so short term we have a bullish signal
Weekly And Monthly
Price remains supported and major resistance ahead at 117 if broken could provide a very good move higher Price now at 111 while monthly low at 105 35 is the stop for bulls The potential is 117 but breaking it will open the way for a move to 125 130 area
The current momentum is bullish with price making higher highs and higher lows Key support as we said is at 105 but a break above 111 will raise stop for bulls at 108 Let s see how this week unfolds Looking very bullish to me ready for a move to new highs
Disclosure None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this article constitutes investment advice and any recommendations that June be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions |
MS | Morgan Stanley upgrades EM currencies as U S stock stay strong | Morgan Stanley NYSE MS strategists raised their rating on emerging market currencies and bonds to neutral from negative partly because their view of global risks isn t as bad as their earlier outlook MarketWatch reports We think this remains a difficult world for EM but we ve likely adjusted enough for now Morgan Stanley strategist James Lord said in a note Their original outlook expected more pressure on emerging market assets as the U S markets softened But the U S market stayed stronger than the strategists originally expected Some emerging market currencies that have been on the decline against the U S dollar Argentina Turkey Indonesia and South Africa Emerging market ETFs EEM VWO IEMG EDC SCHE EDZ EMF MSF ADRE EEV HYEM EUM EMCB EET EMHY SPEM FEO CEMB EEME XSOE DBEM FEM HEEM EWEM ROAM ESGE EDBI EMLB FLQE KEMP EMSA KLEM RFEM PBEE EMEM MFEM PPEMEmerging market ADRs SBGL AU OTCPK NPSNY GFI HMNY YPF ARCO SSL TS CRESY GGAL DRD TX TEO BMA TKCPreviously Europe stocks slide to five month low amid emerging market woes Sept 5 Now read |
MS | Special Report As a Saudi prince rose the Bin Laden business empire crumbled | By Katie Paul Tom Arnold Marwa Rashad and Stephen Kalin JEDDAH RIYADH Reuters Soon after Prince Mohammed bin Salman became second in line to the throne of Saudi Arabia he turned his sights to the sprawling empire of the Saudi Binladin Group In 2015 the prince then 29 approached Bakr bin Laden chairman of the family owned construction giant and told him he wanted to become a partner in the firm according to six people briefed on the exchange The prince pitched his offer as a patriotic opportunity to help transform the kingdom s oil dependent economy It would also he said ease the financial strain on the company as the government reined in infrastructure spending to cope with a drop in oil prices As head of the Saudi royal family s favored building contractor Bakr bin Laden was accustomed to obliging royal requests But he hesitated at the prince s approach these sources said The construction mogul replied that he needed time to consult other family shareholders In the months that followed Prince Mohammed bin Salman known by many simply as MbS grew more powerful rising to crown prince in June 2017 He championed economic reform and took aim at widespread corruption The Bin Ladens in contrast experienced a dramatic fall from grace Three Bin Laden brothers senior executives in the family firm were among more than 200 businessmen royals and officials detained in November 2017 in an anti corruption drive ordered by the prince Bakr and two of his brothers Saleh and Saad eventually transferred their combined 36 2 percent stake in the family firm to the state in April 2018 Bakr in his late 60s is still in custody although no charges have been made public Reuters spoke to more than two dozen Saudi Binladin Group employees family friends government officials bankers and businessmen to tell the story of the fall of the Bin Ladens Few of the sources would go on the record citing the Bin Ladens long standing preference for privacy and restrictions on public criticism of the Saudi government These sources charted the family s reversal of fortune starting with that 2015 exchange between Bakr and Prince Mohammed and ending with the state taking management control of the family firm The Bin Ladens undoing exposes the contradictions in Prince Mohammed s plan to build a modern economy some economists say He has embraced privatization hoping to inject dynamism yet the state has intervened in firms such as Saudi Binladin Group He has tackled corruption yet there has been little transparency around the process One Saudi businessman said the Bin Laden saga had become a symbol of what s happening between the government and the private sector a breakdown of trust Asked to comment a senior government official said Prince Mohammed did not seek a stake in Saudi Binladin Group in 2015 The Saudi government he added had saved the company from collapse after it experienced financial difficulties coupled with extensive supervisory and governance weakness Saudi Binladin Group was a vital Saudi commercial entity he said The Bin Laden family and its representatives did not respond to a request for comment NEW KING NEW RULES The Bin Laden clan has known trouble before The black sheep of the family Osama masterminded the attacks on America of Sept 11 2001 But the Bin Ladens led by Bakr survived that storm Their reckoning began with King Abdullah s death in January 2015 Saudi Binladin Group had grown from humble beginnings in 1931 nourished by the Bin Laden family s good relations with successive rulers Royal contracts were arranged informally sometimes scribbled on paper over coffee It was the inshallah bukra God willing tomorrow way of doing business with a meeting that might have been scheduled for 11 a m in the office rescheduled to 4 p m and then actually taking place at 2 a m at the palace said Thomas Fallows an American banker who worked in Riyadh for eight years In the last months of King Abdullah s life oil prices tumbled to 60 a barrel from above 100 at their peak slashing the kingdom s revenues By the time 79 year old King Salman acceded to the throne projects commissioned in the boom years were becoming a burden These included a Riyadh financial district an airport in Jeddah and an economic city on the Red Sea coast Salman quickly appointed Prince Mohammed a previously little known son as deputy crown prince Mohammed also took control of the kingdom s important economic and defense portfolios As a teenager Prince Mohammed had regularly attended meetings with his father Riyadh s governor at the time but left little impression said a former senior Western diplomat But Salman saw in the boy qualities he prized according to Saudi and Western sources Clever rugged understands the locals said one Western policy adviser Other princes went abroad but Prince Mohammed stayed in Saudi Arabia earning a law degree and investing in the Riyadh stock market By the time Salman became king the young prince was sitting in on meetings with foreign officials and silently communicating with his father via iPad the former Western diplomat said Reform minded and ambitious Prince Mohammed was keen to challenge the status quo He introduced changes to streamline government diversify the economy and cut costs including slashing construction spending One of the new government s first moves in 2015 was to order a review of state contracts with a focus on the big projects on which Saudi Binladin Group depended said two sources Asked about the results of this review the senior government official said The government is keen to review all projects including those contracts that may have a suspicion of corruption or negligence in their sites Prince Mohammed encouraged Saudi Binladin Group to sell shares in an initial public offering according to seven sources familiar with the discussions part of efforts to develop the kingdom s capital markets The Bin Ladens had previously shelved IPO plans begun in 2011 worried that they would not get a good price in a stock market battered by low oil prices and put off by the red tape involved in a share issue The family was reluctant to revive the idea in 2015 when market conditions were worse these seven sources said Asked to comment the senior government official denied that Prince Mohammed had promoted the idea that Saudi Binladin Group should sell shares in an IPO Then in September 2015 a construction crane owned by Saudi Binladin Group collapsed in Mecca s Grand Mosque killing 107 people just before the start of Islam s annual haj pilgrimage The government moved against the company suspending it from receiving new state contracts and barring its board members and senior executives from traveling abroad It also ordered the Finance Ministry to review the firm s existing projects citing unspecified shortcomings A senior Saudi Binladin Group executive and a source close to the family said the crane accident gave the government an opening to act against the firm The executive said Saudi Binladin Group wasn t responsible for the site at the time the work fell under the supervision of local authorities in Mecca The senior government official disputed this saying it was standard practice that the contractor supervised the site A legal case over the incident was still pending he added The Bin Laden family took the slap on the hand and accepted it the executive said They would never speak out against the king or the crown prince They are loyal servants The family tried to limit the damage Bakr sent a letter to brother Saleh formally handing him responsibility for the company hoping that a change of management would placate the government according to two people who saw the letter But the plan didn t work As payments from the state dried up Saudi Binladin Group s finances deteriorated and it stopped paying tens of thousands of its workers leading to riots By mid 2016 much of the group s construction work was stalled including at projects essential to Prince Mohammed s reform plans Again the Bin Ladens tried to defuse the situation Saudi Binladin Group hired dozens of finance and management professionals from overseas including former Morgan Stanley NYSE MS banker Klaus Froehlich as chief financial officer Froehlich who remains CFO came armed with years of experience in Saudi deal making He also had ties to Mohammed al Jadaan who would soon be appointed finance minister two sources said Al Jadaan did not respond to a request for comment Creditors who had been struggling to reach Saudi Binladin Group during its crisis said communication improved after Froehlich arrived Government payments started coming through again Financial pressure eased The company also put plans for a public stock offering back on the table bowing to state pressure to recycle some of the money it had made over the decades back into the kingdom according to six people familiar with the plans It appeared that relations between the Bin Ladens and the government were on the mend But the detente would not last long Saudi Arabia was careening toward a recession and market conditions for a listing were worsening To the government s irritation the stock offering plans stalled again because of this deteriorating environment The rulers and MbS saw the Bin Ladens as a leech sucking the lifeblood out of Saudi Arabia but offering nothing in return said one person who had worked on the company s restructuring They ran out of patience In June 2017 Prince Mohammed replaced his cousin security chief Prince Mohammed bin Nayef as heir apparent further centralizing the levers of power More than ever Prince Mohammed was in a position to do something about the Bin Ladens DOWNFALL On the night of Nov 4 2017 Saudi authorities detained Bakr bin Laden in Jeddah along with more than 200 other members of the Saudi elite in what officials said was a crackdown on corruption Dozens of Bin Laden family members including the brothers children had their bank accounts frozen and were banned from traveling abroad said associates of the family Brothers who were abroad at the time were recalled to the kingdom For Bakr it was the beginning of a detention that has lasted more than 10 months Like many others he was first held at the Ritz Carlton Hotel in Riyadh So were his brothers Saleh and Saad fellow major shareholders Other Bin Laden brothers Omar Ahmed Mohammed Abdullah and Yehya among them were brought to the hotel for shorter periods according to four family associates The purge affected royals ministers and business leaders The Bin Laden family s hometown of Jeddah once the economic capital of Saudi Arabia was particularly hard hit Many of the city s merchant families had maintained close relationships with previous kings few of them were spared in the crackdown The government publicly has not said precisely why the Bin Ladens or any of the other individuals caught up in the anti corruption campaign were detained King Salman said at the time the purge was in response to exploitation by some of the weak souls who have put their own interests above the public interest in order to illicitly accrue money Two sources said the Bin Laden brothers received little attention in the hotel and were left alone in their rooms watching TV and eating room service One family associate said a younger brother told him he was never informed why he was there had no access to a lawyer and was barely visited by interrogators Like others in the Ritz they were made to keep the doors to their rooms open and a doctor came to check on them regularly Authorities also employed a notary to facilitate the changing of power of attorney on assets One brother described it bluntly to a friend upon his release It was a shitty experience Asked to comment the senior government official referred Reuters to statements issued at the time by the kingdom s Attorney General These statements said suspects had the same rights and treatment as any other Saudi citizen Everyone is presumed innocent until proven guilty and everyone s legal rights will be preserved Attorney General Sheikh Saud Al Mojeb said on Nov 5 2017 The Ritz was cleared of prisoners in late January but Bakr is still in detention in Riyadh able to receive visits only from his immediate family members according to five people familiar with the situation Asked about Bakr s whereabouts and the status of the investigation the senior government official referred Reuters to the Attorney General The Attorney General did not respond to a request for comment The other brothers are at home in Jeddah but keeping a low profile Saleh the most gregarious has returned to playing card games with friends said one acquaintance Stripped of many of his assets including a palace in Jeddah bestowed by King Abdullah he has been visiting banks to ask for help according to one lender He s putting a brave face on the lender said Authorities seized the title deeds to the homes of senior brothers including Bakr s villa overlooking the Red Sea as part of settlements for their release four sources said The state also took private jets cash jewelry and Saad s 90 million automobile collection which included limited edition Ferraris and other rare Italian cars said two sources Bakr s son Nawaf was relieved of every Maserati in his personal showroom Asked to comment the senior government official referred Reuters to the Attorney General s Office It did not respond In a statement at the time of the Ritz detentions Attorney General Saud Al Mojeb estimated that corruption and embezzlement had cost Saudi Arabia at least 100 billion over several decades In Dec 2017 he said most detainees faced with corruption allegations had agreed to a settlement involving assets including real estate cash and securities THE TAKEOVER The core of the Bin Laden family s settlement with the government involved the conglomerate itself On April 23 the government finalised the transfer of 36 2 percent of the company representing the shares held by Bakr Saleh and Saad to an entity called Istidama Holding Company according to a Commerce Ministry document reviewed by Reuters Two people who have dealt with Istidama said it was set up by the Ministry of Finance to park the proceeds of settlements agreed between the government and individuals detained in the corruption purge The senior government official confirmed to Reuters that the Ministry of Finance owns Istidama There are no public filings about Istidama because it is not a listed firm and Reuters was unable to contact the company The government established a five man committee to oversee the running of Saudi Binladin Group Its members include Abdulrehman al Harkan a former chief executive of Riyadh based developer Dar Al Arkan Khaled Nahas a board member of petrochemical producer Saudi Basic Industries Corp and Khalid al Khowaiter chief financial officer at Advanced Electronics Company a state established technology firm These government appointees are considered by many close to the company to be a front for the rulers The bottom line is that the government has taken over said one banker in Jeddah Harkan Nahas and Khowaiter did not respond to requests for comment The senior government official said the supervisory committee was an independent committee that represents the interests of all partners The remaining two thirds of Saudi Binladin Group are still held by 15 younger Bin Laden brothers according to the Commerce Ministry document Two family representatives were appointed to the oversight committee Yehya who ran the back office and Abdullah a Harvard educated lawyer who handled the conglomerate s interests in the United States Several sources interpreted their inclusion as a token gesture by the government The brothers and their representatives did not respond to requests for comment The void left by the family s diminished role was filled by Harkan the developer who reports to the royal court and to Finance Minister Mohammed al Jadaan according to the group executive As chairman of the committee and the effective head of Saudi Binladin Group Harkan was involved in securing an 11 billion riyal 3 billion loan from the Ministry of Finance in April He has also met with creditors primarily local banks to offer reassurances about the group s future Harkan told those present that the company was a mess and hopelessly insolvent but that he had been appointed by King Salman to lead its turnaround said one attendee To the incredulity of some of those listening Harkan also explained the brothers were relieved to be absolved of their responsibilities Despite those assurances the company s future remains uncertain As Harkan has told creditors plans drawn up after Froehlich was hired will be dusted off The estimated 537 companies that make up the conglomerate from construction to energy will be broken up and the name of the company changed to distance it from the Bin Laden legacy Also at issue is money owed to Saudi Binladin Group After the Ritz detentions what one source described as an army of accountants began combing through the company s books trying to make sense of the government s liabilities to the firm A person close to the family gauged it at nearly 40 billion A company director estimated the amount was smaller The senior government official said the government had no liabilities to the firm but there were some disputed payments among several government agencies that are being addressed LIFE AFTER THE BIN LADENS Saudi Binladin Group has 93 projects in hand and ties to 1 400 subcontractors but most of its work is on hold The company is focusing its efforts on delivering one massive project commissioned by Prince Mohammed The project is NEOM a 500 billion business zone on the Red Sea coast that is the centrepiece of Mohammed s vision for a modern dynamic Saudi Arabia The city will have its own legal system designed to attract international investors in high tech industries such as biotechnology advanced manufacturing and tourism But the first buildings commissioned at the site were more traditional opulent seaside palaces These included a replica of the palace that Saudi Binladin Group completed for King Salman in Tangier Morocco said three sources one of them working at the site According to a project design document reviewed by Reuters the site has palaces for the king Prince Mohammed and his brother Prince Turki as well as smaller villas for other royal brothers and family princes Landscaped with fountains and flowering trees the complex will also feature three helipads a marina and a golf course Contracts for the palaces originally went to other Saudi construction firms But according to the source at the project site and two other sources those companies were unable to handle the scale and speed of the project Tens of thousands of Binladin workers were diverted from other projects around the country They worked 24 7 at breakneck pace to deliver toiling through the sweltering summer months said three sources Grass planted outside the palaces did not grow quickly enough for the Aug 1 deadline so the workers had to replace it with artificial turf before the royal arrival The senior government official confirmed that a subsidiary of Saudi Binladin Group was involved in the building work Prince Mohammed took regular flights around the project to survey its progress according to four people familiar with the matter Two of them said he has taken charge of marketing NEOM himself bringing in prospective investors for official tours and alcohol free parties At the end of July he and the king moved to the unfinished complex for their summer holiday With no other structures on site trailing cabinet members and business leaders stayed on yachts or in the nearby town of Sharma Once again the kingdom needed the knowhow of Saudi Binladin Group |
JPM | EU warns Britain heading for a no deal Brexit | By Robin Emmott and Gabriela Baczynska STRASBOURG BRUSSELS Reuters The European Union warned on Wednesday that Britain was headed for a damaging no deal Brexit with London s ideas for solving the contentious issue of the Irish border still unlikely to unlock a deal just six weeks before Britain is due to leave Addressing EU lawmakers in Strasbourg European Commission President Jean Claude Juncker said British Prime Minister Boris Johnson had told him on Monday that London still wanted a deal but would leave with or without one on Oct 31 There is very little time left The risk of a no deal is very real said Juncker his comments weighing on sterling Pro Brexit lawmakers cheered and applauded in the Strasbourg chamber It s time for a clean break Brexit said Brexit campaigner Matthew Patten Other pro Brexit EU deputies tried to shout down pro EU British colleagues shouting you lost and rubbish A majority of EU lawmakers later voted for an extension to Britain s scheduled departure date in a resolution that is not binding but which has political weight EU leaders will meet for a make or break summit in Brussels on Oct 17 18 just a fortnight before Brexit is due to materialize more than three years after Britons voted to leave U S investment bank JPMorgan NYSE JPM sounded negative on Wednesday about the prospects of Johnson striking a deal then after recent rounds of talks between the two sides showed significant gaps remain Britain is not likely to present a complete set of detailed written proposals of how it would want the text of the existing but stalled Brexit deal changed before the end of the month UK and EU sources said If that is the case the summit will end with nothing an EU diplomat dealing with Brexit in Brussels said If there is to be a deal it must be prepared to a large extent in advance It is too technical to leave to the leaders at the last minute In a worst case scenario a no deal Brexit could mean severe disruption to trade supplies of medicines fresh foods and possible public disorder according to the British government s contingency plans Such a sharp break in economic ties ending four decades of EU membership might be the United Kingdom s choice but never the choice of the EU Juncker said highlighting how the bloc wants to avoid blame if Britain crashes out Juncker said London must present realistic proposals to replace the Irish backstop arrangement in the Britain EU divorce agreement which former premier Theresa May agreed with EU leaders but which was rejected by the British parliament I am not emotionally attached to the Irish backstop Juncker said I have asked the prime minister to make in writing alternatives he said calling it a safety net to avoid a divided Ireland after Brexit The backstop would require Britain to obey some EU rules if no other way could be found to keep the land border between British ruled Northern Ireland and EU member Ireland invisible His pessimistic tone was echoed by Finland s minister for European affairs Tytti Tuppurainen who told the parliament that a no deal Brexit is a quite likely outcome Finland holds the EU s rotating presidency STUPID BREXIT DISREPUTABLE PM However many EU lawmakers warned against a no deal both to avoid an economic shock and because they do not want to see Britain abandon its commitments to EU social and environmental standards and become a low tax low regulation rival We will not accept a Singapore on the North Sea said former Belgian prime minister Guy Verhofstadt a liberal EU lawmaker and a member of the parliament s Brexit committee In an at times bad tempered debate underscoring general weariness on the tortured issue of Britain s pending departure senior EU lawmakers took jabs at the noisy contingent of British eurosceptic deputies in the chamber Manfred Weber leader of the center right EPP group called Brexit stupid He and Verhofstadt took aim at British plans for greater sovereignty at a time when the parliament in Westminster has been suspended by Johnson British pro EU deputy Julie Ward called the prime minister disreputable Brexiteers claimed Westminster would take back control but now they shut it down Weber a German lawmaker said in Strasbourg as the Supreme Court in London continued hearing arguments on whether Johnson acted unlawfully in suspending the parliament in the run up to Brexit The European Parliament formally called on Wednesday for Britain to be granted another extension to allow more time for London to agree the terms of its withdrawal The resolution passed with 544 in favor 126 against and 38 abstentions Britain s departure has already been delayed twice since March and Johnson has vowed he would not seek another extension The EU s chief negotiator Michel Barnier said a no deal Brexit would not resolve any of the issues around the rights of EU citizens the Irish border and British obligations under the bloc s long term budget
If the United Kingdom leaves without a deal all these questions will not disappear They are still there Barnier told the EU chamber Some three years after the Brexit referendum we should not be pretending to negotiate |
JPM | JPMorgan says UK unlikely to get a Brexit deal at October summit | LONDON Reuters U S investment bank JPMorgan NYSE JPM said on Wednesday it was negative about the prospects of Prime Minister Boris Johnson striking a Brexit deal at the Oct 17 18 EU summit Our reading of the situation is much more negative than positive as far as the prospects of a revised Withdrawal Agreement being agreed at the October summit are concerned it said in a note to clients The UK s negotiating approach appears to be to present the details of its proposals late in the process and to use the brute force of a no deal threat to force the EU to accept them JPMorgan said The very limited credibility of that threat adds to reasons why such a brute force approach is not going to work Johnson has said he can get a deal at the summit though he has cautioned that if he does not the United Kingdom will leave on Oct 31 without a deal JPMorgan s Malcolm Barr said reports of a shift in the position of the Northern Irish Democratic Unionist Party which props up Johnson s government were misplaced Time is increasingly short the note said Any deal that had alternative arrangements at its heart would be a complex one given the EU s demand that a well defined and legally operative solution for Ireland be included in the Withdrawal Agreement |
JPM | Australian Unemployment Rises as Workforce Swells to New Record | Bloomberg Australia s jobless rate unexpectedly climbed in August as the labor force swelled to a fresh record signaling additional labor market slack that sets the scene for further easing by the central bank
Unemployment climbed to 5 3 the highest level in a year and above the 5 2 forecast by economists data from the statistics bureau showed in Sydney Thursday The 34 700 increase in jobs for the month was swamped by the seemingly inexorable rise in the participation rate to 66 2
The result is the wrong direction for a Reserve Bank trying to push down unemployment and revive inflation that s lain dormant for almost half a decade Governor Philip Lowe has lowered the cash rate to 1 to support economic growth and is urging the government to add stimulus an effort frustrated by a focus on returning the books to the black
Just an hour prior to the release Treasurer Josh Frydenberg announced an improved budget deficit of just A 690 million 468 million in the fiscal year that ended June 30 That dashed expectations of a surplus which may have allowed him to say the government had met its election promise and was now prepared to boost spending to support growth
Thursday s jobs report showed two key indicators of slack in the labor market worsening The underemployment rate climbed 0 1 percentage point to 8 6 and underutilization the sum of the unemployment and underemployment rates advanced by the same amount to 13 8
Stronger wage growth is unlikely for the foreseeable future said Callam Pickering an economist at global jobs website Indeed who previously worked at the central bank Rising unemployment is a negative for wages and inflation and justifies the Reserve Bank s stance on rates A rate cut at either their October or November meetings seems all but certain
The Aussie dollar fell after the report buying 67 85 U S cents at 12 48 p m in Sydney from 68 13 before the data
New Normal
Lowe earlier this year reduced the estimated level of full employment in the economy to 4 5 from around 5 and cited the lower figure as justification for rate cuts in June and July Money markets and economists expect him to ease twice more to 0 5 a level that would be close to the lower bound of policy and open the door to unorthodox measures
Two of the nation s most watched economists Westpac Banking Corp s Bill Evans and JPMorgan Chase NYSE JPM Co s Sally Auld think Lowe will move next month and again in February The governor is due to speak Tuesday in an address titled An Economic Update and speculation is mounting that he could signal an imminent rate move then
Meantime Commonwealth Bank of Australia the nation s largest lender said the government s improved budget position provides scope for Frydenberg to help the central bank With a potentially larger surplus also set for 2019 20 there were several policy measures that could compliment easier monetary policy said Belinda Allen a senior economist at Commonwealth
The first would be to bring forward shovel ready infrastructure projects RBA Governor Lowe has made this point repeatedly she said The second policy option would be to bring forward the tax cuts scheduled for 1 July 2022 |
JPM | Japan Stocks Pare Gains After BOJ Aussie Slides Markets Wrap | Bloomberg Japanese stocks pared gains and the yen climbed after the Bank of Japan left its policy settings unchanged while noting rising risks from overseas
Australia s dollar slumped after the unemployment rate rose U S stock futures retreated Hong Kong shares slumped and China s yuan dropped as investors took stock of the Federal Reserve s interest rate cut and the odds for the People s Bank of China to lower borrowing costs Equities were little changed in Shanghai
Failing to follow the Fed and European Central Bank in easing policy interest rates the BOJ nonetheless flagged that it needs to pay more attention to the risk of lost momentum toward its inflation target Officials aim to reexamine growth and price developments next month
In a mixed session though Japan s stocks were still higher midday A late session rebound in American stocks following comments from Chairman Jerome Powell that the Fed is prepared to be aggressive if growth faltered failed to follow through to S P 500 futures Thursday
There s no cohesive narrative at the moment said Hannah Anderson a global market strategist at JPMorgan NYSE JPM Asset Management The Fed rate cut and Powell briefing doesn t really change the narrative that investors are going to need more than that from some governing body to give a central thesis that they feel comfortable sticking with for a while she said
U S China trade talks still loom while the geopolitical situation in the Middle East remains unclear after Saudi Arabia blamed Iran for last Saturday s attack on its oil installations
Still to come Thursday are monetary policy decisions in Indonesia Taiwan and the U K And BOJ Governor Haruhiko Kuroda briefs on the policy decision
These are some key events to keep an eye on this week
Bank Indonesia and Bank of England decide policy Thursday Australia jobs figures are out Thursday Friday is quadruple witching day for U S markets When the quarterly expiration of futures and options on indexes and stocks occurs on the same day surging volatility and trading can follow Here are the main moves in markets
Stocks
Futures on the S P 500 Index slid 0 3 as of 1 04 p m in Tokyo Japan s Topix index rose 0 8 after gaining as much as 1 2 earlier Hong Kong s Hang Seng fell 1 2 The Shanghai Composite was little changed South Korea s Kospi added 0 2 Australia s S P ASX 200 Index rose 0 4 Currencies
The Bloomberg Dollar Spot Index was flat after increasing 0 2 on Wednesday The yen rose 0 5 to 107 87 per dollar The offshore yuan fell 0 3 to 7 1026 per dollar The euro bought 1 1038 The Aussie fell 0 5 to 67 91 U S cents Bonds
The yield on 10 year Treasuries was at 1 79 Australia s 10 year bond yield slid about seven basis points to 1 06 Commodities
West Texas Intermediate crude added 0 2 to 58 24 a barrel Gold was at 1 494 31 an ounce |
MS | Franklin Templeton Investments Launches India ETF | Franklin Templeton Investments launched a new fund on Feb 6 2018 focused on providing exposure to the large cap space of the Indian equity markets
Franklin FTSE India ETF tracks the FTSE India Capped Index and holds a portfolio of equities providing access to the Indian equity markets
Fund Characteristics
The fund s index seeks to provide investment results that closely track the performance of Indian markets It has amassed AUM of 2 4 million in few days of trading and has a low expense ratio of 19 basis points a year It holds 136 stocks in its portfolio The fund bears concentration risk as more than 42 is allocated to the top 10 holdings
From a sector look Financials Energy and Information Technology are the top three allocations of this fund with 21 7 14 9 and 14 3 exposure respectively
From a top holdings perspective the fund has 8 5 exposure each to Reliance Industries Ltd and Housing Development Finance Corporation and 6 4 to Infosys Ltd Therefore owing to its large cap focus the fund bears comparatively less risk However investors should note that investing in emerging markets requires a steady appetite for risk owing to the geopolitical and governance risks that investors are exposed to while investing in these countries
How Does it Fit in a Portfolio
India has been falling prey to frauds and the latest is nothing short of a nightmare for public sector banks India s public sector banks have been witnessing a decline in share prices and market value as diamond billionaire Nirav Modi has been accused of perpetrating a fraud to the tune of INR 110 billion 1 8 billion along with some members of the state run Punjab National Bank PNB read
However the economic scenario for the emerging market nation seems to be attractive India s grew 6 3 year over year in the third quarter of 2017 compared with a three year low of 5 7 in the previous quarter Moreover per a Morgan Stanley NYSE MS report India s GDP is likely to have grown 7 in the December quarter of 2017
Despite the worries on governance Indian equities offer a great diversification option capable of generating great returns for investors
Competition
The fund faces a lot of competition from other funds in the space Below we discuss a few ETFs that seek to provide exposure to the Indian equity markets see
iShares MSCI India ETF
This fund provides exposure to large and mid sized Indian equities
It has AUM of 5 5 billion and charges a fee of 68 basis points a year Financials Computer Software and Consumer Discretionary are the top three sectors of the fund with 22 8 14 4 and 12 0 allocation respectively as of Feb 23 2018 Housing Development Finance Co Reliance Industries Ltd and Infosys Ltd are the top three holdings of the fund with 9 2 8 1 and 6 7 allocation respectively as of Feb 23 2018 The fund has returned 21 5 in a year INDA has a Zacks ETF Rank 1 Strong Buy with a Medium risk outlook
WisdomTree India Earnings Fund V EPI
This fund provides exposure to Indian equities in multiple capitalization segments
It has AUM of 1 8 billion and charges a fee of 84 basis points a year Financials Energy and Information Technology are the top three sectors of the fund with 23 2 18 8 and 18 1 allocation respectively as of Feb 26 2018 Reliance Industries Ltd Infosys Ltd and Housing Development Finance Co are the top three holdings of the fund with 9 1 8 1 and 6 2 allocation respectively as of Feb 26 2018 The fund has returned 23 3 in a year EPI has a Zacks ETF Rank 1 with a Medium risk outlook
iShares India 50 ETF JK INDY
This fund provides exposure to large cap Indian equities
It has AUM of 1 2 billion and charges a fee of 93 basis points a year Banks Computer Software and Refineries Marketing are the top three sectors of the fund with 26 2 11 6 and 10 4 allocation respectively as of Feb 23 2018 Reliance Industries Ltd Housing Development Finance Co and Infosys Ltd are the top three holdings of the fund with 7 9 7 2 and 5 7 allocation respectively as of Feb 23 2018 The fund has returned 20 9 in a year INDY has a Zacks ETF Rank 1 with a Medium risk outlook
Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
MS | Why Is Groupon GRPN Stock Rallying Today | Shares of Groupon NASDAQ GRPN rallied more than 4 in early morning trading Monday after analysts from Morgan Stanley NYSE MS said that online deal website s 15 year to date slump is overdone
In a note to clients published Monday Morgan Stanley s Jonathan Lanterman upgraded Groupon to equal weight from underweight and raised his price target for the stock to 4 40 from 4 30 Lanterman argued that GRPN is fairly valued with limited downside at the stock s current valuation of 7 5x 2019E EBITDA
The analyst also mentioned that Groupon s recent investments in strengthening its core business could generate earnings growth while the company s overall international opportunity remains relatively intact
Groupon has been sold off since its Q4 earnings announcement a few weeks ago Management reported adjusted earnings of 0 07 cents per share missing the Zacks Consensus Estimate of 0 09 Total revenues came in at 873 2 million down about 3 5 on a year over year basis
The company has been trying to reduce dependence on deals and is shifting focus towards the local services market Groupon s famous specials and coupons bring in plenty of revenues but that business operates with razor thin margins The Chicago based firm hopes that a local services focus will be more profitable
Management has been busy building partnerships to make this shift a reality The company now teams up with Grubhub NYSE GRUB enabling its users to order food delivery from around 55 000 restaurant partners of Grubhub via Groupon s platform Groupon also recently inked a partnership with ParkWhiz that will provide its users to reserve convenient parking spots before reaching a particular destination
GRPN is currently sporting a Zacks Rank 3 Hold The company has witnessed mixed analyst activity with three positive full year 2018 earnings estimate revisions and six negative revisions coming in over the past 30 days
Thanks in part to these revisions the Zacks Consensus Estimate is now calling for Groupon to witness adjusted earnings of 0 20 per share this fiscal year This result would represent year over year earnings growth of more than 80 However the company s top line is projected to contract about 7
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Last year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
JPM | JPMorgan Chase JPM Stock Moves 0 83 What You Should Know | JPMorgan Chase JPM closed at 107 76 in the latest trading session marking a 0 83 move from the prior day This move was narrower than the S P 500 s daily loss of 0 95 Elsewhere the Dow lost 0 67 while the tech heavy Nasdaq lost 1 51
Coming into today shares of the biggest U S bank by assets had lost 0 96 in the past month In that same time the Finance sector gained 2 3 while the S P 500 gained 4 32
JPM will be looking to display strength as it nears its next earnings release which is expected to be July 16 2019 The company is expected to report EPS of 2 55 up 11 35 from the prior year quarter Our most recent consensus estimate is calling for quarterly revenue of 29 38 billion up 5 86 from the year ago period
Looking at the full year our Zacks Consensus Estimates suggest analysts are expecting earnings of 10 03 per share and revenue of 115 29 billion These totals would mark changes of 11 44 and 5 74 respectively from last year
It is also important to note the recent changes to analyst estimates for JPM Recent revisions tend to reflect the latest near term business trends With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Our research shows that these estimate changes are directly correlated with near term stock prices Investors can capitalize on this by using the Zacks Rank This model considers these estimate changes and provides a simple actionable rating system
The Zacks Rank system which ranges from 1 Strong Buy to 5 Strong Sell has an impressive outside audited track record of outperformance with 1 stocks generating an average annual return of 25 since 1988 The Zacks Consensus EPS estimate has moved 0 03 lower within the past month JPM is currently a Zacks Rank 3 Hold
Digging into valuation JPM currently has a Forward P E ratio of 10 84 This valuation marks a premium compared to its industry s average Forward P E of 10 79
Also we should mention that JPM has a PEG ratio of 1 55 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate Banks Major Regional stocks are on average holding a PEG ratio of 1 31 based on yesterday s closing prices
The Banks Major Regional industry is part of the Finance sector This industry currently has a Zacks Industry Rank of 107 which puts it in the top 42 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
To follow JPM in the coming trading sessions be sure to utilize Zacks com |
MS | Morgan Stanley sues six Illinois brokers who left for Stifel | By Dena Aubin NEW YORK Reuters Morgan Stanley N MS has sued six brokers who left an Illinois branch of the firm last week to join competitor Stifel Nicolaus N SF alleging that they have been soliciting Morgan Stanley clients in violation of employment agreements Filed on Wednesday in Chicago federal court the lawsuit said the team managed about 660 million in assets at Morgan Stanley s Bourbonnais office before their sudden resignations on Sept 13 The brokers apparently took client files and contact information with them and have been asking clients to move to Stifel the lawsuit alleged When departing advisors breach their agreements remove confidential information or trade secrets including personal client information or engage in other misconduct they should expect that Morgan Stanley will take appropriate legal action spokeswoman Christine Jockle said in a statement The departures include the former manager of Morgan Stanley s Bourbonnais office Zachary Birkey now branch manager of Stifel s Bourbonnais office Birkey declined to comment on the lawsuit Neil Shapiro a spokesman for Stifel said the company does not comment on pending litigation Morgan Stanley s lawsuit said the brokers each signed an agreement not to solicit the company s clients for one year after leaving the firm for any reason It asked the court to order the brokers to stop soliciting clients or using any of Morgan Stanley s information The complaint said the brokers also may be making false statements about their former employer Some clients have been asking Morgan Stanley if its Bourbonnais office is closing or if Morgan Stanley is going bankrupt the complaint said Files for one large client also appear to be missing the complaint said
Lawsuits over broker defections had dropped after major Wall Street firms signed a pact in 2004 agreeing not to sue if brokers left for rival firms and took clients with them Morgan Stanley left the so called Protocol for Broker Recruiting last October saying the move would allow it to invest more in its advisers |
MS | Japan s Economy Was a Cautionary Tale Now It s Starting a New Chapter | Bloomberg Opinion The world s third largest economy has suffered from a caricature Yes Japan fell from its pinnacle in the 1990s because of a property crash enfeebled banks and a dwindling population But that was then It s not falling anymore
When Japan s economy was stumbling China became the darling of the commentariat investors and multinational companies developing supply chains The mood toward China however has soured Now the international impression of Japan needs to change as well
Far from fizzling Japan may be on the cusp of a boom according to a comprehensive report by Morgan Stanley NYSE MS Deflation has been stymied immigration is slowly but surely increasing and that 2 5 percent jobless rate is driving a surge in capital spending A lot of that is likely to be on artificial intelligence and robotics
Capital expenditure growth among large firms will average about 7 percent a year through 2020 Morgan Stanley estimates up from 5 percent last year Outlays like this are essential as the labor pool dries up That became abundantly clear to me on a trip to Japan s Rust Belt in 2016 Employers gushed about robots and bemoaned the shrinking pool of skilled humanoids
Nestled in last week s revisions to second quarter gross domestic product was a jump in private investment a climb of 3 1 percent compared with an originally reported 1 3 percent That was the seventh consecutive increase a stretch unseen since the bubble era of the 1980s That period didn t end well and plenty could still go wrong this time
But give Japan its due It s a very different place from two decades ago when observers abandoned it for China and all those business book paeans to the Japanese way of business were replaced by hagiographies of the Middle Kingdom
Japan has had its share of false dawns since then The central bank has tried to crank inflation up to 2 percent and years of aggressive easing have got it barely halfway Looked at another way at least we are talking about too low inflation rather than deflation An increase in Japan s consumption tax penciled in for next year could provoke a recession Japan could also be collateral damage in the trade war between the U S and China Japanese auto executives also fret about President Donald Trump s threats to impose tariffs on imported vehicles
None of that ought to detract from the essential idea that it s time to pay attention to Japan Its long term prospects are far stronger than conventional wisdom implies |
MS | Danske Bank board close to appointing new CEO Finans | COPENHAGEN Reuters Danske Bank s CO DANSKE board is close to appointing a new chief executive to replace Thomas Borgen who resigned last week amid a money laundering scandal Danish online media Finans reported on Monday citing unnamed sources Finans quoted an anonymous board member at Danske as saying the bank must await the necessary approval from Danish financial markets regulator FSA to be able to appoint a new CEO When asked directly if the board has a candidate ready and is awaiting approval from the FSA the board member said That could be the case Danske Bank declined to comment to Reuters Several sources point to the current head of wealth management and former chief financial officer at the bank Jacob Aarup Andersen as a clear favorite to take over as new CEO Finans also mentioned as possible candidates former CEO of Swedens s SEB ST SEBa and current partner in Swiss bank Lombard Odier Annika Falkengren CEO of mortgage lender Nykredit Michael Rasmussen CEO of Orsted CO ORSTED Henrik Poulsen and head of fixed income and commodities in the EMEA region at Morgan Stanley N MS Jakob Horder |
MS | Barrick and Randgold Raise Hopes Merger to Spark Sluggish Sector | Bloomberg The biggest gold deal of the past three years may ease concerns about Barrick Gold Corp s stagnant production and offer Randgold Resources LON RRS Ltd a reset for its languishing shares The question is whether the whole will really be greater than the sum of its parts
Canada s Barrick agreed on Monday to buy London listed Randgold for about 5 4 billion creating a global gold mining behemoth with a focus on Africa and the Americas The shares of both companies climbed
Both sides are each hoping that the other will be the solution to their own problems Kieron Hodgson natural resources analyst at Panmure Gordon said by phone from London Shareholders have become increasingly agitated with the performance of both companies
Under Executive Chairman John Thornton Barrick has been selling assets and stakes in mines to reduce costs and debt While that effort was initially received well by investors the move also has raised concern about the company s production pipeline helping send its shares falling by about a half from a February 2017 peak For Randgold the transaction offers a reset for its shares which have slipped this year after previously outperforming its gold mining peers
Under the all share deal Barrick shareholders will own about two thirds of the new entity and Randgold investors the remainder the companies said on Monday There is almost no premium for Randgold shareholders but Barrick has agreed to a break fee of 300 million Both sets of investors are expected to vote on the deal around Nov 5
Randgold has a proven ability to operate successfully in some of the most challenging environments in the world Barrick s Thornton said on a conference call The combined company will have five of the world s top 10 tier one gold assets
Thornton will retain his position in the enlarged company while Randgold Chief Executive Officer Mark Bristow becomes president and CEO Randgold Chief Financial Officer Graham Shuttleworth will become CFO of the new company
Barrick will benefit from lower costs and having Bristow as a top executive Jefferies analysts said Monday in a note
While direct operational synergies are unlikely to be significant and increased Africa exposure is a clear risk the addition of Mark Bristow as president and CEO is a positive Alan Spence and Christopher LaFemina wrote All things considered this transformational deal should be good for Barrick shareholders over the medium long term
Barrick rose as much as 6 9 percent in New York the most intraday since March 2017 and was trading up 5 5 percent at 11 05 as of 12 19 p m
Randgold shareholders will receive a dividend of 2 a share for the 2018 financial year The company s shares climbed 6 percent to close at 5 220 pence in London the biggest gain since June 2016
Randgold has still slipped about 30 percent this year as it faced labor challenges in the Ivory Coast a tax dispute in Mali and the prospect of a tougher mining code in the Democratic Republic of Congo Barrick s majority owned Acacia Mining Plc has been stuck in limbo after Tanzania imposed a ban on exports of mineral concentrates in 2017 and slapped a 190 billion tax bill on the London listed company
There are synergies very clear synergies in Africa particularly because we can operate the entire portfolio that will be double in size with exactly the same structures Bristow said on a conference call And as we progress collectively to find a solution that really delivers better value and more transparency in Tanzania we will unlock many synergies
In many ways the strategies of the two companies are similar Both firms are highly focused on production costs aiming to build portfolios that generate free cash flow even if gold prices drop to as low as 1 000 an ounce The metal traded at 1 203 94 at 10 51 a m in New York
Barrick was advised by Morgan Stanley NYSE MS and M Klein and Co while Randgold was advised by CIBC World Markets and Barclays LON BARC Plc
The Terms
Each Randgold shareholder will receive 6 128 new Barrick shares for each Randgold share
Exchange ratio has been agreed based on the volume weighted average prices of Barrick shares traded on NYSE and Randgold ADSs traded on NASDAQ over the 20 trading days ended on Sept 21
Barrick shareholders will receive a total 2018 annualized dividend of up to 14 cents a share |
JPM | Gold Prices Steady After Havens Rally on Attacks in Saudi Arabia | Investing com Gold prices stabilized around 1 510 an ounce on Monday after the attacks on Saudi Arabian oil installations at the weekend triggered a flight to safety in global financial markets that benefited almost all haven assets
By 9 AM ET 1300 GMT gold futures for delivery on the Comex exchange were quoted at 1 509 85 a troy ounce up 0 8 from late Friday albeit off an intraday high of 1 519 65
Spot gold was quoted up 0 9 at 1 501 93 an ounce
The move upward in gold echoed that in bonds where yields fell sharply in response to the attacks The 30 year Treasury bond yield after a sharp sell off last week fell eight basis points to 2 30 Bond prices move inversely to yields
European bond yields have also risen broadly although they remain at much lower levels after the European Central Bank ensured a lasting bid for them by reviving its quantitative easing program at last week s policy meeting
Attention this week will be focused on the Federal Reserve where the Federal Open Market Committee will hold its regular meeting on Tuesday and Wednesday According to Investing com s Fed rate monitor tool the chance of a 25 basis point cut in the Fed funds target range has now fallen to 78 its lowest in several weeks after stronger than expected retail sales and consumer sentiment data on Friday undercut the case for aggressive policy easing
Against the backdrop of easier global monetary policy gold remains a core strategic recommendation for many analysts Cross asset strategists at JPMorgan NYSE JPM expect a modest pull back to 1 485 by the end of this month but still see gold rising to over 1 710 by June next year
Elsewhere silver futures recovered 1 9 to 17 89 an ounce while platinum futures fell 0 1 to 951 20
Industrial metals retreated Copper futures were down 1 1 at 2 67 a pound while nickel futures fell 3 0 to 17 212 a ton |
JPM | JPMorgan is fined for lax disclosure of misconduct allegations over six years FINRA | Reuters A unit of JPMorgan Chase Co N JPM was fined 1 1 million by a U S regulator on Monday for being too slow to disclose 89 internal reviews or allegations of misconduct by financial advisers and other employees over six years The Financial Industry Regulatory Authority FINRA said the alleged misconduct at JPMorgan Securities LLC included misappropriating customer funds borrowing from customers forging and altering documents unauthorized trading and other activities It said that when JPMorgan filed the required information with FINRA it was on average more than two years late FINRA said JPMorgan s disclosure shortfalls occurred from January 2012 to April 2018 JPMorgan did not admit or deny wrongdoing in agreeing to settle |
JPM | Wells Fargo tests cryptocurrency for internal transactions | By Imani Moise
Reuters Wells Fargo Co N WFC said on Tuesday it will pilot its own digital currency powered by blockchain to help move cash across borders and between branches in real time
The currency called Wells Fargo Digital Cash will be linked to the U S dollar and transferred using the bank s distributed ledger technology to keep track of payments within its internal network
The system will allow the bank to bypass third parties in the asset transfer process saving costs and time said Lisa Frazier head of the Innovation Group at Wells Fargo
We are eliminating the intermediaries which can often extend the timeline to be able to do cross border money transfers she said
The fourth largest U S bank s corporate clients will not have to make any changes to the way they interact with the bank since the currency will not be client facing
The pilot will begin next year but the bank has tested the technology by moving money between Canada and the United States Following the broader roll out the company hopes to expand to multi currency transfers
Though Wells Fargo executives have been bullish on the potential for blockchain technology in financial services the company has been more skeptical of cryptocurrencies like bitcoin which launched the system into the spotlight
Last year Wells Fargo joined U S rivals in banning the purchase of Bitcoin by credit card customers due to the volatility of the investment
Blockchain technology has attracted billions of dollars in investments from banks and other companies but concerns about implementation and scalability has hindered many blockchain projects so far
Early roadblocks have not stopped banks from experimenting aggressively in the space In February JPMorgan Chase Co N JPM launched its own digital currency also linked to the U S dollar that allows its corporate clients to transfer funds instantly across its internal blockchain network |
MS | Rate Hikes Not Brexit To Drive Pound | The British pound is expected to push Brexit negotiations aside for the next 3 months and instead the currency will be driven by economic data which may translate into an interest rate hike depending on the outcome of the news
In their latest rate decision the Bank of England kept rates on hold as expected but sent strong signals to the market that rate rise was on the cards in the nearest future in order to drive down inflation which is currently siting around 3 percent and causing problems in the economy with wage growth is lagging far behind
The BOE surprised everyone by being so openly hawkish so now every piece of data will be analyzed as a make or break for a May rate hike said Sonja Marten a currency strategist at DZ Bank AG in Frankfurt who sees the pound climbing to 1 45 in six months Sterling will obviously benefit from evidence that confirms the prospect for a rate hike
Overall weakness in the US dollar is also expected to help the pound sterling climb higher against its major rival according to some analysts who predict that the greenback is in the early stages of a major down trend which will become evident over the next few months
Global capital demand is likely to rise given both more expansionary US fiscal policy and increasingly strong global economic performance which has convinced us to expect the longer term USD downtrend to start sooner and be more pronounced says Hans Redeker head of Foreign exchange strategy at Morgan Stanley NYSE MS
The upward USD correction we previously anticipated for 2H18 has been brought forward into 2Q we expect it to be more shallow He added |
MS | Pandora Pops Then Drops Cycles Pushing Lower | Shares of Pandora Media NYSE P initially popped 11 to 5 42 yesterday when the company reported an increase in subscription revenue of 63 as well as an increase in subscribers of 25
However by the time the market opened on Thursday the stock had flipped over to trade down 11 to as low as 4 32 That s not surprising given its negative earnings per share of 0 21 compared to estimates of 0 07 The stock was also downgraded by Morgan Stanley NYSE MS and other analysts
Looking at the chart below Pandora has seen continual negative cyclical patterns suggesting lower prices This coincides with a challenging competitive environment The stock s current market cycle suggests a decline into mid March likely testing its recent low near 4 The cycles are designated by the gray semicircles at the bottom of the chart
For a more detailed look at cycle analysis for a broader selection of futures watch the every Friday afternoon or subscribe to our channel |
MS | Pairs Trading The Best Way To Invest In Gold Today | I m frequently asked about gold
Over the years it s been a great investment but lately sigh
Let s just say the shiny stuff has hardly lived up to expectations
Part of that is due to the dynamics of the gold market itself and part of that is due to the fascination with cryptocurrencies
Let s talk about each of those things then move onto a great way perhaps even the only way to play gold today
Gold has historically been driven by its relationship to inflationary expectations to interest rates and to physical supply Generally speaking gold prices move inversely to economic prosperity
You can actually see that quite clearly when you compare the SPDR Gold Shares ETF NYSE GLD to the S P 500 Prices tracked almost in tandem from 2009 to mid 2012 then broke when investors finally decided that the post financial crisis recovery had teeth
Now with geopolitical concerns rising and interest rates on the uptick many investors are wondering if gold could shine again
I wouldn t bet on it
As of last November The Wall Street Journal reported that retail gold sales were at the lowest levels in a decade Mohamed El Erian chief economic advisor to Allianz DE ALVG SE ETR ALV even went so far as to warn that cryptocurrencies could pose a serious long term threat to gold
My sentiments exactly
The situation is so bad that even gold purchasers buying directly from the U S Mint are reportedly getting pinched as dealers stockpile coins they can t sell Sales volumes have dropped off a cliff
There s simply not a lot of buyers nor are there likely to be But that doesn t mean all is lost
You can still profit from gold if you know where to look and which tactics to use
Playing Gold in Pairs for Profits
My suggestion is to play gold with something called a pairs trade
If you ve never heard the term before a pairs trade means that you are simultaneously buying and selling shares of two different companies and treating the net spread between them as a single position
Practically speaking it s no different than ordering a value meal at your favorite fast food joint You re paying one price for a burger fries and a drink
Pairs trades have a number of advantages that make them ideal for current market conditions They offer
Big profit potential no matter which direction the markets go next
Easy implementation
Minimal risk exposure
Pairs trading has been around since roughly the early 1980s when Morgan Stanley NYSE MS quants figured out that they could trade the markets for huge profits using an investing approach that did not depend on market direction
Since then pairs trading has become widely used by institutional traders proprietary trading desks and even individual investors thanks in large part to the Internet
The idea is simple
Traders use either fundamental or technical data to construct a pairs trade based on highly correlated stocks indices or other instruments Usually they re in the same sectors or industries but that s not always the case
When done correctly pairs trades are delta neutral meaning they don t depend on direction inexpensive to put on because the short help pay for the long and limited risk because they re dollar sized instead of being share dependent
Pairs trades are also optionable which means that traders who want more juice or who desire using smaller amounts of capital can still be successful For example a trader could sell calls on the stronger security while selling puts against the weaker As both revert to their statistical mean the trader profits from time decay and price movement
There s plenty of verifiable third party evidence that pairs trading is profitable
One of the most important is the 1998 paper from the Yale School of Management by Evan Gatev William Goetzmann and Geert Rouwenhorst One of the better more clearly written books on the subject if you d like a more in depth understanding is Pairs Trading Quantitative Methods and Analysis by Ganapathy Vidyamurthy
The premise is straight forward |
JPM | Here s Why JPMorgan JPM Stock Is A Solid Investment Choice | JPMorgan NYSE JPM the biggest U S bank in terms of total assets is well positioned to grow driven by consistent rise in loan demand higher interest rates branch expansion efforts and solid asset quality Further expanding its reach into lucrative U S healthcare payments market with a deal to acquire InstaMed will go a long way in supporting profitability However a slowdown in mortgage banking operation given the increase in competition and fall in home buying appetite is a major near term concern for JPMorgan Also dismal investment banking and trading performance will hurt fee income growth to some extent Nonetheless this Zacks Rank 2 Buy stock seems like an attractive investment opportunity right now as it has been witnessing solid upward estimate revisions and has decent price performance amid volatile markets Over the past 60 days the Zacks Consensus Estimate for earnings has increased 1 8 for 2019 and nearly 1 for 2020 Additionally shares of JPMorgan have rallied 12 2 so far this year outperforming the s increase of 10 9
What Makes the Stock a Solid PickEarnings growth Over the past three to five years JPMorgan witnessed earnings per share growth of 12 6 Further the company s earnings are projected to grow 11 3 and 6 7 in 2019 and 2020 respectively Moreover JPMorgan has an impressive earnings surprise history Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters the average beat being 3 The company s long term three five years estimated earnings growth rate of 7 promises rewards for investors in the long run Revenue strength JPMorgan continues to benefit from higher interest rates and loan growth Further its plan to open roughly 400 new branches in 15 20 new markets by the end of 2022 will provide additional support Notably the company has already made progress on this front with announcements to open branches in several new regions Also the company announced a deal to acquire InstaMed which will enable it to expand reach into lucrative U S healthcare payments market All these efforts are expected to further support growth in revenues The company s sales growth is projected to be 5 7 for 2019 and 2 5 for 2020 Encouraging capital deployment plan JPMorgan s 2018 capital plan received the Federal Reserve s approval Following this the bank raised its quarterly dividend to 80 cents per share in September 2018 up 42 9 from the prior payout Moreover the company has a share repurchase program of up to 20 7 billion in place These activities reflect its capital strength and commitment toward rewarding shareholders Given its solid liquidity position and earnings strength the company should be able to sustain improved capital deployments Superior Return on Equity ROE JPMorgan s ROE ratio is 14 23 compared with the industry average of 12 69 This indicates that the company reinvests more efficiently compared to the industry Other Bank Stocks to ConsiderCurrent year earnings estimates for Citigroup NYSE C have been revised 2 4 upward over the past 60 days Further the company s shares have gained 28 9 so far this year Currently it carries a Zacks Rank of 2 You can see BankUnited Inc s NYSE BKU earnings estimates for 2019 have moved 2 5 upward over the past 60 days Further year to date the company s shares have rallied 11 Currently it carries a Zacks Rank of 2 Popular Inc s NASDAQ BPOP earnings estimates for 2019 have moved 7 upward over the past 60 days Also year to date the company s shares have rallied 12 8 Currently it carries a Zacks Rank of 2 Will you retire a millionaire One out of every six people retires a multimillionaire Get smart tips you can do today to become one of them in a new Special Report 7 Things You Can Do Now to Retire a Multimillionaire |
JPM | 4 Growth Funds To Buy On May s Upbeat Economic Data | Recently released economic data has provided mutual fund investors some relief in the United States The stock market gained traction on the back of a hearty increase in industrial production and consumer spending In such a bullish scenario it would be prudent to invest in mutual funds that focus on growth
Industrial Production Hits 6 Month High
Industrial production in the country gained momentum in May as it registered 0 4 growth This rise was largely pushed by the increase in production of cars and pickup trucks the Federal Reserve last week May s increased industrial activity also happens to be the strongest monthly rise in six months given the new strength in autos and appliances
Total industrial production was 2 higher in May on an annualized basis The production of business equipment consumer goods and construction supplies gained momentum in May after a slowdown in April
This rise in industrial production eased fears of an economic slowdown due to tariff issues and a dull May jobs report especially at a time when investors are betting on a Fed rate cut in 2019
Consumer Spending Picks Up
Further dismissing fears of the economy slowing down in the second quarter retail sales in the country rose as American shoppers ramped up spending in the month of May
According to the Commerce Department retail sales increased 0 5 last month as consumers bought vehicles and a wide range of other consumer products Sales of building materials and garden equipment rose 0 1 sales at auto dealerships increased 0 7 and online and mail order purchases climbed 1 4 last month In addition sales at restaurants and bars rose 0 7 and sales in hobby musical instrument and book stores increased 1 1
This solid retail sales report may allow the Fed to wait for some more time before deciding on cutting its benchmark interest rates After all a rise in consumer spending is indicative of consumers healthy spending power and accounts for more than 70 of the country s economic activity
Our Choices
An increase in manufacturing activity and uptick in consumer spending which are the two pillars of economic activity could mean that the markets could do well ahead Therefore adding mutual funds to your portfolio that invest in companies with high potential for growth makes sense
We have thus selected four such mutual funds for your portfolio All these funds carry a Zacks Mutual Fund Rank 1 Strong Buy Moreover these funds have encouraging year to date returns Additionally the minimum initial investment is less than 5000
We expect these funds to outperform their peers in the future Remember the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers Unlike most of the fund rating systems the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund
Now we come to the second most vital question why should investors consider mutual funds Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds read more
DWS Capital Growth Fund Class A aims for capital growth over a long period The fund invests the majority of its assets in equity securities of American companies The fund mostly invests in companies that have market capitalizations similar to those included on the S P 500 Index or the Russell 1000 Growth Index
This Zacks sector Large Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
SDGAX has an annual expense ratio of 0 94 which is below the category average of 1 07 It has year to date returns of 16 2 The minimum initial investment for the fund is 1000
JPMorgan NYSE JPM Large Cap Growth Fund Class R5 aims for long term capital appreciation The fund mostly invests in equity securities of large companies The fund recognizes large cap companies as those that have market capitalizations similar to the companies included on the Russell 1000 Growth Index at the time of purchase
This Zacks sector Large Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
JLGRX has an annual expense ratio of 0 54 which is below the category average of 1 07 It has year to date returns of 19 2 There is no minimum initial investment for the fund
Principal MidCap Growth Fund R 5 Class aims for long term capital growth The fund invests a majority of its assets in equity securities of companies with medium market capitalizations at the time of purchase The fund recognizes medium sized companies as those that have market capitalization in the range of the companies included on the Russell Midcap Growth Index
This Zacks sector Mid Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
PHPPX has an annual expense ratio of 0 93 which is below the category average of 1 18 It has year to date returns of 19 8 There is no minimum initial investment for the fund
TIAA CREF Mid Cap Growth Fund Retail Class aims for a favorable total return over a long period of time The fund invests the majority of its assets in securities of medium sized domestic companies as defined by the Russell Midcap Growth Index which the investment adviser believes has the opportunity for growth
This Zacks sector Mid Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
TCMGX has an annual expense ratio of 0 77 which is below the category average of 1 18 It has year to date returns of 20 9 The minimum initial investment for the fund is 2500
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JPM | Gold Surges To 14 Month High ETFs To Tap | Gold price climbed to more than 1 350 per ounce touching a 14 month high and gaining for the fourth straight week the longest run since January Hopes of a Fed rates cut and investors flight to safety fueled by a myriad of woes fueled the rally in the metal The Fed early this month hinted at interest rates cut if needed given the implications of trade tensions on the economy Speculation increased all the more with the latest weak job data and subdued inflation Lower rates will continue to weigh on the dollar against the basket of currencies raising the yellow metal s attractiveness as it does not pay interest like fixed income assets read Global growth worries driven by deepening U S China trade tensions disappointing economic data across the globe and geopolitical tensions spurred demand for safe haven assets The attacks on two oil tankers in the Gulf of Oman sparked fresh concerns of U S Iran conflict as Washington blamed Iran for attacks while Tehran refused
Further factory activity contracted in the United States Europe and Asia last month while China s industrial output growth slowed to a more than 17 year low of 5 in May The World Bank recently slashed its global growth outlook from 2 9 projected in January to 2 6 the slowest growth in three years citing trade conflicts financial strains and unexpectedly sharp slowdown in wealthier countries Against this backdrop gold is considered a great store of value and hedge against market turmoil Moreover investors poured into exchange traded funds backed by gold with since late February read ETFs to TapGiven this investors could tap the rise in bullion price with the help of ETFs We have highlighted five gold ETFs that could be excellent plays for investors who believe that gold will continue to move higher amid rocky fundamentals SPDR Gold Trust P GLD ETF TSXV GLD This is the largest and most popular ETF in the gold space with AUM of 33 2 billion and average daily volume of around 7 7 million shares The fund tracks the price of gold bullion measured in U S dollars and kept in London under the custody of HSBC Bank USA Expense ratio comes in at 0 40 The fund has a Zacks ETF Rank 3 Hold with a Medium risk outlook read iShares Gold Trust ASX IAU This ETF offers exposure to the day to day movement of the price of gold bullion and is backed by physical gold under the custody of JP Morgan Chase NYSE JPM Bank in London It has AUM of 12 4 billion and trades in solid volume of 14 6 million shares a day on average The ETF charges 25 bps in annual fees and has a Zacks ETF Rank 3 with a Medium risk outlook Aberdeen Standard Physical Swiss Gold Shares ETF This product also tracks the price of gold bullion and is backed by physical bullion under the custody of JPMorgan Chase Bank It has amassed 892 million in its asset base and trades in lower volume of 48 000 shares per day The product has an expense ratio of 0 17 and a Zacks ETF Rank 3 with a Medium risk outlook read SPDR Gold MiniShares Trust TSXV GLD This product seeks to reflect the performance of the price of gold bullion Being a low cost product with expense ratio of just 0 18 GLDM has gathered 739 2 million in AUM within a year of debut while trading in solid average daily volume of 836 000 shares GraniteShares Gold Trust TSX BAR With AUM of 523 2 million and expense ratio of 0 17 the fund tracks the performance of gold price It trades in a moderate volume of 286 000 shares per day on average and has a Zacks ETF Rank 3 see Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
MS | Exclusive Bayer puts stake in chemical park operator up for sale sources | By Ludwig Burger and Arno Schuetze FRANKFURT Reuters Bayer DE BAYGN is inviting financial investors to bid for its 60 percent stake in chemical park operator Currenta after initially failing to agree a sale to its former chemicals subsidiary Covestro three people familiar with the matter told Reuters Bayer which is focusing on healthcare and crop protection after the takeover of U S seed maker Monsanto NYSE MON has mandated Morgan Stanley NYSE MS to help with the transaction Buyout firms and infrastructure investors have been asked to put in initial bids by the middle of October the sources said Currenta which operates infrastructure facilities at German chemical complexes in Leverkusen Dormagen and Krefeld Uerdingen could be valued at upwards of 1 billion euros 1 2 billion and possibly more than 2 billion according to one of the sources Covestro Morgan Stanley and Bayer declined to comment Currenta s three industrial sites were once dominated by Bayer but after the drugmaker s staggered exit from the production of industrial chemicals and plastics Bayer no longer plays a major role among Currenta s more than 70 customers Bayer needs to rebuild its financial firepower after the 63 billion takeover of U S seeds maker Monsanto It is competing with larger pharma rivals as it bids for the rights to promising new treatments from biotech firms to try to strengthen its drugs development pipeline Despite the widened group of prospective buyers a sale to Covestro whose products include transparent plastics for road side noise barriers and panoramic car roofs can still not be ruled out Covestro is half in half out They re just not finding any common ground said one of the sources describing the state of negotiations with Bayer Currenta mainly supplies Bayer s former subsidiaries Covestro and the special chemicals company Lanxess which owns the remaining 40 percent in Currenta with electricity steam and natural gas It also provides services including transportation maintenance waste management and workers safety and employs 3 200 staff Even prior to Covestro s 2015 carveout from Bayer and subsequent stock market listing no internal agreement could be reached about transferring Bayer s Currenta stake to Covestro even though the subsidiary was set to replace its parent as Currenta s main customer the sources said Standard Poor s cut its credit rating of Bayer to triple B in the wake of the Monsanto deal and Bayer has vowed to pay back debt to return to a single A rating over the long run Covestro in turn is buying back shares and has bolstered its investment ambitions banking on stable demand for specialty materials even beyond the industry s current upswing The maker of transparent polycarbonate plastics and chemicals for padding foam in mattresses and car seats expects to rake in more than 2 billion euros in cash flow after investment expenditure this year boosted by stronger than expected demand 1 0 8579 euros |
MS | BOJ Keeps Policy Unchanged as It Shifts to Wait and See Mode | Bloomberg The Bank of Japan left its monetary stimulus program unchanged as it settled in to gauge the impact of its first policy adjustments in nearly two years in July
The central bank maintained its 10 year bond yield target asset purchases and guidance on interest rates at the end of a two day meeting Wednesday The result was predicted by all 51 economists surveyed by Bloomberg
The decision leaves the BOJ even further behind its global peers who are moving to return to pre crisis monetary policy The Federal Reserve is expected to raise interest rates again next week and the European Central Bank said it planned to phase out its bond buying by the end of the year
Under Governor Haruhiko Kuroda the BOJ is widely expected to stick with the current basic settings until 2020 while monitoring the build up of side effects the Bloomberg survey found Inflation is only about halfway to the central bank s 2 percent target while a sales tax increase scheduled for the second half of 2019 would pose a challenge to consumption and growth
It s time now for the BOJ to monitor the effects of the policy adjustments it made in July said Naomi Muguruma a senior market economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities Co in Tokyo
The BOJ will face challenges ahead as it tries to sustain Japan s economic expansion and push inflation closer to 2 percent Near term risks include the Hokkaido earthquake typhoons and a record breaking heat wave All are expected to weigh on third quarter growth
The BOJ s basic view of the economy and inflation hasn t changed but the fact that it maintained language from July s quarterly outlook report on trade protectionism shows that it also views the escalating trade fight between China and the U S as a risk Muguruma said
There is also the question of side effects The changes the central bank made in July were aimed at making its stimulus more sustainable but economists concluded the moves amounted to stealth tapering and wouldn t do much about the side effects
Koji Fujiwara head of the Japanese Bankers Association said last week that he wants to step up monitoring of the impact on banks given the central bank s pledge to keep interest rates extremely low for an extended period
The BOJ may decide to adjust policy again in the middle of next year if it determines the recent changes weren t enough to offset the side effects on the JGB market said Kyohei Morita chief Japan economist at Credit Agricole PA CAGR Securities Asia
Dissenters
Board members Goushi Kataoka and Yutaka Harada again delivered dissenting votes on yield curve control and forward guidance on Wednesday Both have previously called for more stimulus if required
Kataoka on Wednesday disagreed with the board s view that inflation was likely to rise gradually to 2 percent saying monetary easing should be strengthened and the central bank should commit to additional measures if it determines that medium and long term inflation expectations were weakening
Abenomics
Prime Minister Shinzo Abe asked about the risks said last week that the BOJ s stimulus shouldn t go on forever serving as another reminder that it surely must come to an end one day
We had Abe s comments recently and there s more concern about side effects so I think it s becoming more the case that the BOJ wants to normalize policy if it can said Masaki Kuwahara senior economist at Nomura Securities Co
Yet it appears that day won t come soon Abe is expected to win a ruling party leadership election on Thursday and continue as prime minister for several more years The BOJ s stimulus has been a pillar of his Abenomics growth program a principal reason he is poised to become Japan s longest serving post war prime minister
Adds details economists comments dissenting votes |
JPM | Exclusive Two JPMorgan metals executives put on leave amid U S probe source | By Peter Hobson Lawrence Delevingne and Koh Gui Qing LONDON NEW YORK Reuters Two JPMorgan Chase Co N JPM employees including a top metals trading executive have been placed on leave in response to a U S criminal investigation into the bank s metals trading practices according to a source familiar with the matter Michael Nowak and Gregg Smith are on leave the source said on Thursday making them the third and fourth JPMorgan employees to be connected to the criminal investigation that has resulted in guilty pleas from two former JPMorgan metals traders Nowak is a managing director and global head of base and precious metals trading in New York for the bank according to his LinkedIn NYSE LNKD profile Smith s title could not be learned Nowak was placed on leave around late August the source said Neither Nowak nor Smith have been charged with a crime Attorneys for Nowak did not respond to a request for comment A call to Smith s number at the bank was answered by an employee at the metals desk who directed questions to the bank s public relations department Reuters could not learn the identity of his lawyer A spokesman for the Department of Justice declined to comment JPMorgan one of the largest gold trading banks in the world said in an August regulatory filing it is responding to and cooperating with investigations by various authorities including the Department of Justice relating to trading practices in the metals markets Spoofing involves placing bids to buy or offers to sell contracts with the intent to cancel them before execution By creating an illusion of demand spoofers can influence prices to benefit their market positions There has been a surge in spoofing related prosecutions in recent years Bank of America Corp s N BAC Merrill Lynch commodities unit for example paid 25 million in July to resolve actions by the U S Commodities Futures Trading Commission and Department of Justice for precious metals spoofing trades between 2008 and 2014 The Department of Justice already secured guilty pleas from two former JPMorgan metals traders Christiaan Trunz and John Edmonds The announcement of their pleas in August 2019 and October 2018 respectively indicated that they had collaborated on spoofing with their supervisors who were not named Trunz placed thousands of orders he did not plan to execute for gold silver platinum and palladium futures contracts between 2007 and 2016 and had learned to spoof from more senior traders the Department of Justice said in August adding that he was cooperating with the ongoing investigation Nowak and another former JPMorgan trader Robert Gottlieb are named as defendants in at least one other civil suit related to metals spoofing at JPMorgan A December 2018 class action complaint for example said that Edmonds Nowak Gottlieb and others made hundreds of spoof orders or more as part of a conspiracy with the bank and other internal traders An attorney for Gottlieb did not respond to a request for comment Koch Industries Inc Gottlieb s last known employer did not immediately respond to a request for comment JPMorgan has also been sued separately by a group of investors who said they lost money as a result of the bank spoofing its trades In one of the lawsuits brought against the bank by Daniel Shak a metals trader Shak estimated he suffered immediate losses of around 25 million after he was forced to liquidate his position as a result of JPMorgan s market manipulation a court document showed
The civil suits against JPMorgan have been stayed pending the Department of Justice probe |
JPM | Deutsche Bank Gets Biggest Boost From Tiering JPMorgan Says | Bloomberg Deutsche Bank DE DBKGn will benefit the most by far from the European Central Bank s new tiered deposit rate JPMorgan Chase Co NYSE JPM analysts led by Kian Abouhossein said Friday
Germany s largest lender stands to save roughly 200 million euros 222 million in annual interest payments thanks to a new rule that exempts a big chunk of the money it holds at the ECB from the negative rate the central bank charges on deposits That s equivalent to 10 of the pretax profit the analysts expect the bank to report in 2020 compared with an average of just 2 5 for the EU banks included in the analysis
The ECB yesterday lowered its deposit rate by 10 basis points to 0 5 as it grapples with persistently low inflation and a weakening economic outlook in the euro area Banks have said the move will make it even harder to improve their already low profitability Deutsche Bank Chief Executive Officer Christian Sewing said last week that negative interest rates will ruin the financial system in the long run
The second biggest tiering beneficiary is Commerzbank DE CBKG the analysts said in the report Friday The bank is set to save about 100 million euros or around 6 of its 2020 pretax profit The total relief for the banking system is about 1 7 billion euros they said
The two German lenders are getting the biggest boost because they have a comparatively high level of ECB deposits that fall under the new rule They also both have relatively weak profitability meaning even a small amount of savings can significantly boost their bottom line
Banks would like to have positive rates unquestionably Draghi said at the ECB s press conference on Thursday But profitability is much more affected by costs and adapting to new technology would be much more compelling than being angry about negative rates he said |
JPM | Solid U S retail sales calm some worries about economy | By Lucia Mutikani
WASHINGTON Reuters U S retail sales increased more than expected in August pointing to solid consumer spending that should continue to support a moderate pace of economic growth
The report from the Commerce Department on Friday could further allay financial market concerns of a recession which have been fueled by a year long trade war between the United States and China as well as slowing global growth
Still the Federal Reserve is expected to cut interest rates again next Wednesday to blunt some of the hit from the trade tensions on the longest economic expansion in history
Fed Chair Jerome Powell said last week he was not forecasting or expecting a recession but reiterated the U S central bank would continue to act as appropriate to keep the expansion now in its 11th year on track The Fed lowered borrowing costs in July for the first time since 2008
The winds of recession aren t coming closer to shore if the consumer continues to buy their hearts out said Chris Rupkey chief economist at MUFG Fed officials are unlikely to cut rates too much deeper as they seek to get out in front of the risks the economy faces acting early instead of being too late
Retail sales rose 0 4 last month lifted by spending on motor vehicles building materials healthcare and hobbies Data for August was revised slightly up to show retail sales increasing 0 8 instead of 0 7 as previously reported
Economists polled by Reuters had forecast retail sales would gain 0 2 in August Compared to August last year retail sales advanced 4 1 Retail sales have increased for six straight months the longest such stretch since June 2017
But with the Trump administration this month slapping a 15 tariff on Chinese consumer goods such as televisions apparel bed linens smart watches and footwear there are concerns retail sales could pull back Economists and retail groups expect businesses will pass on the duties to consumers thereby raising prices for the targeted goods
It is too early to assess the impact of the new tariffs that took effect at the beginning of this month but they do present downside risks to household spending said Jack Kleinhenz chief economist for the National Retail Federation in Washington
Households worries about the new round of tariffs were also underscored by a small rise in consumer sentiment early this month The University of Michigan said its survey of consumers found that concerns about the impact of tariffs on the economy rose in early September
Excluding automobiles gasoline building materials and food services retail sales climbed 0 3 last month after increasing by a slightly downwardly revised 0 9 in July These so called core retail sales correspond most closely with the consumer spending component of gross domestic product They were previously reported to have jumped 1 0 in July
Consumer spending which accounts for more than two thirds of the economy increased at a 4 7 annualized rate in the second quarter the most in 4 1 2 years
Economists expect consumer spending will slow to just below a 4 0 rate in the third quarter which would be more than enough to keep the economy growing at a steady pace rather than tipping into recession as signaled by financial markets
The dollar DXY was little changed against a basket of currencies while U S Treasury prices fell Major U S stock indexes were largely unchanged
GROWTH LOCOMOTIVE
The trend in consumer spending growth still looks very solid said Michael Feroli an economist at JPMorgan NYSE JPM in New York Consumers remain the locomotive of the economy
Strong consumer spending is encouraging retailers to boost inventory A second report from the Commerce Department on Friday showed business inventories increased 0 4 in July after being unchanged in June Stocks at retailers rebounded 0 8 the most in six months after falling 0 2 in June
The inventory increase bodes well for GDP growth this quarter The Atlanta Fed is forecasting the economy to grow at a 1 8 rate in the third quarter The economy grew at a 2 0 rate in the April June quarter down from the first quarter s brisk 3 1 pace
Financial markets have fully priced in a rate cut at the Fed s Sept 17 18 policy meeting Most economists expect additional monetary policy easing in October and December While underlying consumer prices have accelerated in the past three months inflation is likely to remain benign
In a fourth report on Friday the Labor Department said import prices dropped 0 5 last month amid declines in the cost of petroleum products and food In the 12 months through August import prices decreased 2 0 after dropping 1 9 in July
Import prices have now declined for five straight months on an annual basis
Low inflation the lowest unemployment rate in nearly half a century and about 1 27 trillion in personal savings are underpinning consumer spending Even as the economy has been slowing layoffs have remained low
Last month auto sales accelerated 1 8 after edging up 0 1 in July Sales at building material and gardening equipment stores jumped 1 4 the most since January
Online and mail order retail sales increased 1 6 after shooting up 1 7 in July Receipts at health and personal care stores rose 0 7 mirroring a jump in healthcare inflation in August Americans also spent more at hobby musical instrument and book stores boosting sales 0 9
Receipts at service stations fell 0 9 reflecting cheaper gasoline But there were pockets of weakness in sales Receipts at clothing stores fell 0 9 last month and sales at electronics and appliance stores were unchanged
Furniture sales dropped 0 5 the largest decrease in eight months Americans also cut back on spending at restaurants and bars with sales declining 1 2 the most since September 2018 |
JPM | May U S Labor Market Growth Surprised To Downside | U S companies added just 90 000 workers in May according to the payrolls report from the Labor Department The soft gain surprised analysts and marks a hefty slowdown from April s solid 205 000 increase The deceleration in growth is worrisome although mostly because it reflects uncertainty about President Trump s trade war with China and more recently Mexico If and when these battles end or at least cool it s reasonable to assume that the labor market will rebound Meantime employers are taking a cautious approach to hiring
Michael Feroli the chief U S economist for JPMorgan Chase NYSE JPM says that it definitely looks like we ve downshifted in the pace of job growth The catalyst he adds seems largely bound up with the recent trade conflict Overall it s a disheartening report particularly since you may have some trade effects there but a lot of the trade tensions escalated in the second half of May which is after the reference period for today s report As such the number of new jobs created in May be even lower than reported
Using the data in hand shows that the one year trend eased to 1 8 slightly below The Capital Spectator s point forecast Nonetheless a 1 8 year over year increase in payrolls is still healthy and so it s premature to assume the worst at least just yet
History reminds us that monthly numbers even in the best of circumstances are noisy and therefore highly misleading Several times over the past three years we ve seen the monthly comparison drop sharply followed by a rebound No one knows if the pattern will repeat itself this time but it s premature to rule out the possibility
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Quite a lot of what happens next is probably related to Trump s decisions in the days and weeks ahead on the trade front Meantime today s update has strengthened the market s expectations that the Federal Reserve will cut interest rates perhaps as early as this month Fed funds futures are currently estimating a roughly 28 probability that the central bank will trim its target rate currently at a 2 25 to 3 0 range at the FOMC meeting on June 19 based on CME data The estimate for a cut jumps to a nearly 80 probability for the July policy meeting
A darker view of today s numbers is that the slowdown in hiring is less about trade vs a fading business cycle Maybe but recent data suggest that while the economy has slowed the odds are still low that a recession has started or is about to start in the immediate future
But given the bearish blowback via trade today s disappointing labor market report can t be dismissed as a temporary isolated setback Overall the economy is on a fragile footing advises Lindsey Piegza chief economist at Stifel an investment bank We re still talking about solid growth at the start of the year but that s in the rearview mirror The name of the game is uncertainty
True but it s not yet written in stone that the uncertainty is destined to lead to a new NBER defined downturn Macro risk is rising for various reasons but we re still not at the point of no return Much depends on how the incoming numbers pan out and what the White House does or doesn t do with regards to trade policy to name but two of the obvious factors to monitor
Meantime a fresh run of numbers for projecting the one year trend in private payrolls continues to anticipate a gradually slowing growth rate Next month s update for June data is on track to post a 1 7 year over year rise based on The Capital Spectator s average estimate via a set of combination forecasts This outlook suggests that the labor market will continue to provide support for growth in this year s second half albeit on a slowly weakening basis
That s old news Softer growth generally has been standard fare on these pages for some time But for now softer growth doesn t mean that a new recession is imminent
If the economy can dodge a bullet it s probably related to better than expected news on trade That puts Trump in the driver s seat exactly where he likes to be The only glitch history suggests that Trump s decisions to come are as clear as mud |
JPM | Wells Fargo Proposes To Settle Auto Insurance Case For 386M | Wells Fargo Company NYSE WFC NYSE C plans to pay about 386 million in order to settle a class action lawsuit filed by customers in 2017 accusing the bank of forcing unwanted auto insurance without their knowledge at the time they took car loans The lawsuit had stated that rise in expenses due to the insurance pushed roughly 270 000 Wells Fargo customers into delinquency and resulted in almost 25 000 wrongful vehicle repossessions The bank which had denied of any wrongdoing is still going forward with the settlement in a bid to avoid additional risks cost and distractions of litigation The proposed settlement which was filed in the federal court in Santa Ana CA awaits judges approval Per the filing National General an auto insurance underwriter will pay an additional 7 5 million The bank acknowledged the move to be an important step toward making things right for customers Wells Fargo will be sending individualized letters to customers that will clearly state the remediation amount they will receive along with a check for that amount Recently Wells Fargo announced a major overhaul in the commercial banking business structure and several leadership changes Also it created a separate strategic execution and operations unit via which the bank expects to better meet the demands of several unsatisfied regulators and compliance officers Involvement in such restructuring activities reflects the bank s commitment to improve performance However post break out of the sales scandal Wells Fargo continues to suffer from several sanctions including a cap imposed by the Federal Reserve on asset growth in early 2018 The mortgage business continues to witness a decline in revenues as mortgage originations and refinancing activities have slowed down due to a higher interest rate environment In six months time shares of Wells Fargo have lost 4 5 against 6 5 growth recorded by the Currently the stock carries a Zacks Rank 3 Hold You can see Stocks to ConsiderCitigroup NYSE C has witnessed 2 4 upward estimate revision over the past 60 days Also the company s shares have risen nearly 15 in the past six months It has a Zacks Rank 2 Buy at present BankUnited s NYSE BKU earnings estimates for the current year have been revised 2 5 upward over the past 60 days Also the company s shares have risen 5 5 in the past six months It carries a Zacks Rank 2 The Zacks Consensus Estimate for JPMorgan Chase Co s NYSE JPM earnings for the current year has been revised 3 6 upward over the past 60 days Also the company s shares have risen nearly 8 in the past six months It currently carries a Zacks Rank of 2 Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
JPM | Risk Is High After 10 Years Of Bull Market | Between March 2000 and March 2009 JPMorgan Chase Co NYSE JPM investors saw their holdings value decline by almost 78 as the stock fell from over 67 to less than 15 a share The next ten years on the other hand have been a wonder to behold
JPM stock rose like a phoenix from its ashes climbing to over 119 30 per share by February 2018 This 690 rally was supported by improving fundamentals in terms of rising profits and a strong balance sheet As of this writing the stock is not far away from its all time high It is fair to say that JPMorgan has never looked better
Does this mean it is a good investment going forward Usually when all looks perfect complacency starts to settle in and the stage is set for an unpleasant surprise In addition the chart below provides an Elliott Wave reason for skepticism
The weekly chart above reveals JPMorgan s entire uptrend from 14 96 in March 2009 It looks like a five wave impulse whose fifth wave is still under construction Wave 1 up to 48 20 was followed by wave 2 down to the 61 8 Fibonacci level at 27 85
The five sub waves of wave 3 are also clearly visible Wave 4 is a triangle while wave 5 is the extended one among the three motive waves within wave 3 Wave 4 down has been developing during most of 2018 and culminated in the bottom at 91 11 in December
Not the Time to Extrapolate JPMorgan s Past into the Future
This brings us to wave 5 which we think is still unfolding The recovery from 91 11 to 117 16 so far has a three wave structure This means wave 5 is likely going to be an ending diagonal pattern Since truncated ending diagonals in fifth waves are extremely rare it makes sense to expect a new all time high above 120 in wave 5
Unfortunately for JPMorgan bulls when wave 5 exceeds the top of wave 3 the five wave impulse which has been in progress since March 2009 would be completed According to the theory a three wave correction follows every impulse This means that instead of celebrating the new record high in wave 5 investors should prepare for a pullback towards the support area of wave 4 near 90 or lower
Original Post |
JPM | Beyond Meat BYND Declines After Extraordinary Debut | On Tuesday shares of Beyond Meat NASDAQ BYND are plunging down over 20 in afternoon trading after J P Morgan NYSE JPM downgraded the stock to J P Morgan was the lead underwriter for Beyond Meat but has kept its price target of 120 This downgrade was purely a valuation call stated J P Morgan analyst Ken Goldman The stock s fall comes as it announced that it was looking into launching a
Beyond Meat went public in early May and shares have been on a tear ever since as of intraday trading on Monday BYND was up over 600 from its IPO price of 25 a share However Beyond Meat and its main rival Impossible Foods for their meat alternative products Due to their limited production means both companies have had trouble keeping up with orders being placed by restaurants who are adding meatless options to their menus Some of the restaurants that offer their products are TGI Friday s Del Taco NASDAQ TACO Red Robbin NASDAQ RRGB and Burger King NYSE QSR have all added meatless options to their menus in an effort to attract a larger client base
Beyond Meat was also able to surpass analysts expectations in its first earnings report since its IPO The company predicted that as the demand for their products continues to increase Beyond Meat s net sales rose 215 to 40 2 million exceeding analysts predictions of 38 9 million Grocery store sales accounted for 19 6 million while sales to restaurants accounted for 20 6 million The company is anticipating its full year revenue for 2019 to be north of 210 million transcending Wall Street s estimate of 205 million Beyond Meat s short sellers reportedly
Right now Beyond Meat sits at a Zacks Rank 3 Hold with a Style Score of F in Value The company currently doesn t have a P E since it is a loss making company but it does hold a Zacks Style Score of B in Growth with a projected sales growth of 141 11 for the current fiscal year With the way the company has been met with an unprecedented demand for their products the potential they have in sales growth is extraordinary
If Beyond Meat can enhance production to meet the demand future sales growth could prove to be tremendous Additionally if the company can also successfully implement its new meatier product it can potentially reach new consumers who may be hesitant to switch to plant based meat Being able to cater to a new clientele would provide the company with even more room to grow and sustain its success
Will you retire a millionaire One out of every six people retires a multimillionaire Get smart tips you can do today to become one of them in a new Special Report 7 Things You Can Do Now to Retire a Multimillionaire |
JPM | Citi s Japanese Unit Faces Ban From Auction Participation | The Ministry of Finance in Japan has suspended Citigroup s NYSE C Japanese unit namely Citigroup Global Markets from availing special entitlements granted to JGB Market Special Participants for a period of one month beginning Jun 13 As a result Citi will not be able to take part in non price competitive auctions and liquidity enhancement and buy backs auctions The decision follows a verdict from the Financial Services Agency that required the concerned unit to improve supervision of operations as it was found to have overlooked a manipulative trading practice by one of the bond traders Also the agency imposed a fine of 130 million 1 1 million on Citigroup Global Markets The company was accused of practicing spoofing whereby it overlooked and executed fake trading orders attempting to manipulate the prices of Japanese government bond futures on the Osaka exchange in late October 2018 The short period fine is not expected to impact Citi s performance remarkably Citi will continue to enhance governance and internal controls and to develop and implement preventive measures to ensure that the issues identified by the regulators will not occur again the company said in response to the suspension order Last week Citi along with Barclays PLC NYSE C JPMorgan NYSE JPM Mitsubishi UFJ Financial Group NYSE MUFG and Royal Bank of Scotland LON RBS were accused of rigging prices in the 5 1 trillion a day foreign exchange market A penalty of around 90 million Swiss francs was imposed on the companies but Citigroup was hit the hardest with a fine of 28 5 million francs Citi s involvement in litigation issues might keep legal expenses elevated Moreover dismal performance of equity market revenues keeps the top line under pressure However the company remains committed to execute growth strategies and continues to make steady progress toward financial targets In a bid to bolster presence in Southeast Asian markets Citi partnered with Grab a ride hailing transport services company to launch co branded credit cards Read more Over the past six months the stock has gained 21 7 compared with 8 7 growth recorded by the Currently Citi carries a Zacks Rank 2 Buy You can see The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
MS | Get Set for 50 Jump in Macau Casino Stocks Morgan Stanley Says | Bloomberg Macau casino shares are poised for a 50 percent rebound if history repeats itself according to Morgan Stanley NYSE MS
Based on the last cycle that ended in July 2012 shares are set to recover on the back of improving earnings followed by a sharp correction analysts Praveen K Choudhary and Jeremy An wrote in a note Thursday A Bloomberg Intelligence index for Macau casinos has tumbled more than 30 percent since this year s peak in May as gaming revenue growth slowed and analysts turned cautious on the sector
That echoes the previous cycle when VIP revenue growth started to decelerate and dragged down shares by 30 percent the note said Stocks then bottomed and began a steep rebound The Macau gaming measure jumped 3 7 percent as of 10 41 a m in Hong Kong on Friday headed for a two day rally of 8 3 percent MGM China Holdings Ltd climbed 4 4 percent while Sands China Ltd and Wynn Macau Ltd rose more than 3 4 percent
Earnings before interest tax depreciation and amortization for Macau casino companies may grow 19 percent on year this quarter according to the note
If the current cycle were to follow the pattern seven years ago though shares may correct 30 percent following the rebound When stocks surged from January to April 2012 amid solid mass market revenue growth a 30 percent correction followed as earnings estimate revisions remained negative and EBITDA growth began to decelerate
Earlier this week Deutsche Bank AG DE DBKGn cut its ratings on casino operators noting the current downcycle is similar to the late 2011 to mid 2012 slowdown when gaming revenue growth sharply decelerated |
MS | Asian Stock Markets Mixed China s Industrial Output Tops Forecast | Investing com Asian equity markets were mixed on Friday afternoon after China reported better than expected industrial output and retail sales but investment fell to a new low
The country s industrial output rose 6 1 in August compared to the same period last year and retail sales climbed 9 exceeding market expectations while the fixed asset investment growth slowed to 5 3 in the first eight months in 2018 below Reuter s forecast of 6 and a new low
China s economy is on a gradual deceleration trend but at this moment it s still fine The government won t change the direction of deleveraging They will only change the pace of it because the economy is still fine at this stage said Macquarie Securities Ltd Economist Larry Hu
China s Shanghai Composite cut gains and dropped 0 16 at 01 26AM ET 05 26 EMT and SZSE Component slipped 0 58 while the Hang Seng Index edged up 0 84
Amidst the trade war with the U S China s State Councilor Wang Yi said last Thursday that the world trade system needs reform after meeting with French Foreign Minister Jean Yves Le Drian
China supports necessary reforms and perfection of the current system including to the WTO to make it fairer more effective and more rations said Wang
The aim of the reform should be to allow countries to enjoy the fruit of globalization more fairly not to further widen the differences between the south and the north
His remarks came after the possible renewed trade talks in Washington to avoid the trade war jitters to escalate and U S President Donald Trump tweeted Thursday that the White House was under no pressure to make a deal with China
Meanwhile Morgan Stanley NYSE MS said that Macau casino shares are poised for a 50 rebound as the Macau gaming measure jumped 3 7 in the morning The shares of MGM China Holdings Ltd Sands China Ltd and Wynn Macau Ltd all climbed in the morning
Japan s Nikkei 225 extended gains and hiked 0 95 and South Korea s KOSPI also went up 1 26 while down under Australia s S P ASX 200 climbed 0 7
The U S is also set to release its data on retail sales industrial production and consumer sentiment on Friday |
MS | Cryptocurrency project Tezos to launch main network next week | By Anna Irrera and Brenna Hughes Neghaiwi NEW YORK ZURICH Reuters The Tezos cryptocurrency project is preparing to launch the long awaited main version of its network that underpins a new virtual token on Monday a Swiss foundation that promotes the initiative said on Twitter on Friday The Tezos Foundation raised 232 million in July 2017 to build the network and issue a new type of cryptocurrency to its backers in one of the largest ever initial coin offerings and launched an initial version of the network one year later after months of delays The Tezos Foundation plans to transition the network to a mainnet or a more complete version on Monday according to a message seen by Reuters by Ryan Jesperson the foundation s president After Reuters contacted the foundation for comment on the message on Friday morning it confirmed the launch date on Twitter Have a great weekend everyone because mainnet arrives Monday the foundation tweeted That launch would mark an achievement in a project hobbled by internal infighting and delays Tezos still faces litigation in the United States and the threat of increased regulatory scrutiny of the nascent cryptocurrency sector A high profile feud between project founders Arthur and Kathleen Breitman and former foundation president Johann Gevers was followed by Gevers stepping down in February He was replaced by Jesperson one of the project s contributors Since Tezos s problems were first detailed by Reuters in October several class action lawsuits have been filed in the United States against the project s organizers alleging the fundraiser violated federal securities laws and defrauded investors In February the U S Securities and Exchange Commission denied a public information request from David Silver a lawyer representing some of the class action plaintiffs seeking information on Tezos saying doing so could interfere with an investigation or enforcement activities The Tezos fundraiser was structured as a donation though some contributors say they believed it was an investment If deemed a securities offering the new cryptocurrency might fall under the remit of the SEC The Reuters investigation published in October also found that Arthur Breitman a French citizen registered with the Financial Industry Regulatory Authority FINRA in the United States had not reported any outside business activity while working at Morgan Stanley NYSE MS in 2014 and 2015 when he was developing and pitching Tezos
In April FINRA suspended Breitman from associating with broker dealers for two years part of a settlement to resolve allegations that he made false statements about his side venture while working at Morgan Stanley |
MS | Kleiner partner Mary Meeker leaving to start her own venture firm | Reuters Tech analyst Mary Meeker is leaving venture capital firm Kleiner Perkins Caufield Byers LLC to start her own firm Kleiner said on Friday It said Meeker was creating a separate firm with her colleagues Mood Rowghani Noah Knauf and Juliet de Baubigy Kleiner said the split which was first reported by Recode could be attributed to shifts in the funding ecosystem Companies looking for early stage funding the traditional focus at Kleiner Perkins require larger checks and more specialized expertise while fast growing established companies like Meeker investments Uber and Stripe take more support The changes in both areas have led to less overlap between venture and growth and creating two separate firms with different people and operations now makes sense Kleiner spokeswoman Katie Hutchison said on Friday She did not say when Meeker would leave Meeker first became famous as Queen of the Net in the late 1990s after a report she wrote for Morgan Stanley NYSE MS predicted the power and shape of the then still exotic World Wide Web She joined Kleiner in 2010 and helps lead the venture capital firm s digital growth funds This would be a big shake up at the firm after its de facto leader and prominent venture capitalists John Doerr stepped aside from his management role to become the firm s first chairman two year ago Meeker is the author of the annual Internet Trends Report on technology themes and trends |
JPM | Graphic Argentina From bellwether to emerging outlier | By Tom Arnold
LONDON Reuters Argentina s shuddering financial crunch has stirred memories of ripple effects across all emerging markets from prior meltdowns in 2001 and 2014 But the country s woes appeared more ringfenced this time around
Investors are trying to gauge the fallout on their portfolios from possible payment delays on around 100 billion of debt capital controls and an uncertain political backdrop ahead of October s presidential elections Still contagion is expected to be more limited this time round
Here are three charts showing Argentina s changing status in global financial markets
1 LOST WEIGHT
Argentina was an emerging market powerhouse in the run up to its 93 billion default in 2001 But that s changed since
Back then Argentina had a weighting of close to 12 in the JPMorgan NYSE JPM Emerging Markets Bond Index Global Diversified the sector s fixed income benchmark and accounted for 1 1 of the equity MSCI Emerging Markets Index MSCIEF
But now its bond benchmark weighting has dwindled to 1 1 while its equity index weighting has shrivelled to 0 18 little more than a rounding error for many managers
Graphic Weight of Argentina in MSCI Emerging Markets Index
While capital controls rarely sit well with index providers Argentina may still have some breathing space
Having lifted Argentina to emerging markets status only in June 2018 MSCI said it was monitoring developments but the current classification remained valid
MSCI had only relegated Argentina to frontier status in 2009 after a lengthy consultation process citing capital flow caps introduced by the government
2 DIMINISHING SIZE
The frequent boom and bust cycles have seen Argentina s overall standing in the region diminish
World Bank data shows that Argentina s gross domestic product in current U S dollar terms made up less than 9 of the Latin America and Caribbean region at the end of 2018 compared to 12 in 2001
Argentina has a long history of regular defaults and the rest of the emerging world has built resilience said Stephanie de Torquat Macro Strategist at Lombard Odier
Its economic footprint and size have diminished limiting the impact of recessionary episodes for the rest of the region even though some countries for example Brazil Uruguay Paraguay will not fully escape some of the negative economic and financial spillovers
Graphic GDP Argentina vs Latin America
3 BUMPY ROAD
Economic cycles are rarely smooth but Argentina has been on a veritable rollercoaster with growth rates oscillating between crisis crashes and recovery sugar highs
One indicator of Argentina s diminishing influence is the de linking of its economic cycle from the rest of the emerging world And there is little prospect of change With Argentina tipping into the next crisis so shortly after emerging from the last one Macri s government has run out of road to re integrate the country back into the global economy
Graphic Out of sync Argentina real GDP growth vs EM
Reporting and graphics by Tom Arnold additional reporting and graphic by Karin Strohecker Editing by Chizu Nomiyama |
JPM | Trump Brags He s the King of Debt But He Doesn t Get It | Bloomberg Opinion Financial markets at this point ignore just about any tweet from President Donald Trump about the Federal Reserve Occasionally one will merit a meme But for the most part the president s tweets are dismissed either as evidence of frustration that he can t simply fire Jerome Powell his choice for Fed chair or the search for a scapegoat if the U S economy falters and damages his re election prospects
Then came this missive on Wednesday
The timing is obvious It s the day before the European Central Bank will presumably drop interest rates further below zero and a week before the Fed s own rate decision A Washington Post ABC News poll this week showed a majority of Americans fear the U S will enter a recession within a year Stephen Moore who withdrew his candidacy for the Fed board earlier this year wrote a recent op ed in the Wall Street Journal with the headline Refinance U S Debt While Rates Are Low
Put it all together and you have Trump s two part tweet Unfortunately the self proclaimed king of debt doesn t appear to truly understand it Let s unpack the president s comments piece by piece
The Federal Reserve should get our interest rates down to ZERO or less
First the Fed is already cutting its benchmark rate and is widely expected to drop it another 25 basis points on Sept 18 A more significant reduction and certainly to the extent the president wants would probably just panic the markets It could also severely damage banks particularly if longer term yields also tumble Citigroup Inc NYSE C JPMorgan Chase NYSE JPM Co and Wells Fargo Co this week already reduced their annual net interest income targets
Second the idea that Americans would willingly accept negative interest rates is very much an open question After all it s not something they have ever had to deal with before As Katherine Greifeld wrote for Bloomberg Businessweek U S based investors don t just have the good fortune of buying Treasuries at above zero interest rates They can also easily turn the world s 15 trillion pool of negative yielding debt positive
and we should then start to refinance our debt
This is not something that the U S does in any significant way The federal government is not like a company that issues bonds that can be bought back if borrowing costs fall There s no mechanism for example for the Treasury to get big investors to give back bonds issued in 1995 that mature in 2025 and pay 7 625 interest In fact these are likely among funds most prized possessions because they boost both the credit quality and average payout of the overall portfolio
INTEREST COST COULD BE BROUGHT WAY DOWN while at the same time substantially lengthening the term
This is hardly a given The Fed controls only short term interest rates not long term yields In 2010 when the fed funds rate was near zero the 10 year Treasury yield was 4 If central bankers slash interest rates when the economy is on solid footing it could boost inflation which would cause yields on longer term obligations to climb The reason long term rates in Japan and Germany are at or below zero is because their economies are stagnant and inflation is largely nonexistent
As for substantially lengthening the term the Treasury Department itself has found that there s insufficient demand for ultra long Treasuries that mature in 50 or 100 years Yes Treasury Secretary Steven Mnuchin is taking another look but the bond market group that advises him is likely to dismiss the idea again
Also issuing ultra long bonds would probably steepen the yield curve again making the claim that interest costs could be brought way down dubious at best
We have the great currency power and balance sheet
And yet the president clearly wants a significantly weaker dollar which if done recklessly could threaten its position as the reserve currency of the world
The USA should always be paying the the lowest rate
It goes without saying to anyone who took Macroeconomics 101 that stronger economies pay higher interest rates
But setting that aside why should the U S receive more favorable treatment than Germany It has the same triple A ratings from Moody s Investors Service and Fitch Ratings and Germany even has a top grade from S P Global Ratings while the U S was dropped to AA in 2011
Plus investors are begging Germany to borrow more rather than stick to its rigid balanced budget That s of no concern whatsoever for the U S its budget deficit grew to 866 8 billion in the first 10 months of the fiscal year up 27 from the period a year earlier The gap is now projected to reach 1 trillion by the 2020 fiscal year two years earlier than previously estimated Supply and demand isn t everything in the Treasury market but it is something
Obviously the ECB has distorted the bond markets in its region In Italy which is barely rated investment grade 10 year debt yields less than 1 But again this is more a symptom of the lack of economic growth in the euro zone
No Inflation
Low inflation Sure But no inflation
On Wednesday a Labor Department report showed underlying U S producer prices increased 2 3 in August from a year earlier topping the median forecast in a Bloomberg survey Producer prices excluding food energy and trade services rose 0 4 from the prior month the most since April
Those readings suggest Thursday s consumer price index data could also meet or exceed expectations Core CPI is already projected to rise to 2 3 year over year in August which would be close to the fastest growth in the past decade It s fairly modest relative to the historical average but it s not nothing
It is only the na vet of Jay Powell and the Federal Reserve that doesn t allow us to do what other countries are already doing
Is this the first tweet from President Trump with accent marks
It s not naivete that is keeping the Fed from more drastic interest rate cuts but rather prudence and a focus on economic data Fed officials saw some slight weakness earlier this year business confidence was particularly rattled by the U S China trade war and provided a bit of accommodation to help ease concerns Dropping interest rates to zero would serve little purpose except to most likely create a larger bubble in risky financial assets
The president seems to think that Europe and Japan want negative interest rates I m fairly confident that the ECB and Bank of Japan wish they were in a similar position as the Fed which was finally able to move away from the zero bound and now has some breathing room in the event of an economic downturn
A once in a lifetime opportunity that we are missing because of Boneheads
Readers can draw their own conclusions about who s truly boneheaded |
JPM | BP CEO Says He ll Sell Oil Projects to Meet Climate Targets | Bloomberg BP s LON BP CEO plans to sell some oil projects and curb the development of others to align its business with the Paris accord the latest sign climate concerns are starting to impact the investment decisions of the world s largest fossil fuel producers
Senior BP LON BP executives met within the last few days to discuss how to cut carbon as it grapples with a shareholder resolution requiring the company to explain how its spending is aligned with Paris Chief Executive Officer Bob Dudley said on a Wednesday conference call organized by JPMorgan Chase Co NYSE JPM
One proposal weighed up by BP s management team was exiting the most carbon intensive projects though Dudley wouldn t say which assets were targets because there are governments and partners involved
We are certain we ve got a path it may not be linear to being consistent with Paris goals Dudley said in conversation with JPMorgan s head of European oil research Christyan Malek There are going to be projects that we don t do things that we might have done in the past Certain kinds of oil for example that has a different carbon footprint
His comments offer a response to increasingly severe criticism aimed at the entire oil industry over its contribution to man made climate change BP s own shareholders sparred with company managers at its annual general meeting in May before voting almost unanimously to require the company to issue a report about how each new investment is aligned with Paris The report will be issued before its next AGM in May 2020
Still the plan may prompt questions about how selling assets to another producer can possibly help curb global emissions For example Dudley said on the call that the sale last month of BP s oil and gas fields in Alaska helped it reduce its carbon footprint But the buyer plans to invest more in the fields than BP would have potentially increasing production and boosting emissions in the process
Dudley also pointed out the main drive of the Alaska sale was the fact those fields were struggling to compete for capital within BP because production there was unlikely to grow as much as at the company s other projects
Dudley said he s juggling with the challenge of investing in relatively low return renewables businesses while maintaining the company s large dividend He took aim at those who didn t acknowledge how beneficial it is when BP does invest in low carbon technology saying any assessment of its carbon footprint should probably include the emissions it avoids
We ll reduce the emissions from our operations reduce the emissions from our products and come up with the new business models he said If you add all those figures up in reductions of greenhouse gas for example we have a big solar business a big bio fuel wind business you almost get no credit when you do those calculations
While he has maintained the company s business model already with with the Paris accord he said having to issue a report to benchmark progress has caused the company to think further about its spending
A report by Carbon Tracker last week said BP s most polluting investments are the Zinia 2 project in Angola and the Azeri Chirag Gunashli development in Azerbaijan and that neither of those developments are compatible with the Paris goals
BP is also seeking to divest assets because its debt is too high Dudley said on the call constraining his spending power It has announced about 7 billion of a 10 billion disposal program linked to the purchase of shale fields from BHP Group Ltd last year And an earlier plan to meet that target by selling older onshore gas fields was complicated by the price of natural gas falling he said
BP became the operator of the BHP fields in March which has now caused other complications to BP s climate ambitions Dudley said the level of flaring the deliberate burning of methane at the place it s produced is not right and he is working to reduce it Earlier this week the company announced it was adding new equipment to its projects to quantify and identify methane leaks |
JPM | Charles Li Hong Kong s charismatic exchange chief leads charge for LSE | By Alun John
HONG KONG Reuters When Hong Kong Exchange chief executive Charles Li described his company s surprise offer for the London Stock Exchange this week as a a corporate tale of Romeo and Juliet listeners outside Asia may have been surprised by the colorful analogy
But in Hong Kong Li s fondness for extended metaphors are well known and have made the charismatic former offshore oil worker lawyer journalist and investment banker a popular figure at public events
Li has run Hong Kong Exchanges Clearing HK 0388 since 2010 Under his supervision the exchange presents itself as a gateway between China and the rest of the world and has benefited from a wave of IPOs as giant Chinese companies raised billions from international investors
The exchange has been the world s largest capital raising venue in five of the past 10 years an honor it split with the New York Stock Exchange Li also oversaw the creation of stock connect in 2014 a mechanism for Chinese investors to trade Hong Kong listed shares and international investors to trade shares listed in Shanghai and Shenzhen It is now the main channel into China for investors overseas
A Hong Kong Exchanges Clearing representative declined to comment for this article
DEALMAKER
Market participants say Li s previous roles inform his approach to running the exchange He is more of an investment banker than a traditional CEO of an exchange Since taking over he has been pursuing this bolt on as well as transformational acquisitions approach said a financial M A banker in Hong Kong who was not authorized to speak to the media Recently HKEX has focused on buying small fintech players to boost technology and data capabilities
But Wednesday s shock announcement recalls HKEX s 2012 purchase of the London Metal Exchange LME which ran into trouble when HKEX raised trading fees After an angry response from traders a change of course and LME leadership steadied the ship LME traders now generally speak well of Li He is a big personality a great front man he likes getting on the stage and being bombastic and loud and the center of attention said the London based head of one metals brokerage who also declined to be identified because he was not authorized to speak to the media This latest move is hugely ambitious but if anybody can pull it off it s Charles JPMorgan NYSE JPM bankers say that when he was chairman of JPMorgan China between 2003 and 2009 he was known for his willingness to trust colleagues
One said he often explained his attitude with a Chinese proverb If you use a man don t suspect him If you suspect him don t use him
NAVIGATING HONG KONG Beijing born Li despite speaking little Cantonese has managed to balance the competing demands of global investment banks the Hong Kong government which approves six of HKEX s 13 board members and Beijing whose goodwill is crucial for its gateway role After a multi year campaign Li in 2018 won approval to allow companies to list in Hong Kong with different classes of shares a more relaxed standard of governance Before the change many Chinese tech companies chose a New York listing including e commerce giant Alibaba NYSE BABA whose 2014 25 billion IPO is still a global record
Li has not won over all groups in Hong Kong though notably the city s army of small brokers who have their own representative in the 70 seat Legislative Council
I think Charles Li is capable when it comes to developing and promoting HKEX internationally But he doesn t take care of small and medium brokers This takeover is only one example said Christopher Cheung a stockbroker and Hong Kong lawmaker who said adapting to LSE systems would be a financial burden
More important for the success of LSE takeover is whether Li can adapt to the requirements of London based traders as he did eventually at the LME
A senior China banker who has played football with Li an avid fan of the game said the exchange chief was well equipped to pull off the LSE bid
Li s sharp and direct views exactly like his strength on the football field as a striker can always bring success to the team the region and its businesses the banker said |
JPM | StockBeat European Stocks Taper Gains on Trade Hopes Ahead of ECB | By Geoffrey Smith
Investing com Europe s stock markets were mixed after early trading on Thursday losing some initial momentum from President Donald Trump s goodwill gesture to China on trade
Markets had opened higher on relief at Trump s two week deferral of a planned 5 percentage point increase in tariffs on imports from China that was due to take place on Oct 1 That should avoid any further escalation of the trade conflict ahead of the planned resumption of trade talks in early October
But gains were capped by the prospect of the European Central Bank s policy meeting where the risks are arguably weighted to the downside given how much expectation has been built into the outcome
The biggest open questions from the ECB meeting are whether the bank will restart its bond purchase program around 80 of analysts polled by Bloomberg say it will and how effectively it can protect eurozone banks from the negative effects of even lower interest rates analysts expect a cut of as much as 20 basis points in the deposit rate which is currently at a record low of 0 4
By 5 AM ET the benchmark STOXX 600 index was down 0 1 at 389 48 The defensively oriented Swiss and Danish markets fared worst losing 0 4 and 0 3 respectively while Germany s DAX and the U K FTSE 100 both benefited as cyclical stocks returned to favor after a battering in August
The DAX was up 0 1 with carmakers and their suppliers such as coatings company Covestro DE 1COV leading the way In the U K mining stocks were among the biggest gainers with Anglo American LON AAL rising 2 1 and BHP Group PLC LON BHPB 1 5
Anheuser Busch Inbev BR ABI the world s largest brewer was also a prominent gainer rising 3 1 on the back of a report that it is set to revive plans to spin off its Asian brewing operations to reduce debt
British American Tobacco LON BATS was also up 2 3 after announcing 2 300 job cuts 4 of its global workforce and 20 of its senior staff to generate savings that could be reinvested in alternative tobacco products
The CAC 40 suffered as hotel group Accor PA ACCP lost 3 2 in response to a downgrade from JPMorgan NYSE JPM while train maker Alstom PA ALSO fell 5 2 as its largest shareholder Bouygues unloaded around half of its stake via an accelerated bookbuilding process Bouygues PA BOUY stock rose 0 3 to its highest in nearly a year |
JPM | 4 Low Cost Mutual Funds To Beat Uncertain Trade Policies | The United States is at a critical juncture on the trade front which is resulting in turbulent markets Therefore opting for low cost mutual funds that don t burn a hole in the pocket seems judicious at the moment
Trade Uncertainties Loom Large
First the country is gearing up to impose a 5 tariff on all Mexican imports beginning Jun 10 a White House statement cited earlier this week Illegal migration was cited as the primary reason for the taxes In fact if Mexico doesn t enact to reduce or eliminate the number of illegal aliens duties could go as high as 25 in the coming months
According to the statement tariffs will be raised to 15 on Aug 1 to 20 on Sep 1 and to 25 on Oct 1 this year and remain unchanged at 25 till Mexico eventually stops the inflow of illegal migrants from its territory In addition American companies in Mexico that choose to relocate base to the United States would face no tariffs or be affected in any manner
Mexico has requested for dialogue with U S in order to reach an agreement that may benefit both countries Global shares were lower on May 31 following the announcement on May 30
Secondly the ongoing trade war with China has only escalated this month after a brief truce in the January March period What started as a trade tariff spat has now turned to a clash over technology with the United States blacklisting hundreds of Chinese technology companies telecom giant Huawei Technologies being notable among them
In response China is willing to curb its export of rare earth minerals According to US Geological Survey the Asian country accounted for 80 of rare earth imported by the United States in the 2014 2017 period The prospect of a rare earth supply cut has the United States seeking alternatives since these are vital constituents of everyday items like smart phones power banks and batteries etc
These growing trade conflicts could affect all participants since consumers and businesses bear the price hikes in the end Economic activity spending and investments remain at the forefront of trade policy uncertainties
In such a scenario fishing out lump sum amounts for mutual fund investments isn t advisable This is where low cost mutual funds come in
Why Invest in Low Cost Mutual Funds
Armed with their low operational costs and low to none minimum initial investments low cost mutual funds are ideal to wait out the current market volatility induced by uncertain trade policies
Expense ratio which represents the entire management fees and operating costs is a vital component to consider since it decides what a fund investor s take home returns are In fact the inclination toward mutual funds with low expense ratios has led to a stiff competition between asset management companies
4 Best Choices
We have selected four mutual funds that carry a Zacks Mutual Fund Rank 1 Strong Buy and have expense ratios less than 1 Moreover these funds have encouraging year to date three and five year returns Additionally there is no minimum initial investment
We expect these funds to outperform their peers in the future Remember the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers Unlike most of the fund rating systems the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund
Now we come to the second most vital question why should investors consider mutual funds Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds read more
Putnam Sustainable Leaders Y fund aims for long term capital growth The fund primarily invests in common stocks of American companies of any size especially in those that the fund s adviser believes adhere to sustainable business practices
This Zacks sector All Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
PNOYX has an annual expense ratio of 0 74 which is below the category average of 1 07 It has three and five year returns of 20 4 and 14 1 respectively It s year to date return is 23 6
JPMorgan NYSE JPM Growth Advantage R5 fund aims for long term capital appreciation The fund mostly invests in common stocks of U S companies of any market capitalization While investing the fund s adviser tends to focus on those that he believes have strong earnings growth potential
This Zacks sector Large Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
JGVRX has an annual expense ratio of 0 74 which is below the category average of 1 07 It has three and five year returns of 20 1 and 15 3 respectively It s year to date return is 22 6
Hartford Global Growth HLS IA fund aims for capital appreciation by investing in a broadly diversified portfolio of common stocks spanning across countries companies and industries The fund may invest the majority of its assets in common stocks of growth companies
This Zacks sector Global Equity product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
HIALX has an annual expense ratio of 0 80 which is below the category average of 1 11 It has three and five year returns of 17 4 and 13 1 respectively It s year to date return is 21 8
Fidelity Series Opportunistic Insights fund primarily invests in common stocks of companies and seeks capital growth The fund invests in securities of those companies whose value Fidelity Management Research Company believes is not fully recognized by the public FVWSX may invest in growth or value stocks or both It may also invest in U S and non U S issuers alike
This Zacks sector Large Cap Growth product has a history of positive total returns for more than 10 years To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
FVWSX has an annual expense ratio of 0 which is below the category average of 1 07 It has three and five year returns of 17 7 and 14 3 respectively It s year to date return is 21 9
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JPM | This Is Why JPMorgan Chase JPM Is A Great Dividend Stock | Getting big returns from financial portfolios whether through stocks bonds ETFs other securities or a combination of all is an investor s dream However when you re an income investor your primary focus is generating consistent cash flow from each of your liquid investments
While cash flow can come from bond interest or interest from other types of investments income investors hone in on dividends A dividend is that coveted distribution of a company s earnings paid out to shareholders and investors often view it by its dividend yield a metric that measures the dividend as a percent of the current stock price Many academic studies show that dividends account for significant portions of long term returns with dividend contributions exceeding one third of total returns in many cases
JPMorgan Chase in Focus
Headquartered in New York JPMorgan Chase JPM is a Finance stock that has seen a price change of 9 67 so far this year The biggest U S bank by assets is currently shelling out a dividend of 0 8 per share with a dividend yield of 2 99 This compares to the Banks Major Regional industry s yield of 2 9 and the S P 500 s yield of 2 03
Taking a look at the company s dividend growth its current annualized dividend of 3 20 is up 29 from last year Over the last 5 years JPMorgan Chase has increased its dividend 5 times on a year over year basis for an average annual increase of 13 81 Any future dividend growth will depend on both earnings growth and the company s payout ratio a payout ratio is the proportion of a firm s annual earnings per share that it pays out as a dividend JP Morgan s current payout ratio is 35 This means it paid out 35 of its trailing 12 month EPS as dividend
Looking at this fiscal year JPM expects solid earnings growth The Zacks Consensus Estimate for 2019 is 10 03 per share representing a year over year earnings growth rate of 11 44
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages investors like dividends for a variety of different reasons However not all companies offer a quarterly payout
Big established firms that have more secure profits are often seen as the best dividend options but it s fairly uncommon to see high growth businesses or tech start ups offer their stockholders a dividend Income investors have to be mindful of the fact that high yielding stocks tend to struggle during periods of rising interest rates With that in mind JPM presents a compelling investment opportunity it s not only an attractive dividend play but the stock also boasts a strong Zacks Rank of 2 Buy |
JPM | Crypto Investing The Most Promising 2019 Blockchain Projects | The expectations of 2017 where the Bitcoin rate exceeded 20 000 have sunk into oblivion The thunderstorms of last year we re we discussing at St Petersburg International Economic Forum died down when the crypto market shrank seven times losing 700 billion in capital However 2019 came with clear signs of revival What are the root causes of this
To better understand the environment first let s consider the ICO format it s going through hard times In Q1 2019 various startups attracted only 118 million although this figure was 6 9 billion over the same period of 2018 The Initial Exchange Offering IEO has replaced the conventional ICO crowdfunding projects now raise funds at crypto exchanges with subsequent token listing
As we can see 42 startups have already managed to raise 266 million For example VeriBlock gained 7 million on Bittrex in 10 seconds MultiVac made 3 6 million on Kucoin in seven seconds and Fetch AI gleaned 6 million on Binance in 22 seconds
As a result both start ups and the entire crypto market have raked in gains The capitalization of Binance Coin increased from the beginning of the year to 4 5 billion although it was 787 million as of January 1st 2019
Next we must consider the huge yachts of institutional players capable of causing tectonic shifts at the bottom of the financial world flooding adjacent territories They have begun to enter a crypto harbor
Unlike previous years there has been a clear trend toward the creation of so called stable coins Of course many cryptocurrencies are trying to solve the problems of scalability confidentiality and decentralization But this is not enough The key market demand is stability i e relative token independence from exchange rate fluctuations
Who are these players and why can their developments in blockchain field affect billions of users all over the planet
Terra Incognita Creating New Meanings
How about more specifics on the Gram token In March 2018 the Durov brothers reported raising 850 million in the second round of the ICO from 94 investors In total Telegram has raised 1 7 billion for its Gram cryptocurrency it has currently proceeded to a closed testing of the platform with a target audience exceeding 200 million users
Telegram Messenger presented a description of the TVM virtual machine and a new Fift programming language designed for the creation and management of smart contracts in the TON network
Two publications authored by Nikolai Durov winner of the world championships on programming as part of the Saint Petersburg State University team in 2000 2001 present a brief overview of Fift in 87 pages This includes the basics of language and operations related to TON as well as a description of the TVM virtual machine principles in a program document of 155 pages
What s important to understand from these publications Fift has built in support for strong cryptography and is capable of working with the TON blockchain platform Using a virtual machine it forms a scalable system with millions of transactions per second which can be infinitely expanded and varied into many services These can include cross platform blockchains to micropayments and TON proxy
The JPMorgan Chase NYSE JPM investment bank which is among the Top Six largest banks in the world in terms of asset value announced the launch of the stable JPM Coin This may become the first cryptocurrency issued by such a large American bank JPMorgan Chase employs over 200 000 employees serving the largest Fortune 500 organizations
The main project goal is the instantaneous transfer of dollar assets between customer accounts
Facebook NASDAQ FB yet unofficially plans to integrate cryptocurrency transfers into WhatsApp Messenger and Instagram These will provide the future stable coin with a monthly audience of about 2 7 billion people
FB Coin is being developed in an atmosphere of total secrecy more than 50 engineers are working on it in an office with separate access supervised by the former PayPal president David Marcus The project was named Libra
Moreover the Internet giant is negotiating with major payment networks Visa NYSE V and MasterCard to raise 1 billion
Barclays LON BARC analyst Ross Sandler believes that this stable coin when pegged to major fiat currencies the dollar and euro can generate additional Facebook revenue of 19 billion by 2021
The announcement of FB Coin is scheduled for Q3 this year although the banking committee of the U S Senate demanded the unveiling of details about the cryptocurrency project this May
The South Korean Kakao Corp with the KakaoTalk messenger is not far behind This Internet giant plans to integrate cryptocurrency into the messaging application It has more than 220 million users
Finally leading crypto exchange Binance will reportedly issue its own stablecoin 100 backed to the British pound within two months according to Bloomberg
Who Must Die
Obviously most of the developments relate to the field of transfers both between individual users and between cross border institutions
Attempts are being made to enter the territory of the old world This is in regards to SWIFT the interbank system founded in 1973 which includes about 11 000 member banks processing up to 5 trillion transactions per day around the world
So called whales rushed right into this bay indicating obvious transactional drawbacks and outdated technology The average execution time for a SWIFT transfer is about two working days with a commission of 1 However it s worth paying attention to the fact that the institutionalists are leaning in the favor of stable coins Why
First stable coins in a broad sense are pegged to an asset euro dollar ruble etc For example Tether is a tokenized dollar This means that each token issued by them must be linked to one U S dollar in your bank account This scheme is understandable for players from the real sector of economy but it has its own nuances The audit by Freeh Sporkin Sullivan LLP proved the availability of only 2 54 billion in accounts which covers 74 of Tether s issue
Secondly a big incentive to transfer data to blockchain is the market demand for decentralization i e the lack of a single decision making center
Changpeng Zhao the CEO of one of the largest cryptocurrency exchanges Binance explained
We believe that decentralized exchanges bring new hope and opportunities by offering a safe and transparent financial system
There are contrary opinions as well American Congressman Brad Sherman who called for outlawing cryptocurrency recently explained that most of the U S international power stems from the fact that the dollar is a standard unit in international financial calculations In his view the loss of this hegemony could undermine the economic stability of America
Thirdly it is easier for central banks to interact with stable coins because stable coins are to some extent related to fiat currencies and have a regulatory base in advanced jurisdictions
Finally from a technical point of view the main cryptocurrency Bitcoin is a very cumbersome thing Bitcoin blockchain is a distributed database that contains an ever growing list of changes transactions and records since its initial release in 2009 To date it has increased to 210 gigabytes In contrast stable coin can transfer data validity without usual waiting times for transaction confirmations on the network This is achieved by using another consensus mechanism for example Proof of Authority This system levels all that taking away resources like mining
In other words the perspective has gradually shifted from cryptocurrencies to the issue of stable coins However the new structure IEO replaced the ICO when projects raised funds at crypto exchange platforms with subsequent token listing This model is at the very beginning of its development
It s supposed that in 2019 with such a bright series of projects from Facebook Telegram and JPMorgan Chase these companies will certainly play a decisive role in the mass adoption of crypto technologies Billions of users around the world without noticing it themselves will become participants in the economy of the future
Sources Financial Times Entrepreneur com Barclays LON BARC Research WSJ Nytimes com Bloomberg com |
JPM | Wells Fargo WFC To Overhaul Commercial Banking Business | Wells Fargo Company NYSE WFC has announced plans to restructure its Commercial Banking unit by combining Business Banking Government Institutional Banking and Middle Market Banking businesses It expects to further improve customer experience through this move The new structure will be headed by Kyle Hranicky who has been serving Wells Fargo for the past 25 years It will have more than 6 000 team members across 24 divisions and 80 markets nationwide and cater all the financial needs of customers Commercial banking division will remain part of its wholesale banking line of business The wholesale banking division will now be divided into commercial banking corporate and investment banking commercial real estate and commercial capital The unit will provide credit and treasury solutions to customers with annual sales ranging between 5 million and 2 billion Further the bank provides expertise across industries like Food Beverage Agribusiness Investor Real Estate Government and Technology throughout its regional presence with its newly formed national Specialized Industries group Also Wells Fargo reduced the layers of management involved so as to simplify the leadership structure The commercial business will operate in three regions across the United States i e East Central and West each region having a dedicated leader With our new integrated business model and regional structure we re strengthening our core capabilities providing local service and industry expertise Our market leadership affirms that we have the best team in the industry and we re excited to continue to help our commercial customers grow and be successful said Hranicky Notably Wells Fargo has been making efforts at improving its financial position and reputation that was affected by involvement in a horde of scandals In May the company created a strategic execution and operations unit that seeks to meet demands of several regulators and compliance officers who remain unsatisfied with the bank s remediation moves so far Also it will focus exclusively on regulatory priorities i e strengthening and driving the implementation of certain business and risk management processes Though Wells Fargo s cost control plans and efforts to enhance customers experience seem impressive the company still has to look out for a CEO who can be trusted with the responsibility to turn around the bank Shares of Wells Fargo have lost 8 8 over the past six months against 3 4 growth recorded by the Currently the stock carries a Zacks Rank 3 Hold You can see Stocks to ConsiderCitigroup NYSE C has witnessed 2 4 upward estimate revision over the past 60 days Also the company s shares have risen nearly 13 in the past six months It has a Zacks Rank 2 Buy at present BankUnited NYSE BKU estimates have been revised 2 5 upward for current year earnings over the past 60 days Also the company s shares have risen 4 4 in the past six months It carries a Zacks Rank 2 The Zacks Consensus Estimate for JPMorgan Chase Co NYSE JPM current year earnings has been revised 6 4 upward over the past 60 days Also the company s shares have risen nearly 7 in the past six months It currently carries a Zacks Rank of 2 Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
MS | Turkey set to raise rates balancing lira and growth concerns | By Daren Butler and Ali Kucukgocmen ISTANBUL Reuters The Turkish Central Bank is expected to raise interest rates on Thursday to calm a currency crisis but forecasts for the scale of the increase vary widely as the bank balances concerns over lira weakness with worries about an economic slowdown The lira has slumped 40 percent against the dollar this year weakened by unease over President Tayyip Erdogan s influence on monetary policy and more recently a bitter row with the United States that has unsettled investors The central bank confounded expectations for a rate increase at its July meeting fuelling the belief it is under pressure from Erdogan who has called interest rates the mother and father of all evil and frequently urges they be kept low But after inflation surged in August to its highest in nearly 15 years the central bank that it would take action against significant risks to price stability a rare move to soothe financial markets It said its monetary stance will be adjusted at Thursday s policy committee meeting Analysts saw this as pointing to an increase in the benchmark one week repo rate now 17 75 percent less than the annual inflation rate of 17 9 percent Phoenix Kalen strategist at Societe Generale PA SOGN forecast the repo rate would be raised to 20 75 percent and would be restored as the main policy instrument after a period during which the effective funding rate has been 19 25 percent Although this amount of monetary tightening may disappoint market expectations and spark renewed TRY weakness the decision would reflect the prioritization of Turkish authorities concerns regarding a rapidly decelerating economy Kalen said Turkey s economic growth slowed to 5 2 percent in the second quarter data showed this week and the economy is expected to slow again in the second half In a Reuters poll all 11 economists predicted the benchmark one week repo rate would be raised The average forecast was to 22 percent but predictions ranged from an increase of 225 basis points to 725 basis points The central bank has a complete lack of credibility said Guillaume Tresca senior EM strategist at Credit Agricole PA CAGR commenting on why the range was so wide We know they are not independent and that is it So you cannot predict what they will do what you are trying to do is to predict what President Erdogan will do he said Muhammet Mercan ING s chief economist for Turkey said authorities need to act with credible measures to restore confidence given the economy s large forex debt service requirement He forecast the one week repo rate would be raised to 21 percent because of the weakening lira and deteriorating inflation outlook FINANCIAL STABILITY RISKS Morgan Stanley NYSE MS economist Ercan Erguzel highlighted financial stability concerns and said he expected the central bank to tighten the repo rate by 425 basis points to 22 0 percent On the financial stability front the biggest risk is the corporate sector s short FX position and its indirect impact on the banking system s asset quality he said That is likely to have an impact on syndication rollover ratios with September and October appearing from the monthly repayment schedule to be two critical months for rollovers he added However the ratings agency Moody s said on Tuesday that most rated Turkish companies could handle refinancing risks despite the rising uncertainties The central bank last raised rates in June lifting the repo rate by 1 25 percentage points At the end of May it simplified its previously unorthodox policy returning to using the repo rate as its benchmark In August the bank tightened liquidity to counter the lira s slide shifting funding from repo auctions to the upper band of its interest rate corridor raising the effective cost of funding by 150 basis points to 19 25 percent It has also taken other technical measures on reserve requirement ratios while the banking watchdog has also taken steps to limit swap transactions to underpin the currency While there was wide expectation that interest rates would rise on Thursday veteran emerging markets investor Mark Mobius raised doubts about the benefits of such a move I m not convinced that raising interest rates is going to do anything it s all about confidence said Mobius who recently launched his own emerging market investment trust Mobius Investment Trust
OK they raised interest rates but what happens People then say you re not confident You re not confident in your own currency therefore you re offering us some crazy interest rates he said |
MS | Japan s booming July machinery orders point to accelerating capex growth | By Stanley White TOKYO Reuters Japan s core machinery orders robustly exceeded expectations in July rebounding from the previous month s decline and firming up the view that capital expenditure will continue to expand and boost overall economic growth The 11 0 percent rise in core machinery orders a highly volatile data series regarded as a leading indicator of capital spending soared over the median estimate for a 5 7 percent increase seen in a Reuters poll and was the fastest increase since January 2016 Overseas machinery orders rose 6 0 percent month on month in July recovering from a 12 0 percent decline in June a sign that export demand will hold up in the face of growing trade friction for now However the outlook is not without risks A Reuters tankan survey showing business confidence among Japanese manufacturers slipped in September from a seven month high due to worries over an escalating trade war between the United States and China Nonetheless economists still expect companies to invest more to cope with growing labor shortages although businesses may hold back spending if Japan gets dragged into a trade war with the United States Japanese companies need to invest in new equipment is so strong that they are willing to do so even though trade protectionism clouds the outlook said Hiroshi Miyazaki senior economist at Mitsubishi UFJ Morgan Stanley NYSE MS Securities This is clearly driven by labor shortages There is room for capex to rise further and add to economic growth Japan s labor pool is dwindling due to its rapidly aging population and companies across a broad range of industries are investing more in automation and IT systems to operate with fewer staff The government and the Bank of Japan have long argued that increased capital expenditure will improve stodgy domestic demand but business investment is closely tied to corporate sentiment and could gradually fade if companies become more cautious We haven t seen the impact yet in the hard data but looking ahead I am slightly worried about the impact from the trade war said Hiroshi Shiraishi senior economist at BNP Paribas PA BNPP Securities It s not just about domestic capex Japan produces capital goods for export that can be affected The Reuters tankan published earlier on Thursday showed the sentiment index for manufacturers stood at 26 in September down four points from the previous month weighed by declining confidence in areas such as electric machinery metal products machinery textiles paper and chemicals Business is also concerned that U S President Donald Trump will turn his attention to Japan asking for specific measures from Japan to lower its trade surplus with United States backed up by the threat of high tariffs Thursday s cabinet office data showed manufacturers machinery orders rose 11 8 percent in July rebounding from a 15 9 percent decline in the previous month thanks to increased orders from makers of chemicals heavy machinery and processed food Service sector orders rose 10 9 percent in July versus a 7 0 percent decline in the previous month thanks to bigger orders from wholesalers retailers shipping companies and telecommunications businesses Separate data this month showed a modest increase in household spending amid rising real wages offering hope that consumer spending will also support growth |
MS | US Morgan Stanley Mulls Bitcoin BTC Swap Trading Report | One of the world s largest banks US Morgan Stanley NYSE MS plans to offer Bitcoin BTC based financial instruments for its clients in the form of swaps an anonymous source with access to the bank s strategies Bloomberg on Thursday A bank spokesperson declined to comment on the report neither confirming nor denying the information
Morgan Stanley chose the derivatives contract strategy as the institution does not intend for direct BTC trading according to the source The bank is technically fully prepared to offer Bitcoin swaps and will tie them to the BTC futures Morgan Stanley will officially launch the swaps after institutional investors give signs of significant interests in this offer and after the completion of an internal approval process
The U S bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin said the person who asked not to be identified because the information is private Investors will be able to go long or short using the so called price return swaps and Morgan |
JPM | JPMorgan Chase lowers 2019 outlook for net interest income to 57 billion | By Elizabeth Dilts NEW YORK Reuters JPMorgan Chase Co N JPM lowered its outlook for 2019 net interest income by about 500 million on Tuesday following similar moves by rival big banks Wells Fargo Co N WFC and Citigroup Inc N C Our net interest income will be a little bit lower than we told you last time Chief Executive Officer Jamie Dimon said at Barclays Financial Services Conference in New York I think we told you 57 5 billion and I m closer to 57 billion for this year That is a lower forecast for full year net interest income than the bank gave in mid July and it shows that banks with large pools of customer deposits are struggling to make as much money amid lower interest rates and an inverted yield curve On Monday top brass from Citi and Wells Fargo tempered their outlooks for net interest income Citi now expects net interest income to be up 3 to 4 for the year compared with prior guidance of 4 growth Wells Fargo lowered its projections for the second time this year The bank s chief financial officer said it expects net interest income to fall 6 in 2019 compared with 5 stated previously
Dimon also said JPMorgan Chase expects third quarter trading revenues to be 10 lower than in the second quarter while fees from mergers and acquisitions will likely be flat in comparison with the prior quarter |
JPM | JPMorgan Chase JPM Stock Moves 0 27 What You Should Know | JPMorgan Chase JPM closed the most recent trading day at 108 23 moving 0 27 from the previous trading session This move was narrower than the S P 500 s daily loss of 0 69 Elsewhere the Dow lost 0 87 while the tech heavy Nasdaq lost 0 79
Prior to today s trading shares of the biggest U S bank by assets had lost 6 49 over the past month This has lagged the Finance sector s loss of 3 89 and the S P 500 s loss of 4 53 in that time
Investors will be hoping for strength from JPM as it approaches its next earnings release The company is expected to report EPS of 2 56 up 11 79 from the prior year quarter Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 29 38 billion up 5 86 from the year ago period
JPM s full year Zacks Consensus Estimates are calling for earnings of 10 03 per share and revenue of 115 29 billion These results would represent year over year changes of 11 44 and 5 74 respectively
Investors might also notice recent changes to analyst estimates for JPM These revisions typically reflect the latest short term business trends which can change frequently As a result we can interpret positive estimate revisions as a good sign for the company s business outlook
Our research shows that these estimate changes are directly correlated with near term stock prices To benefit from this we have developed the Zacks Rank a proprietary model which takes these estimate changes into account and provides an actionable rating system
The Zacks Rank system ranges from 1 Strong Buy to 5 Strong Sell It has a remarkable outside audited track record of success with 1 stocks delivering an average annual return of 25 since 1988 The Zacks Consensus EPS estimate has moved 0 33 higher within the past month JPM is currently a Zacks Rank 3 Hold
In terms of valuation JPM is currently trading at a Forward P E ratio of 10 82 Its industry sports an average Forward P E of 10 69 so we one might conclude that JPM is trading at a premium comparatively
We can also see that JPM currently has a PEG ratio of 1 55 The PEG ratio is similar to the widely used P E ratio but this metric also takes the company s expected earnings growth rate into account JPM s industry had an average PEG ratio of 1 33 as of yesterday s close
The Banks Major Regional industry is part of the Finance sector This industry currently has a Zacks Industry Rank of 99 which puts it in the top 39 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
To follow JPM in the coming trading sessions be sure to utilize Zacks com |
MS | Exclusive Chinese e commerce portal Yunji Weidian taps banks for U S IPO source | By Joshua Franklin
Reuters Chinese e commerce portal Yunji Weidian has hired investment banks for an initial public offering it plans to launch in the United States early next year a source with direct knowledge of the matter said on Wednesday
Yunji hopes to fetch a valuation of between 7 billion and 10 billion in the IPO and has mandated Morgan Stanley NYSE MS Credit Suisse SIX CSGN Group AG and JPMorgan Chase Co NYSE JPM to lead the listing on the Nasdaq stock exchange the source said requesting anonymity because the plans are not public
The company which broke even in 2017 and expects to be profitable in 2018 has plans to raise around 1 billion in the IPO the source said Yunji has more than 35 million active users the source added
Representatives for Yunji Morgan Stanley Credit Suisse and JPMorgan declined to comment
The Yunji listing would follow other Chinese e commerce companies public in the United States including Alibaba NYSE BABA JD com and Pinduoduo Inc
Pinduoduo which has a market capitalization of around 23 billion went public in July in an IPO that priced at the top of its targeted range
But since the IPO its stock has struggled with Chinese regulators investigating Pinduoduo after media reports of third party vendors selling counterfeit goods on its group discounting marketplace
Like Pinduoduo Yunji allows consumers to purchase items both individually and as a team However Yunji s platform offers more Chinese and international brands
Crucial to both Yunji and Pinduoduo s rapid growth has been the rise of China s top social media app WeChat which users use to discuss potential purchases
Yunji s main investors include Asia focused private equity firm Crescent Point and China s CDH Investments |
MS | China s Hansoh Pharma Applies Hong Kong IPO | Investing com Lianyugang based Hansoh Pharmaceutical Group Company Limited applied on Thursday to issue shares in Hong Kong with Morgan Stanley NYSE MS and Citigroup NYSE C named as joint sponsors according to a company statement at the Hong Kong Stock Exchange HKEx
Established in 1995 and backed by Chinese female billionaire Zhong Hui juan Hansoh s income rose from RMB 5 045 billion 740 million in 2015 to RMB 6 186 billion 900 million in 2017 while its gross profit margin stood at 92 6 last year
The company features R D and production of anti tumor and psychoactive drugs Its olanzapine tablets targeting schizophrenia and bipolar disorder account for a 68 4 share of the olanzapine market in China and RMB1 85 billion 270 million sales for Hansoh in 2017
The firm s second biggest product chemotherapy drug pemetrexed also made up 42 6 of the market share in China generating RMB 1 19 billion 170 million of sales for the company in 2017 |
MS | Italy Market Shows Traders Not Losing Sleep Anymore Over Budget | Bloomberg A rally in Italian bonds shows anxiety among the country s investors might be turning a corner
The yield on two year securities fell to the lowest level in almost six weeks on Monday after Finance Minister Giovanni Tria added to reassuring signals that the country s budget talks will adhere to European Union rules His remarks led Morgan Stanley NYSE MS and NatWest Markets to expect further bond gains as the worst of Italy s fiscal risk might be over in the short term
Morgan Stanley sees Italy s budget shortfall at around 2 2 percent of gross domestic product well within the 3 percent limit set by the EU and says investors should buy Italian 10 year bonds selling similar maturity Spanish securities NatWest Markets thinks it s time to consider aggressively long positions in the nation s five year bonds as market sentiment improves
There s a lot of risk still priced into BTPs so given the more constructive tone on fiscal policy coming from the Italian government there should be scope for further spread tightening over the short term said Michael Ingram chief market strategist at W H Ireland Ltd
The yield on benchmark 10 year securities fell 13 basis points to 2 90 percent following a 20 basis point drop last week The spread over similar maturity German bunds narrowed 14 basis points to 2 50 percent the lowest in a month
Stocks Advance
Italy s FTSE MIB Index outperformed regional equities on the back of the bond moves to gain 2 3 percent led by banks The policies discussed by the new populist government have weighed down Italian stocks taking the FTSE MIB from being the best performing index in Europe to the second worst as their spending plans raised investor concerns
The government in Rome is expected to set new public finance and economic growth targets by Sept 27 and present them to parliament This will be followed by the draft budgetary plan which must be submitted to the European Commission by Oct 15 The budget law has to be sent to parliament by Oct 20 with final approval expected by year end
As long as the Italian economy remains on a low growth trajectory the tension between debt reduction aspirations and fiscal pump priming can only increase Ingram said adding this could lead to renewed volatility in the debt in the longer term |
MS | Blockchain Island Dream Is Calculated Risk Says Malta Leader | Bloomberg Malta s prime minister is doubling down on the booming blockchain industry in a bid to diversify the European Union s smallest economy and to even fight corruption
We re taking a calculated risk Prime Minister Joseph Muscat said in an interview on Monday by cutting layers of bureaucracy and offering fast track approvals for digital players to set up shop on the island
With tax rates as low as 5 percent the government recently passed laws that seek to ease the trading and issuance of cryptocurrencies Malta s stock exchange is also in talks with companies to list digital assets
The aggressive steps to become one of world s friendliest jurisdictions in the industry appear to be working
Crypto exchange Binance founded last year in Hong Kong and now one of the largest said in March that it s moving to Malta after regulators in Asia cracked down on virtual money The island is capturing an outsize share of crypto trading according to research from Morgan Stanley NYSE MS while Binance is working with other investors to create Founders Bank an institution servicing digital clients registered in the island
We have tourism we have the service industry we have finance and gaming Silvio Schembri parliamentary secretary for financial services digital economy and innovation said The country is working with auditor PricewaterhouseCoopers to launch blockchain licenses for regulated entities which will be issued in November he said
Regulatory scrutiny around the world over digital trading platforms continues thanks in part to concerns regarding customer protection So too has scrutiny over Malta s recent economic success overshadowed by money laundering concerns
How Malta Became a Hub of the Cryptocurrency World QuickTake
The European Banking Authority recently said that the Maltese watchdog breached anti money laundering rules after concluding that the Maltese Financial Intelligence Analysis Unit failed to conduct effective supervision of Pilatus Bank
I see blockchain as a technology being part of a solution when it comes to due diligence and anti money laundering procedures Muscat said We re quite aware of AML issues all across Europe and I don t think it can be pinned down on one particular country such as Malta
There s wide disparity in how financial authorities view cryptocurrencies French authorities in February enforced tough reporting standards and barred electronic advertising while Swiss officials are vying to become a crypto nation China for its part has banned initial coin offerings and curbed local trading The U S has dragged its feet on clarifying legislation
In the same way that we came up with our regulation when it came to online gaming we are trail blazers in all this Muscat said I think we can replicate this in this area too where the EU will at the end of the day be doing what we are very much doing right here today
While future regulation remains uncertain those on the ground remain optimistic At a recent dinner in Malta with politicians and bankers Michael Bianchi the chairman of Binance backed Founders Bank toasted the future of Malta dubbing it the Blockchain island |
MS | Asian Stocks Are Caught in the Longest Sell off in 16 Years | Bloomberg It s a losing streak investors haven t seen since 2002
The benchmark MSCI Asia Pacific Index fell for a tenth consecutive day Wednesday extending its recent decline to about 5 percent and bringing the loss in value to almost 700 billion this year
And there s a slew of reasons trade the U S dollar emerging market turmoil and the bear market in Chinese stocks to name but a few
Asian stocks have been caught in the middle of increasing trade tensions as well as the rising dollar and emerging market contagion and certainly China weakness is also adding fuel to the fire said Nader Naeimi head of dynamic markets at AMP Capital Investors Ltd
Most individual Asian stock markets fell Wednesday led by declines in Japan and Hong Kong The Topix index fell 0 6 percent while the Hang Seng Index slumped another 0 5 percent after entering bear market territory yesterday Meanwhile the Shanghai Composite Index neared a four year low as policy makers attempts to lift sentiment fail to gain traction
Here s what strategists are saying about the current state of play in Asian stocks
Emerging Market Spillover
There s more contagion coming from Turkey and Argentina events to the more externally susceptible economies like Indonesia and Philippines said Ken Peng strategist at Citigroup Inc NYSE C Both Southeast Asian nations have double deficits they have inflation that is relatively high and rising And their reserves are falling
Trade
The clear concern in the short term is trade tensions said Michael McCarthy Sydney based chief market strategist at CMC Markets While signs of a de escalation would be positive that seems unlikely in the current environment he added
The biggest risk is trade Citi s Peng said citing that people are very afraid of the additional 200 billion in tariffs He noted that the midterm elections on Nov 6 is key and trade tensions may dissipate after that
Greenback
The slump in Asian stocks is mainly due to the continued strength of the U S dollar against emerging market currencies Paul Kim chief investment officer at Eastspring Investments said He expects an outflow from emerging markets with the Federal Reserve still on course to increase interest rates
Still Bearish
We maintain a bearish stance on Asia and EM equities and expect further downgrades to consensus earnings estimates in coming months said Jonathan Garner managing director at Morgan Stanley NYSE MS citing a slowdown in China s growth consequent upon credit tightening and weaker demand in autos and technology hardware
Premature
Asia is certainly cheaper and oversold now than the start of the year and in my view closer to the end of its falls than the beginning But given the risk around U S equities and the fact that any falls in U S equities will lead to a broad global risk off sentiment I suggest it maybe premature to go in yet AMP s Naeimi said
Some Optimism
We see that light at the end of the tunnel but we re still kind of in the darkness ourselves Citi s Peng said Investors need more concrete catalysts before they step in to buy stocks So that s the challenge for money mangers
We are looking to be more constructive on Asian equities in the next quarter if the current correction continues Valuations will be more attractive and worth a look then said Jason Low senior investment strategist at DBS Bank Holdings Ltd
The good news is that valuations are looking more attractive now and technicals are oversold which suggest that Asian stocks could be poised for a rebound in the next few months Jasslyn Yeo global market strategist as JPMorgan NYSE JPM Asset Management |
MS | European stocks shrug off trade rhetoric Galapagos soars | By Helen Reid LONDON Reuters Oil and mining stocks led European shares higher on Wednesday as investors shrugged off a weaker session in Asia amid rising tensions between the United States and China The pan European STOXX 600 STOXX and eurozone STOXX STOXXE were both up 0 5 percent by 0845 GMT despite declines by Asian stocks after President Donald Trump said the United States was taking a tough stance with China on trade Oil stocks SXEP rose 1 6 percent after a drop in U S crude inventories pushed crude prices higher Mining shares SXPP climbed 1 5 percent We think it is likely that the equity market sell off particularly in the European time zone will slow down or even temporarily reverse said RBC strategists While trade frictions and a perception of slowing Asian markets as a result are easy culprits there seems to be a lot of risk priced in at this stage too they said Dutch biotech firm Galapagos AS GLPG soared 16 7 percent to the top of the STOXX after positive trial results for a drug to treat rheumatoid arthritis Shares in Zara owner Inditex MC ITX rose 2 9 percent to the top of Spain s IBEX IBEX after the fashion retailer said it expected profit margin growth in the second half Salvatore Ferragamo MI SFER topped Italy s FTSE MIB FTMIB with a 5 2 percent rise Traders cited rumors of a potential takeover The family that controls the fashion group is not interested in selling its stake a spokeswoman for the group said Hermes PA HRMS shares rose 2 percent after the French handbag maker reported record first half margins Hermes delivered a solid set of results Importantly the company noted a positive contribution to profits from strong demand in China Berenberg analysts wrote British energy provider SSE L SSE sank 8 percent after it warned first half profit would halve compared with last year calling its financial performance disappointing and regrettable Centrica L CNA another power company fell 3 1 percent Hexpol ST HPOLb shares rose 5 4 percent after the Swedish chemicals company said it acquired U S rubber compounder Kirkhill Rubber Shares in payments processor Adyen AS ADYEN rose 5 6 percent after the recently listed Dutch company said it has selected data platform company Looker to help grow its business Broker research moved some stocks German utility E ON DE EONGn fell 2 5 percent to the bottom of the DAX after Morgan Stanley NYSE MS analysts cut their target price on the stock Swiss chocolate maker Barry Callebaut S BARN gained 6 3 percent after UBS analysts upgraded the stock to neutral from sell We undertook some supply chain checks and think Barry could sign new contracts soon benefiting its volume growth in the next 12 18 months UBS analysts wrote
Overall however analysts are lowering earnings outlooks for MSCI Europe companies as the second quarter earnings season ends and investor attention turns to political risk |
JPM | EU row with Bern short term gain long term pain for Swiss stock exchange | By Josephine Mason
LONDON Reuters A trade dispute between Bern and Brussels has boosted revenue and volumes for Swiss stock exchange SIX but may eventually hurt investment in Switzerland s financial markets SIX s Chief Executive Officer Jos Dijsselhof said on Thursday
Swiss stock volumes have soared after a ban on trading on European Union platforms forced market participants onto the domestic exchange handing Switzerland an early victory in its protracted row with Brussels
Investors in the EU and Switzerland lost direct access to each others stock exchanges from July 1 as the two sides squabbled over a partnership treaty that stalled after years of talks
Before the ban 70 of Zurich listed shares worth 1 2 trillion traded on the domestic market and the remainder in the EU Now it s almost 100 in Switzerland Dijsselhof said in an interview with Reuters
In the short run I m quite happy I have a bit more volume and revenue In the long run I don t think it s good he said
I think for a proper investment climate for investors to have best execution you need to have multiple places to execute If you don t have that in the long run it s not good for the market
Exchange data showed SIX s turnover in August jumped 51 year on year and 38 in July
For Brussels Dijsselhof said the dispute had backfired
The EU government thought we create a tool to hold Switzerland hostage so that we can push Switzerland to move forward on this framework agreement he said
And it s not worked We now have all the volume
There are few signs a deal over the stalled treaty will be struck this year with the EU which is also struggling to forge a new relationship with departing member Britain
Separately SIX is working on a new digital trading platform the SIX Digital Exchange SDX that will use blockchain technology to speed up trading
Dijsselhof said the exchange was working with major global banks on the best applications for the platform with Citibank JP Morgan Chase NYSE JPM and Credit Suisse SIX CSGN all allocating teams to help develop a use for it
He expects to have worked out a prototype product by the end of the year and then to build up the market for it in 2020
The infrastructure will be cheaper you won t need collateral you won t have the credit risk you won t need a clearing house There are huge advantages to moving existing products on it he said
The banks may eventually invest in the platform he added
Technically it s there Now we need to get a market To create a market we need to align with customers to see where are the opportunities Dijsselhof said
The Swiss regulator is working closely with the exchange to create legislation on how to oversee the new platform he said |
JPM | JPMorgan Warns Stablecoins Like Libra at Risk of System Gridlock | The new breed of stablecoins led by Facebook s Libra could be vulnerable to failure in periods of network stress
According to an analysis from JPMorgan NYSE JPM released on Sept 5 they lack the short term liquidity of other payments systems so usage could grow faster than the network can safely support |
JPM | Volfefe a volatility index for the Trump era | By Saqib Iqbal Ahmed NEW YORK Reuters Traders know that when President Donald Trump tweets he can rock financial markets often in unpredictable ways but analysts at JP Morgan N JPM have now quantified the impact of his tweets at least on the U S interest rates market Trump s tweets which have in recent months veered toward market sensitive topics such as trade and monetary policy have increasingly moved U S rates markets analyst Munier Salem said in a note on Friday In the report which runs well over 4 000 words J P Morgan analysts use machine learning techniques and their own volatility model to show how the president s 280 character missives served to raise investors expectations for future moves in the U S rates market While the direction of price moves and their lasting power may be uncertain Trump s tweets often spark a sharp reaction across asset classes JP Morgan s newly built Volfefe index a nod to covfefe the mysterious word coined by Trump in an unfinished 2017 tweet analyzes a rolling sample of recent tweets to judge how much effect the president s remarks have had on volatility The index can explain a measurable fraction of moves in the market s forecast of likely movement in rates particularly the shorter duration 2 year and 5 year rates the analysts said Trump s most market moving tweets dwell on trade and to a lesser extent monetary policy with the words China billion products dollars tariffs and trade making the top list the JP Morgan analysis found To be sure while market moving tweets may be on the rise in recent months these tweets have garnered fewer likes and retweets than other contemporaneous remarks the analysts found Analysts at JP Morgan noted that while their current analysis was limited to U S interest rates such an exercise was easily transferable to equity or currency markets Separately analysts at Citigroup N C found that a wide range of currency pairs logged higher than expected volatility within a one hour window after a Trump tweet
The U S dollar whose recent strength against major currencies has drawn much of the president s ire weakening against the euro and the Japanese yen is the most pronounced reaction to the president s tweets about the greenback analysts at Citigroup said in a Friday note |
JPM | JPMorgan Rises 3 | Investing com JPMorgan NYSE JPM rose by 3 01 to trade at 115 99 by 15 24 19 24 GMT on Monday on the NYSE exchange
The volume of JPMorgan shares traded since the start of the session was 9 71M JPMorgan has traded in a range of 113 60 to 116 05 on the day
The stock has traded at 116 0600 at its highest and 107 3200 at its lowest during the past seven days |
JPM | Paypal PYPL Down 0 3 Since Last Earnings Report Can It Rebound | A month has gone by since the last earnings report for Paypal PYPL Shares have lost about 0 3 in that time frame outperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Paypal due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers PayPal s Q1 Earnings Beat Estimates Revenues Up Y YPayPal Holdings delivered non GAAP earnings of 78 cents per share in the first quarter of 2019 which surpassed the Zacks Consensus Estimate by 11 cents and surged 37 on a year over year basis The company s strategic investment in MercadoLibre acted a key catalyst throughout the quarter as evident from its contribution of 8 cents to the reported EPS figure Net revenues of 4 128 billion missed the Zacks Consensus Estimate of 4 129 billion However the figure increased 12 from the year ago quarter The year over year growth in top line can be attributed to rapidly increasing net new active accounts and strengthening customer engagement on the company s platform which provided a significant boost to the total active accounts in the reported quarter Further robust performance of Venmo and One Touch continued to contribute well to revenues However sale of the U S consumer credit receivables portfolio to Synchrony negatively impacted revenues Without the impact revenues would have exhibited growth of 19 Top Line in DetailBy Type Transaction revenues came in at 3 731 billion 90 4 of net revenues up 17 from the year ago quarter Other value added services generated 397 million of revenues accounting for 9 6 of net revenues decreasing 18 6 year over year The decline can be attributed to the sale of its U S consumer credit receivables portfolio to Synchrony By Geography Revenues from the United States came in at 2 187 billion 53 of net revenues up 8 1 on a year over year basis International revenues were 1 941 billion 47 of revenues increasing 17 from the prior year quarter Quarter in DetailPayPal s strategic partnerships and portfolio strength continued to strengthen its customer as well as merchant base throughout the reported quarter which in turn aided its total payment volume TPV During the first quarter the company revealed a partnership with Facebook s Instagram Per the deal it will process payment infrastructure on the latter s Checkout on Instagram Further PayPal invested 750 million in MercadoLibre in order to make a foray into the e commerce space Further this move is strengthening the company s international presence Additionally PayPal unveiled Instant Transfer in collaboration with JPMorgan Chase NYSE JPM This offers real time payments for both consumers and merchants consequently enabling PayPal s customers to access their money seamlessly Further the company s efforts to monetize Venmo remained positive throughout the quarter The product s annual revenue run rate exceeded 300 million in the first quarter Key Metrics to ConsiderSupported by these endeavors the company recorded year over year growth of 17 in total active accounts by addition of 9 3 million net new active accounts during the reported quarter The total number of active accounts was 277 million in the quarter beating the Zacks Consensus Estimate of 274 million Venmo remains a key growth driver in this metric with over 40 million active customers Additionally the total number of payment transactions came in at 2 84 billion up 28 2 on a year over year basis The figure topped the Zacks Consensus Estimate of 2 82 billion Further the company s payment transactions per active user were 37 9 million which increased 9 2 from the year ago quarter The figure lagged the Zacks Consensus Estimate of 38 2 million TPV came in at 161 5 billion in the reported quarter exhibiting year over year growth of 22 and 25 on spot rate and currency neutral basis respectively However the figure missed the Zacks Consensus Estimate of 162 9 billion eBay NASDAQ EBAY volume which was down 4 remains a concern Further it accounted for 9 7 of TPV contracting 300 bps from the year ago quarter Nevertheless Venmo which accounted for 21 billion of TPV surged 73 on a year over year basis driven by its strong performance Further growing momentum of core peer to peer P2P also contributed 42 billion up 41 from the prior year quarter Also merchant services volume which was up 29 helped in offsetting the declining eBay contribution during the reported quarter Further mobile payment accounted for more than 66 billion of TPV primarily driven by robust mobile checkout services of One Touch which had 12 1 million merchants and 136 million customers at the end of first quarter Operating DetailsPayPal s operating expenses were 3 61 billion in the first quarter climbing 14 6 from the prior year quarter Non GAAP operating income rose 12 7 year over year to 934 million Further non GAAP operating margin came in at 22 6 expanding 10 bps on a year over year basis Balance Sheet Cash FlowAs of Mar 31 2019 cash equivalents and investments came in at 7 8 billion down from 9 1 billion on Dec 31 2018 PayPal generated 1 03 billion of cash from operations and free cash flow of 809 million during the reported quarter Further the company bought back 7 7 million shares worth 750 million GuidanceFor second quarter 2019 PayPal expects revenues between 4 3 billion and 4 34 billion growing in the range of 11 13 at current spot rate and 12 13 on FX neutral basis Non GAAP earnings are anticipated in the range of 68 70 cents per share The company s investment portfolio is likely to contribute 1 cent to the EPS in second quarter For 2019 PayPal estimates revenues between 17 85 billion and 18 1 billion rising in the band of 16 17 at both current spot rates and on FX neutral basis Further non GAAP earnings are expected in the range of 2 94 3 01 per share This includes benefit of 8 cents from PayPal s investment in MercadoLibre
How Have Estimates Been Moving Since Then
It turns out fresh estimates have trended upward during the past month
VGM Scores
At this time Paypal has a nice Growth Score of B a grade with the same score on the momentum front However the stock was allocated a grade of F on the value side putting it in the fifth quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising It comes with little surprise Paypal has a Zacks Rank 2 Buy We expect an above average return from the stock in the next few months |
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