• Tag Archives JP Morgan
  • U.S. Mega Banks Are This Close to Breaking Their Profit Record

    The last time big U.S. banks made so much money, the financial world was heading toward the brink of collapse. This time, it’s stiff regulation that’s in danger.
    Ten of the nation’s biggest lenders including JPMorgan Chase & Co. and Bank of America Corp. together made $30 billion last quarter, just a few hundred million short of the record in the second quarter of 2007, according to data compiled by Bloomberg. The achievement comes just as the industry’s long campaign against post-crisis rules finds traction with the Trump administration.
    Banks have been decrying regulations aimed at curbing risk, blaming them for hurting capital markets and discouraging lending to consumers and companies. President Donald Trump, echoing those complaints, has asked regulators to find ways to ease off. But in this year’s second quarter, banks saw their profits propped up by lending operations even after a surge in revenue from more volatile trading units subsided.
    ‘It shows that the legislation we passed in no way retarded the ability of the banks to make money,’ said Barney Frank, the former congressman whose name is on the 2010 law tightening industry oversight. Banks are supporting the economy, he said. And ‘very specifically, it refutes Trump’s claim that we cut into lending. How do banks make record profits if they can’t lend — especially when they’re down in trading?’
    The second quarter wasn’t a fluke. Even looking at the past 12 months, profits are still near the same level as 2007.

    This post was published at bloomberg


  • Greece Returns To The Bond Market With A Present To Its Last Group Of Bond Buyers

    On the same day that Greek PM Alexis Tsipras triumphantly announced to The Guardian that “The worst is clearly behind us“, Greece just as triumphantly announced that its long-rumored bond issue, the first after a three year hiatus which saw its last bond issue crash then surge, is now a reality. Just like in 2014, Greece is looking to sell another batch of five-year bonds, according to an Athens Stock Exchange filing. The bonds will be sold in benchmark size via a legion of banks, and are expected to price on Tuesday. In terms of total size, it will ultimately depend on client demand – recall that the the 2014 issue was 8x oversubscribed – with UBS expecting a possible size of 2BN-4BN while JPMorgan anticipates roughly 3BN in new bonds.
    But the biggest surprise in today’s announcement was the present for its latest batch of bond buyers: a cash tender offer for its existing 4.75% bonds due in 2019 – the same bonds that were issued in 2014 – which will be bought back at a price of 102.6. The 2019 bond have jumped in recent weeks, with the yield dropping around 15bps, though as Bloomberg notes “hardly anything has traded as is usual in Greek bonds.” The bond was priced around 102.25 ahead of the announcement, before rising another 30c.

    This post was published at Zero Hedge on Jul 24, 2017.


  • Ted Butler Quote of the Day 07-21-17

    “JPMorgan may have been the largest single entity buying COMEX silver contracts over this time (more than 20,000 net contracts), but the raptors were the largest collective buyers. Moreover, JPMorgan is still net short in COMEX silver futures, while the raptors are decidedly net long – meaning the raptors will take profits by selling at higher prices, whereas JPMorgan, should it decide to sell, will be adding to short positions to control and manipulate prices, not to take profits. That’s an important distinction that has been lost on the regulators until now.”

    “What this means in practical terms is that it must be expected that the raptors in both gold and silver will sell and take profits on their large net long positions as gold and silver prices rise – this is in their financial interest and is why they trade. Any such raptor sales will have somewhat of a price depressant effect as the contracts are sold, but these traders are also interested in maximum profits and they know how to make the technical funds reach up in price when they move to buy. The raptors, in my opinion, are less interested in capping gold and silver prices than they are in taking as much money as they can from the technical funds. It will be the additional short sales by JPMorgan (or lack thereof) that will determine whether silver prices get capped on this next go-around.”

    A small excerpt from Ted Butler’s subscription letter on 19 July 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.
     


  • Wall Street Efforts to Improve Its Image Fail to Sway Americans

    Bad news for financial titans like JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs Group Inc.’s Lloyd Blankfein: Most Americans hold unfavorable views of Wall Street banks and corporate executives, and distrust billionaires more than they admire them.
    Despite efforts by Wall Street firms to regain trust since the 2008 financial crisis, fewer than a third of Americans view the industry positively — unchanged from 2009, according to the latest Bloomberg National Poll.
    Dimon, 61, and Blankfein, 62, each chief executive officers for more than a decade, have sought to influence the public policy debate on issues including infrastructure investment, regulation, education, immigration and corporate tax reform. Both were revealed as billionaires in 2015, according to the Bloomberg Billionaires Index.
    Yet the poll shows that Americans are much more likely to distrust billionaires than admire them, 53 percent to 31 percent. And just 31 percent look favorably on corporate executives and Wall Street.
    Big banks ‘are still pushing for deregulation and they are going to get us right back to where we were with the financial crisis,’ said poll participant Chad Boyd, 36, an independent voter and information technology worker who lives in Louisville, Colorado, about 10 miles east of Boulder.

    This post was published at bloomberg


  • Gold and Silver Shine in the Midst of Commodity Slump

    Banks active in commodities have been hammered so far in 2017.
    According to reporting in the Financial Times, income from commodity trading and related activities at Goldman Sachs, Citigroup, JPMorgan and nine other investment banks dropped 40% in Q1 2017, and the struggles have continued into the second quarter.
    Weakness in the energy sector generally, and the price of oil in particular, drug down commodity trading. Gold and silver were the bright spot – an exception to the general commodity trend.
    Revenues shrank as banks became more wary of doing business with cash-strapped oil companies after the price of crude dropped below $30 a barrel. At the same time, there was little or no incentive for producers to hedge output at loss-making prices.’
    Goldman Sachs was the hardest hit. Its problems extended into the second quarter with another 40% plunge in fixed income, currencies, and commodities revenues. According to CNBC, the bank recorded its worst commodities quarter ever. Goldman CFO Martin Chavez called it a ‘challenging environment on multiple fronts.’

    This post was published at Schiffgold on JULY 20, 2017.


  • Bank Earnings & Fed Chairs

    Earlier this week we appeared on CNBC’s ‘Squawk Box’ to talk about bank earnings and the Fed. The results from the top-four banks – Bank America (NYSE:BAC), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) – are really no surprise to readers of The IRA. The largest banks all beat small on revenue and earnings, but showed weakness on fixed income and the mortgage banking lines.
    We suspect that there will be even more pain on the mortgage banking line for WFC, JPM and BAC next quarter. As we told Andrew Ross Sorkin, bank stocks have essentially been going sideways since February and are likely to continue side-stepping because most of the large cap names are fully valued after the Trump Bump. But the biggest obstacle to rising bank stock valuations is the Federal Reserve System’s policies of low rates and open market purchases of debt.
    At the Fed of New York back in the 1980s, one and a quarter times book was seen as the natural limit for bank valuations. Have a look at our previous note if you have any questions on the particulars. Suffice to say that 1x book value for BAC is about right given the bank’s asset and equity returns, and the state of the credit markets. Tight credit spreads make life tough for all but the best run banks.
    When we suggested US Bancorp (NASDAQ:USB) to Squawk Box as our favorite large cap, that was because of the operational excellence as opposed to the stock price, which trades above 2x book value. But the more interesting question from CNBC’s Andrew Sorkin had to do with the choice of the next Fed Chairman.

    This post was published at Wall Street Examiner on July 18, 2017.


  • Ted Butler Quote of the Day 07-19-17

    “History shows that not only are the commercials zooming the technical funds, they have just done so in a manner of unprecedented proportions. Never have the commercials snookered the technical funds in COMEX silver and gold as has just occurred. While I suppose it’s always possible for the commercials to snooker and hoodwink the technical funds into selling even more silver and gold contracts, thus setting the bullish stage even more extreme, that’s not the odds-on bet. The odds-on bet is that the commercials will now look to maximize in monetary terms what they have just created in positioning terms. In other words, it’s time for the commercials to ring the cash register.”

    Now that the technical funds are more short in silver than ever and close to the least net long they have been in both silver and gold in history, the best way for the commercials to ring the cash register would be to let prices rip higher. Nothing would hurt the managed money traders or benefit the commercials more at this time than sharply higher prices. Those sharply higher prices will, obviously, also benefit gold and silver investors and producers, but that’s beside the point in the exclusive private COMEX paper betting game. What happens to the rest of the world doesn’t matter to the big COMEX betters, nor does it matter to the regulators (much to their great shame).”

    All that matters is that the COMEX commercials appear to be on the verge of extracting great sums of money from the technical funds as silver and gold prices move higher. As I indicated previously, no one appears better positioned than JPMorgan for a price explosion in silver. In fact, I am truly in awe of what this crooked bank just pulled off, as much as any criminal act could ever inspire awe. I know how they did it and why they did it, but I am still amazed that JPM actually did it.”

    A small excerpt from Ted Butler’s subscription letter on 15 July 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.
     


  • BofA Beats Despite 14% Slump In FICC Revenue; Interest Income Unexpectedly Declines

    Echoing the trend set by JPM and Wells Fargo last Friday, moments ago Bank of America reported revenue and earnings that modestly beat expectations, with Q2 revenue of $22.8bn, above the $21.8bn expected, generating net income of $5.3 billion up 10% Y/Y, and EPS of $0.46, above the $0.43 estimate, and 12% higher than Q2 2016.
    Net interest income increased 9%, or $0.9B, to $11.0B while investment banking fees rose 9% to $1.5B. BofA achieved this even though its Net Interest Yield (i.e. NIM) unexpectedly declined from 2.39% in Q1 to 2.34% in Q2 as analysts had expected the number to remain unchanged. As the bank explained, “NII was relatively flat from 1Q17, reflecting the benefits from higher short-end rates and one additional interest accrual day, offset by lower NII in Global Markets… Lower Global Markets NII included the impact of higher funding costs associated with balance sheet growth to support client financing activities in equities.” Looking forward the bank said “Expect 3Q17 NII to increase from 2Q17, assuming realization of the forward curve and modest growth in loans and deposits.”

    This post was published at Zero Hedge on Jul 18, 2017.


  • What’ll Happen to US Commercial Real Estate as Chinese Money Dries Up?

    See Manhattan.
    In the second quarter in Manhattan, Chinese entities accounted for half of the commercial real estate purchases with prices over $10 million. By comparison, in 2011 through 2014, total cross-border purchases from all over the world (not just from China) were in the mid-20% range.
    ‘At a time when domestic investors have pulled back, foreign parties have ramped up their holdings in Manhattan,’ according to Avison Young’s Second Quarter Manhattan Market Report.
    This includes the $2.2 billion purchase in May of 245 Park Avenue by the Chinese conglomerate HNA Group, the sixth largest transaction ever in Manhattan. And at $1,282 per square foot, it was ‘among the highest price per pound for this type of asset.’
    The purchase of the 45-story trophy tower is being funded in part by money borrowed in the US via a $508 million loan from JPMorgan Chase, Natixis, Deutsche Bank, Barclays, and Societe Generale, according to CommercialCaf. The rest is funded by HNA’s other sources, presumably in China.
    The influx of Chinese money and the propensity by Chinese companies to hunt down trophy assets have propped up prices in Manhattan. And yet, despite the Chinese hunger, total sales volume has plunged, according to Avison Young:

    This post was published at Wolf Street by Wolf Richter – Jul 17, 2017.


  • JPMorgan Warns S&P Faces Large “Negative Gamma”, Could Exaggerate Any Drop Next Week

    Earlier in the week we noted the ‘odd’ surge in downside protection demand even as tech stocks were soaring, and now JPMorgan is noting the S&P has shifted to a large ‘negative gamma’ underhang which “could boost volatility if we were to sell off.”
    As Bloomberg notes, options markets suggest a lack of confidence in the rally. Traders are piling into downside hedges on every uptick in prices…

    This post was published at Zero Hedge on Jul 14, 2017.


  • The “Missing Slide”: JPM Credit Card Charge-Offs Jump To Four Year High

    While JPM was quick to provide all the favorable data in its earnings presentation (and not so favorable when it comes to the sharp drop in its markets sales and trading division) one thing was conspicuously missing: the slide on “Mortgage Banking And Card Services” which has traditionally been part of the bank’s earnings presentation and was certainly featured prominently last quarter.
    Of course, it is possible that JPM simply forgot to include it, or perhaps it did not want to bring attention to a troubling trend: the concerning increase in net credit card charge-offs, which last quarter rose to just shy of $1 billion, and which prompted JPM to report an unexpected increase in credit costs (driven also by JPM’s write-down in its student loan portfolio).

    This post was published at Zero Hedge on Jul 14, 2017.


  • JPM Beats Boosted By Lending Despite Trading Miss As FICC, Sales & Trading Revenues Tumble

    Launching Q2 earnings season, moments ago JPM reported Q2 an adjusted record Net Income of $7.03 billion and EPS of $1.82, which however included an 11 cent legal benefit, beating expectations $1.57 and 27 cents higher than a year ago, on “managed” revenue of $26.4BN, beating consensus expectations of $25.1BN.
    JPM reported average core loans up 8% Y/Y with net interest income also 8% higher to $12.5bn, ‘primarily driven by the net impact of rising rates and loan growth” even as average NIM missed.
    Commenting on the result, Jamie Dimon said: ‘We continued to post very solid results against a stable-to-improving global economic backdrop. The U. S. consumer remains healthy, evidenced in our strong underlying performance in Consumer & Community Banking. Loans and deposits continue to grow strongly, and card sales and merchant processing volumes were up double digits, reflecting our consistent investment in the business. In the Corporate & Investment Bank, we maintained our leadership in Banking, while Markets revenue was down amid lower volatility and client activity.’
    Dimon concluded:’We are also pleased to announce increases to our capital return plans while continuing to invest in our businesses for long-term profitability – reflecting the financial strength of our company and the significant capital and liquidity improvements we have made over the past several years.’

    This post was published at Zero Hedge on Jul 14, 2017.


  • Ted Butler Quote of the Day 07-14-17

    But there are other factors that may play into the only question that matters, namely, will JPM add to shorts or not. Among those factors are the widespread and growing attention to the extreme COMEX positioning changes and otherwise unexplainable and weird price action in silver, which can only be explained by COMEX positioning. Throw in the wildcard of the new Enforcement Director at the CFTC, James McDonald, and the game’s outcome goes beyond interesting.

    As far as I’m concerned, we’re on the verge of discovering if McDonald will go down as perhaps the regulatory hero of all time or if we’ll be calling for his head on a spike. Again, it all comes down to whether JPMorgan adds or doesn’t add to its silver short positions whenever the next price rally commences. I can’t get more specific than that.

    As far as what Friday’s COT report will indicate, the dramatic downside price action and extremely high trading volume point to yet another week of significant improvement – big commercial buying and managed money selling. This is also supported by an increase in total open interest in the reporting week (4,000 contracts in silver and 18,000 in gold). We may even see improvements on the scale of last week’s report, but regardless of whatever the actual reported numbers may be, it sure feels to me that we’re at or passed the point of a downside climax, particularly in terms of extreme contract positioning. Full and maximum exposure is warranted, particularly in silver.

    A small excerpt from Ted Butler’s subscription letter on 12 July 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.
     


  • Jamie Dimon: “It’s Embarrassing As An American Listening To This Stupid Shit We Have To Deal With”

    One month after Goldman CEO Lloyd Blankfein trolled Donald Trump, when on June 9 in only his 4th ever tweet, the chief executive sarcastically said on Twitter “Just landed from China, trying to catch up…. How did “infrastructure week” go?” moments ago Jamie Dimon, in very uncertain terms, lashed out at the gridlock in Washington in general, and – according to some – president Donald Trump in particular (despite Dimon’s subsequent clarification that that was not the case).
    During today’s earnings call discussing JPM’s Q2 beat, which however masked another sharp drop in the company’s trading revenue, Dimon – fresh from a work trip overseas, unloaded on everything that’s holding U. S. businesses back.

    “It’s almost an embarrassment be an American citizen traveling around the world and listening to the stupid shit we have to deal with in this country and at one point we have to get our act together. We won’t do what were supposed to for the average American.”
    He continued: “since the Great Recession, which is now 8 years old, we’ve been growing at 1.5 to 2 percent in spite of stupidity and political gridlock, because the American business sector is powerful and strong. What I’m saying is that it would be much stronger growth if there were more intelligent decisions and less gridlock.” Dimon’s outburst was prompted by a Wall Street analyst who asked if clients were beginning to worry about D. C. dysfunction and a lack of progress. Dimon countered by saying that the economy has grown despite years of bad policy, and that it would continue to grow regardless of the US political climate.

    This post was published at Zero Hedge on Jul 14, 2017.


  • JPM ‘Unprecedented Run of Corporate Savings’ Has Been Pushing Stocks Higher

    An unprecedented run of elevated corporate savings has been a defining feature of the secular stagnation thesis since the Lehman crisis claims a new report from JP Morgan’s Global Asset Allocation team headed by Nikolaos Panigirtzoglou.
    According to the report, G4 non-financial corporate have accumulated more than $2 trillion in cash assets, bringing the total corporate cash pile to $7.7 trillion, since the Lehman crisis as they have prioritized saving over investment.
    You may also like MIT’s Andrew Lo on Adaptive Markets, Passive Indexing, and Systemic Shocks
    However, while it is widely believed that companies invest their excess cash in interest-bearing securities such as bonds, JP Morgan’s research shows that despite this cash build up, corporate bond holdings have remained unchanged at close to $1.1 trillion over the past decade.

    This post was published at FinancialSense on 07/13/2017.


  • Dimon Says QE Unwind May Be More Disruptive Than You Think

    JPMorgan Chase & Co. Chairman Jamie Dimon said the unwinding of central bank bond-buying programs is an unprecedented challenge that may be more disruptive than people think.
    ‘We’ve never have had QE like this before, we’ve never had unwinding like this before,’ Dimon said at a conference in Paris Tuesday. ‘Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.’
    Central banks led by the U.S. Federal Reserve are preparing to reverse massive asset purchases made after the financial crisis as their economies recover and interest rates rise. The Fed alone has seen its bond portfolio swell to $4.5 trillion, an amount it wants to reduce without roiling longer-term interest rates. Minutes of the Fed’s June 13-14 meeting indicate policy makers want to begin the balance-sheet process this year.
    ‘When that happens of size or substance, it could be a little more disruptive than people think,’ Dimon said. ‘We act like we know exactly how it’s going to happen and we don’t.’
    Cumulatively, the Fed, the European Central Bank and the Bank of Japan bulked up their balance sheets to almost $14 trillion. The unwind of such a large amount of assets has the potential to influence a slew of markets, from stocks and bonds to currencies and even real estate.

    This post was published at bloomberg


  • Unwinding QE will be ‘More Disruptive than People Think’: JP Morgan CEO Dimon

    ‘We act like we know exactly how it’s going to happen, and we don’t.’
    ‘We’ve never had QE like this before, and we’ve never had unwinding like this before,’ said JPMorgan CEO Jamie Dimon at the Europlace finance conference in Paris. ‘Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.’
    He was referring to the Fed’s plan to unwind QE, shedding Treasury securities and mortgage-backed securities on its balance sheet. The Fed will likely announce the kick-off this year, possibly at its September meeting.
    According to its plan, there will be a phase-in period. It will unload $10 billion the first month and raise that to $50 billion over the next 12 months. Then it will continue at that pace to achieve its ‘balance sheet normalization.’ Just like the Fed ‘created’ this money during QE to buy these assets, it will ‘destroy’ this money at a rate of $50 billion a month, or $600 billion a year. It’s the reverse of QE, with reverse effects.
    Other central banks are in a similar boat. The Fed, the Bank of Japan, and the ECB together have loaded up their balance sheets with $14 trillion in assets. Unwinding this is going to have some impact – likely reversing some of the asset price inflation in stocks, bonds, real estate, and other markets that these gigantic bouts of asset buying have caused.

    This post was published at Wolf Street on Jul 12, 2017.


  • Investors Are Dumping Emerging Market Debt At A Record Pace

    Having warned that Emerging Market debt risks had hit 10-year lows (despite soaring uncertainty) and EM equity risk had hit record lows (amid record inflows), it seems the lagged impact of the collapse in the China credit impulse is finally being recognized as the largest EM Debt ETF (from JPMorgan) just suffered its largest outflows in history…
    As a reminder, in the run-up to this dumping of EM assets, expected uncertainty in Emerging Market Equities has never been lower… (in fact EEM implied vol is now less than half its lifetime average of 29.7%)
    What was even more stunning than investors’ tolerance for these risky issuers is how little compensation they’re demanding in return. Emerging Market bonds were pricing in the least ‘risk’ since Dec 2007…
    The disconnect is a result of historically low interest rates worldwide — notes in Japan, Germany and France have negative yields — as well as what skeptics see as investors’ complacency as they pour into index-based funds without scrutinizing their holdings.

    This post was published at Zero Hedge on Jul 12, 2017.


  • So what’s happening to gold – and silver? — Lawrie Williams

    What a difference a week or two makes in gold sentiment – and in silver which has fared even worse with the gold:silver ratio running close to 80 again at one point – a level which usually is at the top end of the comparison and would seem to signify a great buying opportunity for silver bulls – but is it? Gold sank to $1204 before making a small recovery, and silver to $15.07 before making a slightly larger one (in percentage terms at least.) Prices do seem to be clawing their way back upwards at the time of writing, but is this just a blip in a continuing downtrend? As I write, gold is at $1214 and silver at $15.60.
    No doubt the dastardly bullion banks with their huge short positions in both precious metals are being seen as the principal culprits. Certainly trading volumes have been far higher than one would expect, particularly at the tail end of last week, but as usual these are paper gold (and silver) transactions driving the markets, but this time aided by sales of physical metal out of the big ETFs. Gold and silver bulls feel that the end-game is nigh and the big bullion banks (of which JP Morgan comes in for particular stick) will switch tack and drive prices back up again making mega profits on metal they have bought on the cheap. But is this just wishful thinking – no-one really knows. Second guessing the big banks is a mug’s game. JP Morgan, for example, always seems to come out on top in its trades – far more so than normal balanced financial markets would suggest. No wonder there is ever-continuing talk of blatant market manipulation by the big guys.

    This post was published at Sharps Pixley


  • “The Tide Is Going Out” – JPMorgan’s Dimon Warns QE Unwind Could Be Far Worse Than Fed Hopes

    Janet Yellen confidently stated at the last FOMC press conference that The Fed will start unwinding its massive balance sheet “relatively soon” and Patrick Harker, the Philadelphia Fed president, has said the process will be so dull that it is equivalent to watching paint dry.
    Not everyone agrees…
    Louis Crandall, an economist at Wrightson Icap, said at the time:

    This post was published at Zero Hedge on Jul 11, 2017.