Oct. 23, 2014, 4:49 PM
- Not having had the pleasure of being subject to the stress test and CCAR previously, Deutsche Bank's (NYSE:DB) U.S. unit will be a participant next year
- As in prior years, those BHCs with large trading operations - BAC, C, GS, JPM, MS, WFC - will be required to factor in a global market shock as part of their scenarios.
- Those six, plus STT and BK - thanks to their custodial operations - will be required to incorporate a counterparty default scenario.
- Among the items in the severely adverse scenario is the unemployment rate jumping to 10%, a 60% dive in the stock market, and oil jumping to $110 per barrel (how about oil falling to $10 per barrel?).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KCE, KRU, KBWR, RWW, RYF, KBWC, FINZ, KRS
Oct. 22, 2014, 3:43 PM
- Emails from 2011 show legal and compliance executives in New York were alerted JPMorgan's (JPM -0.5%) hiring of the offspring of senior Chinese officials helped to win it investment banking business, reports the WSJ. This was more than a year before U.S. authorities began their investigation.
- The emails show JPMorgan officials dismissed the accusations, but nevertheless proposed changes to the bank's hiring practices in the region.
- JPMorgan hasn't yet been officially charged with any wrongdoing, but the SEC is investigating "what executives knew and when they knew it." The breadth of any enforcement action is likely to closely follow how high up the JPMorgan organization chart the SEC can show awareness of misconduct, says a law professor.
Oct. 22, 2014, 10:32 AM
- The MBA index rose 11.6% for the week ended October 17, the largest gain since January as mortgage rates continued to decline - the average 30-year fixed mortgage coming in at 4.1%, the lowest since May 2013.
- Leading the way were refinancings, with that gauge jumping 23.3%, the biggest move since January 2012 (purchase applications fell 4.6%).
- Should the trend continue, the now-lean mortgage operations at places like Wells Fargo (WFC +0.2%), JPMorgan (JPM +0.2%), and Bank of America (BAC +0.2%), among others, should provide a nice boost to Q4 results.
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, KBWR, RWW, RYF, FINZ, KRS
Oct. 21, 2014, 10:57 AM
- Ignoring a recommendation from other Fed supervisors in 2009, the FRBNY failed to examine JPMorgan's (JPM +1.6%) Chief Investment Office ahead of the 2012 trading debacle which cost the bank $6B, according to a report released today by the Fed's Office of Inspector General.
- Among the flaws at the New York Fed, says OIG, were limited resources and an over-reliance on certain personnel.
- The FRBNY says it is "committed to improving supervision."
Oct. 21, 2014, 8:49 AM
- At issue are charges of rigging Swiss franc Libor benchmark interest rates, and JPMorgan (NYSE:JPM), UBS, and Credit Suisse (NYSE:CS) will be collectively fined more than $115M, reports Reuters. Not being penalized is RBS thanks to its role as a whistleblower in the case.
- JPMorgan is reportedly set to receive the biggest fine at about $89M.
Oct. 21, 2014, 3:51 AM
- Officials from the FBI and Secret Service have announced that authorities believe the cyber attack on JPMorgan (NYSE:JPM) in August was the work of cybercriminals, ruling out the Russian government as a culprit.
- News reports at the time of the attack suggested that Russia may have been a sponsor of the security breach as retribution for economic sanctions imposed by the U.S.
Oct. 17, 2014, 2:50 PM
- Among the lenders now charging clients who want to park euros with them are Bank of New York Mellon (BK +0.2%), Goldman Sachs (GS +1.8%), and JPMorgan (JPM +1.5%), reports the WSJ. The banks themselves must pay to deposit money with the ECB after it imposed a negative rate on deposits last summer (and then made it more negative last month).
- Next up is HSBC which reportedly will son begin charging customers who deposit more than about €10M, and Credit Suisse (CS +1.1%) is set to do the same.
- Clients most immediately affected are investment firms, but multinationals with sizable European operations may soon face these costs.
Oct. 17, 2014, 8:07 AM
- The talks - which would involve one of the largest real estate complexes for one company in city history and include a large package of incentives - have reached a "feverish" state after nearly falling apart earlier this week, reports the NYT.
- The property at Hudson Yard would include two towers with space equivalent to that of two Empire State Buildings, and be home to 16K employees.
- JPMorgan (NYSE:JPM) - according to sources - had initially sought more than $1B in state and city concessions, and says the benefits to NY would far outweigh that value. “There’s no way that the city would entertain a demand for a billion dollars in additional incentives at Hudson Yards,” says NYC's deputy mayor for economic development.
Oct. 15, 2014, 10:49 AM
- Bank earnings models will no doubt need to be tweaked as the sure thing of higher rates becomes somewhat less sure, with the 10-year U.S. Treasury yield plunging all the way down to 2%, and 30-day Fed Funds futures - just weeks ago pricing in 100% chance of a rate hike by June 2015 - now sees no move until December 2015.
- The XLF is lower by 1.9% and the Regional Banking ETF (NYSEARCA:KRE) is down 2.1% (the S&P 500 is off a mere 1.1%). Among individual names, KeyCorp (KEY -6.4%), First Bancorp (FBP -6.4%), Regions Financial (RF -4%), U.S. Bancorp (USB -2.2%), Fifth Third (FITB -2.6%), Bank of America (BAC -4%), Citigroup (C -3.3%), JPMorgan (JPM -2.8%), Wells Fargo (WFC -1.9%).
- Financial ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, FINZ, KRS
- Life insurers were also waiting on higher rates and they're slipping more than the averages as well. MetLife (MET -3.7%), Prudential (PRU -2.9%), Manulife (MFC -3.5%) Sun Life (SLF -3.4%), Lincoln Financial (LNC -3.9%).
- Insurance ETFs: KIE, IAK, KBWP, KBWI
- Previously: BofA call: Assumption about higher rates not so sure anymore
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 14, 2014, 8:58 AM
- A key component of JPMorgan's (NYSE:JPM) outsized legal expense ($1B after-tax, or $0.26 per share), says CFO Marianne Lake on the earnings call, was related to the investigation over foreign-exchange trading, and in other news this morning, JPMorgan's chief currency trader in London has reportedly exited the bank.
- Conference call webcast and presentation slides
- Page 3: Tangible book value per share of $44.13 is up from $39.51 a year ago. Last night's close of $58.16 is 1.32x book.
- Pages 4-7: Overhead ratio of 56% vs. 62% a year ago, number of branches falls to 5,613 rom 5,652, active mobile customers of 18.351M up from 14.993M. Deposit margin of 2.20% falls 12 basis points Y/Y, but net interest income was higher thanks to 9% growth in deposits. Mortgage originations of $21.2B down from $40.5B.
- Page 8: FICC revenue - which had been dropping at double-digit Y/Y rates - turns upward, growing 2% from a year ago.
- Page 10: Asset management net income of $572M up 20% Y/Y. AUM net inflows of $24B.
- Page 12: Firmwide adjusted expenses are expected to be above $58B this year; net charge-offs should be less than $5B - better than previously forecast.
- The Q&A begins momentarily.
- Shares -1.8% premarket
- Previously: JPMorgan: Interest income and FICC gain
Oct. 14, 2014, 7:04 AM
- Q3 net income of $5.6B of $1.36 per share vs. a loss of $400M and $0.17 one year ago. Results include a $1B, or $0.26 per share legal charge. Return on tangible common equity of 13%. Roughly $3B returned to owners in Q3 - $1.5B of repurchases and a $0.40 per share dividend.
- Consumer & Community Banking net income of $2.468B down 9% Y/Y, as the boost to income from lower credit loss provisions comes to and end. This quarter allowed a $200M reduction in loan-loss allowance vs. $1.6B one year ago. Noninterest expense of $6.3B falls 8% Y/Y thanks mostly to mortgage banking staff cuts. Net interest income of $11.4B gains a strong 4% from a year ago.
- Corporate & Investment Bank net income of $1.485B down 34% Y/Y; excluding the DVA, net income fell 40%. Banking revenue of $2.7B fell 6% - investment banking fees grew 2% thanks to strong equity underwriting (up 24%), but debt underwriting fees fell 16%. Markets & Investor Services revenue of $6.1B rises 15% Y/Y, with Fixed Income Markets revenue of $3.5B up 2%, with particularly strong action in currencies and emerging markets.
- Conference call at 8:30 ET
- Source: Press Release
- JPM -0.3% premarket
- Previously: Report: JPMorgan EPS $1.36 vs consensus of $1.39
Oct. 14, 2014, 4:41 AM| 1 Comment
Oct. 14, 2014, 4:32 AM| 2 Comments
Oct. 13, 2014, 5:30 PM
Oct. 13, 2014, 8:00 AM
- When you're a hammer, everything looks like a nail. In what smells like another foray by the Consumer Financial Protection Bureau, with other agencies possibly joining in, banks are reportedly under investigation for lending ... this time for automobiles.
- Amid an otherwise sluggish loan market - especially for mortgages - auto lending has experienced rapid growth over the past few years, particularly subprime lending, and those in that business - Santander Consumer being one - are already under examination by the CFPB.
- At issue for banks is not just the direct auto loans they're making, but the financing they're providing to shops like Santander Consumer.
- Wells Fargo (NYSE:WFC) is the largest U.S. auto lender, with $50.8B in loans outstanding at the end of last year, roughly $15B of which was subprime. In addition, the bank has extended since 2011 more than $1.5B of credit lines to the country's largest subprime lenders. Other sizable players include Capital One (NYSE:COF) and JPMorgan (NYSE:JPM).
- "Banks are making a lot of money off these (auto) loans in many different ways," says the head of a consumer advocate group. Isn't that what they're supposed to do?
- "The subprime auto sector appears too small to present a systemic risk," says BAML's Michael Hanson.
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, KBWR, RWW, RYF, KRS, FINZ
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