|Day's Range||17.50 - 19.87|
Yahoo Finance's Alexis Christoforous and Brian Sozzi speak to Tom Michaud, KBW CEO about the current merger and acquisition market, future outlook for the banking industry with interest rates near zero and more.
DOW UPDATE Shares of Boeing and American Express are posting strong returns Wednesday afternoon, sending the Dow Jones Industrial Average soaring. The Dow (DJIA) is trading 556 points higher (2.2%), as shares of Boeing (BA) and American Express (AXP) have contributed around two thirds of the blue-chip gauge's intraday rally.
DOW UPDATE Led by strong returns for shares of Boeing and American Express, the Dow Jones Industrial Average is rallying Wednesday afternoon. Shares of Boeing (BA) and American Express (AXP) are contributing to the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 487 points (1.
DOW UPDATE Shares of Boeing and American Express are posting strong returns Wednesday morning, leading the Dow Jones Industrial Average rally. The Dow (DJIA) was most recently trading 413 points, or 1.
DOW UPDATE Shares of Boeing and JPMorgan Chase are trading higher Wednesday morning, leading the Dow Jones Industrial Average rally. Shares of Boeing (BA) and JPMorgan Chase (JPM) have contributed to the index's intraday rally, as the Dow (DJIA) is trading 336 points higher (1.
DOW UPDATE Powered by positive momentum for shares of Dow Inc. and American Express, the Dow Jones Industrial Average is climbing Wednesday morning. The Dow (DJIA) is trading 250 points, or 1.0%, higher, as shares of Dow Inc.
One thing to start: This Saturday, DD launches a new edition of the newsletter called Scoreboard in collaboration with the FT’s sports editor Murad Ahmed. In the pre-coronavirus era, the due diligence process involved a lot of travelling and in-person meetings that allowed investors or buyers to get a feel for where their money was going. Here’s a look at how some venture capitalist groups are getting creative.
Once upon a time, companies were reluctant to wade into debates over social issues for fear of alienating their customers. Today, many feel they must weigh in, although their efforts sometimes fall short.
Financial stocks were set for a broad rally Tuesday, with the SPDR Financial Select Sector ETF climbing 1.2% in premarket trading. The top two early gainers among the Dow Jones Industrial Average's components were financial stocks, with shares of American Express Co. rising 1.8% and J.P. Morgan Chase & Co. gaining 1.5%. Fellow Dow component Goldman Sachs Group Inc.'s stock rose 1.0%. Meanwhile, Dow futures advanced 150 points, or 0.6%. Among other more actively traded financial stocks in the premarket, Bank of America Corp. rallied 1.8%, Wells Fargo & Co. climbed 1.9% and Citigroup Inc. tacked on 2.2%. Helping provide a lift to bank stocks, the yield on the 10-year Treasury note rose 1.3 basis points to 0.675%. Higher longer-term rates can help boost bank profits, as that can widen the spread banks earn on longer-term assets, such as loans, that are funded by shorter-term liabilities.
(Bloomberg Opinion) -- The Federal Reserve has always been a popular villain to some investors. The U.S. central bank, the argument goes, consistently bends to the whims of financial markets, keeping interest rates artificially suppressed to force savers into ever-riskier assets at ever-higher prices.The coronavirus pandemic and the Fed’s kitchen-sink response have only amplified these feelings. Oaktree Capital Group’s Howard Marks and Berkshire Hathaway’s Warren Buffett are among those who have said they couldn’t make deals because the central bank kept prices too high. I’ve argued that the Fed buying high-yield exchange-traded funds defies explanation, while my Bloomberg Opinion colleague Mohamed El-Erian this week implored the central bank to resist market pressure to do more. More broadly, the V-shaped rebound of nearly 40% in U.S. stocks when the unemployment rate is likely close to 20% just doesn’t sit well with some people.Bob Michele, global head of fixed income at J.P. Morgan Asset Management, shared some no-nonsense advice: “It’s a return to financial repression — deal with it.”As someone who oversees $615 billion across debt markets for the asset manager and got his start just as U.S. Treasury yields peaked in the early 1980s, Michele has had a bird’s-eye view of the long-running bond bull market and has seen global central banks take increasingly novel measures to support their economies. I spoke with Michele by phone last week. This is a lightly edited transcript:Brian Chappatta: You wrote, “It’s a return to financial repression — deal with it.” Other high-profile investors haven’t taken the central bank’s actions in stride. Has the Fed done anything up to this point that they shouldn’t have?Bob Michele: They’re doing everything they needed to do. I know the markets have recovered a lot, and a lot of investors are frustrated they didn’t get a chance to put money in the markets at the bottom. But people forget what those first couple of weeks in March looked like as the pandemic was gaining traction. There was this flight to quality, and as risk assets started selling off, Treasuries started to sell off as well. The markets had trouble clearing and weren’t functioning properly.If you’re at the Fed, you step back and you see the trillions of dollars of issuance that’s coming. You see several trillion being added to the federal rolls through Treasury issuance to fund the CARES Act and other programs, you see corporate issuance which already this year is over $1 trillion, and you think about the amount of funding that state and local governments have to do to just survive the shutdown. You begin to realize — the market cannot absorb it on its own. If you rely on the markets on their own to absorb the trillions of dollars of issuance, not just in the U.S., but globally, prices are going to go down a lot, or yields are going to go up a lot. That certainly doesn’t help a recovery.BC: You mention a strategy of co-investing with central banks, including buying U.S. investment-grade corporate bonds. Analysts for years were warning that corporate America was too overleveraged. Why is taking on more debt an answer? BM: We saw what happens when that backstop isn’t there. Yields just rise indiscriminately and suddenly it becomes unaffordable for companies and municipalities to take on leverage and work their way through.My biggest concern is that the decision-making tree will be something like Hertz. Which is, you have some access to credit — Avis funded itself a month ago at 11.3% — you could get funding through the CARES Act, but it comes with strings attached. Even still, you think, adding one or two more turns of leverage to our balance sheet, is it worth it? Or at some point do you realize you’ll never be able to pay back that debt, so might as well start the restructuring process now? I think access to credit is one thing, but the affordability of credit is probably more important.BC: So far, the Fed has just purchased ETFs through its credit facilities. Do you expect it will ultimately buy individual company bonds?BM: They’ve done some decorative amounts of ETFs, mostly to ensure that the plumbing is working and just show the market that they are serious about buying credit. But I think with the amount of issuance coming and with the data we’re yet to see that will rattle investors, we’ll need the backstop from the Fed.BC: What kind of upside is there with investment-grade yields near all-time lows?BM: You end up looking at both the investment-grade market and the Treasury market as your anchor in the storm. At some point, they’ll be maintained at a pretty expensive level. It all goes back to what you think is the ultimate endgame here. I think whether implicitly or explicitly, the Fed is fixing the rate of funding across the economy. The reality is their signal that the markets weren’t functioning properly was that yields went up and prices went down. How we got there — because broker-dealer balance sheets were clogged or there was risk-aversion — it doesn’t really matter. Restoring functionality to the market means that you diminish the liquidity premium that’s priced into the market, first and foremost, and also any sort of volatility premium. If you remove those things, then the price of bonds goes up. I know they talk in circles around market functionality, but it is implicitly reducing the cost of credit.BC: Do you expect the Fed to implement some form of yield-curve control?BM: I think it’s inevitable. I think by the way the Fed is doing it implicitly anyway.If the yield curve ever steepened a lot and the cost to the federal government for the next couple trillion of issuance is too high, they’ll step in and bring it down. I see an environment where the front end of the curve is going to be fixed pretty much around 0% to 0.25%. When you get out to the 10-year, I think 0.5% to 0.75% gets them pretty comfortable. Then you leave the 30-year for pension funds and insurance companies.The same thing is happening with investment-grade credit. I think credit spreads will come in to a point where the average cost of funding for an investment-grade borrower in the U.S. will be no greater than 2%. Then you start playing that through the municipal market, and again, just them backstopping the market and removing that uncertainty lowers the cost of funding for all of these borrowers.BC: Inflation is always a concern for bond investors, especially with yields so low across the world. Where do you come down on the inflation versus deflation debate?BM: This is probably the most emotional conversation I have with clients currently. Our view is the amount of debt being ladened on top of not only the U.S. economy, but the global economy, is deflationary, and it’s creating such a large output gap that it will take about 10 years to close that output gap and return inflation to something that looks normal. Clients just push back, think I’m nuts, think that the amount of stimulus being poured onto the economy, and the amount of borrowing and money printing is all very inflationary. That amount of debt is just outright disinflationary, if not deflationary, because a lot of the output of the economy going forward has to be used to service that debt and start to pay it down. It doesn’t get used more productively through cap-ex or investment. We’re absolutely firm that we’re going to be in a very low inflation environment for a long period of time.BC: Do you see the Fed resorting to negative interest rates?BM: I completely agree with the Fed that negative interest rate policy is just a bridge too far. It creates structural problems that are difficult to extract yourself from.Could I see the 10-year Treasury go down to zero or slightly negative? Sure. It won’t be driven by the Fed, it will be driven by the next risk-off environment, where the money that’s in the negative-yielding markets will come flooding into the U.S. because they’ll see a positive yield, they won’t care about hedging the currency back because they’ll want the safety of the dollar, and they’ll see some capital appreciation. But I don’t see this Fed ever bringing rates down to negative territory. If a couple years from now, Jay Powell gets replaced, depending on who replaces him, they may open the door to that. But for now I just don’t see the Fed going to negative yields.BC: To circle back to where we started — financial repression. Is there any way out?BM: The trillions of dollars of borrowing, we view it as aid and assistance and support, not stimulus. I know it’s semantics, but it’s very different. There’s lost economic activity, and this debt is being used to replace lost income to households and to businesses. It’s just helping to fill in the hole. I struggle with aid and assistance being called stimulus. What would get me more optimistic is if on the other side of this, you did see borrowing that was actual stimulus. In the first year or so of this administration, there was talk of a trillion-dollar infrastructure spend, spread out over 10 years, and people got excited. What if that happens this time, and it’s spent over three to five years, not 10? That’s actual stimulus. It’s creating jobs and aggregate final demand and helping support household income.If the government is willing to borrow more to invest in things like infrastructure and companies are willing to borrow more to invest in cap-ex, that is what would be different than the great financial crisis, when everyone was focused on austerity and trying to re-strengthen their balance sheet.At this point, the debt burden is so high, what’s another trillion on top of the federal deficit? And if you’re a company and you have a chance to borrow at record-low rates, especially somewhat subsidized by the Fed, why not do it and think about the future? Perhaps we’ve all learned that the economy needs to be retooled to better suit a work-from-home model. Maybe parts of the healthcare system need to be retooled. There are things that need to be addressed that create some spending and aggregate final demand. And for me, that hasn’t been fully discussed yet.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- NetEase Inc. has started taking investor orders for a listing in Hong Kong that could raise as much as $2.8 billion, which could be the world’s second-largest initial share sale this year.The company plans to sell 171 million new shares in its second listing before exercising the over-allotment option, according to terms for the deal seen by Bloomberg. The offering by the Nasdaq-listed Chinese internet company is already oversubscribed, people familiar with the matter said. It has set the maximum offer price at HK$126 ($16.25) a share, meaning it could raise as much as $2.8 billion.NetEase’s listing is set to overtake coffee giant JDE Peet’s BV’s $2.5 billion initial public offering in Europe as the second-largest initial share sale this year. Only Beijing-Shanghai High Speed Railway Co. has raised more with its $4.3 billion IPO in January, according to data compiled by Bloomberg.The offering comes as tensions between the U.S. and China are intensifying. Late last month, the Senate passed a bipartisan bill that could force major Chinese companies to stop trading their shares on U.S. exchanges. On Friday, President Donald Trump announced measures including that American financial regulators would examine Chinese firms listed on U.S. stock markets with an eye toward limiting American investment in the companies.NetEase follows Alibaba Group Holding Ltd., which raised $13 billion in a homecoming listing last year while JD.com Inc. won approval from Hong Kong Exchanges & Clearing Ltd. last week for a $2 billion offering, Bloomberg has reported.NetEase’s Hong Kong share sale represents about 5% of its total shares outstanding after the completion of the deal. The company is taking orders from institutional investors from Monday through June 4 and retail ones from June 2 to June 5, terms for the deal show.It aims to price the offering on June 5 before the U.S. market opens and to begin trading on June 11. NetEase plans to use the proceeds for global strategies and opportunities, to fund innovation and general corporate purposes.China International Capital Corporation Ltd., Credit Suisse Group AG and JPMorgan Chase and Co. are joint sponsors.A representative for NetEase declined to comment on the subscription of the offering.(Updates first, second and third paragraphs with details of share offering.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Hestia Capital Partners LP ("Hestia"), Permit Capital Enterprise Fund, L.P. ("Permit") and their affiliates (the "Investor Group"), who beneficially own approximately 7.2% of the outstanding shares of GameStop Corp. (NYSE: GME) (the "Company"), announced that Glass Lewis & Co. ("Glass Lewis"), a leading independent proxy voting advisory firm, has recommended that GameStop stockholders vote the Investor Group's WHITE proxy card FOR the election of Paul J. Evans and Kurtis J. Wolf at the Company upcoming Annual Meeting of Stockholders on June 12, 2020.
Employee Benefit Research Institute (EBRI) and J.P. Morgan Asset Management today announced a significant new research collaboration leveraging 22 million Chase households and 27 million 401(k) plan participant records, offering the first truly holistic view of how U.S. households spend and save.
JPMorgan (JPM) and Barclays PLC (BCS) will pay $15 million and $5.7 million, respectively, to settle claims by investors that they tried to rig the Mexican bond market.
Hestia Capital Partners LP ("Hestia"), Permit Capital Enterprise Fund, L.P. ("Permit") and their affiliates (the "Investor Group"), who beneficially own approximately 7.2% of the outstanding shares of GameStop Corp. (NYSE: GME) (the "Company"), announced that Institutional Shareholder Services ("ISS"), a leading independent proxy advisory firm, has recommended that stockholders vote the Investor's Group WHITE proxy card FOR the election of Paul J. Evans and Kurtis J. Wolf at the Company upcoming Annual Meeting of Stockholders on June 12, 2020.
JPMorgan Chase & Co and Barclays Plc will pay $20.7 million to resolve investors' claims they conspired to rig the Mexican government bond market, the first of nine banks in the proposed class-action litigation to settle. In a Monday night filing with the U.S. District Court in Manhattan, lawyers for the investors said the "ice breaker" settlements could be a catalyst for settlements with the other bank defendants. JPMorgan is paying $15 million, and Barclays is paying $5.7 million.
(Bloomberg Opinion) -- A crisis should be an opportune time for M&A bargain hunters. In reality, buyers probably won’t be getting deals done on the cheap. It’s not just that markets are rallying. Even companies whose fallen shares aren’t recovering may not make easy targets for lowball takeovers. Bidders should think about pricey deals becoming available rather than available deals becoming cheap.Dealmakers at JPMorgan Chase & Co. recently looked into the dynamics of 17 significant deals done during the crisis of 2008-2009. One conclusion was that the takeover target’s 52-week share-price high was a stubborn benchmark for the acceptable price of a deal. Boards and investors were wary of taking low cash offers that crystallized the value of the company at a sunken level — never mind that there might have been valid reasons for the shares taking a dive.The study found that the fixation with historic share-price highs does wane over time. Investors get used to markets being at lower levels. For example, Schering-Plough agreed to be bought by pharmaceutical peer Merck & Co. Inc. when the financial crisis was well advanced in March 2009. The price represented a conventional one-third takeover premium (the top-up required to win support for a deal). At that point, this was in line with its 12-month high, but well below its pre-crisis peak.All the same, it can take many months for the managers and shareholders of bid targets to lower their expectations. Until that happens, bidders may just have to be generous to get deals done.What if the buyer offers to pay in its own stock? That way the target company’s shareholders might be persuaded they are getting remunerated in a currency with some recovery potential. The tactic might work if both sides’ share prices fell in tandem as the crisis took hold. But for the buyer, paying in depressed stock means issuing more shares than it would otherwise need to do. That means giving away more value to the target’s stockholders. Again, the chance of a bargain evaporates.No wonder that only in about half of the deals looked at by JPMorgan was the bidder’s share price outperforming the market a year later.It’s not entirely discouraging. Where buyers are willing to pay up, they should find the boards of the targets are less able to rebuff a takeover approach. A bid made at a historic high in a crisis will likely contain a much bigger premium to the current share price than it would have just a few months earlier. Imagine a bid for a stock made at its 12-month high of $100 per share. If the stock was $85 in mid-February, just before markets woke up to the impending pandemic, the premium at that time would have been about 18%. Assume the stock is now 20% lower, and the premium approaches 50% against the current share price. That's very hard to reject.True, it’s always easier for a bidder and its advisers to get a deal done by simply overpaying. Nevertheless, the implication is clear. You can rarely get a good asset on the cheap. But you may be able to get a good asset without a big fight.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Hestia Capital Partners LP ("Hestia Capital"), Permit Capital Enterprise Fund, L.P. ("Permit Capital") and their affiliates (collectively, the "Investor Group"), who beneficially own approximately 7.2% of the outstanding common stock of GameStop Corp. ("GameStop" or the "Company") (NYSE: GME), today issued the following statement in response to the Company's claims that the Investor Group had rejected a settlement proposal to avoid a proxy contest at the Company's upcoming annual meeting of stockholders scheduled for June 12, 2020:
The Dow Jones Industrial Average is up Monday afternoon with shares of Boeing and American Express leading the way for the index. Shares of Boeing (BA) and American Express (AXP) are contributing to the index's intraday rally, as the Dow (DJIA) was most recently trading 70 points, or 0.3%, higher. Boeing's shares have climbed $5.50, or 3.8%, while those of American Express have risen $2.13, or 2.2%, combining for an approximately 52-point bump for the Dow.
(Bloomberg Opinion) -- The rising tide of pandemic relief money that’s oiling the wheels of finance has been a boon for those in the business of securities trading. Even as the wild market swings have subsided, activity has been buoyant as central banks and governments pumped trillions into economies. This may turn out to be one of the best environments for investment bankers generally, especially those who are buying and selling shares and bonds, but a standout company is emerging.After a record trading performance in first three months of 2020, JPMorgan Chase & Co. is on course to post a 50% jump in trading revenue in the second quarter, when compared with the same period a year ago, the New York giant’s co-president, Daniel Pinto, said last week. The reserved Argentine banker, who has helped JPMorgan move to the top of Wall Street’s rankings, was “very pleased” by the performance. That tells you how well things are going.Other trading firms are doing well too, although not as handsomely as Pinto’s employer. Bank of America Corp. expects bond- and stock-trading revenue to rise close to 10% in the period; Citigroup Inc. is seeing “very good momentum” in the fixed-income business after a 40% jump in the first quarter. Citi is still playing catch-up with its rivals in equities trading.JPMorgan might also be edging further ahead of its European rivals on their home patch. The bank is the favored dealer in Europe for both interest-rate and credit trading, ahead of Goldman Sachs Group Inc. and Citi, according to a poll of bond investors by Greenwich Associates at the end of April. European banks barely made it into the top three in some of Greenwich’s subcategories on fixed-income trading.“It’s a balance sheet, scale and electronification game now, and the bigger you are, the better you do,” Greenwich Associates said when the report was published. That’s propelling JPMorgan — which spends more than $11 billion a year on technology — ahead of its competitors.America’s biggest bank added 2.5 percentage points to its share of trading revenue among its top peers between 2015 and 2019. It has a 12% share of trading in fixed-income, currencies and commodities, an 11% share of equity trading, and a lead in derivatives. That places it at the center of the world’s financial markets. Its ability to move large volumes of inventory is unrivaled, competitors and clients say.Last year, JPMorgan added 25% to its hedge-fund balances, bringing them to $500 billion, and it has been targeting $1 trillion. This growth in hedge fund clients has allowed it to build its stock-trading business, with equity derivatives powering a surge in revenue. It helps too that borrowers have been tapping the bond markets at a record pace.Crucially, it’s the bank’s market dominance — which lets it take on more risk relative to its size — that appears to have become self-perpetuating. “We don't need to take a huge amount of risk for the franchise to be profitable,” Pinto told a conference last week. “At our scale, the franchise is perfectly profitable. So, the only thing we need to do is to always be in a position where we can monetize the franchise.”For Chief Executive Officer Jamie Dimon, a roaring trading division is just what he needs to make up for the inevitable problems in the lending business caused by the Covid-19 pandemic, with companies and households struggling to repay their loans amid the worst recession in decades. Credit losses will pile up and the decline in U.S. interest rates will erode profit margins in the business over time. JPMorgan’s profitable consumer business won’t be such a cash cow.But when the wave recedes, the Wall Street trading titan could be in a league of its own. The question then becomes: Is that healthy for the banking system? This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Daniel Pinto checked into a hotel in midtown Manhattan around 2 a.m. on a Friday in early March, hoping to get a little rest after an epically hard day. Things were about to get much worse.His slog that day had begun in London with a routine call with his boss, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon. But just a few hours later Dimon was rushed into emergency heart surgery, and the board named Pinto -- who oversees the firm’s Wall Street operations -- to temporarily run the bank alongside Gordon Smith, the head of its consumer business.Pinto flew to New York for what he thought would be a brief stay. Then markets began panicking over the coronavirus pandemic. He didn’t check out until a month later.“I’ve seen crises my whole life,” Pinto said in an interview. Yet “we haven’t seen a crisis of this magnitude. It’s probably short-lived but very deep, and it’s everywhere around the world.”Pinto and Smith’s stint atop JPMorgan through the worst financial turmoil in decades has answered a question that’s long loomed over the largest U.S. bank: Could anyone other than Dimon ever run it? Created with Dimon’s uncanny knack for melding financial behemoths, JPMorgan has leading franchises in everything from complex trading and corporate lending to bank accounts and credit cards. The anxiety among shareholders has long been that its dominance and record-setting profits might not last under anyone else.And then suddenly, Dimon was sidelined for a month, just as deadly infections exploded across Europe and the U.S., upending economies and sending markets into free fall. The plunge began getting momentum just as Dimon headed to the operating room. Yet by almost any account, Pinto and Smith managed to fill his shoes. Though JPMorgan’s shares are down this year, they’re faring better than all three of its main rivals.Pinto’s account is half that story. Together, he and Smith had to figure out how to run a giant bank with most of its employees home. As Smith focused on JPMorgan’s vast network of branches and call centers, and flew to the White House to meet with President Donald Trump, Pinto focused on markets and propping up corporate clients. Companies, suddenly short of cash and unable to tap markets, were drawing hard on credit lines, putting their bankers in the awkward position of potentially saying no.For Pinto, those weeks were both nerve-wracking and lonely. He ended up stranded at an empty hotel in New York thousands of miles from his wife and his three kids. Even at the office, he was isolated.Most days, Pinto didn’t see anyone but the hotel receptionist, his driver and a security guard at JPMorgan’s tower at 383 Madison Ave., which was virtually empty as employees and executives -- including the entire operating committee -- worked remotely.The industry strained under the selloff. At peak moments, Pinto later wrote in a staff memo, JPMorgan’s foreign-exchange desk executed 730 trades per second while the bank’s payments arm processed a daily deluge of $9 trillion. A senior manager on the corporate bond desk traded $750 million of high-grade debt in a single day in March, according to people familiar with the matter.In some ways, Pinto had been preparing for decades for the role of crisis CEO. A native of Argentina, he embarked on his career almost by accident, taking a job at one of JPMorgan’s predecessors in 1983 to help pay for a degree in public accounting and business administration. He never left. Starting as a currency trader in Buenos Aires, he worked his way up through emerging-market desks, navigating financial blow-ups in places from Brazil to Russia.Tall but softer spoken than his boss, Pinto has spent the past 24 years based in London, climbing the rungs of JPMorgan’s corporate and investment bank, catering to companies and institutional investors. He became sole head of the division in 2014 and has been splitting his time between his office there and the bank’s New York headquarters.“This time it was different because New York was an empty town,” Pinto said. “It was tough. I talked to my family, wife and kids every day -- video-called them -- and I was interacting with the people that worked for me and my partners through video. I still went to the gym and exercised every day to keep up my energy.”It helped that JPMorgan essentially anointed Pinto, 57, and Smith, 61, as Dimon’s emergency stand-ins back in 2018 by elevating them to co-presidents. They honed their rapport and took more active roles in the firm’s control and support functions, while still overseeing businesses that together contribute 80% of revenue. Because of their ages, they aren’t widely seen as the likely longer-term successors if Dimon stays on for several more years. But Pinto said the experience helped them reach big decisions quickly.“Gordon and I really like to work together,” he said. “We know how each of us operates, his strengths and my strengths. It felt extremely natural.”Even while recuperating from surgery, Dimon would check in regularly.“He did challenge us, and gave his opinion on many matters,” Pinto said. “He was 100% supportive.”It also helped that Dimon had been cutting costs and adjusting the bank’s footing for the possibility that the aging bull market could end. Last year he publicly assured investors JPMorgan was “prepared for a recession” even if it wasn’t predicting one. He had also been warning for years that a downturn could be bumpy if stiffer regulations prevented banks from stepping in quickly.“You had a long cycle in the economy where asset managers had been accumulating assets, the banking sector was capitalized but we thought a lack of liquidity could lead to massive volatility,” Pinto said. “And that’s pretty much what happened.”‘Zillions of Requests’Two of the hardest things he and Smith dealt with were figuring out how to move the vast majority of employees home, while still serving desperate clients in ways that wouldn’t endanger the bank’s balance sheet.“When the markets are behaving that way, you have zillions of requests for funding and liquidity,” he said. There were “plenty of requests to draw on existing credit lines and for new funding facilities.” Pinto thinks they got it right.As markets stabilized, Pinto’s division moved from that defensive stance to a more active one, advising companies on tapping markets to ride out the storm. Even takeover talks have resumed.Looking forward, Pinto envisions JPMorgan’s staff working in rotations with about a third logged on remotely at any time, reducing real estate costs, fulfilling sustainability goals and helping prevent overcrowding of public transportation. He worries about not being able to fully measure productivity, so it’s unlikely anyone will always work remotely.The crisis also proved bankers might not need to visit clients as often, though there could be more regular check-ins. He predicts travel and expense budgets will decline.“We still have people working from home but we know the technology works, volumes have normalized,” Pinto said. Yet the strategic agenda “hasn’t changed at all. It’s just been put aside a month or two.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Actually, it’s much bigger than that and I am sure the Fed is working hard to get it right. Since the 2009 financial crisis, the Fed has tested annually a snapshot of big bank balance sheets against an extreme hypothetical economic shock. This year, however, the real life economic blow dealt by the pandemic has by several measures exceeded the doomsday scenario the Fed unveiled in February, leading some banks to grumble it may as well scrap the tests this year.