JPM Jan 2022 55.000 call

OPR - OPR Delayed Price. Currency in USD
39.01
0.00 (0.00%)
As of 2:40PM EDT. Market open.
Stock chart is not supported by your current browser
Previous Close39.01
Open39.50
Bid0.00
Ask0.00
Strike55.00
Expire Date2022-01-21
Day's Range39.01 - 39.50
Contract RangeN/A
Volume3
Open Interest160
  • Black-owned small businesses continue to face harsh cash crunch
    Yahoo Finance

    Black-owned small businesses continue to face harsh cash crunch

    Black-owned small businesses face deeper liquidity problems than the average small business, raising questions over how entrepreneurs can navigate the COVID-19 crisis.

  • Investors Bet Against Junk Bonds at Their Peril
    Bloomberg

    Investors Bet Against Junk Bonds at Their Peril

    (Bloomberg Opinion) -- In the past six months, investors across the globe witnessed the world turn upside down. Then, just as suddenly, sweeping coordinated action by central banks and governments left many major financial markets unchanged at worst — and at record highs at best. Just from looking at asset prices, things appear mostly right-sided, even though millions are unemployed, bankruptcies are piling up and new coronavirus outbreaks raise doubts about reopening efforts.After experiencing such a whipsaw, could you blame investors for heading into the second half of 2020 wanting to bet against something? Anything? While it’s still early days, U.S. high-yield corporate bonds are starting to look like the flashpoint for this anxiety. Investors pulled a whopping $5.55 billion from junk debt funds in the week ended July 1, the fourth-biggest outflow ever and the largest in more than two years, according to data compiled by Refinitiv Lipper. An additional $2.6 billion left exchange-traded funds tracking speculative-grade bonds last week, Bloomberg News’s Katherine Greifeld reported. Generally, high-yield pros are chalking this up to individual investors taking profits after the strongest quarter in more than a decade.Some other troubling signs are starting to crop up, however. Traders are taking bearish options positions on the $27.3 billion iShares iBoxx High Yield Corporate Bond ETF (ticker: HYG), with about $2.5 billion in notional put volume changing hands on July 6, the most since June 11. Total call volume, by contrast, slid to the lowest in a month. Whether for hedging or just outright speculation, these wagers would suggest limited upside and potentially large losses ahead.I admit, this is a tempting narrative. Maybe U.S. stocks can keep climbing thanks to the near-invincible large technology companies. Perhaps total returns on investment-grade bonds should be at a record high with the Federal Reserve buying a broad index of the securities and pledging to keep benchmark interest rates near zero for the foreseeable future, pegging borrowing costs at rock-bottom levels for creditworthy companies. But if the world is in for a slow and uneven recovery, what exactly is the case for junk bonds? They’re a natural asset class to show the first signs of skittishness.Indeed, U.S. bonds and loans trading at distressed levels rose for a second consecutive week through July 2, by 5.9% to $369 billion, according to data compiled by Bloomberg. Before that stretch, that figure hadn’t expanded since April. While it’s still a far cry from the peak of $930 billion in March, this week-by-week chart of bankruptcies from Bloomberg’s Josh Saul shows that corporate America’s struggles are far from over:The superlatives are stunning. More airlines sought U.S. bankruptcy protection this year than at any time since the global financial crisis. Energy filings grew at the fastest pace since oil prices collapsed in 2016. More retail companies turned to court protection in the first half of 2020 than in any other comparable period ever, with Brooks Brothers Group Inc. adding to that tally this week and the owner of the brands Ann Taylor and Lane Bryant reportedly soon to follow. Not all of these companies have unsecured bonds on their books, but the pace is nonetheless ominous.Could the past few months have been a Fed-induced head-fake before the real storm? “Sharp corrections are common in highly volatile distressed cycles, and we think the exuberance may mirror spring 2008’s similar two-month window of calm, which didn’t last,” wrote Philip Brendel, a senior credit analyst at Bloomberg Intelligence. “That correction also reveled in Fed largesse as the central bank stood behind JPMorgan’s Bear Stearns acquisition in March 2008.”Hearing comparisons to the global financial crisis might make an investor rush to a new ETF that Tabula Investment Management introduced this week (ticker: TABS), which effectively bets against 100 high-yield bonds by tracking the performance of the CDX North American High Yield Credit Short Index. “Investors need to review their exposure to high-yield U.S. debt and consider strategies for protecting against any rise in defaults,” said Jason Smith, Tabula’s chief investment officer.For individual investors, it’s one thing to take profits after a blockbuster quarter. It’s quite another to make an outright bet against high-yield bonds. There are several reasons to doubt a full-scale collapse is in the offing, starting with the fact that junk-debt issuance reached $58 billion in June, the busiest month ever. That suggests a large swath of companies, particularly those rated double-B like the preponderance of the CDX index, have successfully raised funds to offset any immediate revenue shortfalls, which in turn lowers the stakes for the coming months if mutual-fund withdrawals persist.Moreover, as I’ve noted before, distressed-debt investors have raised tens of billions of dollars for an opportunity to snap up cheap bonds and loans when companies run into trouble. Some already missed out on the biggest bargains in March; it stands to reason that they’ll be more eager to pounce at the first hint of another selloff, or attractive businesses falling on temporary hard times. On top of that, Bank of America Corp. estimates these investors might sell $200 billion of investment-grade securities in the next several months — money that would likely be deployed into riskier securities.This wall of cash alone won’t save every company from bankruptcy, of course. But one reason that Hertz Global Holdings Inc. went bust while Avis Budget Group Inc. hasn’t is because investors lined up in early May to lend Avis $500 million for five years in exchange for a huge 10.5% coupon. Since then, Avis’s longest-dated bonds have rallied to 84 cents on the dollar from 56 cents, while the new securities trade at 114 cents to yield 6.3%, about the same as the Bloomberg Barclays high-yield index. It went from a company on the brink to an average speculative-grade borrower in just two months.This kind of resolution seems more likely than a 2008 redux. Plus, the Fed wasn’t buying corporate debt and ETFs in 2008, nor was Congress so quick to extend lifelines to businesses and individuals alike. By all accounts, we’re living through a unique economic recession and recovery.Investors shouldn’t assume anything about the behavior of speculative-grade debt in this environment. By all means, take some chips off the table if the persistent drip of bankruptcy filings is unnerving. But bet against the broad junk-bond market at your own risk.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.

  • Rolls-Royce Experiences a Unique Kind of Hell
    Bloomberg

    Rolls-Royce Experiences a Unique Kind of Hell

    (Bloomberg Opinion) -- Few aerospace companies have been left unscarred by Covid-19, but those that were struggling even before the pandemic are experiencing a unique kind of hell.Boeing Co. was already up against it after grounding its 737 Max jets and it’s expected to burn through as much as $16 billion of cash this year. Among suppliers, few were as vulnerable going into the crisis as Rolls-Royce Holdings Plc, the British jet engine manufacturer. It invested billions of pounds in several new engine designs, only to discover that one — the Trent 1000 — isn’t totally reliable. Fixing this will cost 2.4 billion pounds ($3 billion), and now the collapse in air travel has taken its own toll on Rolls-Royce’s finances.On Thursday, a trading update laid bare just how devastating the virus has been for a company whose propulsion systems power 38% of the world’s wide-body passenger jets, including the Boeing 787 and Airbus A380. The group expects to consume about 4 billion pounds of cash this year. Like Boeing, Rolls-Royce’s liabilities now far exceed its balance-sheet assets.Even in normal times the company loses more than 1 million pounds on each large jet engine it sells, and makes most of its commercial aviation revenue from maintenance contracts. When planes are grounded, precious little cash comes in to cover the company’s high fixed costs. The number of hours Rolls-Royce engines were in flight fell by 75% in the second quarter; they’re expected to more than halve this year. With intercontinental flying likely to remain subdued, many of the twin-aisled jets that Rolls-Royce powers will remain underutilized. A strategic decision to focus on the wide-body aircraft market is coming back to haunt the company.  Bloomberg reported last week that Rolls-Royce was considering raising up to 2 billion pounds in equity capital. But, for now, it has announced only a new 2 billion-pound government-guaranteed loan.A large capital increase would heavily dilute shareholders that don’t participate but Rolls-Royce has surely run out of other options, having already scrapped its dividend and announced 9,000 job cuts. The shares have declined by more than 60% this year, valuing the business at just 5.1 billion pounds. At its 2013 peak, Rolls-Royce was worth more than 4 times that.The company still has 4.2 billion pounds of cash and 8.1 billion pounds of total available liquidity, a decent cushion considering the scale of the ongoing cash burn. But its finances are in a worse state than those numbers suggest, something Rolls-Royce’s complex accounting, large working capital swings and invoice-financing arrangements (since discontinued) helped paper over.Rolls-Royce’s net indebtedness could rise to as much as 16.6 billion pounds, according to an estimate from JPMorgan analyst David Perry that preceded Thursday’s trading update. That’s when you include the cash that customers have advanced Rolls-Royce ahead of the maintenance work it must still carry out, as well as its operating leases, provisions for fixing faulty engines and other liabilities.About half of Rolls-Royce’s revenue comes from making power-generation and defense equipment, businesses that haven’t been as badly affected by coronavirus. Power-generation sales fell but defense is holding steady. A group target to achieve 750 million pounds of free cash flow in 2022 gives investors something to cling to. Chief Executive Officer Warren East believes the company has an attractive and independent future.And yet, Rolls-Royce will emerge from this crisis as a smaller group with less cash-flow potential and more debt. As a key military supplier to Britain and one of the country’s last truly world-class manufacturers, the government will be keeping a close eye on its financial health. The state had to rescue the company when it went bust in the early 1970s, and it still holds a so-called “golden share,” allowing it to block a foreign takeover.Investors seem to think more state assistance will be forthcoming if needed.(2) The company’s 550 million euros of senior unsecured 1.625% coupon bonds, which mature in 2028, trade at 90 cents on the euro. That’s not great, but it’s not disastrous either. Standard & Poor’s has already cut the credit rating to junk. If Rolls-Royce does prove too fragile to stand alone, the idea of merging it with BAE Systems Plc could be revived. It’s too important to fail.(1) So far Rolls-Royce has tapped 300 million pounds from the U.K.’s Covid Corporate Financing Facility and now has another 2 billion pound government-guaranteed loan available to it.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.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.

  • Reuters

    GLOBAL MARKETS-China charges on, gold reaches nine-year high

    European shares were rising again after a two-day wobble on Thursday as China's markets continued their charge, and something between fear and greed propelled gold to a nine-year high. Chinese stocks set their longest winning streak in two years and the yuan had strengthened past 7 per dollar overnight, despite rising tension over Hong Kong and the economic uncertainty caused by COVID-19. Trade- and commodity- related currencies also reacted to China's gains.

  • Reuters

    Ant Group listing would be fillip for Hong Kong's flagging IPO market

    An initial public offering from Alibaba's Ant Group by year-end would give equity capital markets in Hong Kong a timely boost after a new security law cast in doubt the city's future as a global financial centre, analysts said on Thursday. With new deals worth $4.17 billion in the first half, Hong Kong's exchange accounted for 7.6% of the global IPO market, though down from a share of 11%, and deals worth $7.91 billion, in the same period last year, Refinitiv data showed. The fall in value ranked Hong Kong as the fourth most active exchange after the Nasdaq, mainland China's new Star Market and the Shanghai stock market.

  • Reuters

    GLOBAL MARKETS-China bull charge drives stocks and yuan higher

    Surging Chinese stocks led Asia's equity markets higher on Thursday, as investors looked past Sino-U.S. tension and renewed coronavirus lockdowns and hoped stimulus washing through the world economy finds its way to company earnings. Asia's investors are riding high after a front-page editorial in Monday's China Securities Journal extolling market fundamentals was seen as official encouragement to buy stocks. European futures point to gains from London to Frankfurt, with FTSE futures up 0.5% and Germany's DAX futures up 1.2%, while U.S. stock futures fell 0.1%.

  • JPMorgan puts plans for Ohio office return on hold indefinitely
    Reuters

    JPMorgan puts plans for Ohio office return on hold indefinitely

    Plans by the biggest U.S. bank to bring back as many as half of its workers to buildings in the city between July 13 and Labor Day are on hold indefinitely, Bloomberg News first reported https://www.bloomberg.com/news/articles/2020-07-08/jpmorgan-puts-plans-for-ohio-office-return-on-hold-indefinitely?sref=V7uxlNge, citing people briefed on the decision. The bank is making plans to start a first phase of returning workers to offices in additional states including Delaware starting in mid-August, Bloomberg said.

  • Reuters

    GLOBAL MARKETS-Asian stocks grind higher as focus turns to earnings

    Asian equity markets ground higher as investors tried to look past gathering Sino-U.S. tension and renewed coronavirus lockdowns to upcoming company earnings, hoping that global stimulus efforts will yield upbeat outlooks. The Chinese yuan rose to a four-month high of 6.9872 per dollar and the greenback sat near a one-month low against a basket of currencies . China was hit first and so is emerging first from the COVID-19 pandemic.

  • Reuters

    Credit Suisse aims for 100% of securities venture in China growth plan

    Credit Suisse wants to raise its China securities joint venture stake to 100% and increase its market share after getting the regulatory green light to take a majority holding, the head of its Asia business said. Switzerland's second-largest bank is also looking to hire more staff and invest in China, the world's second-biggest economy, as its most significant business opportunity in the world, its APAC boss Helman Sitohang told Reuters. China has gained in relevance for Credit Suisse and other international banks after Beijing fast-tracked the opening of its financial markets to foreigner investors.

  • Reuters

    Ford seeks to extend maturities on US$5.35bn in loans

    Ford Motor Co is in discussions with its lenders to extend maturities on US$5.35bn in existing credit facilities, two sources familiar with the discussions said. The second-largest US automaker has reached out to lenders within its top 20 bank group for a one-year extension of its US$3.35bn three-year main corporate revolving credit facility and US$2bn three-year supplemental revolving credit facility. The company is offering an all-in spread of 225bp over Libor, split between a drawn spread of 175bp and an undrawn fee of 50bp for the main corporate and supplemental revolving credit facilities, one of the sources said.

  • MarketWatch

    Dow falls 275 points on losses for shares of Boeing, American Express

    DOW UPDATE Behind negative returns for shares of Boeing and American Express, the Dow Jones Industrial Average is in selloff mode Tuesday afternoon. Shares of Boeing (BA) and American Express (AXP) have contributed to the index's intraday decline, as the Dow (DJIA) was most recently trading 279 points, or 1.

  • Banks Poised to Get Fee Windfall From Small-Business Stimulus
    Bloomberg

    Banks Poised to Get Fee Windfall From Small-Business Stimulus

    (Bloomberg) -- Earlier this year, thousands of lenders rushed to arrange loans under the U.S. government’s Paycheck Protection Program. Now, some of them will be rewarded handsomely.More than 30 banks across the country, including dozens of community banks and some lenders with more than $1 billion in assets, could generate fees that surpass their 2019 net revenue before set-asides for loan losses, according to a study distributed Tuesday by S&P Global Market Intelligence. The firms that will reap the biggest gains are the ones that punched above their weight in arranging loans for the rescue program.The Small Business Administration’s $669 billion Paycheck Protection Program was launched in April as part of the $2 trillion CARES Act passed by Congress to help the U.S. economy through the coronavirus pandemic. The program was initially marred by confusion and technological glitches as banks large and small raced to secure loan funding for their clients.As of June 30, lenders arranged almost 4.9 million loans supporting more than 51 million jobs, according to the SBA. Fees range from 1% to 5% for each loan, depending on its size.Cross River Bank, a Fort Lee, New Jersey-based firm with $2.5 billion in assets at the end of the first quarter, arranged more than $5 billion in PPP loans, making it the 13th-most-active lender, according to the SBA. S&P estimates that Cross River will pull in $163 million in related fees, more than double its pre-provision net revenue last year.JPMorgan Chase & Co., Bank of America Corp., Truist Financial Corp., PNC Financial Services Group Inc. and Wells Fargo & Co. were the top five PPP lenders by volume, arranging a combined $91 billion as of June 30, SBA figures show. JPMorgan could make $864 million in related fees, according to S&P, but that will “represent a modest boost to the top line.” And JPMorgan is among the lenders, also including Bank of America and Wells Fargo, that plan to donate the fees.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.

  • MarketWatch

    American Express, Boeing share losses contribute to Dow's 200-point fall

    DOW UPDATE The Dow Jones Industrial Average is trading down Tuesday afternoon with shares of American Express and Boeing facing the biggest losses for the index. The Dow (DJIA) was most recently trading 207 points, or 0.

  • MarketWatch

    Boeing, American Express share losses contribute to Dow's 140-point fall

    DOW UPDATE Dragged down by negative returns for shares of Boeing and American Express, the Dow Jones Industrial Average is trading down Tuesday morning. Shares of Boeing (BA) and American Express (AXP) are contributing to the blue-chip gauge's intraday decline, as the Dow (DJIA) was most recently trading 140 points lower (-0.

  • Universities Drop the Ball in Hiring Minority Bankers
    Bloomberg

    Universities Drop the Ball in Hiring Minority Bankers

    (Bloomberg Opinion) -- As the U.S. deals with social unrest and the focus on  fairness and equality grows, many public and private leaders have asked a simple question: “How can we do better?” It’s a fair question, one which got me thinking about the public finance sector, long considered among the most diverse and inclusive areas in investment banking. While this sector has seen many positive developments over the 30-plus years since I started my career on Wall Street, there is clearly much work to do.As of late, my phone has been ringing off the hook with calls from other chief executives wanting to know what they can do better when it comes to promoting diversity and inclusion. We have heard this narrative before, yet never with this great a sense of urgency. Some major banking institutions have gone beyond simple lip service and begun to hold leaders directly accountable for diversity goals and objectives. Major cities such as New York, Chicago, Atlanta and Washington have been consistent leaders in not just a broad commitment to inclusion, but have gone the extra mile to ensure equality as well. They have made the deliberate choice of involving minority- and women-owned business enterprise banking firms, and other diverse professional-services firms, in leading and meaningful roles. This is not just about offering small monetary compensation to appear inclusive. These cities further a broader mission of building trust, respect and reputation in these firms — in an industry where those characteristics mean everything. It has been through the responsibility shown by many entities in the public sector that we have started to see real change trickle into other areas of finance, such as corporate banking and the buy-side of the industry. Institutions and organizations in other areas should be commended as well. They include sub-sectors such as transportation, water and sewer, housing and K-12 education. However, one sector has had a poor and often erratic record with regard to inclusion and diversity: higher education. It is a disappointing irony that an industry whose institutions have often been the most vocal promoters of tolerance, inclusion and diversity, should be one so lacking in the tangible promotion of those values within the financial industry.The higher education sector has issued a record volume of debt since the Covid-19 shock began in March — over $12 billion. While some major universities and colleges have an open-door policy in terms of inclusion and equity for professional-services providers, others have been shockingly closed, seemingly inconsistent with their core mission. For example, in the mighty Ivy League, only Penn, Princeton, Columbia and Cornell regularly have minority- and women-owned firms in their bond underwriting syndicates, along with other professional-services providers for bond transactions. Harvard, Yale, Brown and Dartmouth rarely, if ever, have such companies. Almost none have included minority law firms. We’ve seen much the same disappointment at other prestigious institutions, including the Massachusetts Institute of Technology, Johns Hopkins, the California Institute of Technology, Notre Dame and Boston College, to name a few.Harvard says its mission is to educate its citizens into leaders of our society. Yale takes it one step further: Its mission is to educate leaders who serve "all sectors of society." I suspect Yale didn’t apply that principle to its $1.5 billion transaction priced in early June, one in which the school used no minority-led law firms and just three major firms —  Barclays Plc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. — for its underwriting syndicate. And remember, Yale is located in New Haven, Connecticut, a city where almost two-thirds of the residents are people of color.But this is not just about the Ivy League or private schools. Ohio State has beaten Michigan eight straight years in football, and it appears that the Buckeyes beat the Wolverines in the inclusion area as well. Michigan issued almost $1 billion in debt recently and failed to include a single minority-owned law firm or underwriter. Whereas Ohio State recently executed a $187 million transaction that did include a minority underwriter — it joins fellow Big Ten members Northwestern and Purdue, which have also recently completed deals with minority- and women-owned businesses in their transaction teams. Unfortunately, Michigan State, Indiana, Nebraska and Penn State have not, and each executed transactions that exceeded $500 million. We have seen similar inconsistencies out west. The University of Southern California, the University of California Regents, the Cal State System and the Universities of Washington and Colorado have been very inclusive. On the other hand, Stanford, Arizona, Arizona State, Oregon and Oregon State have lacked minority participation. Elsewhere, major systems that should be commended for their inclusion policies include the University of Texas, Texas A&M and the Universities of Massachusetts and Connecticut. Institutions such as Temple, the University of Chicago and Kent State deserve solid marks as well.  Some of the least inclusive schools have been in southern states. Georgia Tech, Emory, Duke, North Carolina, North Carolina State, Vanderbilt and Wake Forest have not used minority firms. These are institutions which have never failed to be inclusive on the gridiron or hardwood, but this “inclusivity” would seemingly stop at professional services.More broadly, in the municipal and not-for-profit sectors — which in many respects are not dissimilar from the nation as a whole — there has been much progress, but much work remains. Many of our municipal issuers understand this and have been inclusive and equitable, with positive results. New York City’s first deal after the onset of Covid-19 was senior-managed by a minority firm, to spectacular results. The State of Ohio recently did the same for an $800 million taxable and tax-exempt transaction that generated over $360 million in much-needed budgetary and cash-flow savings. Finally, many minority- and women-owned business enterprise firms have formed partnerships with large banks to provide additional liquidity to universities. The argument that an institution only uses so-called “credit banks” is no longer valid. Minority- and women-owned firms have time and again shown the capability to provide outstanding execution on some of the largest and most complex financial transactions in the country. It is time that grand American institutions such as Harvard, Yale, Stanford, Duke, Michigan and the like give their coveted stamps of responsibility and trust to minority firms that can help universities build a capital structure worthy of their academic prowess.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Jim Reynolds is the chairman and chief executive of Loop Capital.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.

  • Analysis reveals banks may get billions in PPP Loan fees: WSJ
    Yahoo Finance Video

    Analysis reveals banks may get billions in PPP Loan fees: WSJ

    Yahoo Finance’s Brian Cheung joins Zack Guzman break down new analysis from the Wall Street journal that shows how big banks may get billions in fees from PPP loans.

  • Reuters

    JPMorgan puts plans for Ohio office return on hold indefinitely- Bloomberg News

    JPMorgan Chase & Co is pulling back on returning employees to offices in Columbus, Ohio, after coronavirus cases in the state jumped, Bloomberg News reported https://www.bloomberg.com/news/articles/2020-07-08/jpmorgan-puts-plans-for-ohio-office-return-on-hold-indefinitely?sref=V7uxlNge on Wednesday, citing people briefed on the decision. The bank is making plans to start a first phase of returning workers in additional states including Delaware starting in mid-August, Bloomberg said. JPMorgan did not immediately respond to a Reuters request for comment.

  • Chase Business Banking looks to 'help black-owned businesses survive' after getting hit hard by COVID-19
    Yahoo Finance Video

    Chase Business Banking looks to 'help black-owned businesses survive' after getting hit hard by COVID-19

    Chase Banking is teaming up with a coalition of four business advocacy groups to help black-owned businesses impacted by COVID-19. Christopher Hollins, Managing Director of Chase Business Banking, joins Yahoo Finance's The First Trade to discuss the details and more.

  • Business Advocacy Groups Partner with Chase Business Banking to Help Black Entrepreneurs Address the Financial Challenges of COVID-19
    PR Newswire

    Business Advocacy Groups Partner with Chase Business Banking to Help Black Entrepreneurs Address the Financial Challenges of COVID-19

    The economic fallout from the COVID-19 pandemic has been devastating for U.S. small businesses, with many experiencing dramatic declines in revenues and cash liquidity following the government-mandated closures that began in March. The effects of the economic downturn have been especially severe for Black-owned businesses— many of which entered this crisis undercapitalized.1

  • With Most Businesses Operating at a Reduced Capacity, Normalcy is a Ways Off, JPMorgan Chase Survey Finds
    Business Wire

    With Most Businesses Operating at a Reduced Capacity, Normalcy is a Ways Off, JPMorgan Chase Survey Finds

    Amidst an unprecedented global pandemic and disruptions to the economy, more than 1 in 2 business leaders (53%) expect their companies to return to normal in the next 12 months, according to JPMorgan Chase’s Business Leaders Outlook Pulse Survey released today. The majority of business leaders remain hopeful in the face of adversity: while most (83%) are running at a reduced capacity, 68% are confident their businesses will thrive and just 2% are concerned their businesses may not survive.

  • JPMorgan Chase to Host Second-Quarter 2020 Earnings Call
    Business Wire

    JPMorgan Chase to Host Second-Quarter 2020 Earnings Call

    As previously announced, JPMorgan Chase & Co. (NYSE: JPM) ("JPMorgan Chase" or the "Firm") will host a conference call to review second-quarter 2020 financial results on Tuesday, July 14, 2020 at 8:30 a.m. (Eastern). The results are scheduled to be released at approximately 7:00 a.m. (Eastern). The live audio webcast and presentation slides will be available on www.jpmorganchase.com under Investor Relations, Events & Presentations.

  • Banks’ Risks During the Pandemic Aren’t Clear
    Bloomberg

    Banks’ Risks During the Pandemic Aren’t Clear

    (Bloomberg Opinion) -- Transparency and public trust are essential to effective bank regulation. These guiding principles were severely compromised in the years leading up to the 2008 financial crisis. Instead of simple, straightforward metrics of bank solvency, capital requirements became an exercise in gamesmanship. Regulators deferred to banks’ own opaque and incomprehensible models of risk to determine how much capital they needed, deeming them “well-capitalized” when the banks were anything but. Reforms adopted after the crisis wisely added simpler, objective capital standards, complemented by stress tests that publicize whether large banks have sufficient capacity to weather severe economic conditions.Unfortunately, last month’s confusing and vague pronouncements by the Federal Reserve of this year’s stress test results undermined those principles. Instead of reassuring the public, they have created more uncertainty as to the strength of the banking system.Much criticism has centered on the failure of the Fed to publish bank-specific results under its “enhanced sensitivity analysis,” which took into account worsening economic scenarios caused by the Covid-19 pandemic. The stress scenarios the Fed had announced in February were not as severe as the path the economy is on now. But the Fed only published bank-specific results under February’s now essentially irrelevant assumptions.Less noticed, but we feel equally important, was the failure of the Fed to publish an enhanced sensitivity analysis using a simpler, more reliable measure of financial strength called the leverage ratio. Instead, the Fed relied solely on banks’ “risk-based ratios,” which seek to measure capital adequacy in relation to judgments about the riskiness of banks’ assets. Risk-based ratios failed spectacularly in the lead up to the financial crisis as large banks took huge, highly leveraged stakes in securities and derivatives tied to mortgages because they and their regulators deemed those assets low risk.After the crisis, global consensus emerged that regulators should backstop risk-based capital rules with leverage ratios, which proved to be more reliable indicators of solvency during the financial crisis. For the largest banks, these supplemental leverage ratios require a minimum of 5% equity funding for the banking organization, and 6% for subsidiaries insured by the Federal Deposit Insurance Corp.A review of the bank-specific results published by the Fed using February’s pre-pandemic assumptions shows that some large banks would be operating with thin capital margins even under those more benign scenarios. For instance, Goldman Sachs’s supplemental leverage ratio dipped as low as 3.5%; Morgan Stanley, 4.5%; JPMorgan Chase, 5.1%. Unfortunately, we don’t know how these and other large banks will fare under the more-distressed conditions caused by the pandemic. The Fed’s enhanced sensitivity assessment only disclosed aggregate risk-based ratios. These ranged from 9.5% for a “V-shaped” recovery to 7.7% for a more severe “W,” with the bottom 25th percentile of banks going as low as 4.8% in a “W” scenario. Leverage ratios are typically less than half of banks’ risk-based measures. Indeed, a major concern about risk-based ratios is that they imply capital levels greater than they actually are. Thus, it is likely there were a number of banks with stress leverage ratios below 3% in the Fed’s sensitivity analysis, far too thin to keep them lending and solvent without government support.The failure to disclose leverage ratios in the pandemic sensitivity analysis is consistent with the Fed’s rulemaking in March to eliminate leverage requirements from their stress tests. Unfortunately, it is not the only step regulators have taken to marginalize leverage ratios. They have also allowed large banks to remove “safe assets” such as Treasury securities and reserve deposits from the supplemental leverage ratios calculation. But the relatively low requirements were calibrated based on the assumption that they would apply to all of a banks’ assets, including safe assets as well as risky exposures such as uncleared derivatives and leveraged loans. Removing safe assets without raising the required ratio will eventually lead to significant reductions in capital minimums, according to regulators’ estimates: $76 billion for banking organizations and more than $55 billion for their insured subsidiaries.Regulators have said this step was necessary to “support credit to households and businesses.” But this is hard to reconcile with their refusal to request suspension of bank dividend payments. (They did finally impose a modest cap, which will still permit most banks to continue paying dividends at their first quarter levels.) Retaining that capital would give banks the ability to expand support for the real economy without weakening their capital position. FDIC-insured banks paid $30 billion in dividends to their holding companies in the first quarter. If that $30 billion had stayed on banks’ balance sheets, it could have supported nearly a half trillion dollars in additional capacity to take new deposits and make loans.Moreover, we challenge whether this change will further its stated goal to increase Main Street lending. It will instead create incentives to reduce lending. A number of banks will most likely need to improve their capital ratios as a result of the Fed’s continued stress assessments. But to do so, they can simply cut back on loans, which have relatively high risk-based capital requirements, and shift into U.S. Treasuries, which now have no capital requirements. They will be able to boost their risk-based ratios without having to curb dividends or issue new equity.Regulators have said removing Treasury securities and reserve deposits from the leverage ratio calculation is temporary, but bank lobbyists are expected to seek legislation making it permanent as part of the next stimulus package. Banking advocates are also pushing regulators to finalize pending changes to the supplemental leverage ratios which would reduce required capital at the eight largest FDIC-insured banks by $121 billion, or 20% on average. If the banking lobby is successful, we fear there won’t be much left of meaningful leverage restrictions.Bank capital funding requirements are not unnecessary red tape as bank lobbyists try to portray them. They are essential to financial stability. Studies show that highly capitalized banks do a better job of lending than highly leveraged ones, especially during economic stress. The previous financial crisis demonstrated how unreliable risk-based ratios can be and the need to backstop them with overarching leverage constraints on large financial institutions. Greater reliance on simpler, transparent leverage ratios was central to regaining public trust in the solvency and resilience of the banking system. Their demise will force the public to rely on the Fed’s and big banks’ complex and nontransparent risk models. Bank capital levels will once again become an insiders’ game.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sheila Bair was chair of the Federal Deposit Insurance Corp. from 2006 to 2011.Thomas Hoenig was vice chair of the Federal Deposit Insurance Corp. from 2012 to 2018.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.

  • Uber Charts Path to Long-Elusive Profit With Postmates Deal
    Bloomberg

    Uber Charts Path to Long-Elusive Profit With Postmates Deal

    (Bloomberg) -- Neither Uber Technologies Inc. nor Postmates Inc. are profitable. They’re hoping that a combination of the two businesses will somehow get them there.Uber said Monday it will spend $2.65 billion for the San Francisco-based food delivery company Postmates. The all-stock transaction is a bid to accelerate a path to profitability set by Uber Chief Executive Officer Dara Khosrowshahi and deliver growth rates once typical of Uber’s ride-hailing operation. Both aspects of that strategy rely on food delivery, which has gotten a boost from the coronavirus pandemic.The deal is a relatively modest outcome for Postmates, a pioneer of the gig economy that was outmaneuvered by deep-pocketed competitors. The privately held company had been valued at $2.4 billion in an investment last year, a person with knowledge of the matter said at the time.For Uber, the purchase comes at a reasonable price and could help lead to a rational—and perhaps someday, profitable—market, said Benjamin Black, an analyst at Evercore ISI. “You had four players who were very aggressive on price and were essentially giving away food for free,” said Black. “Rational pricing will start to kick in after consolidation.”Uber estimates that it will issue about 84 million shares of common stock for 100% of the fully diluted equity of Postmates, the company said in a statement Monday. Shares of Uber rose about 5% during trading Monday.Early this year, Uber was expecting to turn its first quarterly profit by the end of 2020. The virus forced a swift reassessment of that plan. Uber revised the estimate in May targeting a quarterly profit in 2021.Since the start of the pandemic, Uber has cut more than a quarter of its staff and exited or pared back some businesses, such as electric bikes and financial services, so it could focus on core areas: ride-hailing and food delivery. Growth in Uber’s core rides business was slowing even before the pandemic drove a first ever decline in bookings in the first quarter. Global rides plummeted 70%, Khosrowshahi said in June.Uber Eats has been a bright spot for the company as stay-at-home orders and restaurant closures have prompted more customers to order in. Food-delivery bookings more than doubled for Uber in the second quarter and rose about 67% for Postmates, Khosrowshahi said in the statement Monday.The company sees advantages from the Postmates deal beyond meal delivery. Postmates was a pioneer in so-called delivery-as-a-service, complementing Uber’s efforts in shuttling groceries, essentials and other goods, the company said. Restaurants and other retailers will benefit from tools and technology to connect with a bigger customer base, according to the statement.“Platforms like ours can power much more than just food delivery—they can be a hugely important part of local commerce and communities, all the more important during crises like Covid-19,” Khosrowshahi said.Postmates wasn’t Uber’s first choice. A proposed acquisition of Grubhub fell through last month when European rival Just Eat Takeaway.com NV bought it instead for $7.3 billion. Uber’s bid for Grubhub, one of the larger players in the U.S. food delivery market, was likely to have raised antitrust concerns, according to industry analysts. The two together would have controlled more than half the U.S. market.An acquisition of Postmates is less likely to raise regulatory scrutiny because it wouldn’t change the market as much. Postmates, a distant fourth, would give Uber a firm lead over Grubhub, but the combined company would still trail SoftBank-backed DoorDash Inc., the nationwide leader. Postmates would strengthen Uber’s position in Los Angeles and the American Southwest, two markets where the brand is strongest.Still, the deal has drawn some criticism. “Uber and Postmates’s business model is built on the exploitation of restaurants, workers, and consumers,” said Sarah Miller, executive director of the anti-monopoly group American Economic Liberties Project. “The Federal Trade Commission should refuse to rubber stamp this power grab.”Uber executives have been vocal for months about wanting to drive consolidation in the food delivery market. JPMorgan Chase & Co. was the financial adviser to Postmates, and Latham & Watkins LLP was its legal counsel. Uber’s legal counsel was Wachtell, Lipton, Rosen & Katz.In addition to competitive threats, the industry faces regulatory risks relating to worker classification. Uber and Postmates sued California last year, alleging a state law that took effect this year designed to give gig workers unemployment protections is unconstitutional.The acquisition of Postmates is expected to close in the first quarter of 2021, pending regulatory approval, Uber said. Pierre-Dimitri Gore-Coty, the head of Uber’s food-delivery business, is expected to remain in that role, a person with knowledge of the plan said Sunday night. Under their agreement, Postmates co-founder Bastian Lehmann and his team will stay on to manage the Postmates service, said another person, both of whom asked not to be identified discussing a private deal.In its statement, Uber said it plans to keep the Postmates app running separately, supported by a more efficient, combined merchant and delivery network.(Updates with profit context in the sixth paragraph.)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.

  • JPMorgan says a Biden win in November could be positive for stocks
    Yahoo Finance Video

    JPMorgan says a Biden win in November could be positive for stocks

    JPMorgan says Wall Street is too negative about how Democratic candidate Joe Biden getting elected would impact the markets. Yahoo Finance's Rick Newman shares the details.