|Day's Range||69.90 - 69.95|
Big banks may be making the vast majority of the loans under the Small Business Administration’s Paycheck Protection Program, but fintechs are proving they’re worthy partners, reaching more small businesses.
The upheaval caused by the coronavirus may mean the end of the 60/40 portfolio, investing icon Burton Malkiel tells MarketWatch, but some other truths will likely endure. Investors are probably better off in passive portfolios, not chasing active managers - or even worse, day trading out of boredom.
The top shareholders of JPMorgan Chase are Jamie Dimon, Mary Callahan Erdoes, Daniel Pinto, Vanguard Group, BlackRock, and State Street.
JPMorgan Chase has the reputation of being the best-run banking giant. But is the stock a good buy right now?
(Bloomberg) -- March presented the threat of a credit freeze along the lines of 2008. Instead, the Federal Reserve’s efforts to keep debt markets flowing have things looking more like 2009, with concerns about the U.S. economy abundant but times still great on Wall Street trading floors.The Fed’s moves have meant a $10 billion windfall for the biggest U.S. banks as their bond traders seized on big market swings to set new records, and their bankers arranged a slew of debt deals for companies desperate to raise cash. That helped keep JPMorgan Chase & Co. and Citigroup Inc. profitable despite a surge in loan-loss provisions, and even delivered a surprise earnings increase at Goldman Sachs Group Inc.The market bonanza has for now eased fears about the type of bank capital concerns that fueled the last crisis and prompted government bailouts. But it also raises questions of whether the Fed’s efforts have disproportionately benefited financial firms rather than the small businesses still struggling with virus-driven lockdowns.“Goldman’s earnings this quarter were too good -- almost indecent, in fact,” said Octavio Marenzi, chief executive officer of capital markets consultancy Opimas. “The Fed has been able to engineer a huge bounce-back in the markets by injecting trillions of dollars, benefiting investment banks primarily. This will lead to calls for the government to do more to help Main Street rather than Wall Street.”Debt BonanzaThe $10 billion figure is the gap between the $20.5 billion that the three banks generated from their fixed-income trading and debt underwriting units, and the $10.4 billion average quarter for those businesses over the last four years.Citigroup’s investment bankers posted their best quarter since the financial crisis, helped by a 41% gain in debt underwriting revenue. At JPMorgan, the firm’s fixed-income traders generated $7.3 billion in the second quarter. That alone would have set a record for total markets revenue, even without the help of the firm’s stock traders.Goldman boasted that it saw “significantly higher revenues” across all its major fixed-income trading business, particularly in interest rate, credit and commodities products. The group posted its best performance in nine years and topped analysts’ estimates by more than $1.5 billion. The bank’s shares climbed 0.9% at 11:46 a.m. as the major Wall Street firms all rose, including Bank of America Corp. and Morgan Stanley, which both report results Thursday.“The activity levels that we saw at the end of March and April were really extraordinary,” Goldman CEO David Solomon told analysts on Wednesday. “In a period where there’s enormous change and enormous volatility in markets, we became super busy because our clients are super busy.”Credit markets have enjoyed a healthy recovery from the virus-induced rout in March after the Federal Reserve promised to buy corporate bonds and other assets to unfreeze trading. U.S. companies responded by selling hundreds of billions of dollars of bonds in the second quarter to shore up liquidity as it became cheaper to borrow. And because corporate bonds tend to trade most after they’re freshly issued, the explosion in debt sales fueled a trading boom as well. Banks could also reverse some markdowns the firms had to take on corporate loans stuck on their books.The performances are reminiscent of 2009, when credit markets began to recover from the previous year’s sharp declines and bank trading desks set records. That resulted in record profit for Goldman Sachs and allowed many of its Wall Street rivals to quickly rebound and repay their government bailouts even as the recession dragged on.While the Fed has bolstered Wall Street operations, it has also taken steps to prevent large banks from passing along profits to shareholders, instead encouraging them to hoard capital that can be used to support lending through the pandemic. The central bank last month extended a pause on buybacks, capped dividends at the largest 33 banks at current levels, and forced some to cut payouts or boost capital ratios to maintain them.The Fed also warned it might conduct an additional test on banks later this year that uses harsher economic scenarios, which could further limit firms’ payouts.And the nation’s largest banks have cautioned investors that they shouldn’t expect the revenue boom to continue. Citigroup said trading revenue would “normalize,” while JPMorgan told analysts to expect declines in investment banking fees and warned trading revenue may be halved in coming quarters.Underwriting volumes “will definitely come down,” JPMorgan CEO Jamie Dimon told analysts on a conference call on Tuesday. “All this capital is not being raised to go spend. It’s being raised to sit on the balance sheet so that you’re prepared for whatever comes next.”The Fed has emphasized that its powers center around lending and its efforts to keep credit flowing are ultimately intended to save jobs. The U.S. government has doled out trillions of dollars in stimulus, much of it to individuals. That has boosted incomes even amid rising unemployment and helped stave off a spike in missed loan payments.Still, U.S. banks spent much of the first half of the year battening down the hatches, with Citigroup, JPMorgan and Wells Fargo & Co. setting aside almost $50 billion to cover souring loans.The lenders cautioned they might yet need to set aside more in provisions, depending on the pace and shape of the recovery of the global economy. Many states around the U.S. are seeing a resurgence in coronavirus cases after beginning to reopen earlier this summer.“If somebody has the crystal ball, I would love to see it,” Citigroup CEO Mike Corbat told analysts on Tuesday. “I would certainly say that the unknowns outweigh the knowns.”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.
On July 8, 2020, Giverny Capital released its Q2 2020 Investor Letter, a copy of which you can download here. The Fund returned 19.64% for the second quarter of 2020. Meanwhile, the benchmark S&P 500 Index gained 20.54%. You should check out Giverny Capital's top 5 stock picks for investors to buy right now, which could […]
(Bloomberg Opinion) -- Goldman Sachs Group Inc.’s bond traders came through in the clutch.The bank that’s synonymous with Wall Street has made no secret about its efforts in recent years to diversify its business to create more durable revenue and reduce sensitivity to financial market conditions. But the second quarter was no time to shy away from its roots, as earnings from JPMorgan Chase & Co. and Citigroup Inc. proved on Tuesday by delivering profits even after setting aside huge sums for loan losses. JPMorgan’s trading revenue in fixed-income, currencies and commodities rose in the second quarter by a whopping 120%,(1)while Citigroup’s jumped by 89%. In equities, JPMorgan posted a 38% increase while Citigroup had a modest drop.Needless to say, 120% is a high hurdle. But Goldman cleared it and then some, reporting on Wednesday that FICC trading revenue soared 149% relative to a year ago to $4.24 billion, the highest in nine years and far and away outpacing estimates for $2.64 billion. Even in equities, trading rose 46%, the division’s best performance in 11 years. Together, traders accounted for more than half of the bank’s revenue in the second quarter. That kind of profiting from market volatility, combined with a doubling in revenue from underwriting stocks and bonds, pushed net income higher than it was a year earlier — quite the surprise, given the global pandemic and economic recession.Then again, the swift and sharp turnaround in financial markets in April and May was also shocking, so perhaps it’s only natural that Goldman was in the best position to take advantage of Wall Street’s animal spirits while staying largely insulated from Main Street’s anxiety. Heading into this earnings season, its shares were only down about 10% in 2020, compared with declines of more than 30% for Bank of America Corp., Citigroup and JPMorgan (Morgan Stanley was down just 2.6%). On Tuesday, after the blockbuster quarters for bond traders at Citigroup and JPMorgan, it was Goldman shares that rallied 2.5%, more than any company in the S&P 500 bank index and the second most behind Berkshire Hathaway Inc. in the diversified financials sub-index. Shares extended their advance in pre-market trading.In one of the more colorful comments on second-quarter earnings so far, Octavio Marenzi, chief executive officer of Opimas, called Goldman’s results “almost indecent” and may lead to an outcry for the government to take steps that don’t directly boost investment-banking profits. Now, just because Goldman’s traders are clearly still talented at their jobs, and Wall Street trading businesses aren’t irreparably broken as some feared, doesn’t mean the bank should count on the second quarter becoming the norm. The S&P 500 Index staged one of its biggest rallies ever from its March lows but has since traded sideways for more than a month. Corporate-bond prices have trickled higher while the torrent of new deals has slowed considerably. The Federal Reserve used its shock-and-awe power to get markets to where they are today. There’s a good chance it’ll be a slog in the months ahead.JPMorgan CEO Jamie Dimon effectively said as much on Tuesday toward the end of a call with analysts. “For trading, because no one asked, cut it in half,” he said of projecting coming revenue based on its second-quarter results. “Cut it in half, and that’ll probably be closer to the future than if you say it’s still going to still be double what it normally runs.”Goldman’s leadership didn’t quite go that far. “I don’t think any of us are in a position to make such a declaratory judgment about the exact direction of trading revenues into the second half of the year,” Stephen Scherr, the bank’s chief financial officer, said during the earnings call in response to a question mentioning Dimon’s remarks. Earlier, he noted that Goldman “went to the market and didn’t pull back and away from the market, and in doing that we picked up market share, which I think will have lasting effect, notwithstanding where the market goes.” Market share is the holy grail of the banking industry, so investors were likely encouraged to hear that.Goldman CEO David Solomon also acknowledged during the call that this huge windfall probably can’t last. “The activity levels that we saw at the end of March and in April were really extraordinary — we’ve not seen the same level of activity over the course of the last five or six weeks, since the beginning of June. But I would say the activity levels over the last five or six weeks, when looked at compared to activity levels in 2019 or 2018, still look pretty active.”Solomon said in a statement that “the turbulence we have seen in recent months only reinforces our commitment to the strategy we outlined earlier this year to investors.” That likely refers to initiatives like its new U.S. transaction banking business, which takes deposits and provides escrow services, among other things, as well as its Marcus consumer bank and its joint effort with Apple Inc. on the Apple Card credit card.Meanwhile, Goldman’s provision for credit losses is $1.59 billion, a fraction of what its more consumer-facing competitors have had to set aside. While that figure is seven times what it was a year ago, due in part to higher write-downs in private credit and real estate, JPMorgan’s was nine times greater and Wells Fargo & Co.’s was almost 20 times. Of course, Goldman has its own unique troubles: Provisions for litigation and regulatory proceedings were $945 million in the quarter, up from $66 million a year ago, as it nears a settlement with regulators over its 1MDB scandal. To paraphrase the late football coach Dennis Green, Goldman and its legion of traders are who we thought they were. The bank proved it still dominates Wall Street during one of the most tumultuous periods for financial markets in recent memory. Frankly, if it didn’t blow away all expectations, that would have been something of a red flag.Solomon shouldn’t let one set of eye-popping numbers distract from the longer-term approach of getting a foothold in new lines of business. He’ll sing praises for his traders today — and rightfully so — but probably knows deep down that he can’t count on a repeat performance.(Adds remarks from Goldman Sachs executives in the eighth and ninth paragraphs.)(1) This excludes the gain from the Tradeweb initial public offering in 2019's second quarter.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.
Goldman Sachs earnings unexpectedly rose as trading revenue hit the highest level in years, after rival Wall Street bank stocks reported surges too.
Jim Cramer discusses stock market news, including buying Citigroup stock, JPMorgan earnings, and more financial support for airline stocks.
Goldman Sachs (GS) reported stronger-than-expected second-quarter earnings results on Wednesday, as surging revenues despite the pandemic buttressed the bottom line and its stock price.
JPMorgan Chase (NYSE: JPM) showed a loss in earnings in Q2, totaling $2.87 billion. Sales, on the other hand, increased by 16.33% to $33.82 billion during Q2. In Q1, JPMorgan Chase hit $6.05 billion in earnings, but sales only totaled $29.07 billion.What Is Return On Capital Employed? Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed in a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth in a company and is a sign of higher earnings per share for shareholders in the future. A low or negative ROCE suggests the opposite.In Q2, JPMorgan Chase posted an ROCE of -0.03%.View more earnings on JPMKeep in mind, while ROCE is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.For JPMorgan Chase, the return on capital employed ratio shows the current amount of assets may not actually be helping the company achieve higher returns, a note many investors will take into account when making long-term financial decisions.Analyst Predictions JPMorgan Chase reported Q2 earnings per share at $1.38/share against analyst predictions of $1.04/share.See more from Benzinga * P/E Ratio Insights for JPMorgan Chase * Morning Market Stats in 5 Minutes * Recap: JPMorgan Chase Q2 Earnings(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
JPMorgan economists now expect a contraction of 3% in 2021. Until Tuesday, JPMorgan itself saw GDP growth of 0.3% by the end of 2021 from the pre-pandemic rate of 2.3% at the end of 2019.
The experienced CEO offered a lot of good insight on the bank's future earnings and the economy as a whole during the company's second-quarter earnings call.
The Street Quant Rating Rates Rigel Pharmaceuticals a Sell with a rating score of D. Shares of Rigel Pharmaceuticals jumped on Tuesday after the drugmaker said it started a U.K. trial of a drug designed to combat COVID-19 pneumonia. The Street Quant Rating Rates Vaxart a Sell with a rating score of D.
JPM earnings call for the period ending June 30, 2020.
JPM earnings call for the period ending June 30, 2020.
Wall Street surged on Tuesday, with the Dow Jones Industrial Average ending more than 2% higher as investors bought energy and materials stocks and looked beyond a recent rise in coronavirus cases. In extended trade, Moderna Inc surged 18% after the biotech company's experimental vaccine for COVID-19 showed it was safe and provoked immune responses in an ongoing early-stage study. Extended trade in S&P 500 emini futures suggested investors expect Wall Street to rise on Wednesday, with the futures climbing 0.8%.
Three of the largest U.S. banks reported Tuesday that their loan loss provisions had grown by almost $23 billion to over $81 billion, illustrating the pessimism over the economic path ahead.
Banks kicked off the earnings season with mixed results
Dow comes on strong, closing 2.1% higher after an afternoon surge, as bank earnings are assessed. Tech wavered and finished the day up.
JPMorgan earnings beat views, while Citigroup reported mixed results and Wells Fargo missed badly and slashed its dividend.
J.P. Morgan Asset Management today announced the appointment of Jared Gross to the newly created role of Head of Institutional Portfolio Strategy, based in New York.