JPM - JPMorgan Chase & Co.

NYSE - NYSE Delayed Price. Currency in USD
129.53
+0.93 (+0.72%)
At close: 4:00PM EST

129.45 -0.08 (-0.06%)
After hours: 6:07PM EST

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Previous Close128.60
Open129.23
Bid129.29 x 1100
Ask129.32 x 900
Day's Range128.40 - 129.53
52 Week Range91.11 - 131.29
Volume8,832,864
Avg. Volume10,949,229
Market Cap406.648B
Beta (3Y Monthly)1.20
PE Ratio (TTM)12.79
EPS (TTM)10.13
Earnings DateJan 14, 2020
Forward Dividend & Yield3.60 (2.80%)
Ex-Dividend Date2019-10-03
1y Target Est123.58
  • India Has People. It Needs Consumers
    Bloomberg

    India Has People. It Needs Consumers

    (Bloomberg Opinion) -- A long-held belief of analysts in India is that the economy is supply-constrained. Demand isn’t even worth a footnote, while a temporary squeeze in the onion market deserves obsession because it could be inflationary. It’s increasingly obvious that this view is outdated. In October, inflation quickened more than expected to 4.62% because of, yes, an onion shortage. Yet core inflation, which strips out volatile commodity prices, slumped to 3.4%, the lowest since the current price series began in 2012. One explanation is that people have less money to spend on other things after buying vegetables. Yet, as Mark Williams, chief Asia economist at Capital Economics puts it, a 1.1 percentage point drop in core inflation over three months is rare. “This weakness isn’t solely due to spending being diverted,” he says in a research note.It’s a demand funk. Until about 2012, temporary supply shocks dominated. The starting point of production and transport is hydrocarbons, and India needs to import most of its crude oil. The government also has to pay farmers to feed 1.3 billion people. Because of the outsize dominance of food and fuel in consumption, price stability is ephemeral: A few months of high inflation could drastically impact consumers’ expectations.  Any gap between (runaway) headline and (soft) core inflation would typically close with the core moving toward the main indicator. But something has changed. The supply-dominated headline number is now more likely to shift toward the demand-led core figure, JPMorgan Chase & Co. research has shown. Slack in the economy — of which there’s plenty — has become much more important than a transient disruption in commodity supplies. Therefore, despite consumer prices rising more than the central bank’s 4% target for the first time since mid-2018, the new consensus is that the economy is deflation-bound. That’s the reason most observers are shrugging off the October inflation rate as any kind of a speed limit on the central bank’s rate cuts. Whether the five rate reductions this year will lift demand is a different story. Banks aren’t passing lower borrowing costs down the line. As of August, their weighted average lending charge was almost double the Reserve Bank of India’s repurchase rate. This record spread is a crisis-like situation, Credit Suisse AG strategist Neelkanth Mishra says.It’s also a supply-side bottleneck, except more durable. The input missing from the production process is trust. In September last year, when I termed the collapse of infrastructure financier IL&FS Group as India’s mini-Lehman moment, lending by shadow banks was growing by 24%. It’s now collapsed to 7% because everyone’s worried about who will go bust next. Nonbank financiers’ funding sources have dried up. Meanwhile, state-run banks are dogged by $200 billion-plus in bad corporate loans, no matter how generously a cash-strapped government tries to recapitalize them.Nomura’s Sonal Varma calls it a “triple balance sheet problem” shared by banks, shadow lenders and India Inc. In her estimate, GDP expansion may have slowed further to 4.2% in the September quarter from a six-year low of 5% in the previous three months. The potential growth rate, she says, is around 6.5%. The longer the deleveraging cycle lasts, the bigger the risk that this potential could ebb further. How fast an economy can grow is measured from the supply side — by slapping together labor and capital inputs as well as productivity growth. But it’s here that demand is emerging as a constraint. Consumer spending fell in real terms in 2017-18, its first decline in four decades, the Business Standard reported Friday, citing an unreleased official survey. As Rathin Roy of the New Delhi-based National Institute of Public Finance and Policy has been arguing, the economy grows by producing what 150 million of the top income earners consume. When it comes to an inexpensive shirt that India’s workers can make for their billion-plus fellow citizens, Bangladesh does a better job. India balked at the last minute from joining the 16-nation Regional Comprehensive Economic Partnership trade agreement because it can’t compete against China in making everyday things. Roy’s call for a meaningful minimum wage for workers in all Indian states rich and poor shows a sensible way to create sustainable demand. Make things well enough for a swelling home market, and eventually India will supply them to the world. Satisfying the needs at the vast bottom of the socioeconomic pyramid will reduce slack. In an emerging market, confidence of entrepreneurs comes not from killer innovation but from knowing that producers can sell what they make. An undemanding India hurts everyone. To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • U.S. charges another ex-JPMorgan executive with alleged market manipulation
    Reuters

    U.S. charges another ex-JPMorgan executive with alleged market manipulation

    The Department of Justice has charged another former JPMorgan Chase & Co executive with alleged racketeering and manipulating precious metals prices between 2008 and 2016, the latest in a string of similar prosecutions. The indictment against Jeffrey Ruffo, who is also charged with other federal crimes including conspiracy to commit wire fraud, is the result of an "ongoing investigation", federal prosecutors said in a statement. Ruffo is the sixth person to be charged with alleged fraud in connection to JPMorgan's precious metals desk.

  • 5 Stocks That Boosted Dow Above 28,000
    GuruFocus.com

    5 Stocks That Boosted Dow Above 28,000

    Dow sets new milestone close on the heels of improving US-China trade talks Continue reading...

  • Business Wire

    JPMorgan Chase Declares Preferred Stock Dividend

    JPMorgan Chase & Co. declared a dividend on the outstanding shares of the Firm’s Series V preferred stock. Information can be found on the Firm’s Investor Relations website at jpmorganchase.com/press-releases.

  • Is a Cryptocurrency Derivatives Boom On Its Way?
    Insider Monkey

    Is a Cryptocurrency Derivatives Boom On Its Way?

    While the crypto market continues to stall, some analysts are betting on institutions to carry the next bull cycle, opposed to casual traders who snowballed the BTC price in 2017. Indeed, the Wild West days of crypto, accompanied by thousands of cash-grabbing, fraudulent ICOs seem to be coming to a close — compliance is the […]

  • Barrons.com

    Berkshire Hathaway’s Warren Buffett Has Tons of Cash — and Did Almost Nothing With It

    Berkshire Hathaway’s Warren Buffett appears to have taken the summer off when it comes to investments, as stakes in RH and Occidental were probably taken by the two portfolio managers who oversees part of Berkshire’s big equity portfolio.

  • Bank Stock Roundup: Ambiguity Over Trade War Remains, SunTrust & Citi in Focus
    Zacks

    Bank Stock Roundup: Ambiguity Over Trade War Remains, SunTrust & Citi in Focus

    Banking stocks depreciate on uncertainty over trade conflict along with other global concerns.

  • Financial Times

    FirstFT: Today’s top stories 

    as former Goldman Sachs chief executive Lloyd Blankfein took aim at the Democratic presidential candidate. last year, was reacting to his appearance in a Warren campaign video released on Wednesday calling for a US wealth tax. The tweet from Mr Blankfein, who says on his Twitter profile he is on a “gap year”, was seen as a reference to the controversy over Ms Warren’s past claims of Native American ancestry, which have included President Donald Trump referring to her as “Pocahontas”.

  • ETF Of The Week: ‘Straggler’ Hits $1B
    ETF.com

    ETF Of The Week: ‘Straggler’ Hits $1B

    REIT ETF 'BBRE' gains steam.

  • Financial Times

    Private equity funds can help your portfolio scale heights

    Private equity is a difficult niche for private investors to access. This style of investing is usually the preserve of very large institutional players, and can have plenty of off-putting features — think highly paid fund managers with highly leveraged assets and business turnround plans that focus on cutting costs (and corners). in this area means it is possible for the adventurous (yet selective) private investor to gain exposure.

  • A 24-Year-Old Is Suing His Pension Fund for Not Being Green Enough
    Bloomberg

    A 24-Year-Old Is Suing His Pension Fund for Not Being Green Enough

    (Bloomberg) -- Mark McVeigh, a 24-year-old environmental scientist from Australia, won’t be able to access his retirement savings until 2055. But, concerned about what the world may look like then, he’s taking action now, suing his A$57 billion ($39 billion) pension fund for not adequately disclosing or assessing the impact of climate change on its investments.The Federal Court battle is shaping up to be a unique test case. Are pension funds in breach of their fiduciary duties by failing to mitigate the financial ravages of a warmer planet?Before launching the legal action, McVeigh asked Retail Employees Superannuation Trust, or Rest, how it was ensuring his savings were future proofed against rising world temperatures. Its response didn’t satisfy him and he ended up engaging specialist climate change law firm, Equity Generation Lawyers.“I see climate change as a huge risk that dwarfs a lot of other things -- it’s such a big physical impact on the planet, and the economy,” McVeigh said in a phone interview from Brisbane, where he works as an ecologist for a local government. He said other people had contacted him on learning of the case and also wanted such information from their funds.Rest says climate change is just one of a variety of factors it must consider when investing the savings of its around 2 million members, which include grocery-store clerks and shop keepers, according to court filings.Australia’s pension industry -- home to the world’s fourth-largest retirement-savings pool at A$2.9 trillion -- is watching the case closely, particularly because many funds must also meet legislated minimum return targets. While investing in renewable-energy projects and pressuring miners to be better corporate citizens is all well and good, this requirement makes it more complicated than simply dumping fossil-fuel emitters from a portfolio.Interests of Members“Looking after the best financial interests of our members requires us to be conscious of the risks, but not exclude a whole segment of the economy that’s going to be very meaningful for a period of time,” said Ian Patrick, chief investment officer at Sunsuper Pty, which manages A$70 billion. “Right now, the interests of our members -- the sole purpose of super -- is what wins out.”Australia’s mandatory retirement savings system, known as superannuation, is meant to relieve pressure on the public purse as the nation’s population ages, lives longer and requires a steady income stream to survive. Much of the industry must strive to return 3.5% above inflation over a decade.But returns aside, members like McVeigh want to see their savings last as long as possible in an uncertain environment, with polls showing increasing public concern about climate change.“Investors may not be sufficiently factoring in the impact of climate-change risk on future economic growth,” said Jennifer Wu, global head of sustainable investing at JPMorgan Asset Management.Firms are beginning to act, with a study by State Street Global Advisors released Wednesday finding that fiduciary duty is one of the main ‘push factors’ for financial institutions to adopt environmental, social and governance principles.Sunsuper, AustralianSuper Pty, Construction & Building Unions Superannuation, Health Employees Superannuation Trust Australia and others have employed responsible investment teams to integrate ESG factors into their portfolios. They’ve joined global investor initiatives such as the United Nations-backed Principles for Responsible Investment and they’ve used their sizable holdings in companies like BHP Group Ltd. and Glencore Plc to agitate for change.Conversations around engagement versus divestment are frequent when five or so years ago, they pretty much didn’t exist.Mary Delahunty, who as head of impact at HESTA is responsible for improving the A$50 billion fund’s responsible investment practices, says selling out isn’t always a prudent option.“As soon as you remove capital, they don’t have to have a conversation with you anymore,” she said.Debt is another way pension funds are trying to manage climate risk in their portfolios.Sunsuper has written loans to gas companies in the Permian Basin in the U.S., rather than taking equity stakes and running the risk of being left with a stranded asset. Those loans deliver double-digit returns over periods of up to 10 years while the world shifts to a cleaner energy mix, Patrick said.“It’s why we prefer debt and why we think about the tenor of that debt quite deeply,” Patrick said. “Relative to holding long-term equity in an energy asset, that addresses the risk quite substantially.”While activism is rising and investors and banks are shying away from financing environmentally damaging projects, the Australian government is going the other way. Prime Minister Scott Morrison, a staunch supporter of the coal-mining industry, is considering new laws to prevent activists like environmental lobby group Market Forces from stymieing commercial decisions and threatening economic growth.Will Judges Have the Last Word on Climate Change?: QuickTakeThe McVeigh case, which is back in court Nov. 22 for a preliminary hearing, has also gained international attention, even though climate change litigation isn’t new (oil companies in the U.S., for example, have been sued to recover the cost of rebuilding to protect against rising sea levels).As well as improving its environmental disclosures, Rest recently appointed a responsible investment manager and in June, took control of a wind farm in Western Australia from a UBS Group AG unit.The fund also said it had sought to meet with McVeigh to discuss his concerns. “Specific climate-related issues which we engage with our investment managers on include carbon foot printing, stranded assets, climate-related scenario analysis and exposure to lower carbon assets,” a spokesperson said in an emailed statement.Michael Gerrard, a professor of environmental, climate change and energy law at Columbia University, said that “success in litigation breeds imitation, so if McVeigh wins, people will take a close look.”“People are so desperate at the failure of governments to act adequately on climate change that they’re looking for litigation targets.”(Adds JPMorgan Asset Management comment in 10th paragraph. An earlier version corrected the spelling of Columbia University in penultimate paragraph.)To contact the reporter on this story: Matthew Burgess in Melbourne at mburgess46@bloomberg.netTo contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Katrina NicholasFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • The Only Chart You Need to Understand 2019's Global Markets
    Bloomberg

    The Only Chart You Need to Understand 2019's Global Markets

    (Bloomberg Opinion) -- It’s still all about the central banks. If you care about allocating money between global assets, everything else remains ancillary, and all 2019’s biggest trends — from negative interest rates in Germany through the inverted U.S. yield curve to the impressive global rebound in share prices — can be explained by the actions of central bankers.Many will find this rather depressing. Approaching the end of an exciting year for world markets, it is tempting to rely on a narrative of geopolitical intrigue and trade wars. But it is far simpler and more accurate to explain 2019’s events in terms of the liquidity that the developed world’s central banks have unleashed — while China and the bigger emerging markets have prominently refused to follow the same. CrossBorder Capital, a London-based investment group, maintains indexes of global liquidity, covering central banks, international financial flows and domestic private-sector liquidity. Numbers above 50 show expansion, and a rising number shows acceleration. They show a dramatic shift in 2019.The year started with the developed world’s central banks trying to dry up liquidity and return to normality after the crisis years, while their counterparts in the emerging world pumped money into their economies. Since then, there has been a 180-degree turn:Jerome Powell, chairman of the Federal Reserve, protests that nobody should put the label “QE” on the U.S. central bank’s decision to expand its balance sheet in the last two months to address disruptions in the repo market for short-term bank funding. But the financial markets don’t recognize this distinction. In conjunction with asset purchases from the European Central Bank (which does describe what it is doing as QE) and the Bank of Japan, provision of liquidity has accelerated faster in the past few months than at any time since the first desperate days after the 2008 Lehman Brothers bankruptcy. The story in the emerging markets, which these days are dominated by China, is the polar opposite. At the beginning of the year, liquidity was expanding, and the People’s Bank of China appeared to be trying to repeat its trick from 2016, when a big expansion in credit averted a slowdown. Since then, however, emerging-market central bank liquidity has dried up, and is now as tight as it has been since the series started in 2005. Contrary to the hopes of a year ago, it appears that the PBoC has been engaged in cleaning up balance sheets and helping local governments to cut back their debts in the Chinese shadow banking system, rather than making any concerted attempt to stimulate the macro economy. This dynamic helps to explain the anomalous poor performance of emerging-market currencies. Normally, EM foreign exchange is regarded as a “risk-on” asset. If investors are feeling confident, as is typically the case when the Fed is making money plentiful, that tends to mean flows into emerging markets. But JPMorgan Chase & Co.’s emerging-markets foreign exchange index is close to its post-crisis low.Weak emerging-market currencies open the risk of debt crises as their dollar-denominated debt grows harder to service. The emerging world remains under pressure. This isn’t just from the U.S.-China trade conflict but also, as the liquidity figures make clear, from China’s efforts to avert a financial crisis at home. The fresh flow of money from the developed world’s central banks has allowed U.S. stock markets to set fresh highs, and spurred optimism. The greatest risk remains, as it has been for years, that China succeeds in averting a Lehman-style credit crisis at home, but at the cost of an economic slowdown that would affect the rest of the world. To contact the author of this story: John Authers at jauthers@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of “The Fearful Rise of Markets” and other books.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Zacks Market Edge Highlights: JPMorgan Chase, Bank of America, Citigroup, Apple and Alphabet
    Zacks

    Zacks Market Edge Highlights: JPMorgan Chase, Bank of America, Citigroup, Apple and Alphabet

    Zacks Market Edge Highlights: JPMorgan Chase, Bank of America, Citigroup, Apple and Alphabet

  • Apollo Global (APO) to Acquire Tech Data for $5.4 Billion
    Zacks

    Apollo Global (APO) to Acquire Tech Data for $5.4 Billion

    Continuing with strategic moves, Apollo Global (APO) signs deal to acquire Tech Data (TECD), with the aim to boost the latter's position in the market.

  • Walgreens Boots Rallies on KKR's Bid but Market View Mixed
    Zacks

    Walgreens Boots Rallies on KKR's Bid but Market View Mixed

    Albeit the market sentiment is bullish on Walgreens Boots' (WBA) potential acquisition deal, many analysts are in doubt about the company's effective approach to get privatized.

  • Citi to Enable Google Pay Customers to Access Bank Accounts
    Zacks

    Citi to Enable Google Pay Customers to Access Bank Accounts

    Citigroup's (C) plan to partner with technological companies will help it deepen relations with customers.

  • JPMorgan Chase & Co. is a 2019 One Tampa Bay honoree
    American City Business Journals

    JPMorgan Chase & Co. is a 2019 One Tampa Bay honoree

    JPMorgan Chase is a national banking and financial services company with around 5,700 employees in the Tampa Bay area.

  • Alibaba Is Taking Orders for Its $11 Billion Hong Kong Listing
    Bloomberg

    Alibaba Is Taking Orders for Its $11 Billion Hong Kong Listing

    (Bloomberg) -- Alibaba Group Holding Ltd. started taking investor orders for its Hong Kong share sale, which could raise more than $11 billion in the city’s largest equity offering since 2010.The New York-listed tech giant is offering 500 million new shares, according to terms for the deal obtained by Bloomberg on Wednesday. The base offering could raise about $11.7 billion based on Alibaba’s Tuesday close in New York, though it’s possible the stock will be priced at a discount. Alibaba’s American depositary shares, which represent 8 ordinary shares of the internet company, closed at $186.97 in U.S. trading Tuesday. The shares fell 2.4% on Wednesday.Asia’s largest corporation is proceeding with what could be one of this year’s biggest stock offering globally despite violent pro-democracy protests gripping the city. Alibaba aims to price the offering before U.S. market open on Nov. 20 and start trading in Hong Kong on Nov. 26, the terms show.Alibaba plans to use the offering proceeds to drive user engagement, improve operational efficiency and fund continued innovation, according to the terms. Deal underwriters have a so-called greenshoe option to sell an additional 75 million shares. Alibaba said in a regulatory filing that New York will continue to be its primary listing venue.China International Capital Corp. and Credit Suisse Group AG are joint sponsors of the offering, while Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley are joint global coordinators. HSBC Holdings Plc and ICBC International Holdings Ltd. are also helping arrange the sale, the terms show.Alibaba’s share sale marks a triumph for the Hong Kong stock exchange, which lost many of China’s brightest technology stars to U.S. rivals. The city’s bourse has introduced new rules that allow dual-class shares after resisting such a change for a decade. Efforts to lure Alibaba went all the way to the top of Hong Kong’s government, with Chief Executive Carrie Lam exhorting billionaire Jack Ma to consider a listing in the city.Alibaba has considered a Hong Kong listing for a long time, even as far back as five years ago when it was scouting for its initial public offering, said Michael Yao, head of corporate finance at Alibaba, on a call with investors. “We viewed Hong Kong as strategically important to us. It’s one of the most important financial centers. And this listing will allow more of our users and stakeholders in the Alibaba digital economy across Asia the ability to invest in and participate in the fruits of our growth,” Yao said.The New York-listed Chinese giant had aimed to list over the summer before pro-democracy protests rocked the financial hub, while trade tensions between Washington and Beijing clouded the market’s outlook. It’s unclear if the violence will affect the listing process, given growing resentment toward mainland Chinese influence as well as the country’s most visible corporate symbols.Yao said the deal size hasn’t changed as a result of the protests. “This has always been our deal size,” he said, adding that the company wants to ensure there is ample liquidity in the market.Listing closer to home has been a long-time dream of Ma’s-- a move that curries favor with Beijing and hedges against trade war risks. A successful Hong Kong share sale could also help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat operator Tencent Holdings Ltd.A successful Hong Kong debut will be another feather in the cap for Daniel Zhang, who took over as chairman from Ma in September. The former accountant is now spearheading the company’s expansion beyond Asia but also into adjacent markets from cloud computing to entertainment, logistics and physical retail.(Updates Alibaba’s share price to close in second paragraph.)\--With assistance from Manuel Baigorri, Crystal Tse and Julia Fioretti.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Kiuyan Wong in Hong Kong at kwong739@bloomberg.net;Carol Zhong in Hong Kong at yzhong71@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, ;Fion Li at fli59@bloomberg.net, Ben ScentFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bond Traders Clear the Tourists From the Room
    Bloomberg

    Bond Traders Clear the Tourists From the Room

    (Bloomberg Opinion) -- The bond market isn’t ready to concede that the economy is on a sustained upturn that will allow it to skirt a severe slowdown or even a recession. U.S. Treasuries followed most of the rest of the global government debt market higher Wednesday, providing a welcome respite from a sell-off that’s looking more like an adjustment of overextended positions than a referendum on faster growth.Sure, some of the gains in the bond market may be related to doubts about the U.S. and China actually agreeing to the first phase of a trade deal after some downbeat comments by President Donald Trump on Tuesday and subsequent reports of a “snag” on Wednesday. But what hasn’t been discussed as much is evidence that the recent slump in bonds had much to do with the reversal of positions by general investors who bought government debt in August, September and early October as recession speculation peaked. That was borne out in the latest monthly survey of global fund managers by Bank of America released on Tuesday. It showed being long Treasuries is no longer the world’s “most crowded trade,” with 21% of respondents saying so, down from a massive 41% in October. The new “most crowded trade” is long U.S. technology and growth stocks at 39%. And with yields on benchmark 10-year Treasuries having risen from 1.43% in early September to 1.87% on Wednesday, there’s reason to believe that bonds are more fairly valued. In fact, the latest yield is higher than the 1.71% that economists expect it to be at the end of the year and the 1.78% they estimate at the end of the first quarter 2020, according to data compiled by Bloomberg.Although the data show that the economy both in the U.S and globally may not be getting any worse, that’s far different from showing it’s getting much better and causing central banks to turn hawkish again. “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook,” Federal Reserve Chair Jerome Powell told the Congressional Joint Economic Committee on Wednesday in Washington. “However, noteworthy risks to this outlook remain.”STOCKS HIT A TRADE SNAGThanks in part to Powell’s dovish comments, everything was going swimmingly in the stock market until the Wall Street Journal reported that trade talks between the U.S. and China had hit a snag, briefly causing equities to erase their gains. Citing people familiar with the matter, the paper said China is leery of putting a numerical commitment on agriculture purchases in the text of a potential agreement. The development seems to explain why Trump only a day earlier sounded unusually cautious about a trade agreement, saying only that it “could happen soon” and adding that if it didn’t, then he would just increase tariffs on Chinese goods. This is no small matter for the stock market, which has rallied to new highs largely on the notion that a “phase one” deal would be reached, eliminating a significant drag on the global economy. “A couple of weeks ago, it looked like that phase one deal looked all but certain. I think the market started to price in a really positive outcome on the trade side,” Jeff Mills, chief investment officer at Bryn Mawr Trust, told Bloomberg News. “Although I do think that progress is moving in a positive direction, I think it would be foolish for us to assume that we’re going to move completely in a positive direction in trade without any type of intermittent setbacks.” Although equities recovered in late trading, buying stocks in the hopes of a trade deal is proving to be a perilous strategy.DEFICITS (SOMETIMES) DON’T MATTERThe Bloomberg Dollar Spot Index rose for the seventh time in eight days on Wednesday to its highest in a month even though the U.S. government said its budget deficit widened in October, the first month of the fiscal year, as government spending increased and receipts declined. The shortfall grew about $34 billion, or almost 34%, from the same month last year, to $134.5 billion. This comes after the budget deficit for fiscal 2019 clocked in at just shy of $1 trillion at $984.4 billion. One benefit to having the world’s primary reserve currency is that such deficits don’t exactly matter as much as they would in a place such as Greece. Still, an out-of-control deficit and borrowing could reduce demand for the greenback and U.S. debt at the margins. The upshot is it looks as if the U.S. may not borrow as much as previously estimated to finance the deficit, thanks to recent moves by the Fed to buy Treasury bills to ensure reserves remain abundant. As a result, the strategists at JPMorgan Chase wrote in a report this week that net debt issuance to the public by the U.S. Treasury will be just $720 billion, down from a projected $1.27 trillion in fiscal 2019. That should provide some support to the dollar and, by extension, the U.S. government.ITALY GETS BYPASSEDOne place where the bond rally failed to make an appearance was Italy. Demand slumped to the lowest in 14 months at an auction Wednesday of seven-year notes, even with yields near the highest in three months. That suggests investors prefer countries with slimmer returns but lower credit risk and comes after a recent rise in yields in markets such as Germany and France, weakening Italy’s relative appeal, according to Bloomberg News’s James Hirai. Investors have been cooling toward Italy after political uncertainty and a recent revival in the fortunes of euro-skeptic politician Matteo Salvini. “Peripheral spreads become more vulnerable the higher core yields go as investors switch demand to safer core, semi-core bonds,” Peter Chatwell, head of European rates strategy at Mizuho International, told Bloomberg News. “Higher yields, without a broad based and structural rise in nominal growth, will pose a sustainability risk to Italy’s debt.” With $2.26 trillion of government debt, Italy has more bonds outstanding than all but the U.S., China and Japan, data compiled by Bloomberg show. Italy also has one of the highest debt-to-gross domestic product ratios at 131.5%, compared with 82.3% in the U.S. So when Italy has a poor debt auction, it’s worth paying attention.HOT COCOAChocolate lovers may soon have to dig a little deeper in their pockets to afford their favorite indulgence. Cocoa prices have staged an impressive rally in recent months, approaching an almost 18-month high in New York on Wednesday. The gains come amid speculation that near-term supplies are getting tighter, according to Bloomberg News’s Agnieszka de Sousa. The clearest sign that traders expect tighter supplies can be seen in the prices of so-called nearby contracts, which have moved into a premium compared with later deliveries in a market structure known as backwardation and a sign of tightening supplies. “Traders are blaming the upsurge on concerns about a shortage in the short-term availability of cocoa beans,” Carsten Fritsch, an analyst at Commerzbank AG, said in a note. Still, it’s not clear why short-term supplies should be so tight as shipments in top grower Ivory Coast are still in full swing and higher than a year earlier, he said. There are also some concerns that a new $400-a-ton premium for supplies from West Africa, the world’s top producing region, may affect the way cocoa is traded on the exchanges. The new pricing system could mean that fewer supplies end up getting delivered to warehouses monitored by ICE Futures U.S., driving a rally in the market, according to NickJen Capital Management.TEA LEAVESThere is a good chance that talk of a global recession could heat up again as soon as Thursday. That’s when Germany — Europe’s largest economy — reports on GDP for the third quarter. The median estimate of economists surveyed by Bloomberg is for a contraction of 0.1%, which would mark a technical recession because the economy shrank by the same amount in the second quarter. But as Bloomberg Economics points out, whether the German economy records the shallowest of recessions or escapes one by the narrowest of margins isn’t important; what’s important is how long the dip will persist.DON’T MISS FOMO Doesn’t Cut It as a Buy Signal for Stocks: John Authers The World Is Being Inundated With Financial Capital: Noah Smith Jamie Dimon Is Wrong About Negative Rates: Ferdinando Giugliano The IEA’s New Energy Outlook Comforts No One: Liam Denning Trump’s Economy Complicates Democrats’ Message: Karl W. SmithTo contact the author of this story: Robert Burgess at bburgess@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

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    (Bloomberg) -- JPMorgan Chase & Co. may be leading the next trend for banks seeking to shift risk away from their mortgage portfolios -- if regulators give Wall Street the green light.The deal last month mimics the credit-risk transfer operations of Fannie Mae and Freddie Mac, using the form of a credit-linked note with payments dependent on those from mortgage loans held on the bank’s balance sheet. It offloaded a portion of the credit risk on about $750 million worth of mortgages and could “prove to be the next little big thing” if regulators allow such deals to continue, according to Amherst Pierpont Managing Director Chris Helwig.The Fannie and Freddie credit risk transfers began in 2013 to reduce taxpayer exposure to their operations. By the end of June they had such transactions on $3.1 trillion worth of mortgages, according to a recent Federal Housing Finance Agency report.Each transaction was structured into multiple amortizing, sequential-paying, floating-rate securities indexed to 1-month Libor, according to Mark Fontanilla, whose eponymous company created the CRTx Credit Risk Transfer Return Tracking Index. The credit ratings for each security vary depending upon its position within the structure.Payments and losses are based on the performance of a reference pool of mortgage loans. All classes accrue and pay interest monthly, with principal payments allocated first to the highest priority class (usually designated “M1”) and credit losses are applied first to the lowest priority class (typically designated with a “B” prefix).JPMorgan’s private CRT transaction has a similar structure, yet it has a few nuances that make it more “a hybrid of both mortgages and unsecured corporate credit risk,” according to Helwig. Both principal and interest payments are unsecured general obligations of the bank itself, opening up investors to counterparty risk. Investors also need to be compensated for liquidity risk because the deal that may turn out to be “little more than a thought experiment” if it fails to get regulatory blessing, he added.Moreover, JPMorgan is transferring the first 8% of losses, about twice the average seen in Fannie and Freddie CRT deals. The bank is playing it safe in terms of the underlying collateral, so while they are not “qualified mortgages” they are arguably by any measure high-quality loans, with an average size of $775,000, high credit scores, low loan-to-values ratios and about four years of seasoning. Fitch’s base case expected pool loss is 0.20%.Most importantly, the bank reserves the right to collapse the deal if regulatory approval from the Office of the Comptroller of the Currency fails to materialize.“Depending on how it is structured, banks may find a private CRT attractive for capital relief, better return on capital and improved capital velocity,” said Fontanilla. In other words, this could be a way for a bank to sell the credit risk (or at least a portion of it) from a pool of loans, thereby lowering any capital buffer required to be held against it.So market participants are watching to see whether this deal floats past the regulators or they sink it. Should it pass muster, it could open the door to a new era in mortgage investing.“For a small deal, it’s garnered a lot of attention,” said Helwig.To contact the reporter on this story: Christopher Maloney in New York at cmaloney16@bloomberg.netTo contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, William Selway, Christopher DeRezaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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