|Bid||108.09 x 1800|
|Ask||108.96 x 800|
|Day's Range||108.54 - 109.77|
|52 Week Range||91.11 - 119.24|
|Beta (3Y Monthly)||1.22|
|PE Ratio (TTM)||11.72|
|Earnings Date||Jul 16, 2019|
|Forward Dividend & Yield||3.20 (2.92%)|
|1y Target Est||118.84|
(Bloomberg) -- JPMorgan Chase & Co. is seeing interest from clients in the U.S., Europe and Japan on the potential for its prototype digital coin to speed up trading of securities such as bonds.JPM Coin could enable “instant” delivery of bonds on a blockchain platform, said Umar Farooq, head of digital treasury services and blockchain at the U.S. bank. “We believe that a lot of securities over time, in five to 20 years, will increasingly become digital or get tokenized,” he said in an interview in Tokyo.Unveiled in February, JPM Coin is pegged to the U.S. dollar and uses the bank’s private blockchain. JPMorgan has been testing the token to enable institutional clients to transfer payments instantly, it said at the time.The idea of using blockchain to speed up trading settlement isn’t new: stock exchanges from Hong Kong, Australia and Canada are among those that are exploring the possibility. The race to develop digital coins reached a new level earlier this month when Facebook Inc. announced plans for a cryptocurrency called Libra, which will be backed by assets including bank deposits.Read why Facebook chose the stablecoin path to cryptoFor bond transactions, JPM Coin would allow traders to instantly deliver the securities in exchange for cash, according to Farooq. The buyer purchases JPM Coins in advance, putting them in their JPMorgan deposit account, while the seller’s bonds are represented by tokens. Computer programs on a blockchain platform then complete the transaction.The time savings could be significant. For now, it usually takes a seller of Japanese government bonds two days to electronically deliver them to the buyer in exchange for cash, said Shuichi Ohsaki, chief rates strategist at Bank of America Merrill Lynch in Tokyo.JPMorgan will probably begin pilot testing JPM Coin with a few clients to see how it helps to quickly transfer money between them, Farooq said. The testing could take place around the end of the year if relevant regulators approve it, he added.To contact the reporters on this story: Takashi Nakamichi in Tokyo at firstname.lastname@example.org;Takako Taniguchi in Tokyo at email@example.comTo contact the editors responsible for this story: Marcus Wright at firstname.lastname@example.org, Russell WardFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Democratic presidential hopeful Bernie Sanders is proposing canceling the nation’s outstanding $1.6 trillion of student debt and offsetting the cost with a tax on Wall Street transactions.The Vermont senator said Monday that his plan would provide debt relief to some 45 million Americans who have college loans. It would include a 0.5% tax on stock transactions, a 0.1% tax on bond trades and a .005% tax on derivatives transactions.Sanders’s proposal, which comes ahead of this week’s Democratic debates, also would provide states $48 billion annually to eliminate undergraduate tuition and fees at public colleges and universities, a longstanding Sanders campaign promise. Democratic House lawmakers including Representatives Anouilh Omar of Minnesota and Pyramidal Jayapura of Washington will introduce the legislation to their own chamber Monday.Sanders called it a “revolutionary” initiative that would curb student debt and boost the economy by freeing overly indebted consumers to spend on goods and services.“This proposal completely eliminates student debt in this country and ends the absurdity of sentencing an entire generation, a millennial generation, to a lifetime of debt for the crime of doing the right thing,” Sanders said.The proposal represents the latest attempt by Democrats to tame what some economists and bankers have deemed a growing threat to U.S. economic growth. Relentless tuition hikes and cutbacks in government spending have propelled student debt loads to triple since 2007, eclipsing car loans and credit cards as Americans’ second-largest source of household debt behind home mortgages. That’s prompted policy makers such as Federal Reserve Chairman Jerome Powell and executives such as JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon to worry aloud that young Americans’ indebtedness is hurting the property market and overall economy.Sanders’s plan relies on a proposed tax that has been repeatedly rejected by Wall Street and Washington on the grounds that it would stifle growth. Taxing financial transactions “is effectively a sales tax on investors,” Kenneth E. Bent sen Jr., chief executive officer of the Securities Industry and Financial Markets Association, said in an online commentary published this month. “Such a tax never raises anywhere close to the revenue promised, while wreaking havoc for investors and markets,” Bentsen said.Coming DebatesSanders has been amplifying his embrace of government-centered solutions to policy problems in advance of the Democratic presidential debates Wednesday and Thursday in Miami. Two groups of 10 contenders will face off in a state that often helps decide the White House contest.Sanders helped popularize proposals for tuition-free college during his unsuccessful nomination fight against former Secretary of State Hillary Clinton in 2016. A few other Democratic contenders, including Senator Elizabeth Warren of Massachusetts, have put forth proposals to erase past debts. Warren’s plan would cancel $50,000 in student loan debt for every person with household income under $100,000. It also would provide some forgiveness for those with household income between $100,000 and $250,000.Nearly all Democrats have publicly toyed with the idea of either canceling some student debt or increasing government spending to make some public colleges free for some Americans.Read more about the race to 2020More than 1 million Americans annually default on a student loan, U.S. Department of Education data show, and about 1 in 9 borrowers are at least 90 days late on their debt, the highest delinquency rate among any form of household debt, according to the Federal Reserve Bank of New York. The Education Department owns or insures more than 90% of all student debt.Widespread struggles are at least in part a consequence of the fact that virtually anyone can borrow from the U.S. government to pay for college, with effectively little check on their ability to repay. But with joblessness at near record lows, rising wages and a growing national economy, experts question why so many Americans are unable to pay their student loan bills.Sanders’s proposal is meant to highlight his appeal to progressives as he battles frontrunner Joe Biden, the former vice president who’s taking more centrist stands and pointing to past bipartisan work. Sanders is also facing challenges from other progressives among the two dozen Democratic contenders, including Warren, who has been gaining in national and some early primary state polls.Sanders embraced “democratic socialism” in a campaign address this month in Washington. Top Republicans, including Senate Majority Leader Mitch McConnell, have sought to emphasize what they say are “socialist” tendencies of Democratic White House contenders as part of their 2020 campaign strategy.(Adds remarks by Sanders in fourth, fifth paragraphs.)To contact the reporters on this story: Laura Litvan in Washington at email@example.com;Shahien Nasiripour in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Joe Sobczyk at email@example.com, ;Michael J. Moore at firstname.lastname@example.org, Laurie AsséoFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Federal Reserve releases the Dodd-Frank Act supervisory stress test 2019 (DFAST 2019) results which reflect the stability of the banking system.
Italian government debt rallied on Monday after it was revealed that the EU was set to pause its budget crackdown on Rome, potentially de-escalating a stand-off that has sparked investor anxiety about the country’s debt burden. The yield on Italy’s benchmark 10-year bonds, which moves inversely to prices, fell 4 basis points to 2.122 per cent on Monday afternoon, having earlier fallen as low as 2.076 per cent to take it close to the one-year lows it hit last week. that Brussels would hold off on launching a disciplinary process against Italy’s rising debt levels this week, buying time for the populist government in Rome to reach a deal and avoid the possibility of being sanctioned.
(Bloomberg) -- U.S. banks might be happy to stay away from Facebook Inc.’s push into cryptocurrencies. For now.The Libra Association, the governing body for the coin, is in talks with lenders around the world to join its ranks. Banks are mostly keeping their distance after seeing tepid consumer reaction to digital wallets such as Apple Pay and regulatory scrutiny of digital currencies.“If Facebook is able to create mass adoption on this platform, then banks will want in,” David Donovan, who leads the global financial-services consulting practice at Publicis Sapient, said in a phone interview. “There’s a business decision they have to make. Facebook is saying the market is not being served well.”Banks were absent when Facebook announced Libra last week, saying that more than two dozen other companies, including payment networks Visa Inc. and Mastercard Inc., joined the project. The social-media giant said Libra will be backed by fiat currencies to provide payment services to the 1.7 billion people worldwide without easy access to banking.Facebook and its 2.4 billion active users are hard for the largest U.S. banks to ignore -- and Citigroup Inc.’s Michael Corbat has said his firm would consider joining Libra if asked. But it’s not the first time a technology giant promised sweeping changes to the payments world.Apple Inc. introduced Apple Pay in 2014 to much fanfare. Banks spent millions promoting the service and created card rewards tied to customer use of the product. In a sign of how eager they were, banks even gave Apple a cut of the coveted interchange fees they earn from each swipe of a card.But five years in, Apple Pay has struggled to take off. Large retailers including Walmart Inc. have been hesitant to accept the technology. And while consumers spent roughly $3 trillion using digital wallets in 2018, almost two-thirds of that spending occurred in China where apps like Alipay and WeChat Pay dominate commerce, according to a report from Juniper Research.“Advanced payment methods haven’t really taken hold unless they’re mandated,” Tim Spenny, a senior vice president at market researcher Magid who has consulted for Facebook and Visa, said in an interview. For him, the question is: “What is the use case or what is the pain point that would cause people to say ‘Hey, I’m going to put money into a cryptocurrency to start paying for things.’”After years spent trying to promote Apple Pay, U.S. banks turned their attention to tap-to-pay cards, which use the same technology while keeping the familiar card product. It’s a recipe that’s worked for JPMorgan Chase & Co. customers.“There’s a big segment that never used mobile wallets, but the moment they got their contactless cards, they’re starting to tap right away,” Abeer Bhatia, president of card marketing, pricing and innovation for the bank, said in an interview last month. “When they have the choice to use either, they’re overwhelmingly using tap-to-pay.”Banks have been conducting their own experiments with cryptocurrencies, such as JPMorgan’s JPM Coin, which is meant to speed up corporate payments. The largest U.S. lenders have also promoted a new real-time payments service spearheaded by The Clearing House.Regulatory ResponseThere have been cases where startups were assessed for compliance lapses. And Libra’s debut drew attention from regulators, as members of the House Financial Services Committee and the Senate Banking Committee promised hearings on the digital coin and its governance.John Smith, who used to lead the Treasury Department’s Office of Foreign Assets Control, said tech companies and the banks they work with “will be held accountable” if they violate the law.“There’s a view within the fintechs that, ‘We couldn’t possibly do the rules that big banks do because we’re trying to be quick,’” Smith, co-head of Morrison & Foerster’s national security law practice, said Friday at a conference. “There’s going to be a rude awakening.”\--With assistance from Lananh Nguyen, Michelle F. Davis and Kurt Wagner.To contact the reporter on this story: Jenny Surane in New York at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, Dan Reichl, Daniel TaubFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The largest banks in the U.S.—including Morgan Stanley, Goldman Sachs, Bank of America, Citigroup, and JPMorgan—have sufficient capital that would allow them to weather a severe recession, the Federal Reserve said.
The Fed released the first round of stress tests for this year, showing that banks have cleaned up their balance sheets. But regulatory changes meant fewer banks were tested this year.
The nation's largest banks have enough capital to withstand a severe recession, the Federal Reserve said Friday. The so-called stress tests showed that 18 big banks including Bank of America , JPMorgan Chase and Citi could absorb a cumulative $410 billion of losses, with a global recession and the U.S. unemployment rate rising by more than 6 percentage points, the Fed said. The firms' aggregate common equity tier 1 capital ratio, which compares high-quality capital to risk-weighted assets, would fall from an actual level of 12.3% in the fourth quarter of 2018 to a minimum level of 9.2%. Next week the Fed will say whether the banks can make the share buybacks and dividend payments they want to give to shareholders.
The annual stress-test report cards for large U.S. financial companies are due out Friday. The consensus is that the banks are largely well-capitalized.
The organization announced its 2019 startup cohort and three out of the fourfinance ventures — Chipper Cash, Salutat and Turaco — have an Africa focus(Brazil-based venture Diin, was the fourth)
(Bloomberg) -- While global banks have been pouring money into information technology -- to the tune of $1 trillion over three years -- only a handful appear to be fully committed to a digital transformation and are therefore reaping the benefits, according to an Accenture Plc study.Just 19 of the 161 largest retail and commercial banks that the consulting firm examined have been focusing enough on digital strategies to “make the shift to a different sort of bank,” Accenture said in the report, released Thursday. And those that did were rewarded for their efforts, the firm said.All the banks studied, based in 21 countries, started at roughly similar rates of return on equity in 2011, but by 2017 the banks that Accenture identified as “digital focused” had ROE that rose 0.9 percentage points. The 81 least digitally focused banks, meanwhile, saw their ROE slip 1.1 percentage points -- and Accenture researchers said the gap is likely to continue to widen through 2021. ROE at a middle group of 61 “digital active” banks was little changed.“You could see in those three groups the performance deferential,” Alan McIntyre, an Accenture senior managing director and co-author of the report, said in an interview. “You see a gap, and where the gap is coming from, and it’s coming from digital.”Cost-CuttingThe $1 trillion estimate by Accenture is for retail and commercial banks globally, and includes all internal and external hardware, software, service and information-technology staff costs. The most digitally focused banks became more profitable through cost-cutting, Accenture researchers said, and Wall Street has rewarded them with higher valuations. While the study didn’t include names of the banks studied, McIntyre said that the 19 most digitally focused banks include JPMorgan Chase & Co.New York-based JPMorgan, the largest U.S. bank, has been a top spender among financial firms in the technology arms race. In February, it said it planned to boost its tech budget by $600 million to $11.4 billion this year.“Everyone is trying to do something -- there’s not any bank in the world that’s ignoring digital,” McIntyre said. “Everyone’s trying to become more digital, but it takes organization, evangelism, commitment and structure.”(Updates with co-author’s comment in last paragraph.)\--With assistance from Michelle F. Davis and Jenny Surane.To contact the reporter on this story: Elizabeth Rembert in New York at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, Daniel Taub, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
With the Fed opening the door for interest rate cut soon, banks will be at a disadvantageous position amid already challenging operating backdrop.
(Bloomberg Opinion) -- Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, wrote a provocative op-ed in the New York Times last weekend. Titled “When Dead Companies Don’t Die,” it argues that unprecedented monetary stimulus from global central banks created a “fat and slow” world, dominated by large companies and plagued by a swarm of “zombie firms” — those that should be out of business but survive because of rock-bottom borrowing costs.I would add that central bankers are creating a horde of zombie investors as well.By now, bond markets have adjusted to the unabashedly dovish shift from European Central Bank President Mario Draghi and Federal Reserve Chair Jerome Powell. In the U.S., benchmark 10-year Treasury yields fell below 2% for the first time since Donald Trump was elected president, and some Wall Street strategists expect it’ll reach a record low around this time in 2020. Across the Atlantic, 10-year German bund yields plumbed new lows of negative 0.33%, French 10-year yields hit zero for the first time, and the entire yield curve in Denmark was on the cusp of turning negative.With any sort of risk-free yield largely zapped worldwide on the prospect of further monetary easing, is it any surprise what happened next? Investors turned to the tried-and-true playbook of grabbing anything risky. No matter that the global recovery has lasted nearly a decade, trade concerns abound and central banks see economic weakness — the S&P 500 Index promptly rose to a record high as investors mindlessly plowed in. And in a more specific example highlighted by my Bloomberg Opinion colleagues Marcus Ashworth and Elisa Martinuzzi, bond buyers were all-too-eager to snap up subordinated Greek bank debt from Piraeus Bank SA, which tapped European capital markets for the first time since the financial crisis. “The offer would have been unthinkable a year ago,” they wrote.Are these really the characteristics of healthy financial markets? It hardly seems ideal that individual investors, pensions and insurers are effectively forced into owning lower-rated bonds, equities or even alternative assets like timber to meet their return targets. In fact, that sounds like the textbook definition of a bubble. But as Sharma points out, permanently easy policy aims to create an environment in which those bubbles can’t pop.“Government stimulus programs were conceived as a way to revive economies in recession, not to keep growth alive indefinitely. A world without recessions may sound like progress, but recessions can be like forest fires, purging the economy of dead brush so that new shoots can grow. Lately, the cycle of regeneration has been suspended, as governments douse the first flicker of a coming recession with buckets of easy money and new spending. Now experiments in permanent stimulus are sapping the process of creative destruction at the heart of any capitalist system and breeding oversize zombies faster than start-ups.To assume that central banks can hold the next recession at bay indefinitely represents a dangerous complacency.”Time and again, market watchers will warn that the credit cycle is on the verge of turning. “The future looks pretty bleak,” Bob Michele, JPMorgan Asset Management’s head of global fixed income, said this week as he advocated selling into high-yield rallies. “We have probably the riskiest credit market that we have ever had,” Scott Mather, chief investment officer of U.S. core strategies at Pacific Investment Management Co., said last month. Morningstar Inc. just suspended its rating on a fund owned by French bank Natixis SA because of concerns about the “liquidity and appropriateness” of some corporate bond holdings, adding to jitters about a broader liquidity mismatch in the money-management industry.It’s hard to take this fretting too seriously when central banks persistently come to the rescue. What’s more, in many ways it’s in the best interest of all involved not to get too worked up about those risks.U.S. households and nonprofits had a combined net worth of $109 trillion in the first quarter of 2019, a record, according to Fed data. Dig a bit deeper, and it’s clear that a surge in the value of their equity holdings plays a crucial role. They directly owned $17.5 trillion of stocks, which represents 110% of their disposable personal income. That ratio reached 120% in the third quarter of 2018, very nearly topping the all-time high of 121.2% set just before the dot-com crash. Add in “indirectly held” stocks, and individuals look as exposed to equities as ever. At $12.3 trillion, those holdings were worth 78.6% of DPI in the third quarter, compared with 69.5% at the dot-com peak.To put it more plainly, since the start of the economic recovery in mid-2009, their total assets have increased by almost 70%. Financial assets(1) have appreciated 76%. Stock holdings have soared by more than 140%.Effectively, the sharp rally in equities has turbocharged a resurgence in the overall wealth of Americans. The prospect of losing those gains is almost too painful to think about. Perhaps that’s why, as DoubleLine Capital’s Jeffrey Gundlach pointed out in January, investors were “panicking into stocks, not out of stocks” during the late-2018 sell-off. “People have been so programmed” to buy the dip, he said, that it reminded him a bit of how the financial crisis developed. Call investors programmed; call them zombies — it’s the same thing.The Fed, for its part, argues that it’s doing good by sustaining the expansion. Notably, Powell said the economic recovery is starting to reach segments of the U.S. population that had been largely left out thus far — communities that “haven’t had a bull market” and “haven’t had just a booming economy.” Overall, he said officials don’t see signals that the U.S. is at maximum employment. Morgan Stanley’s Sharma argues wage growth is sluggish because bigger companies have more power to suppress worker pay, given that they crowd out (or acquire) startups and other competition.There are no easy answers to these large-scale problems. That includes central banks simply lowering interest rates or purchasing more government bonds. Powell said as much, noting “we have the tools we have.” But at least he has some room to maneuver toward a soft landing. The ECB, which has pushed yields on some corporate bonds in the region below zero, and the Bank of Japan, which owns large swaths of local exchange-traded funds, have done virtually no tightening and may soon need to ease even further.The most troubling part of this heavy-handed approach among central banks is that it eliminates the option for investors to earn any sort of return above inflation on safe assets. This delicate balance seems as if it can only last as long as business and consumer sentiment allows. It has been more than a decade since the Fed last cut interest rates, and during that period, it paid handsomely to be a zombie investor throwing money at the S&P 500. With the next easing cycle upon us, much is riding on the status quo prevailing.(1) Aside from stocks, this includes deposits, direct-benefit promises, non-corporate businesses and other financial assets.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis 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/opinion©2019 Bloomberg L.P.
Slack (WORK) is the most recent listing, hitting the exchanges today and immediately surging more than 50% from its reference price. Slack has taken a much different approach to make their share available to the general public.
It's been a good year for the Dow Jones Industrial Average. The index has gained over 12% so far in 2019, reversing a 5.6% decline seen last year. 25 of the 30 Dow Jones stocks have risen so far this year. * 6 Stocks Ready to Bounce on a Trade Deal That admittedly makes it a bit tougher to find value in the index's components. But there are still a few Dow Jones stocks to buy left. Valuations for several components are reasonable -- and maybe too reasonable. And given that nearly all of the Dow Jones stocks promise ownership of quality businesses with long-term track records of creating value, there are still good stocks to buy.InvestorPlace - Stock Market News, Stock Advice & Trading Tips UnitedHealth Group (UNH)Source: Shutterstock UnitedHealth Group (NYSE:UNH) has been one of the Dow's losers this year, dropping about 1.5% YTD. That comes after UNH was one of the index's best stocks, rising from a little over $100 at the beginning of 2015 to $287 late last year.In the context of those gains, the recent pause makes some sense. Stock chart aside, there are some risks here. A Democratic win in the 2020 U.S. presidential election could augur more government intervention into healthcare -- and at the very least create some uncertainty for the stock. An increasing focus on drug rebates could pressure profits at the company's Optum unit, a key source of growth. Investors sold off UNH after a first quarter that was solid, but not quite up to the high bar UnitedHealth has set with recent performance.Still, I recommended UNH stock back in February, at a higher price -- and this still looks like an attractive long-term play. Valuation is reasonable, at less than 17x 2019 EPS estimates. Optum still is growing. UnitedHealth's market lead seems secure. Even more government involvement in healthcare seems likely to strengthen UnitedHealth's position rather than weaken it. Indeed, UNH stock did quite well in the wake of the passage of the Affordable Care Act.UNH almost certainly isn't going to come close to tripling over the next four-plus years, but there's still reason to see 10%+ total returns annually, at least. Chevron (CVX)Source: swong95765 via Flickr (Modified)Shares of energy giant Chevron (NYSE:CVX) fell back in April when the company announced a plan to buy out shale play Anadarko Petroleum (NYSE:APC). And CVX stock now trades at pretty much the same price it did after the decline.But, of course, Chevron isn't buying Anadarko. It dropped out after Occidental Petroleum (NYSE:OXY) made a higher offer for Anadarko. Chevron not only dumped a deal investors didn't like, but it received a cool $1 billion termination fee in the process.And yet CVX stock trades where it did after the deal was announced. Lower crude prices might be a factor, but Chevron's integrated model limits its exposure to oil prices (which is either good or bad news, depending on crude's trend).That alone suggests that CVX should be able to re-test recent highs around $126. And while that's only ~4% upside, admittedly, there's a nearly 4% dividend yield as well. Dividend aside, Chevron stock remains cheap, at less than 14x 2020 EPS estimates. And there might be another, better-liked, acquisition out there for Chevron to make. * Check Out These 5 Fast-Growing Stocks to Buy Today CVX stock probably isn't going to be a huge gainer over the next six months -- or even the next few years. But there's a nice combination here of value, income and a company with options to improve shareholder returns going forward, no matter where oil prices go. Exxon Mobil (XOM)Source: Shutterstock Chevron's fellow energy component, Exxon Mobil (NYSE:XOM), looks attractive here as well. XOM stock trades at a similar valuation on an earnings basis, but its 4.7% dividend yield is higher than that of CVX. For the world's largest energy company -- and like Chevron, one with impressive upstream/downstream diversification -- that type of yield is rare, and attractive.That said, there are some concerns. Most notably, XOM stock has been a terrible investment for basically this entire decade. The stock has risen 10%, total since the beginning of 2010. Investors have received healthy dividends, but Exxon stock still has badly underperformed the broader markets. More recent performance has been even worse: XOM stock touched its lowest levels in almost eight years back in December. And it's fallen over 25% from 2014 highs; even with dividends, shareholders are in the red over that period.That said, XOM stock is about as cheap as it ever gets. Its dividend yield hasn't been this high in over 20 years. Meanwhile, even amid weak trading the past few years, investors who have tried to time the bottom -- and sell at the top -- generally have been able to take some profits. Longer-term investors can get in cheap.It's not a perfect bull case, and as I wrote just a few months ago, XOM stock is not the play for those betting on higher oil prices. Those who are looking for stocks to buy for income and value, however, should look closely at both XOM and CVX. Visa (V)Source: Shutterstock There are a number of stocks like Visa (NYSE:V) in the current market. The argument isn't over the health of the business, but rather the price investors are willing to pay. On a forward basis, Visa stock is second-most expensive of the Dow Jones stocks, just modestly behind Nike (NYSE:NKE). * 5 Undervalued Stocks to Buy But as I wrote this week, Visa stock still seems worth paying up for. The staggering returns of the last decade -- nearly 1,000% including dividends -- aren't going to be replicated over the next ten years. But Visa still is growing earnings at a double-digit clip, with B2B (business-to-business), international, and domestic opportunities for more gains ahead. Visa stock isn't cheap, but a "set it and forget it" long-term play rarely is. Goldman Sachs (GS)Source: Shutterstock On the other side of the Dow's valuation spectrum is Goldman Sachs (NYSE:GS). Goldman Sachs stock is the cheapest in the Dow in terms of earnings, with its 7.4x forward multiple barely a quarter that of Visa and Nike.And there are reasons why GS stock is cheap. Trading revenue has been uneven. The company's investment banking business is losing share to Morgan Stanley (NYSE:MS). Investors on the whole aren't giving much credit to financials, with more traditional banks too trading at cheap multiples.That said, GS stock is not just cheap, but close to ridiculously so. Indeed, the stock trades below its tangible book value -- the net value of its assets. That implies essentially zero value for the company's franchise, which remains a Wall Street leader. (To be fair, investors simply could believe that the net value of the assets is going to come down if and when the economy turns.)Meanwhile, Goldman Sachs continues to invest in newer efforts. CEO David Solomon has noted that its Marcus online banking effort has received "absolutely no credit" from investors. The same is true of the new credit card venture with Apple (NASDAQ:AAPL). There are worries here with a market near all-time highs and an economy heading into year eleven of expansion. But Goldman Sachs stock seems to be pricing in much of the risk -- and little of the upside. JPMorgan Chase (JPM)Source: Shutterstock Shares of JPMorgan Chase (NYSE:JPM) hardly look expensive, either. JPM trades at 10.3x 2020 consensus earnings per share estimates. Like GS, the low multiple comes in part due to worries about the economic cycle, but JPM still receives a nearly three-turn premium to its rival on an earnings basis.Of course, there's a strong case that JPM deserves that premium. I still think this is the premier big bank stock to own, along with Bank of America (NYSE:BAC). And after the last 2-3 quarters, JPMorgan Chase probably has pulled ahead of BofA.There's simply a lot to like here. The combination of retail and investment banking is a plus. Growth continues to be solid: Q1 numbers crushed expectations as the company posted double-digit EPS growth. The company's delinquency rate, meanwhile, continues to decline and remains among the best in the industry. * 6 Stocks Ready to Bounce on a Trade Deal Again, near- to mid-term economic risks are a factor. Lower interest rates could pressure earnings in 2020. But I see this as a stock to buy and owned for decades, not just years, and the price at the moment remains attractive. Dow (DOW)Source: Roy Luck via Flickr (modified)This week, I called out Dow (NYSE:DOW) as one of the DJIA's 5 worst stocks so far this year, but as I wrote, that was a bit of stretch. DOW stock actually has risen 2.7% in its few weeks on the public markets, but in terms of the broader story, it's been a disappointment.That broader story was the breakup of the former DowDuPont into DOW, Corteva (NYSE:CTVA), and DuPont (NYSE:DD). Many savvy value investors saw the three-way split driving significant value, with many estimates topping $80 of value per DowDuPont share. The figure, at the moment, is under $50.There have been external pressures, to be sure. Adjusted earnings declined sharply in the first quarter. Trade battles between the U.S. and China aren't helping. Neither are concerns about the global automotive industry. Cyclical worries are a factor here, too: other chemical stocks like LyondellBasell Industries (NYSE:LYB) and Westlake Chemical (NYSE:WLK) are similarly cheap as investors discount potentially falling earnings.That said, there's a case to try and time the bottom here. DOW offers an attractive 5.5% dividend yield. It's still a leader in many of its end markets. Global demand may be choppy, but it should rise over time.This might be the most aggressive play in the index right now. DOW stock can take a beating if economic sentiment worsens. But personally, I'm not yet convinced that the smart money backing the DowDuPont split was necessarily wrong.As of this writing, Vince Martin has no positions in any securities mentioned.Compare Brokers The post The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 appeared first on InvestorPlace.
(Bloomberg Opinion) -- Aviation has long been considered General Electric Co.’s crown jewel, but with the company’s free cash flow turning negative this year, “crown jewel” is a relative term and the business is coming under increasing scrutiny. Some of it is deserved; some isn’t.GE Aviation CEO David Joyce seemed to be on a mission at this year’s Paris Air Show to prove his division’s worth. He arrived armed with more financial detail than GE had ever previously provided for the business, came out swinging against suggestions he was sacrificing price to score revenue wins, and announced some notable orders. And yet questions remain about what the business’s true financial profile would be if it was reconstituted as a stand-alone company and cut off from the tax and working-capital benefits that have historically come with being part of the mother ship. That matters, because many investors continue to value GE based on the sum of its parts, the argument being that the aviation unit alone can offset trouble spots in GE’s power, renewables and long-term care insurance operations and support a higher valuation for the stock.First, the positives: GE Aviation and its CFM International engine joint venture with Safran SA booked $55 billion in orders for engines and services at the Air Show, exceeding the $35 billion target Joyce laid out at a media briefing at the start of this week.(2) Like most order tallies from the event, not all of that is technically new business. The number includes an order from AirAsia that had initially been announced in 2016 and entails 200 of GE’s LEAP engines. The purchase was finalized at this year’s event and AirAsia also expanded a servicing agreement, bringing the total value of the deal to $23.1 billion before customary discounts. But there was also a significant new win: Indian budget carrier IndiGo agreed to a $20 billion order for Leap engines, spares and overhaul support.The deal is a blow to United Technologies Corp.’s Pratt & Whitney arm, which had been the sole provider of engines for IndiGo’s Airbus SE A320neo jets. As with Boeing Co.’s face-saving win of an order for its embattled 737 Max jet, some analysts have wondered what GE had to give up in order to convince IndiGo to abandon Pratt. They were encouraged in this thinking by comments from Pratt President Bob Leduc, who said “GE was willing to be more aggressive than we were” on pricing. That may just be Leduc talking his book, though.(4) Unlike in the depressed gas turbine market, where every revenue win likely comes at a cost to GE’s margins, GE shouldn’t need to sacrifice profit to chase market share in aviation – both in general and in the case of this particular deal. Pratt’s GTF engine has had a series of glitches that ultimately proved fixable and relatively minor, but as one of the largest buyers, IndiGo has borne the brunt of the fallout, including in-flight engine shutdowns and grounded planes. Earlier this year, India mandated weekly inspections of certain engine parts and restricted some operations for Airbus planes powered by the GTF. GE has engine headaches of its own. Boeing’s CFO Greg Smith put GE on the hot seat earlier this month, saying its GE9X engine was holding up the aerospace giant’s new 777X plane. At a media briefing this week, Joyce said GE discovered a part of the engine was showing more wear than anticipated and because of the extensive testing required to prove it had fixed the issue, the 777X’s first flight likely won’t happen until the fall. Investors are understandably jittery over any product setbacks after the uncovering of durability issues with GE’s flagship H-class gas turbine. But given the GTF’s history of bugs, I find it hard to fault GE for making tweaks to its engine. In the wake of the voluminous criticism directed at Boeing and the FAA for not realizing the potential impact of a software system linked to the Max’s two fatal crashes, rigorous testing – before the planes start flying – would seem to be in everyone’s best interest.GE has argued it has a technology advantage that will continue to give it an edge even as United Technologies increases its R&D budget through a blockbuster merger with defense contractor Raytheon Co. That remains to be seen, and I don’t think GE’s order wins at the Air Show tilt the scale one way or another. A smart R&D budget is worth more than a big one, but United Technologies will have a lot of money to work with and that will make it difficult for GE and others to stand pat. GE Aviation’s ability to respond to that competition ultimately boils down to how much cash flow it generates – and that’s where confusion continues to reign supreme. At Tuesday’s analyst event, Joyce laid out the various inputs behind the unit’s reported $4.2 billion in free cash flow last year. It was a sign the company is taking investors’ demands for more transparency seriously, although it remains disappointing that these disclosures come in fits and starts. There were some positive takeaways: Citigroup Inc. analyst Andrew Kaplowitz noted the improvement in inventory turns in 2018 even as GE ramped up production of the Leap. But one sticking point was the allocation of corporate costs including pension, interest and taxes, with JPMorgan Chase & Co. analyst Steve Tusa and Gordon Haskett’s John Inch debating whether the unit was carrying its fair share.On the subject of taxes, GE didn't do itself any favors as far as illuminating what's really happening in the aviation unit. The presentation included a line that indicated taxes and other operating expenses deducted $100 million from the aviation unit’s cash flow, which seems quite low on the face of it. But the aviation unit actually pays more than that in taxes. And GE isn't hiding that burden from its calculation of the free cash flow. You just have to know where to look for it.The starting point for GE’s explanation of how it calculated the aviation unit’s free cash flow – $5.8 billion in net earnings after adjusting for depreciation and amortization – had already been adjusted for taxes accrued, based on its operations, according to a company representative. GE confirmed the aviation unit pays a tax rate in the low 20% range that CFO Jamie Miller has guided to for the entire company. The $100 million number for taxes and other operating expenses in the Air Show presentation is something different. That is the difference between taxes paid and accruals in 2018. Are you still with me?The fact that this is all so confusing underscores one of the issues I’ve had with GE’s efforts to be more transparent. Disclosures come in fitfully and often leave people with only more questions. I don’t think GE always does this on purpose; it’s partly a reflection of the fact that this remains an incredibly complex company and any given number is going to require a half-hour explanation. But you can’t have it both ways. Is GE Aviation a crown jewel? Yes. Is GE very good at explaining that? It could use some work in that department. (1) The total doesn't include engines for the 200 737 Max jets that British Airways owner IAG SA ordered at the Air Show. CFM is the sole engine provider for that plane.The list price for those engines is $5.8 billion.(2) The flip side of Leduc's comments was Rolls-Royce Holdings Plc CEO Warren East's description of GE as a "very savvy commercial operator."To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
What a difference strong leadership can make for a company, as shown by General Electric (NYSE:GE) stock. Larry Culp, who came on board as CEO in October 2018, had the unenviable task of leading the company's turnaround.But his moves has been decisive and strategic. More importantly, he has brought realism to the company. Then again, Culp demonstrated those abilities while he was the CEO of Danaher (NYSE:DHR), which generated standout results for shareholders during his tenure. * 6 Stocks Ready to Bounce on a Trade Deal Source: Shutterstock GE stock has done great during Culp's brief time with the company. Since December, the shares have gained 55%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut turnarounds often take a long time. And that will certainly be the case with GE's efforts. There is still lots of heavy lifting to be done, and GE is facing some tough headwinds. In other words, investors should be cautious, as the easy gains of GE stock may be over.In fact, there are already signs of that. Keep in mind that GE stock has been in a persistent range of $9 to $11 since February.So what issues is GE facing? Let's take a look at three risks of investing in General Electric stock. Risk Facing GE Stock: GE's FinancialsOne of the biggest changes at GE has been Culp's transparency with Wall Street. To this end, he says that 2019 will be a "reset" year. But the fact is that GE has a tremendous amount of debt and contingent liabilities. Cumulatively, GE owes a staggering $107.5 billion. So for quite some time, Culp will be mostly focused on finding ways to generate cash. To help accomplish that goal, he's already agreed to sell GE's biopharma business to Danaher and divest its locomotive segment, which was acquired by WabTec (NYSE:WAB).But given that GE is cyclical and that the global economy appears to be slowing, GE could easily report negative earnings surprises in the months ahead. Risk Facing GE Stock: GE's Aviation BusinessThe aviation business has been positive for General Electric stock for some time. As seen at this week's Paris Air Show, the unit is snagging plenty of orders. Note that it recently signed its biggest deal ever, agreeing to sell $20 billion of engines to an India-based airline.But unfortunately, the aviation business is still facing headwinds. For example, Boeing's (NYSE:BA) 777X widebody jet will not meet its deadline because of a problem caused by GE's engines. The problem is likely temporary, but it's still worrisome and will cause a meaningful amount of GE's revenue to be delayed.It's far from clear what will happen with the 737 MAX, which has been grounded because of two crashes. But again, this means loss of momentum for GE's engine business. Risk Facing GE Stock: GE's Power BusinessThe Power Business, which accounts for roughly 20% of GE's overall revenues, continues to be a problem for the company. The competitive environment of the sector is intense, demand for Power's products has been sluggish for some time, and it's been accused of being less than 100% forthright about its results. There are also signs that Chinese companies may make inroads in this industry.Here's what JPMorgan analyst Stephen Tusa has said about the situation: "We believe a full accounting of the situation with a closer look at the data, even a rudimentary review, supports our view that GE is indeed losing market share…"Keep in mind that Tusa was able to predict the implosion of GE stock. Consider that he currently has a $5 price target on the shares, implying a drop of more than 50% from their current levels.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 3 Reasons GE Stock May Stall Out appeared first on InvestorPlace.
Today, Chase and Southwest Airlines introduce the Southwest Rapid Rewards® Performance Business Card, a new credit card for business owners with an enhanced day-of-travel experience and accelerated earning in key business spending categories. The Southwest Rapid Rewards Performance Business Card has a new Cardmember offer of 80,000 points after qualifying spend. “Through research, we heard directly from business owners that they’re looking for simple and attainable perks out of their business credit cards, as well as more rewards for the business they do,” said Leslie Gillin, Chase Co-Branded Cards President.
After the June policy meeting, the Fed kept the interest rates changed. However, the Fed sounded amenable to future rate cuts. President Trump has been a fierce critic of Fed Chair Jerome Powell.
(Bloomberg) -- Treasuries led a global bond rally, with 10-year yields dropping below 2% for the first time since November 2016 as expectations grow that major central banks will ease policy.The U.S. 10-year yield slid as much as five basis points to 1.9719% after the Federal Reserve signaled it was ready to cut interest rates. Japan’s benchmark yield dropped to minus 0.185%, near the bottom of the central bank’s targeted range after Governor Haruhiko Kuroda suggested policy makers won’t step in to prevent further declines. Similar rates in Germany fell deeper into the negative, approaching a record low reached earlier this week.The Fed on Wednesday scrapped its use of “patient” in describing its approach to policy, offering support for bond bulls who argue that the U.S.-China trade war will sap growth momentum. The dovish tilt came after European Central Bank President Mario Draghi signaled he’s ready to add monetary stimulus.“You’ve got a Fed that’s now changed its language and we’re on a path where there’s going to be rate cuts ahead,” said Shyam Devani, senior technical strategist at Citigroup Inc. in Singapore. “Whether it’s two or three times, it’s hard to say -- but there will be cuts.”The Treasury 10-year yield has fallen more than 70 basis points this year as the U.S.-China trade war took its toll on the global economy. Calls for a rate cut are growing with Pacific Investment Management Co. forecasting a 50-basis-point reduction in July.Read What Analysts Are Recommending on TreasuriesFrance and Spain sold debt at all-time low yields Thursday, joining euro-area nations from Germany and Portugal to Ireland that borrowed at record-low costs in the past two weeks. Bonds in Australia joined the rally, with 10-year yields falling as much as seven basis points to a record 1.271%. Similar-tenor New Zealand yields slid to an all-time-low 1.51%.“As yields head lower, investors could be tempted to lower their allocation to fixed income -- but we’d caution them against that,” Rachel O’Connor, portfolio manager at Vanguard Group Inc. said at a Bloomberg investment forum in Sydney Thursday. “Given the high level of uncertainties in markets at the moment, we’d be encouraging investors to think long term.”With the Fed and ECB mulling easing, that’s raising expectations of other central banks also adding to stimulus. It’s “not unrealistic” to expect another rate cut in Australia, the nation’s central bank chief Philip Lowe said in a speech Thursday, after policy makers lowered their benchmark for the first time in three years this month.BOJ ComfortBOJ Governor Kuroda indicated he was comfortable with the recent slide in the 10-year bond yield, after the central bank kept its policy unchanged.“There is no need to be extremely and strictly mindful about the concrete range of the rate,” he said during a news conference. “It’s appropriate to deal with it with some flexibility.”Still, with U.S. President Donald Trump and Chinese leader Xi Jinping planning to meet next week at the Group-of-20 gathering, some investors are betting the two nations will eventually reach a trade deal.“There are still people out there who are seeing Treasury yields as being too low given the possibility of the U.S. resuming trade talks with China,” said Naoichi Kanaoka, a senior strategist at Mizuho Securities Co. in Tokyo. “However, if the Fed reduces rates because of low inflation, then it would be full-swing policy easing rather than a preemptive cut.”The Fed on Wednesday lowered its inflation forecasts. Futures are now signaling four rate cuts before the end of next year, with one at the July 30-31 meeting fully priced in.The prospect of lower rates has prompted some investors to move further out along the yield curve, with 30-year yields falling as much as six basis points to 2.48% on Thursday, the lowest since October 2016.“This will be the start of a rate-cutting cycle, not a one- or two-off cut in isolation,” Bob Michele, head of global fixed income at JPMorgan Asset Management in New York, wrote in a research note.(Adds German bond move in second pragraph, French and Spanish debt sales in sixth.)\--With assistance from Stephen Spratt and Toru Fujioka.To contact the reporters on this story: Ruth Carson in Singapore at email@example.com;Masaki Kondo in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Anil VarmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan has proposed stripping a swath of middle-income Asian countries from its influential emerging market corporate bond indices in a move that could raise returns for investors but increase risk. The proposal would see companies from South Korea, Singapore, Israel and Taiwan removed from the CEMBI bond index family, tracked by an estimated $110bn of assets. If enacted, the move would bring the country inclusion criteria for the CEMBI indices into line with JPMorgan’s EMBI hard-currency EM sovereign bond benchmarks, unrooting debt from companies such as Teva Pharmaceutical, Hyundai, Singtel and Kia Motors from the index.
Square stock is down roughly 3.5% over the last three months as investors decide what's next for the once high-flying financial tech giant.
In addition to a planned location on Lancaster Avenue, the New York bank has also signed a lease to open a branch in a West Philadelphia redevelopment project.