Tag Archives: JPMorgan

Avaya’s Collapsing Debt Deal Hits Clients of Goldman, JPMorgan

August 9, 2022 Admin Leave a comment

The two banks sold new loans and bonds for Avaya, a cloud-communications company, in late June. Investors included Brigade Capital Management LP and Symphony Asset Management LLC, people familiar with the matter said.

A few weeks later, Avaya announced that it would miss by more than 60% its previous forecasts for adjusted earnings in the third quarter, which ended June 30. It gave no explanation. The company also said that it would miss revenue targets and announced it was removing its chief executive officer.

Prices of the newly issued debt plummeted, hitting investors who lent Avaya the money with paper losses exceeding $100 million, according to analyst commentary and data from MarketAxess and Advantage Data Inc.

Avaya said Tuesday that it “has determined that there is substantial doubt about the Company’s ability to continue as a going concern.” It also said that the audit committee of the board of directors had opened an internal investigation “to review the circumstances surrounding” the most recent quarter. The committee is also investigating a whistleblower letter, but it didn’t give details.

Avaya also tapped law firm Kirkland & Ellis LLP and turnaround adviser AlixPartners LLP as it considers its options, The Wall Street Journal reported Tuesday.

New CEO

Alan Masarek

held an abbreviated conference call Tuesday to discuss third-quarter earnings and declined to take questions from Wall Street analysts. Mr. Masarek attributed Avaya’s poor performance in part to clients signing up for smaller and shorter software subscription contracts than expected, potentially out of fear about the company’s debt load.

“I understand very clearly that there is disappointment, there’s worry, there’s concern out there across effectively all Avaya stakeholders,” Mr. Masarek said. “I’m going to thank you in advance for your patience… Give us some time to demonstrate a better future.”

Avaya’s 6.125% bond due 2028 fell as low as 48.50 cents on the dollar after the presentation, down from a close of 56.25 cents on Monday, according to data from MarketAxess.

Some analysts were already skeptical of Avaya’s financial forecasts.

“Why [are] your projections always faltering when you report quarterly results? Why can’t you have a stable outlook?” asked

Hamed Khorsand,

an analyst at BWS Financial, after the company’s last quarterly earnings report in May. Avaya undershot that quarter’s adjusted-earnings targets by about 10%.

Avaya’s former CEO Jim Chirico, applauding at the company’s stock listing in 2018, was removed last month.

Photo:

Richard Drew/Associated Press

Then-CEO

Jim Chirico

attributed the fumble to Avaya’s adoption of a new sales strategy that forced the company to recognize revenue more slowly. “We believe we’re over that hurdle,” he said at the time.

Avaya emerged as a telecommunications-equipment supplier to corporations in 2000, when it spun out of Lucent Technologies. Private-equity firms TPG and Silver Lake Partners bought the company in 2007, but it struggled to transition from selling hardware to selling software, and with servicing debt from the buyout. The company filed for bankruptcy protection a decade later before reorganizing. Mr. Chirico took the helm in 2017 and shifted to developing cloud-based software for enterprises.

“Avaya squandered a lot of money and time and has little to show for it,” independent enterprise communications analyst Dave Michels wrote in a recent report. “Many of us have wondered why the board didn’t act sooner—years sooner.”

A spokeswoman for Avaya declined to comment on analysts’ critiques.

The financial crunch hit this spring when Avaya’s cash reserves shrank to $324 million—down from almost $600 million a year earlier, according to company filings. The company tried to raise new debt to refinance a $350 million convertible bond that was coming due in 2023, according to company filings.

Goldman initially proposed a $500 million loan with a 12.6% yield but found few buyers, according to data provider LevFin Insights. The bank ultimately placed a $350 million secured loan yielding 15.5% with investors. Lenders included Symphony, which has invested in Avaya since before its bankruptcy, the people familiar with the matter said.

Avaya approached JPMorgan in late June to raise additional funds, according to one of the people. The bank placed a $250 million secured convertible bond. Investors included Brigade, the people said.

During the marketing process, Avaya executives told lenders that the company was on track to hit its earnings guidance, some of the people familiar with the matter said.

SHARE YOUR THOUGHTS

Should companies return capital raised shortly before large earnings misses? Why or why not? Join the conversation below.

The company had set Ebitda guidance of about $145 million for the quarter ended June 30 but cut that to between $50 million and $55 million on July 28. (Ebitda refers to earnings before interest, taxes, depreciation and amortization.) Avaya reported $54 million of Ebitda for the quarter on Tuesday, a figure that barely covers the quarterly interest expenses it disclosed in recent earnings reports.

“It is a surprising outcome for a company that priced $600 million of fresh capital…just four weeks ago,” said

Lance Vitanza,

a stock analyst at Cowen Inc. “It may be too late to accomplish much without radically restructuring Avaya’s balance sheet.”

The newly issued loans were quoted around 65 cents on the dollar Tuesday, down from 87 cents in late July, according to Advantage Data. The new convertible bond is likely to trade at similar prices in the near future, Mr. Vitanza said.

Losses have been heavier for owners of Avaya stock, which fell to as low as 82 cents last week from around $2.50 in early July and about $10 at the start of May. Avaya shares fell 46% Tuesday to 61 cents.

Alexander Gladstone and Andrew Scurria contributed to this article.

Write to Matt Wirz at matthieu.wirz@wsj.com

Read original article here

Business

Prosecutors Say JPMorgan Traders Scammed Metals Markets by Spoofing

July 9, 2022 Admin Leave a comment

CHICAGO—

JPMorgan Chase

& Co.’s precious-metals traders consistently manipulated the gold and silver market over a period of seven years and lied about their conduct to regulators who investigated them, federal prosecutors said Friday.

The bank built a formidable franchise trading precious metals, but some of it was based on deception, prosecutors said at the start of a trial of two former traders and a co-worker who dealt with important hedge-fund clients. They said the traders engaged in a price-rigging strategy known as spoofing, which involved sending large, deceptive orders that fooled other traders about the state of supply and demand. The orders were often canceled before others could trade with them.

The criminal trial in Chicago is the climax of a seven-year Justice Department campaign to punish alleged spoofing in the futures markets. Prosecutors have alleged the former members of

JPMorgan’s

JPM -0.31%

precious-metals desk constituted a sort of criminal gang that carried out a yearslong conspiracy that racked up big profits for the bank.

“Day in, day out for seven years, the defendants manipulated the market so that they could make more money,” U.S. Justice Department prosecutor Lucy Jennings said. “And then they lied to cover it up.”

JPMorgan paid $920 million in 2020 to resolve regulatory and criminal charges over the conduct, which involved nine futures traders and at least two salespeople who dealt with clients such as hedge funds, according to court records. Three former traders cooperated with the Justice Department’s investigation and will testify against the three defendants: Gregg Smith and Michael Nowak, who traded precious metals; and Jeffrey Ruffo, who was their liaison to big hedge funds whose trades earned money for the bank.

SHARE YOUR THOUGHTS

How do you expect the trial to play out? Join the conversation below.

Attorneys for Messrs. Smith, Nowak and Ruffo told jurors Friday that prosecutors cherry-picked a handful of trades to concoct a misleading theory of how the men traded.

Mr. Smith canceled many orders but never used them as a ruse, defense attorney Jonathan Cogan said. He often canceled orders after he realized that high-speed trading firms, which made decisions faster than he could, jumped ahead of his orders and moved the price up or down, Mr. Cogan said.

“He did not place orders with the intent to manipulate the market, not during the snippets of time the prosecutors will focus on in this case—not ever,” Mr. Cogan said.

An attorney for Mr. Nowak, who led the precious-metals desk, said his client was a gold-options trader during the years under scrutiny. Mr. Nowak used futures mostly to limit the risk of his large options positions, attorney David Meister said, so his pay wasn’t linked to making more or less money on a futures trade.

“The stuff he’s charged with here couldn’t move the needle for Mike’s pay,” Mr. Meister said.

Mr. Smith had worked at Bear Stearns before joining JPMorgan in 2008 when the bank acquired Bear in a fire sale precipitated by the financial crisis. Mr. Nowak traded for JPMorgan in both London and New York. Mr. Ruffo worked at the bank for a decade, communicating with hedge funds that were brokerage clients and providing the desk with important market intelligence, according to prosecutors. All three have pleaded not guilty.

Prosecutors have alleged the pattern of spoofing was continuous, a claim that allowed them to charge the three men with racketeering in addition to conspiracy, attempted price manipulation, fraud, and spoofing. The conduct allegedly spanned from 2008 to 2016.

Racketeering is a charge typically reserved for criminal enterprises such as the mafia and violent gangs, although eight soybean-futures traders in Chicago were convicted of racketeering in a crackdown on cheating in the early 1990s.

U.S. District Judge Edmond E. Chang has reserved up to six weeks for the trial, although prosecutors said Friday that they could be finished presenting their case within two weeks. Judge Chang last year dismissed part of the case—several counts of bank fraud—against the defendants. Prosecutors also recently moved to drop allegations related to options trading that authorities claimed had been manipulative.

Prosecutors have alleged that JPMorgan employees already were spoofing when Mr. Smith got to the bank. They say Mr. Smith and another trader from Bear brought a new style of spoofing that was more aggressive than the simpler approach people at JPMorgan had been using, according to court records.

Spoofing became an important way to successfully execute trades for hedge-fund clients whose fees were critical to the trading desk, prosecutors said. “It was key to get the best prices for those clients, so that they keep coming back to the precious-metals desk at JPMorgan, and not another bank,” Ms. Jennings said.

Guy Petrillo, an attorney for Mr. Ruffo, said Friday his client was a reliable and honest salesman whose only role was to communicate with clients and pass their orders to traders such as Messrs. Smith and Nowak.

“There will be no reliable evidence that Jeff knew that traders were using trading tactics that he understood at the time were unlawful,” Mr. Petrillo said.

Federal prosecutors have honed a formula for going after spoofing defendants during their multiyear strike on the practice. In addition to using cooperating witnesses who said they knew the conduct was wrong, prosecutors have deployed trading charts and electronic chats to depict a sequence of trades intended to deceive others in the market. While the charts show a pattern of allegedly deceptive trading, prosecutors said the incriminating chats reveal the intent of the traders placing the orders.

Former traders at

Deutsche Bank AG

and

Bank of America Corp.

were convicted of spoofing-related crimes in 2020 and 2021, respectively.

Those trials featured chats in which some defendants boasted about spoofing.

Lawyers for Messrs. Smith, Nowak and Ruffo said there are no chats in which their clients talked about spoofing because the men didn’t engage in it.

Spoofing is a form of market manipulation outlawed by Congress in 2010. Spoofers send orders priced above or below the best prices, so they don’t immediately execute. Those orders create a false appearance of supply and demand, prosecutors say. The tactic is designed to move prices toward a level where the spoofer has placed another order he wants to trade. Once the bona fide order is filled, the spoofer cancels the deceptive orders, often causing prices to move back to where they were before the maneuver started.

Mr. Smith’s style of spoofing involved layering multiple deceptive orders at different prices and in rapid succession, according to the settlement agreement that JPMorgan struck with prosecutors two years ago. It was harder to pull off but also harder to detect, and other JPMorgan traders adopted his mode of trading, court records say.

In the earlier trials, prosecutors successfully defended their theory that spoofing constitutes a type of fraud. Some traders have argued spoofing doesn’t involve making false statements—usually a precondition for fraud—because electronic orders don’t convey any intent or promises.

The tactic can impose losses on those tricked by spoofing patterns. The government has portrayed some of Wall Street’s most sophisticated trading firms, such as Citadel Securities and Quantlab Financial, as the past victims of spoofers. In the latest trial, prosecutors also plan to call individual traders who traded for their own accounts and were harmed by spoofing.

Write to Dave Michaels at dave.michaels@wsj.com

Read original article here

Business

JPMorgan sees higher BTC price potential, a16z unveils $4.5 billion crypto fund, and PayPal hints at more crypto and blockchain involvement: Hodler’s Digest, May 22-28

May 28, 2022 Admin Leave a comment

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $28,449, Ether (ETH) at $1,729 and XRP at $0.37. The total market cap is at $1.17 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are BORA (BORA) at 18.15%, Bitcoin Gold (BTG) at 17.79% and Ethereum Classic (ETC) at 11.09%.

The top three altcoin losers of the week are TerraClassicUSD (USTC) at -46.13%, STEPN (GMT) at -27.38% and Elrond (EGLD) at -25.70%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“Decentralization truly puts more control and power back into the people’s hands where it belongs.”

Sonali Giovino, head of communications for Defiyield

“Projects must watch the interests of their community and users because, in the end, that’s the most valuable thing you have.”

Nicky Chalabi, ecosystem success and enablement professional at Near Foundation

“A lot of the policy and regulatory issues that limit the power of moving money have to do with stripping people of their economic freedoms.”

Jeremy Allaire, CEO of Circle

“In TradiFi people are thinking, ‘I don’t want to lose money — how can you help me keep my wealth regardless of markets?’ So, it’s very risk-management orientated. While in DeFi, the degens are like, ‘Gimme those triple-digit yields, woo!’”

Alexander Fazel, chief partnership officer for SwissBorg

“The rise of the term ‘Web3’ is encouraging because it means that people are seeing this underlying technology feed into different applications — the ones they didn’t necessarily expect.”

Gavin Wood, co-founder of Polkadot and Ethereum

“There’s absolutely no reason that a deed to a house couldn’t be a unique digital asset as long as that asset is created and stored in the correct way.”

Alex Altman, chief operating officer of Seal Storage Technology

Prediction of the Week

Bitcoin price may bottom at $15.5K if it retests this lifetime historical support level

Bitcoin’s price has continued to struggle in recent days, often trading below $30,000, according to Cointelegraph’s BTC price index. However, the asset could still fall considerably further, according to Rekt Capital.

Over the course of Bitcoin’s history, the asset’s price has respected the 200-week moving average (200WMA). “#BTC tends to wick -14% to -28% below the 200-MA,” Rekt Capital detailed as part of a thread on Twitter. “And since the $BTC 200-MA now represents the price point of ~$22000… A -14% downside wick below the 200-MA would result in a ~$19000 Bitcoin,” they added. “And if #BTC were to repeat the March 2020 downside wicking depth below the 200-MA $BTC would revisit the ~$15500 price point.”

FUD of the Week

‘Yikes!’ Elon Musk warns users against latest deepfake crypto scam

Did you watch a video of Tesla CEO Elon Musk advertising 30% gains via deposits on a crypto platform? Be warned that the video is a scam. Classified as a deepfake, the video was doctored to look real but is not, as verified by a Twitter comment from Musk himself. The video harnesses real footage of Musk doing a TED Talk earlier in 2022, altered to deceive viewers into a scam. Deepfakes are nothing new, however. This recent effort utilizes Musk’s fame in tandem with his known crypto involvement.

Crypto spam increases 4,000% in two years — LunarCrush

The last two years have resulted in a 3,894% uptick in crypto-related spam, according to recent data from LunarCrush, a crypto intelligence outfit. One aspect making detection difficult: The undesirable action is not all bot related, with a surprising amount coming from humans. Twitter is a hotbed for spam, based on the LunarCrush data.

Targeted phishing scam nets $438K in crypto and NFTs from hacked Beeple account

A hacker or group of hackers recently took over the Twitter account of Mike Winkelmann, a.k.a. Beeple. The hacker(s) that commandeered the well-known NFT artist’s account posted phishing scam tweets, angling the scam around Beeple’s recent collaboration with Louis Vuitton. Although Beeple managed to take back control of his Twitter account, the phishing effort pilfered roughly $438,000 worth of Ether and NFTs from victims.

Best Cointelegraph Features

The Moon ‘created’ his lavish reality… and says you can, too

“Three years and BOOM, you can be anything you want — a famous musician, a billionaire. It doesn’t matter what you want to do, anything can be done with the right mindset.”

Crypto is changing how humanitarian agencies deliver aid and services

“It’s almost like the whole idea of a decentralized, distributed model is exactly what worked in terms of how we operated and deployed the system.”

How Terra’s collapse will impact future stablecoin regulations

The collapse of algorithmic stablecoin UST created a ripple effect for the broader crypto market and put regulators on extremely high alert.

Read original article here

Business

Gas prices will surpass $6 nationwide by August, JPMorgan says

May 18, 2022 Admin Leave a comment

The Schork Group principal Stephen Schork says the U.S. doesn’t have the oil refinery capacity to meet demand.

The average national retail price for a gallon of regular gasoline is projected to surpass $6 by the of summer, according to a recent JPMorgan research note.

On Wednesday, the national average hit another record, reaching $4.56 per gallon, according to AAA. That’s already up nearly 50 cents from a month ago, and $1.52 from this time last year, according to AAA’s recent data.

GAS PRICES: HOW YOUR DRIVING BEHAVIOR IMPACTS COSTS AT THE PUMP

According to JPMorgan, prices could surge another 37% by August, hitting a $6.20 per gallon national average.

This is due to “expectations of strong driving demand” throughout the summer driving season, which spans from Memorial Day and lasts until Labor Day, the analysts, led by Natasha Kaneva, the head of JPMorgan’s global commodities strategy team, wrote.

“Typically, refiners produce more gasoline ahead of the summer road-trip season, building up inventories,” the analysts said. However, since mid-April, “gasoline inventories have fallen counter seasonally and today sit at the lowest seasonal levels since 2019,” the analysts continued.

The analysts cautioned that “gasoline balances on the East Coast have been even tighter, drawing to their lowest levels since 2011.”

GAS PRICES HIT $4 IN ALL 50 STATES FOR THE FIRST TIME, NATIONAL AVERAGE REACHES RECORD HIGH

Earlier this week, Los Angeles became the second metro, joining San Francisco, with the average cost for a gallon of gasoline surpassing $6.

“It’s likely that more Californian cities will join,” Patrick De Haan, head of petroleum analysis for GasBuddy, told FOX Business. Although, De Haan noted that he doesn’t see any other cities “at high risk of hitting $6” just yet.

CLICK HERE TO READ MORE ON FOX BUSINESS

However, for the first time ever, the average cost for a gallon of gasoline surpassed $4 in all 50 states, driven by the high cost of oil, according to AAA.

Read original article here

Business

JPMorgan shareholders reject $52M payout to CEO Jamie Dimon

May 18, 2022 Admin Leave a comment

Check out what’s clicking on FoxBusiness.com.

NEW YORK – In an unusual rebuke for Jamie Dimon, CEO of JPMorgan Chase & Co, shareholders on Tuesday clearly disapproved of the special $52.6 million stock option award directors gave him last year to stay on the job for at least five more years.

Ticker	Security	Last	Change	Change %
JPM	JPMORGAN CHASE & CO.	122.28	+4.02	+3.40%
BAC	BANK OF AMERICA CORP.	36.03	+1.23	+3.53%
C	CITIGROUP INC.	51.13	+3.64	+7.66%
WFC	WELLS FARGO & CO.	43.74	+1.56	+3.70%

In an advisory say-on-pay referendum, only 31% of votes cast endorsed JPMorgan executive payments for 2021, according to a preliminary count announced at the company’s annual meeting.

Because of the special award this year two major advisory firms, from which investors take their cue when voting, had recommended “no” votes on pay.

Institutional Shareholder Services Inc and Glass Lewis & Co criticized Dimon’s options as lacking performance criteria for vesting.

JAMIE DIMON WARNS US ECONOMY FACES MAJOR RISKS FROM INFLATION, RUSSIA-UKRAINE WAR

In eight of the last 12 years JPMorgan had won approval from more than 90% of votes cast in its annual compensation ballots.

In an unusual rebuke for Jamie Dimon, CEO of JPMorgan Chase & Co, shareholders on Tuesday clearly disapproved of the special $52.6 million stock option award directors gave him last year to stay on the job for at least five more years. (REUTERS/Jeenah Moon/File Photo / Reuters Photos)

Dimon, 66, will keep the award, but such votes are closely followed as a test of investors’ attitudes toward executive pay and what payouts they will tolerate.

Average support for pay packages at S&P 500 companies was 88.3% in 2021, down from 89.6% in 2020 and 90% in 2019, according to consulting firm Semler Brossy.

In response to the vote, JPMorgan directors pointed out through a spokesman the special award was extremely rare and the first for Dimon in more than a decade.

JPMORGAN PROFIT FALLS 42% ON SLOWDOWN IN DEALS, TRADING

Directors said before the vote that the special award would not be recurring and “reflects the board’s desire for him to continue to lead the firm for a further significant number of years.”

The board said before the vote it made the award in consideration of Dimon’s performance, his leadership since 2005 and “management succession planning amidst a highly competitive landscape for executive leadership talent.”

The JP Morgan Chase & Co. headquarters, The JP Morgan Chase Tower in Park Avenue, Midtown, Manhattan, New York. JPMorgan Chase & Co. is an American multinational banking and financial services holding company. It is the largest bank in th ( Tim Clayton/Corbis via Getty Images / Getty Images)

If Dimon, a billionaire, keeps working at the bank for five years the options will vest, although he could still receive them if he leaves to work for the government or to run for public office.

Stock from the options must be held until 10 years after being granted.

The award was separate from Dimon’s usual annual pay package, which was up 10% to $34.5 million for 2021.

The board prevailed in its recommendations on all other issues. All directors, including Dimon, were re-elected with more than 92% of the votes cast, according to preliminary figures.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Two shareholder proposals on fossil fuel financing received only 11% and 15% of votes cast, consistent with weak support recently for initiatives at Bank of America, Citigroup and Wells Fargo, as well as at big oil companies.

Read original article here

Business

After Blowing $328 Billion on Share Buybacks since 2017, JPMorgan, BofA, Wells Fargo, Citi, Goldman Sachs Stocks Drop

April 15, 2022 Admin Leave a comment

Q1 was crappy as IPOs imploded, investment banking took a hit, mortgage activity fizzled, other stuff happened.

By Wolf Richter for WOLF STREET.

Of the big five banks and bank holding companies in the US by total assets – JP Morgan, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs Group – four reported Q1 earnings so far, and BofA will do so next week. Those earnings reports were marked by a sharp decline in revenues and net income, with all kinds of complications in between. And as a group their shares continued their jagged decline that started in November last year.

The WOLF STREET index of the big five banks’ market capitalization has plunged 23.5% since its recent peak in October 2021 (data via YCharts):

This debacle occurred amid enormous share buybacks. These banks have been regularly featured among the largest share buyback queens in the US, except during the pandemic, when they halted the practice for three quarters.

In the five years from 2017 through 2021, the five banks have incinerated, wasted, and destroyed $328 billion in cash on repurchasing their own shares to prop up their stocks, and now their stocks have nothing to show for it (data via YCharts):

Q1 was crappy as IPOs imploded, mortgage activity fizzled, other stuff happened.

JPMorgan Chase [JPM] kicked off the quarterly banking show on Wednesday morning when it reported that its net income plunged by 42% to $8.3 billion in Q1 compared to Q1 last year. Revenues fell 5% to $30.7 billion, on a 35% plunge in revenues in its investment banking division.

Over the two trading days since the earnings release on Wednesday morning, JP Morgan’s shares tanked 4.1% and are down 25% from their 52-week high in January.

In preparation for rate-hike-induced financial stress on borrowers, it set aside $902 million for loan loss reserves, compared to a $5.2-billion benefit a year ago from releasing loan loss reserves it had set up during the pandemic. And it booked $582 million in net charge-offs, bringing the total credit costs to $1.5 billion.

Its Corporate & Investment Bank profits got hit by a $524 million loss, “driven by funding spread widening as well as credit valuation adjustments relating to both increases in commodities exposures and markdowns of derivatives receivables from Russia-associated counterparties,” it said in the earnings release.

During the earnings call, CEO Jamie Dimon said that the bank sees “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues, and the war in Ukraine.”

Goldman Sachs [GS] reported that revenues plunged 27% in Q1, to $12.9 billion, and net income plunged by 42% to $3.9 billion.

Goldman Sachs share were down just a tad on Thursday, and are down 24.5% from their 52-week high in early November.

Investment banking revenue plunged by 36% to $2.4 billion. It set aside $561 million for credit losses, compared to a benefit of $70 million a year earlier. Asset management revenue collapsed by 88% to $546 million, “primarily reflecting net losses in Equity investments and significantly lower net revenues in Lending and debt investments.”

But at its consumer and wealth management division, revenues grew by 21% to $2.10 billion. And its global market revenues ticked up 4% to $7.87 billion. And yes, given the turmoil in the commodities markets, currency markets, and bond markets, revenues at FICC (Fixed Income, Currency and Commodities) jumped 21% to $4.71 billion.

“The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill,” the earnings release said.

IPOs were crappy all around.

By “equity issuance came to a near standstill,” Goldman is talking about IPOs and SPACs, many of which have imploded spectacularly over the past 12 months. I’m now tracking some of them, including those where Goldman Sachs was the lead underwriter, in the WOLF STREET category of Imploded Stocks.

IPOs are massive fee generators for investment banks. But the collapse of these newly listed stocks has now essentially killed the appetite for new IPOs, which are only fun in a relentless hype-and-hoopla market. In Q1, according to Renaissance Capital, there were only 18 IPOs, including only two in March, down from 118 IPOs in Q2 last year:

Citigroup [C] reported that revenues declined 2.5% to $19.2 billion. Net income plunged 46% to $4.3 billion, on higher operating expenses (+15%) and credit losses of $755 million, compared to a benefit of $2.05 billion a year earlier.

The problem isn’t consumers in the US; they’re doing fine, Citibank said in its earnings release: “We continue to see the health and resilience of the U.S. consumer through our cost of credit and their payment rates. We had good engagement in key drivers such as cards loan growth and vigorous purchase sales growth, so we like where this business is headed.”

The big culprit was investment banking, including IPOs: “the current macro backdrop impacted Investment Banking as we saw a contraction in capital market activity. This remains a key area of investment for us,” Citigroup said.

Its shares rose 1.6% on Thursday but are down 36% from their 52-week high in June.

Wells Fargo [WFC] reported that revenues dropped 5% to $17.6 billion. Net income plunged 21% to $3.67 billion.

One of the culprits was mortgage lending activity, which plunged by 33% in the quarter on surging mortgage rates. “The Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth,” and “the war in Ukraine adds additional risk to the downside,” Wells Fargo said in the earnings release.

Shares tanked 4.5% on Thursday and have dropped 23% in two months from their 52-week high in early February.

Bank of America [BAC] will report earnings on Monday. In anticipation, its shares fell 3.2% on Thursday and have plunged 25% from the 52-week high in February.

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

Read original article here

Business

Delta, JPMorgan, BlackRock and more

April 13, 2022 Admin Leave a comment

Check out the companies making headlines before the bell:

Delta Air Lines (DAL) – Delta rallied 6.6% in the premarket after reporting a smaller-than-expected quarterly loss and predicting a current-quarter profit. The airline also said monthly revenue exceeded pre-pandemic levels for the first time in March.

JPMorgan Chase (JPM) – The bank reported quarterly earnings of $2.63 per share, 6 cents shy of estimates, though revenue exceed Wall Street forecasts. JPMorgan’s profit was down 42% from a year ago as deal volume slowed and trading revenue declined. The stock fell 1.1% in the premarket.

Bed Bath & Beyond (BBBY) – The housewares retailer reported an adjusted quarterly loss of 92 cents per share, compared with analyst expectations of a 3-cents-per-share profit. Bed Bath & Beyond instituted price hikes during the quarter, but it was not enough to offset a surge in shipping costs and other adverse factors. Bed Bath & Beyond shares tumbled 8% in premarket trading.

BlackRock (BLK) – The asset management firm reported an adjusted quarterly profit of $9.52 per share compared with the $8.75 consensus estimate. Revenue was essentially in line with forecasts. BlackRock was helped by a jump in inflows as assets under management rose to $9.57 trillion from just over $9 trillion a year earlier.

Antares Pharma (ATRS) – The specialty pharmaceutical company’s stock soared 48.7% in premarket trading after agreeing to be bought by Halozyme Therapeutics (HALO) for $960 million, or $5.60 per share, in cash.

PayPal Holdings (PYPL) – PayPal Chief Financial Officer John Rainey is leaving the payments company to take the same role at Walmart (WMT), effective June 6. Rainey will replace Brett Biggs, who was CFO since 2015. PayPal slid 3.5% in premarket action.

Sierra Oncology (SRRA) – The drug developer agreed to be bought by GlaxoSmithKline (GSK) for $1.9 billion, sending its shares surging by 37.5% in the premarket, while Glaxo shares rose 1.1%.

Charles Schwab (SCHW) – The brokerage firm’s stock gained 1% in premarket trading after Morgan Stanley named it a “top pick,” saying Schwab will benefit from rising rates and that it has an attractive valuation compared to its peers.

Read original article here

Business

JPMorgan, Goldman pick top Southeast Asia markets for 2022

April 4, 2022 Admin Leave a comment

Indonesia’s stocks are among the top picks of JPMorgan Asset Management and Goldman Sachs for 2022. In this photo from April 2019, the statue of a bull is standing at the lobby of the Indonesia Stock Exchange (IDX) in Jakarta, Indonesia.

Dimas Ardian | Bloomberg via Getty Images

Geopolitical tensions around the world have been on the rise, but Southeast Asia’s markets may offer relative safety to investors, according to top investment banks.

As we enter the next quarter of 2022, CNBC asked analysts from Goldman Sachs and JPMorgan Asset Management which Southeast Asian markets were their top picks.

Southeast Asian stocks have underperformed and been “largely ignored by global investors for a decade,” said Timothy Moe, Goldman’s chief Asia Pacific equity strategist.

Indonesia is a top Southeast Asian pick for both Wall Street banks.

Indonesia: Banking and commodity plays

“In Indonesia, we are structurally positive on the banks as the majority of the population are still unbanked or underbanked. We are currently positioned in the leading private sector and also state-owned banks as they have been proactively driving digital adoption to accelerate financial penetration,” said Desmond Loh, a portfolio manager at JPMorgan Asset Management.

Strong commodity prices have also been beneficial for export earnings in Indonesia as well as the country’s trade balance, and that’s set to support the Indonesian rupiah as well as the nearer term growth outlook in Indonesia, he said.

Stock picks and investing trends from CNBC Pro:

Global commodity prices have been on a rollercoaster ride since the war in Ukraine broke out after Russia’s invasion in late February. Russia is a major oil producer while Ukraine is a major exporter of other commodities such as wheat and corn.

As of Monday morning in Asia, international benchmark Brent crude futures have risen more than 30% so far this year.

Vietnam and Singapore

JPMorgan Asset Management also likes Vietnam, which Loh termed a “star performer in the past few years” in economic resiliency and growth. Vietnam is one of the few economies globally to have seen positive economic growth throughout the pandemic, he added.

“To capitalize on the growth, we are positioned in high quality consumer proxies and banks,” he said, without naming specific stocks.

Meanwhile, Singapore is the other Southeast Asian that Goldman Sachs likes.

There are three main reasons why the investment bank likes Indonesia as well as Singapore, said Moe.

Improving economic and growth momentum from a region recovering belatedly from Covid-related setbacks.
A banking sector that is heavily weighted in stock indexes and set to benefit from a switch to tighter monetary policy and rising interest rates.
The “gradual emergence” of digital economy firms which are being included in Indonesia and Singapore indexes.

Indonesia’s Jakarta Composite has risen more than 7% this year, while Vietnam’s VN index is up about 1% in the same period. Singapore’s Straits Times index has gained more than 9%.

In comparison, MSCI’s broadest index of Asia-Pacific shares outside Japan has dropped 6%.

On Wall Street, the S&P 500 is down 4.6% so far this year, while the pan-European Stoxx 600 has dropped about 6%.

Investors have in recent weeks been grappling with a range of concerns, from the commodity price spike triggered by Russia’s invasion of Ukraine to a rising interest rate environment as major central banks like the U.S. Federal Reserve seek to fight inflation.

Shelter from geopolitical tensions

Southeast Asia is “relatively insulated” from rising geopolitical tensions in Europe, as Russia and Ukraine account for less than 1% of regional exports, according to Loh.

“Escalation in geopolitical risks renders near-term tailwind for commodity prices to underpin the strength of ASEAN’s commodity-exporter markets,” he said, referring to the 10-member states of the Association of Southeast Asian Nations.

No ‘exodus of outflows’ expected

Global investors have been repositioning in the last few weeks in anticipation of more aggressive moves ahead by the Federal Reserve’s monetary tightening, but the analysts expect the impact on Southeast Asia to be relatively smaller compared to before.

In March, the Federal Reserve raised interest rates for the first time since 2018, and Fed Chair Jerome Powell subsequently pledged to take tough action on inflation that is “much too high.”

The prospect of more rate hikes ahead by the Fed has raised concerns of capital outflows and currency depreciation in Southeast Asia’s emerging markets, a phenomenon seen in 2013 during the “taper tantrum” that saw bond yields spike after the Fed hinted asset purchases could wind down.

“We don’t expect an exodus of outflows [from ASEAN] as we saw in the last taper tantrum,” Loh said, explaining that country level balance sheets in Southeast Asia are “generally much healthier” now compared to a decade ago.

Most of Southeast Asia’s central banks, with the exception of Singapore, have yet to tighten monetary policy. That’s in part due to an inflation situation regionally that is relatively less severe compared with developed economies in the West.

Southeast Asian economies today are also more resilient compared to past cycles, according to Moe, who cited external balances that are in better shape as well as currencies that are attractively valued.

Read original article here

Crucial Russian sovereign bond payment received by JPMorgan, processed -source

March 17, 2022 Admin Leave a comment

File Photo: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar

Register now for FREE unlimited access to Reuters.com

NEW YORK, March 17 (Reuters) – Coupon payments on Russian sovereign bonds due this week were received by correspondent bank JPMorgan (JPM.N), processed and the bank then made an onwards credit to the paying agent Citi (C.N), a source familiar with the situation said on Thursday, an indicator that the country may have averted default.

The payment received was a U.S. dollar payment, the source said. After being credited to the paying agent, it would be checked and distributed on to various bondholders, the source said.

Russia said on Thursday it had made debt payments that were due this week. Russia was due to pay $117 million in coupon payments on Wednesday on two dollar-denominated sovereign bonds and some creditors had received payments, market sources separately told Reuters, also indicating it avoided what would have been its first external bond default in a century. read more

Register now for FREE unlimited access to Reuters.com

The payments were widely seen as the first test of whether Moscow would meet its obligations after Western sanctions hobbled its financial dealings.

The source said that JPMorgan’s obligation as a foreign correspondent bank was to process payments, but that given the circumstances, also to check with authorities before doing so.

Sanctions imposed over Moscow’s invasion of Ukraine have cut Russia off from the global financial system and blocked the bulk of its gold and foreign exchange reserves, while Moscow has in turn retaliated – all of which complicate payments.

The bank checked with authorities before processing, the source said. Not to process the payment would have harmed bondholders, the source said.

Under the sanctions and restrictions announced last month, in response to Russia’s invasion of Ukraine, U.S. banks were prohibited from correspondent banking – allowing banks to make payments between one another and move money around the globe – with Russia’s largest lender, Sberbank, within 30 days. Washington and its partners also started barring some Russian banks from the SWIFT international payment system – a step that will stop lenders from conducting most of their financial transactions worldwide. read more

A March 2020 report by the Bank for International Settlements showed that correspondent banks have been “paring back their cross-border banking relations for the past decade.” The number of correspondent banks fell by 20% between 2011 and 2018, even as the value of payments increased, the report said.

Register now for FREE unlimited access to Reuters.com

Reporting by Megan Davies;
Editing by Chizu Nomiyama and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

‘Growth’ stocks still not cheap, cautions JPMorgan

February 21, 2022 Admin Leave a comment

Facebook, Amazon, Netflix and Google logos are seen in this combination photo from Reuters files./File Photo

Register now for FREE unlimited access to Reuters.com

LONDON, Feb 21 (Reuters) – Tech-dominated “growth” stocks are still not cheap despite some sharp falls over the last six months, analysts at U.S. investment bank JPMorgan cautioned on Monday.

The so-called FAANGs have seen some of their COVID-era surges cut back this year, with Facebook (.FB.O) down 38%, Apple (AAPL.O) down 5.7%, Amazon down 8.5% and Netflix and Google (GOOGL.O) down 35% and 10% respectively. (.NYFANG).

JPMorgan’s analysts estimate that on average tech firms that are yet to even make a profit have lost 30% of their value since peaks around September last year, while ‘fintech’ firms which focus on tech-savvy banking apps and tools have dropped 40%.

Register now for FREE unlimited access to Reuters.com

“As Growth stocks weakened of late, they derated, but are still not outright cheap,” JPMorgan’s analysts said in a note to clients, adding that banks and commodity-linked stocks which have rallied this year thanks to rising oil and metals prices or interest rates were still “far from expensive”.

The chance is that the earnings of ‘growth’ sectors might not be exceptional anymore, although the big driver remains bond market borrowing costs, which have shot up this year as top central banks have laid the groundwork for interest rate rises.

Years of record-low rates have fuelled the tech stock rally but with those rates now rising again the appeal of stratospherically-valued tech stocks gets dimmer for investors, especially if their growth trajectories splutter.

“We believe that bond yields will keep moving higher through the course of the year,” JPMorgan said referring to the bond market costs

“Our fixed income strategists expect U.S. 10-year (Treasury) yields to reach 2.35% by the end of this year, and German 10-year yields to reach 0.5%.” Treasury yields are now at 1.92% and Germany bunds are at 0.2%.

They also said that the tensions building between Russia and Western powers over Ukraine shouldn’t drive a return to big tech names, which carved out a safe-haven reputation during the pandemic.

“While geopolitics could flare up into month end… we do not expect this to last, and call for risk-on internals to resume into spring”.

Register now for FREE unlimited access to Reuters.com

Reporting by Marc Jones
Editing by Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Avaya’s former CEO Jim Chirico, applauding at the company’s stock listing in 2018, was removed last month.

SHARE YOUR THOUGHTS

SHARE YOUR THOUGHTS

Newsletter Sign-up

Markets

Top Stories This Week

Andreessen Horowitz closes $4.5 billion crypto fund amid market turmoil

JPMorgan places BTC fair price at $38K, declares crypto a preferred alternative asset

WEF 2022: PayPal looks to embrace all possible crypto and blockchain services

GameStop unveils beta cryptocurrency wallet and upcoming NFT platform

Korean watchdog begins risk assessment of crypto as Terra 2.0 passes vote

Winners and Losers

Most Memorable Quotations

Prediction of the Week

Bitcoin price may bottom at $15.5K if it retests this lifetime historical support level

FUD of the Week

‘Yikes!’ Elon Musk warns users against latest deepfake crypto scam

Crypto spam increases 4,000% in two years — LunarCrush

Targeted phishing scam nets $438K in crypto and NFTs from hacked Beeple account

Best Cointelegraph Features

The Moon ‘created’ his lavish reality… and says you can, too

Crypto is changing how humanitarian agencies deliver aid and services

How Terra’s collapse will impact future stablecoin regulations

Q1 was crappy as IPOs imploded, investment banking took a hit, mortgage activity fizzled, other stuff happened.

By Wolf Richter for WOLF STREET.

Q1 was crappy as IPOs imploded, mortgage activity fizzled, other stuff happened.

IPOs were crappy all around.

Indonesia: Banking and commodity plays

Stock picks and investing trends from CNBC Pro:

Vietnam and Singapore

Shelter from geopolitical tensions

No ‘exodus of outflows’ expected

Register now for FREE unlimited access to Reuters.com

Register now for FREE unlimited access to Reuters.com

Register now for FREE unlimited access to Reuters.com

Register now for FREE unlimited access to Reuters.com

Register now for FREE unlimited access to Reuters.com

Register now for FREE unlimited access to Reuters.com

The Ultimate News Site