There were four things we mostly cared about in today's JPM earnings release, the first Wall Street bank to report Q4 results:i) how did the company's fixed income and equity trading revenue do; ii)what is the bank's credit exposure to energy/oil;iii) did the recent Fed hike do anything to boost the company's Net Interest Margin (this has been the primary catalyst for bank share upside), and iv) did JPM halt its practice of releasing reserves and start building reserves - a major inflection point when it comes to management expectations for future credit quality deterioration.
"Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates.” 2016 Democratic presidential candidate and Senator from Vermont Bernie Sanders said in an op-ed on Wednesday that a full independent audit of the Federal Reserve is necessary “to reign in Wall Street."
Year end 2015, we go from Ponzi scheme to failure to the thing every major global bank desires. The dilemma is, the ingenuity to excel in this space lies in scrappy young startups, not trillion dollar mega banks. Let me prove this to you, step by prior art step.
Is having the CEOs of two of the largest, most powerful banks sit on the board of their own regulator literally worse than putting a fox in charge of the hen house? Here's why the name "Morgan" get's you a regulator board seat and what regular people can do about it.
As FT reports, "some of the European Central Bank’s top decision-makers met banks and asset managers days before major policy decisions, and on one occasion just hours before, copies of their diaries reveal."
Oil companies have sold $61.5 billion in stocks and bonds since January as oil prices have tumbled. However, the fees geneated are a tiny fraction of the bank's real exposure to the energy sector, at over $150 billion. So have the banks learned their lesson? "The bankers have gone through this before,” says Oscar Gruss’s Meyer. “They know how it works out in the end, and it’s not pretty." Then again, perhaps banks are just sailing on an ocean of liquidity allowing them to postpone the day of Mark to Market reckoning, especially since this time, everyone is in it together....
Retail Sales (ex Auts) dropped 0.3% in September, the 2nd drop in a row, the biggest drop since January (at the heart of the weather-driven economic weakness). For the first time since February, the 'Control Group' Retail Sales dropped (down 0.1% vs +0.3% expectations) as sales dropped in 7 of 13 categories (but notably autos rose significantly but was offset by a collapse in gas station spending). Notably 27 out of 27 'experts' agreed that the control group sales data woul dnot be negative.. wrong! Year-over-year data shows sustained stagnant growth in retail sales historically aligned with a recessionary environment.
The current surge in dis-inflationary pressures is not just due to the recent fall in oil prices, but rather a global epidemic of slowing economic growth. While Janet Yellen addressed this "disinflationary" wave during her post-meeting press conference, the Fed still maintains the illusion of confidence that economic growth will return shortly. Unfortunately, this has been the Fed's "Unicorn" since 2011 as annual hopes of economic recovery have failed to materialize. However, it is these ongoing views of optimism that have collided with economic realities.
Butter prices hit $3.10 per lb today in Chicago trading - a record high - as it appears the expectations of production increases after the EU milk quota system expired in March have proved "wildly optimistic." Of course, no one should complain at the rising cost of staples like butter (or toilet paper), just ask Jamie Dimon... "let them eat iPhones."
To my colleagues, our clients and our shareholders,
Late this summer after several weeks of not feeling well, I underwent a series of tests, which culminated in a biopsy last week. After the biopsy, I was told by my doctors that I have lymphoma. Fortunately, my form of lymphoma is highly curable and my doctors' and my own expectation is that I will be cured.
While Mr. Dimon's view - "Amerca has the best hand ever dealt right now." is certainly uplifting, it is a bit delusional. But of course, give any person a billion dollars and they will likely become just as detached from economic realities. Does America have "greatest hand ever dealt." The data certainly doesn't suggest such. However, that can change. We just have to stop hoping that we can magically cure a debt problem by adding more debt and then shuffling it between Central Banks.
The Federal Reserve system was created in December 1913 with the stroke of the pen by then President Woodrow Wilson. Since that time, consumer purchasing power has fallen from $1,000 in December 1913 to … $40 today.