|Bid||92.65 x 800|
|Ask||92.87 x 1300|
|Day's range||91.93 - 94.96|
|52-week range||76.91 - 141.10|
|Beta (5Y monthly)||1.18|
|PE ratio (TTM)||10.41|
|Earnings date||14 Jul 2020|
|Forward dividend & yield||3.60 (3.89%)|
|Ex-dividend date||02 Jul 2020|
|1y target est||109.75|
Starting in October, the bank will have to maintain a common equity tier 1 capital ratio of 11.3%, up from its current 10.5% requirement.
JPMorgan Chase & Co is eliminating terms like "blacklist," "master" and "slave" from its internal technology materials and code as it seeks to address racism within the company, said two sources with knowledge of the move. The terms had appeared in some of the bank's technology policies, standards and control procedures, as well in the programming code that runs some of its processes, one of the sources said. Other companies like Twitter Inc and GitHub Inc adopted similar changes, prompted by the renewed spotlight on racism after the death of George Floyd, a Black man who died in police custody in Minneapolis in May.
The Zacks Analyst Blog Highlights: Visa, JPMorgan Chase, Bank of America, Chevron and Eli Lilly
Former CFPB head Richard Cordray says Monday's Supreme Court ruling would mean quick removal of the agency's Trump-appointed director if the Democrats win the White House.
While JPMorgan (JPM) is likely to be able to maintain the current dividend payout in the near term, further worsening of the economic environment might compel it to cut the same.
(Bloomberg) -- The value of mergers and acquisitions fell 50% in the first half from the year-earlier period to the lowest level since the depths of the euro-zone debt crisis, as the coronavirus pandemic brought global dealmaking to an abrupt halt.Every region was hit by the economic impact of Covid-19, which gripped markets in March and sparked countrywide lockdowns. This situation has made face-to-face meetings, a lifeblood of M&A, all but impossible. Little more than $1 trillion of deals have been announced this year, making for the slowest first half since 2012, according to data compiled by Bloomberg.The sharpest fall has been in the Americas, where the value of deals is down 69% in the first half. While every major industry has been hurt, the financial sector fared better than most. It was boosted by insurance brokerage Aon Plc’s $30 billion offer for Willis Towers Watson Plc and Morgan Stanley’s proposed $13 billion acquisition of E*Trade Financial Corp. The top three advisers on deals targeting the Americas so far in 2020 were Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co., the Bloomberg-compiled data show.Deals involving targets in Europe, the Middle East and Africa are down 32%. Large transactions that helped prevent a more dramatic drop include the $19 billion leveraged buyout of Thyssenkrupp AG’s elevator unit by Advent International and Cinven. There was also a recent flurry of activity in the Middle East, including Abu Dhabi’s sale of a $10.1 billion stake in its gas pipeline network that ranks as the biggest infrastructure transaction of the year. Goldman Sachs, JPMorgan and Rothschild & Co. were the busiest advisers on EMEA deals.Asia Pacific has held up better, with overall volumes falling just 7% and most sectors seeing smaller declines than in other parts of the world. The technology, media and telecommunications industry reported a 13% increase, helped by Indian billionaire Mukesh Ambani’s digital arm attracting $15 billion of investments from the likes of Facebook Inc. and KKR & Co. Another landmark transaction was Tesco Plc’s sale of Asian businesses to Thai billionaire Dhanin Chearavanont for more than $10 billion. The most active banks on deals in the region were Morgan Stanley, HSBC Holdings Plc and JPMorgan.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- China is attempting to create its own JPMorgan Chase & Co. The ambitions could prove hard to satisfy.Regulatory authorities may allow some of the largest commercial lenders into the brokerage industry to perform services that include investment banking, underwriting initial public offerings, retail brokering, and proprietary trading, local media outlet Caixin reported. With capital markets flailing and direct financing struggling to take hold as debt rises across the economy, what better way than to bring in its trillion-dollar whales to boost the financial sector?There is logic to this. Size matters, and the volumes could lead to success. China’s banks have more than $40 trillion in assets; the securities industry’s amount to around 3% of that. The largest lender, Industrial & Commercial Bank of China Ltd., had 32.1 trillion yuan ($4.5 trillion) in assets and 650 million retail customers as of March, according to Goldman Sachs Group Inc. The biggest broker, CITIC Securities Co., had 922 billion yuan and 8.7 million retail clients. Banks have thousands of branches with deeper distribution channels.But banks are the load-bearing pillars of China’s financial system. Regulators have asked lenders to show leniency with hard-up borrowers and to forego profits in the name of national service, in both tough and normal times. Granting brokerage licenses could help them create another channel of (small) profits.Banks stepping in where brokers have failed could help the broader capital markets. In theory, commercial lenders know how to deal with different types of risk, like with the ups and downs in the value of a security and market movements. They’re already big participants in bond markets and have access. Bringing banks into mainstream brokering could help reduce the intensity of risk associated with the trillions of dollars of credit being created in China every month. It may also help solve a persistent problem: the inefficient allocation of credit that has led to mispriced assets.All of this is contingent upon the banks pulling their weight. Going by past experiments, they haven’t brought the heft that Beijing had hoped. Consider China’s life insurance industry. It took bank-backed players in this sector a decade to build a foothold. Their market share grew to 9.2% last year from 2.5% in 2010. The brokerage arms of Chinese banks in Hong Kong have fared little better. Bank of China International Securities, set up in 2002 by Bank of China Ltd., remains a mid-size broker by assets and revenue, Goldman Sachs says. Top executives come from the bank; related-party transactions with the parent account for just about 14% for underwriting business and around 39% for income from asset management fees.Catapulting ICBC to the same stature as JPMorgan — a full service bank with a 200-year history — may take a while. The American financial giant has hired big, and opportunistically built out businesses. It bought and merged with firms like Banc One Corp. and Bear Stearns Cos. and is in consumer banking, prime brokerage and cash clearing. The services it offers run the gamut of credit cards, retail branches, investment banking, and asset management. Shareholders have mostly rewarded the efforts.For China’s biggest lenders, conflicting and competing priorities will make this challenging. They’re already being required to take on more balance sheet risk, lend to weak companies and roll over loans while maintaining capital buffers, keeping depositors happy and essentially martyring themselves. Now, they’ll be adding brokering at a time when traditional revenue sources are shrinking in that business. And it won’t happen overnight, or even in the next two years. As for brokers? Their stock prices dropped on the news that banks would be wading into their territory.Beijing’s efforts to shore up its capital markets may look OK on paper, but they’re increasingly muddled and interests aren’t aligned. As China attempts to make its financial sector more institutional and less fragmented while it’s also letting in foreign banks and brokers, allowing the big homegrown institutions to do more, with additional leeway, doesn’t necessarily make for a stronger system. As I’ve written, experiments like these can have unexpected results.Over time, it won’t be surprising to see China’s large brokers and banks start looking very similar; for instance, big securities firms becoming bank holding-type companies, as one investor suggested. That may be a laudable goal for Beijing, but is it realistic? And does it take into account the problems on the financing side, such as misallocation and transmission? Ultimately, none of this really gets at one big problem: unproductive credit.All the while, regulators are inviting in the likes of the actual JPMorgan Chase and Nomura Holdings Inc. and giving them bigger roles. China won’t be ready. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JPMorgan Chase & Co. (NYSE: JPM) ("JPMorgan Chase" or the "Firm") announced today that it has completed the 2020 Comprehensive Capital Analysis and Review ("CCAR") stress test process. Information can be found on the Firm’s Investor Relations website at www.jpmorganchase.com/press-releases.
(Bloomberg Opinion) -- New York’s Metropolitan Transportation Authority has a lot of problems, but bankruptcy isn’t one of them.That’s not because the MTA couldn’t use the debt relief. Far from it: The agency has more than $40 billion of municipal bonds outstanding, borrowed $1.1 billion in early May to pay down maturing notes, issued an additional $525 million two weeks later for infrastructure needs, secured a $950 million credit agreement with JPMorgan Chase & Co. and Bank of China, and won approval to tap the Federal Reserve’s emergency liquidity facility. Debt is as much a part of the lifeblood of the nation’s largest public transit system as the subway tunnels themselves. Rather, the MTA is legally barred from filing for bankruptcy. This doesn’t get discussed much — perhaps to avoid evoking New York City’s own brush with insolvency in the 1970s. For instance, neither Moody’s Investors Service nor S&P Global Ratings mentioned the word “bankruptcy” in reports this year explaining why they downgraded the agency’s debt. Fitch Ratings, which gives the MTA a higher grade than its two competitors, also cut the MTA’s rating after the Covid-19 pandemic roiled the New York metropolitan area. But it specifically cites the lack of bankruptcy risk as a key strength. Here’s the provision in full, from a recent MTA bond sale:No Bankruptcy. State law specifically prohibits MTA, its Transit System affiliates, its Commuter System subsidiaries or MTA Bus from filing a bankruptcy petition under Chapter 9 of the U.S. Federal Bankruptcy Code. As long as any Transportation Revenue Bonds are outstanding, the State has covenanted not to change the law to permit MTA or its affiliates or subsidiaries to file such a petition. Chapter 9 does not provide authority for creditors to file involuntary bankruptcy proceedings against MTA or other Related Entities.“We’re very clear that their legal structure and their inability to file for bankruptcy protection is an important criteria,” Michael Rinaldi, Fitch’s lead analyst on the MTA, told me in a phone interview. “Absent that protection, it would have an adverse ramification for how we view the MTA’s financial leverage, which is quite substantial.”Or as I’d put it: If the MTA could file for bankruptcy, the move couldn’t be ruled out.To be clear, the MTA is hardly out of options, even though it faces a potential $10.3 billion deficit through 2021. As I wrote in April, the agency’s leaders know public transit is vital to moving people around the New York City area, which accounts for almost 10% of the nation’s gross domestic product, and have successfully used that as leverage to secure federal funds. However, it’s burning through that money fast: It has about $1 billion remaining of the $3.8 billion that Congress approved to help cover the sharp drop in ridership and the cost of extra cleaning and disinfecting. MTA officials say they need $3.9 billion more.There’s every reason to expect it’ll get those funds — Congress isn’t about to repeat Gerald Ford’s “drop dead” moment by denying federal aid. But digging deeper into the MTA’s operating framework, it’s clear that the coronavirus pandemic has set the agency back in such a way that it’ll have no choice but to rely on federal help and more debt for the foreseeable future. That’s probably enough to scrape by, but it raises doubts about whether the MTA will ever have enough cash to truly revitalize the system’s aging infrastructure.The MTA borrows under something known as the “Transportation Resolution,” which allows it to issue additional bonds without meeting any specific debt-service-coverage level as long as the securities are used to fund approved capital projects and the MTA certifies to meeting a “rate covenant” for the year the bonds are sold.This is the rate covenant:MTA must fix the transit and commuter fares and other charges and fees to be sufficient, together with other money legally available or expected to be available, including from government subsidies — to pay the debt service on all the Transportation Revenue Bonds; to pay any Parity Debt; to pay any Subordinated Indebtedness and amounts due on any Subordinated Contract Obligations; and to pay, when due, all operating and maintenance expenses and other obligations of its transit and commuter affiliates and subsidiaries. Take note of the “including government subsidies” clause. As the MTA eventually explains, it’s the entire game:The Transit, Commuter and MTA Bus Systems have depended, and are expected to continue to depend, upon government subsidies to meet capital and operating needs. Thus, although MTA is legally obligated by the Transportation Resolution’s rate covenant to raise fares sufficiently to cover all capital and operating costs, there can be no assurance that there is any level at which Transit, Commuter and MTA Bus Systems fares alone would produce revenues sufficient to comply with the rate covenant.That puts all the cards on the table. Notably, this language is based on the MTA’s adopted budget from February, before any Covid-19 impacts were even considered. In April, ridership compared with a year earlier fell 92% on MTA subways, 94% on the Metro-North Railroad and 97% on the Long Island Rail Road.Clearly, either the federal, state or city government (or all three) will have to pay up. The MTA alone has no chance of raising enough money itself to satisfy the rate covenant. If it doesn’t get aid, it can’t issue more bonds and would most likely have to slash operating expenses. And if the MTA can’t borrow, there’s no money to finance infrastructure projects. This is the domino effect that has halted the agency’s $51.5 billion five-year capital program.“This is a four-alarm fire,” Pat Foye, the MTA’s chief executive officer, said last week. “We are facing the most acute financial crisis in the history of the MTA.”Bloomberg News’s Michelle Kaske reported that the MTA was set to spend $13.5 billion this year for infrastructure upgrades, but the agency has awarded only $2.3 billion. Without federal aid, it may need to freeze wages, fire workers and divert more money from the capital budget. Foye said he would ask the U.S. government for more cash in 2021.To some extent, “every mass transit system needs to be subsidized,” says Howard Cure, head of municipal research at Evercore Wealth Management. For the MTA in particular, “it’s almost a thought of too big to fail. The New York metropolitan area cannot function without a strong transportation system. They need access to the capital markets — you cannot let the system deteriorate.”Yet the MTA will be hard pressed to squeeze more money out of the city, which itself is considering 22,000 layoffs and furloughs to cut $1 billion of expenses. At the state level, some studies suggest tax revenue could tumble by 40%, the most in the nation. In theory, both the state and city can require the MTA to redeem its bonds as long as they provide sufficient funds.(1) If that didn’t happen during good economic times, though, it’s not happening now. If push came to shove, Cure says, the state could move to backstop the MTA’s borrowing with its own credit rating, just one step below triple-A. That would presumably lower borrowing costs and provide some budgetary flexibility.All that is to say, the MTA will have to subsist on federal payments throughout the coronavirus crisis, with perhaps some short-term financing from the Fed sprinkled in. Without question, the U.S. government should do more to help support state and local governments, including public transit agencies, through this economic downturn. Congress will likely provide at least some aid in its next relief package, and the MTA will probably get what it wants again. Still, it’s tough to project the MTA’s financial situation over the next several years and come up with a scenario in which the agency does any better than muddle through. More than likely, it will continue to lean heavily on government assistance while maxing out its debt. Maybe that’s a better alternative than bankruptcy and the stigma that comes with it, or maybe not. Regardless, New Yorkers can only hope there’s some money for much-needed infrastructure improvements without huge fare hikes.(1) See Article IV: Redemption at Demand of the State or the City. Except as otherwise provided pursuant to a Supplemental Resolution, either the State or the City may, upon furnishing sufficient funds therefor, require the Issuer to redeem all or any portion of the Obligations as provided in the Issuer Act.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European stock markets are set to open lower Monday, with investors displaying a cautious tone as the ever-rising number of Covid-19 cases threatens the global economic recovery. At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.8% lower. France's CAC 40 futures were down 0.8%, while the FTSE 100 futures contract in the U.K. fell 0.5%.
(Bloomberg) -- Wall Street banks will soon be able to boost investments in venture capital funds and pocket billions of dollars they’ve had to set aside to backstop derivatives trades as U.S. regulators continue their push to roll back post-crisis constraints.The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. approved changes to the Volcker Rule Thursday that let banks increase their dealings with certain funds by providing more clarity on what’s allowed. The regulators also scrapped a requirement that lenders hold margin when trading derivatives with their affiliates.Read More: Wall Street’s Win Streak With Trump Regulators Dangles by ThreadThe revisions will complete what watchdogs appointed by President Donald Trump have referred to as Volcker 2.0 -- a softening of one of the most controversial regulations included in the 2010 Dodd-Frank Act. Last year, the Fed, FDIC, OCC and other agencies eased the better-known aspect of Volcker that restricts lenders from engaging in proprietary trading -- the practice of making market bets for themselves instead of on behalf of clients.Thursday’s separate reversal of the interaffiliate margin requirement for swaps trades could free up an estimated $40 billion for Wall Street banks, though regulators added a new threshold that limits the scale of margin that can be forgiven.The KBW Bank Index rose 3.4% Thursday, with Bank of America Corp. and JPMorgan Chase & Co. among the gainers.Key DetailsVolcker 2.0 allows banks to take stakes in venture-capital funds that were previously banned in an effort to provide “greater flexibility in sponsoring funds that provide loans to companies.” The change is mostly similar to what regulators proposed last year.The Volcker Rule changes were also approved by the Securities and Exchange Commission and Commodity Futures Trading Commission.The FDIC board passed the new rule in a 3-1 vote, with Chairman Jelena McWilliams saying the changes “should improve both compliance and supervision.” Democratic board member Martin Gruenberg opposed the move, saying it leaves Volcker “severely weakened” and “risks repeating the mistakes” of the 2008 financial crisis.Volcker 2.0 didn’t include all of the industry’s demands for relief. In a March comment letter, Goldman Sachs Group Inc. had urged regulators to eliminate certain Volcker interpretations that have “restricted our ability to invest in certain incubator companies that provide capital and ‘know-how’ to startup companies and entrepreneurs.” The agencies didn’t act on that request.In scrapping the requirement that banks post margin for trades between affiliates, regulators did add a new threshold to prevent banks from abusing the relief: If a firm operating under the old rule would have had to set aside initial margin exceeding more than 15% of its so-called “Tier 1” capital, then it still has to set aside margin that surpasses that amount. The demand, which is meant to boost the safety and soundness of the new approach, will force banks to continue calculating on a daily basis what their margin requirements would have been under the rule that’s been eliminated.The industry and regulators argued that requiring margin for interaffiliate transactions made it difficult banks to manage their risks. But critics say forcing banks to maintain an extra cushion against losses helped protect subsidiaries that are backed by the federal government, including through deposit insurance.The FDIC’s Gruenberg opposed the change to swaps rules, arguing that it removes a critical protection for banks. Fed Governor Lael Brainard reiterated that concern, saying in a statement that she dissented from the Fed’s approval because she fears the deregulatory move “could again leave banks exposed to the buildup of risky derivatives.”Read MoreWall Street’s Win Streak With Trump Regulators Dangles by ThreadTrump Regulators Hand Wall Street Banks a Big Win on Swaps Rule(Updates with index price in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Fed will bar big banks from increasing their dividend payments, following the central bank’s annual stress tests that included a “sensitivity” analysis incorporating the impact of the COVID-19 crisis.
(Bloomberg) -- Bob Michele bet on U.S. yields sinking to zero last year, and reaped the rewards of a historic rally. Now, he says the gains are looking exhausted.The chief investment officer and head of global fixed income at JPMorgan Asset Management has slashed the firm’s holdings of U.S. government bonds to the smallest since September 2018. He expects stagnant returns for the safest government bonds as global economies recover from coronavirus-induced recessions, and has pivoted into securities like corporate bonds and emerging markets debt pegged to growth.Central bankers in the U.S., U.K., Germany and Australia are turning government debt into “zombie” bonds -- depriving them of the yield and volatility that makes them alluring to traders, Michele contends.“We are going to be stuck with low yields for a long period of time,” Michele said in an interview. “Central banks are going to just control the level of yields in those markets and there are other things to us that look more attractive where we still get high quality and protection on the downside.”The Federal Reserve and other central banks have pledged trillions in quantitative easing program to underpin economies hit by the pandemic. It’s possible that yields could fall further, Michele said. A spike in infections, election risk or even another rate cut would spark a flight to quality back to government bonds.JPMorgan Fund That Sold Junk Debt Before Crash Is Diving Back InThe writing was on the wall for Michele in July 2019. While he didn’t warn a pandemic would bring global economies to a screeching halt, he did expect central banks to “cut rates as far as they can and expand balance sheets” to stave off a downturn.Bob Michele Warns the 10-Year Treasury Yield Is ‘Headed to Zero’Though the firm’s absolute holdings of Treasuries are the lowest in two years, duration, or exposure to rate risk though long-dated debt, is little changed.“We are still holding roughly the same duration because we still expect yields to continue to come down,” Michele said. “Although we expect this recovery to continue and policy makers to ensure that it does, when you go back and look at the previous crises, there were fits and starts along the way.”JPMorgan Asset now sees an 80% probability of above-trend global growth in the third quarter, compared with zero in the previous three months. The firm has also revised down a chance of a recession to 10% from 55%.Growth OptimismHis optimistic view on the economy is one reason Michele favors securitized credit -- a choice he said surprised some of the company’s clients because it’s tied to consumer loans.“Although the unemployment data looks horrific now, because of the policy response there’s enough cash coming to those collecting unemployment insurance that they are able to make payments on all the borrowing they have, and by and large they are doing it,” said Michele. “That’s been a pleasant surprise to us.”Renewed trade tension between the U.S. and China poses the biggest threat to growth, overshadowing the risk of a second wave of Covid-19 and the U.S. election, he said.“Elections come and go. They can be disruptive and create some political headwinds, but the market learns to reprice and adjust,” Michele said. “The world’s two biggest economies entering a feared cold war and the knock-on effects on the global economy is a long-term risk I am most concerned about.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With tax revenue plummeting by $8 billion in April, New York needed cash, quickly.At the end of May, the state needed to pay $4 billion to school districts and $1.8 billion to Medicaid. Borrowing money in a public offering didn’t seem like a good option, with record volatility having shut down much of the market as investors yanked out their cash. So the state at the epicenter of the coronavirus pandemic borrowed $1 billion directly from JPMorgan Chase & Co., the country’s biggest bank.It came at a price. The 2.05% tax-exempt interest rate JPMorgan charged New York for the seven-month loan was more than what three other states with similar -- or lower -- credit ratings paid to borrow from rival banks to cover temporary cash shortfalls.In April, Bank of America Corp. purchased $600 million of Hawaii’s taxable notes maturing in 12 and 18 months for yields of 1.46% and 1.76%, respectively, the equivalent of 1.15% and 1.39% if the securities were tax-free like New York’s.In March and April, Rhode Island arranged $300 million in credit agreements with Bank of America and Santander Bank at floating-tax exempt rates that haven’t exceeded 1.65%. And last month, Massachusetts secured a $1.75 billion credit line with a syndicate of lenders led by Bank of America at a minimum taxable rate of 2.25%, or 1.78% on a tax-exempt basis, according to a spokesman for Massachusetts Treasurer Deborah Goldberg.Still, New York, which has a AA+ credit rating, was able to get lower borrowing costs than its neighbor, New Jersey, which at A- has the second-lowest rating among US states. It is paying 4% on $1.5 billion of notes purchased by Bank of America and The Vanguard Group that mature in September.The outcomes illustrate the divergent pricing in the business of extending direct loans to states and cities, which boomed as governments raced to raise cash just as the economic havoc caused by the coronavirus was rattling the public bond markets.Had New York borrowed at Hawaii’s tax-exempt equivalent rates of 1.15% and 1.39%, it would have saved $6.6 million to $9 million, enough to pay the annual salaries of 78 to 107 teachers, based on New York’s average teachers’ salary of $84,230. New York would have saved $2.7 million borrowing at the same rate as Massachusetts.JPMorgan provided the best terms to the Dormitory Authority of the State of New York, which issued the $1 billion notes and solicited bids from nine banks in the agency’s underwriting syndicate, said Jeffrey Gordon, a spokesman for the agency.Gordon didn’t provide the terms offered by the other banks. He said it was misleading to compare other states to New York, which received a competitive rate given the size of the deal and market conditions, and that the state is eligible to be reimbursed for the interest under federal stimulus legislation.“New York State was the epicenter of the coronavirus pandemic, with more deaths and cases than any other state, and it is terribly misleading to compare New York’s much larger transaction in May to smaller borrowings done in in March and April by states that were not similarly situated,” Gordon said in a email.Jessica Francisco, a JPMorgan spokeswoman, declined to comment.New York is among cash-strapped governments, hospitals and universities that turned directly to banks to cover temporary cash shortfalls and boost liquidity in the months after states shuttered non-essential businesses to contain the pandemic. In mid-March, yields on municipal bonds maturing in one year skyrocketed to 2.8%, only to then tumble back toward zero as the Federal Reserve’s emergency lending program restored investors’ confidence.The number of municipal securities filings that report new financial obligations -- a category that includes bank loans -- has increased dramatically this year to 471 in May, according to Municipal Securities Rulemaking Board data, more than twice what it was in February.New York needed the money primarily because of a revenue shortfall driven by a three-month delay in the income-tax filing deadline to July 15. New York state’s tax revenue plummeted 68.4% in April and 19.7% in May from the prior year -- or $8.7 billion -- as the coronavirus lockdowns and the filing extension took a toll on state coffers.To bridge the gap, New York lawmakers authorized $11 billion in new state borrowing for the fiscal year that began April 1, consisting of as much as $8 billion in tax-backed revenue or bond anticipation notes and $3 billion in credit lines or revolving loans.In a sign of how much the municipal market has healed since March and April, earlier this month, New York’s Dormitory Authority issued $3.4 billion notes maturing in nine months in a public offering at an interest rate of 0.55%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Indonesian bonds appear more promising than India’s in a contest between Asia’s high-yield heavyweights, according to two of the world’s biggest investment funds.The archipelago’s debt is more attractive due to a superior fiscal outlook and the greater potential for currency strength, says JPMorgan Asset Management, which oversaw $1.9 trillion globally at the end of March. Indonesia’s bonds also have more upside than India’s after suffering more heavily in the virus sell-off, according to BNP Paribas Asset Management.“We favor Indonesian debt since we reckon that fiscal challenges are less severe there,” said Julio Callegari, lead fund manager for Asia local rates and currencies at JPMorgan Asset in Hong Kong. “We hold a small position in India debt that we don’t intend to increase. In Indonesia we hold a larger position and our bias is to increase it.”The debate among investors over the relative merits of Indonesian and Indian bonds illustrates the shift in markets that has taken place in recent weeks. Risk assets largely rallied across the board in April and May as sentiment rebounded from coronavirus sell-off. That period has now given way to one of greater caution where buyers are more discerning about where they put their money.One of those places is Indonesia. The nation’s local bonds have returned 22% this quarter in dollar terms, reversing the 17% decline from January to March, according to Bloomberg Barclays indexes. Indian securities have gained just 3.3% in the current quarter, following a 1.4% loss in the prior three months. Indonesia’s rupiah has rallied almost 15% since the start of April, while India’s rupee has lost 0.4%.JPMorgan Asset already had an existing bias in favor of Indonesian bonds over Indian debt, and this was reinforced by the impact of the virus pandemic, Callegari said.“The recession in India is likely to be deeper than in Indonesia and the fiscal deterioration larger,” he said. “Given India’s already larger debt and fiscal deficit and lower credit ratings, this contributes to our relative preference for Indonesian debt.”Some investors still see value in both Indian and Indonesian bonds.India’s high foreign-exchange reserves bode well for its bonds during times of risk aversion, while its efforts to gain inclusion in JPMorgan Chase & Co.’s global indexes will attract more investors, according to Emso Asset Management, a $5.5 billion asset management firm focused on emerging markets fixed income“Indonesia has strong risk-on properties, whilst India has strong risk-off buffers,” said Shikeb Farooqui, a senior economist and macro strategist at Emso Asset in London. “It is encouraging that India is looking to diversify its investor base with JPMorgan index inclusion.”Hit HarderAt the start of the pandemic crisis, Indonesian bonds fell further than India’s amid concern the Southeast Asian nation would be more vulnerable due to its reliance on foreign flows. With the Federal Reserve and other global central banks providing extraordinary support, the crisis has eased and the trend is now turning in favor of Indonesia.Indonesia’s debt has attracted $1.1 billion of overseas funds this quarter, while India has lost $4.8 billion, according to data released by the two nations. Combined net withdrawals from both markets totaled $18.4 billion in the first quarter, data compiled by Bloomberg show.BNP Paribas Asset said it’s hard to be positive about Indian bonds because a recovery in oil prices is likely to boost inflation. The South Asian nation relies on imports for about 80% of its crude requirements.“We now think that real rates are more appealing in Indonesia,” said Jean-Charles Sambor, head of emerging-market debt in London at BNP Paribas Asset, which oversaw the equivalent of $457 billion at the end of March.(Updates to add currency performance in 5th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Investing.com -- Crude oil prices drifted slightly lower on Monday, after rallying last week to a level that many think is at far as it can convincingly go in the near term.
(Bloomberg) -- The Trump administration, following a backlash, said it would release details about companies that received loans of $150,000 or more from a coronavirus relief program for small businesses.Treasury Secretary Steven Mnuchin said last week the firms that got billions of dollars in taxpayer-funded aid wouldn’t be disclosed, sparking fury from Democrats and others. In a joint statement on Friday night, the Treasury Department and the Small Business Administration said the company names, addresses, demographic data and other information would be disclosed in five ranges -- starting with $150,000 to $350,000, and going up to between $5 million and $10 million. For loans below $150,000, only totals will be released and will be aggregated by zip code, by industry, by business type, and by various demographic categories, the agencies said. The loans above $150,000 account for almost 75% of the total loan dollars approved, they said. The statement didn’t say when the data would be released.Lawmakers demanded the disclosure of details about Paycheck Protection Program loans after Mnuchin said at a Senate committee hearing on June 10 that the names of companies that received forgivable loans and the amounts were proprietary or confidential. The administration had previously said the details would be disclosed, and the PPP application said such data would “automatically” be released.Officials had expressed concerns about releasing the details because a company’s payroll is used to determine the loan amount, and some independent contractors and small businesses use their home addresses that would then be disclosed.“We have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors, and independent contractors,” Mnuchin said in a statement on Friday. Critics said the public has a right to know how taxpayer dollars were being spent, and that more detail was needed to know whether PPP was serving businesses that need help. Eleven news organizations, including Bloomberg News, sued to make details of the loan recipients public.The SBA reported that as of Friday night, loans had been approved for almost 4.7 million small businesses totaling $514.5 billion. As of June 12, there were 3.9 million loans of less than $150,000 totaling $136.7 billion and almost 650,000 larger loans worth $375.6 billion.Not Far EnoughReleasing details about companies with loans of more than $150,000 is a step in the right direction but doesn’t go far enough because it means the identities of more than 85% of loan recipients will still be withheld, said Democratic Representative James Clyburn of South Carolina, chairman of the Select Subcommittee on the Coronavirus Crisis.“This is far from the full transparency that American taxpayers deserve,” Clyburn said in a statement.Democrats on the House panel have sent letters to several banks, including JPMorgan Chase, Bank of America, Wells Fargo & Co and Citigroup Inc., asking whether they favored larger, well-connected companies over smaller firms from rural or minority communities when making PPP loans. The Democrats also demanded that the Trump administration release the names of all PPP borrowers.Friday’s action “is an overdue step toward securing the transparency needed to ensure struggling small businesses, particularly minority, women and veteran-owned businesses, are getting the vital assistance they need to survive and retain their workers,” House Speaker Nancy Pelosi said in a statement on Saturday. Republican Senator Marco Rubio of Florida, chairman of the Small Business & Entrepreneurship Committee, said the public deserves to know how effective the PPP has been, but that there are legitimate concerns about disclosing information about small firms.“Today’s announcement strikes a balance between those concerns and the need for transparency,” Rubio said in a statement.Lawmakers have also called on Treasury and the SBA to provide details about its coronavirus relief loans to the Government Accountability Office, which is preparing a report about how relief dollars were spent.(Updates with Clyburn comment from tenth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JPMorgan Chase CEO Jamie Dimon renewed the company’s commitment to addressing the U.S. racial wealth gap in the wake of the killing of George Floyd.
China on Thursday approved JPMorgan's application to operate the first fully foreign-owned futures business, as the world's second-largest economy pushes ahead with opening its multi-trillion-dollar financial market. The latest regulatory approval for a U.S. financial services company coincides with tension between Beijing and Washington, increased by the COVID-19 pandemic and China's move to impose security legislation on Hong Kong. JPMorgan reportedly sought full control of its China futures joint venture last December as Beijing moved to scrap caps on foreign ownership.
(Bloomberg Opinion) -- HSBC Holdings Plc had little choice. It’s a measure of how much the world has changed that the 35,000 job cuts it announced in February, a plan that looked like radical surgery at the time, are now almost certainly inadequate. The economic damage wreaked by Covid-19 and the political quagmire into which the bank has sunk over its support for a national security law in Hong Kong meant that a return to retrenchment was inevitable sooner rather than later.The London-based bank has restarted its cost reduction program, according to a memo from Chief Executive Officer Noel Quinn, having placed it on pause in March as the pandemic spread. The plan calls for HSBC to eliminate those jobs over three years and shed $100 billion in risk-weighted assets by shrinking its underperforming U.S. operations and European businesses and cutting back on its investment bank.Few expected HSBC to hold out indefinitely. The longer the virus lasts, the more bad loans will accumulate and the heavier will weigh its network of 235,000 employees across 64 countries. The bank, a major player in trade finance, warned in February that it could face more credit losses from disruption to supply chains. Since then, worsening geopolitical tensions between China and the U.S. have added a further negative. A strong first quarter for fixed-income and foreign-exchange trading will be hard to sustain. Improving its paltry 1.9% return on equity is a priority. JPMorgan Chase & Co., comparable in size with a workforce of 257,000, has an ROE of 15%.The controversy over Hong Kong provides an added incentive for HSBC to push ahead with its transformation. The bank has upset the U.S. and the U.K. by its stance on the security bill, with HSBC’s Asia head Peter Wong signing a petition this month in support of the legislation that China is imposing on the former British colony. Hong Kong contributes 54% of profit and a third of global revenue. Most of the job cuts are targeted at less profitable or money-losing units in other regions. HSBC has made its choice and may as well follow through: Expect an acceleration of the “pivot to Asia” begun under Quinn’s predecessor Stuart Gulliver five years ago.Granted, HSBC cannot afford to give up its global footprint or alienate Washington. Its status as a dollar-clearing bank is valuable, and many of China’s biggest banks use HSBC’s system to trade in the U.S. currency. Multinational clients may be less inclined to stick with HSBC for European and U.S. business as it scales back. At the same time, it has an opportunity to strengthen its hold as a corporate bank for multinationals operating in China.Challenges remain even in the market on which HSBC has bet its future. The bank is still a target of suspicion in China after providing U.S. prosecutors with information that led to the arrest of Huawei Technologies Co.’s chief financial officer in late 2018. Having sided with authorities over the security bill, it also risks alienating a large part of its customer base in Hong Kong. HSBC already drew the ire of pro-democracy protesters in the city after closing an account linked to the movement last year. And the axing of its dividend in April stung the bank’s base of small shareholders in Hong Kong.Walking that tightrope is unlikely to get any easier. In the meantime, HSBC has plenty of tasks to get on with elsewhere in the world. The bank is already looking for a buyer for its French retail operations. A tiny U.S. retail presence and sub-scale businesses in countries such as the Philippines and New Zealand are among unneeded units that could go. Hong Kong, at least, can expect gentler treatment for now. (Corrects chart to insert missing Europe bar.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Nintendo Co.’s stock has surged to levels not seen since the height of Wii mania.Shares in the videogame maker climbed as much as 2.7% in Tokyo Thursday, lifting the stock past the 50,000 yen barrier for the first time since September 2008. Shares have in recent days been driven by rising fears of a coronavirus second wave, and were boosted further by the announcement of new Pokemon games for both Switch and mobile.The announcement of the Pokemon games by Nintendo and Pokemon Co., in which Nintendo owns a significant stake, was long overdue. The Nintendo 64 game Pokemon Snap will be getting a sequel on Switch, while a paid expansion was announced for the Switch titles Pokemon Sword and Shield, which have sold more than 17 million copies. Pokemon developers also said they would share news on a further “big project” on June 24.Nintendo’s Switch console-handheld hybrid was a hit product during global lockdowns, sold out in many regions and was buoyed by the surprising success of laid-back social simulator Animal Crossing: New Horizons. With cases reappearing in Beijing and increasing in the U.S., the prospect of more lockdowns has helped boosted the shares out of its two-month plateau.“The stock had been struggling the past two months with demand for stay-at-home stocks dropping as the economy re-opened and the state of emergency in Japan was lifted,” Katsuyuki Fujii, an analyst at Asunaro Investment, said Thursday. “But as fears for the second wave of coronavirus grow, people are taking a second look at those stocks.”Shares hit an all-time high of 73,200 yen in November 2007, when the Wii was the must-have hit product.Investors and gamers alike have been wondering what the company has in store for the rest of the year, with Nintendo’s slate looking remarkably bare. Beyond Pokemon, there are almost no titles in its hit franchises with set release windows -- despite Sony Corp. and Microsoft Corp. both preparing to spend big as they roll out new generations of their PlayStation and Xbox consoles this holiday season.“The shares have remained range-bound due to concerns over the lack of upcoming titles,” Daiwa Securities analyst Takao Suzuki wrote in a note dated June 9 in which he raised his price target to 55,000 yen. “We look for new title announcements and a surge in digital sales, other than those for Animal Crossing: New Horizons.”Sony announced more than 20 new titles when it showed off the PlayStation 5 for the first time last week, while Microsoft showcased more than a dozen Xbox Series X titles in May. At Nintendo’s most recent earnings in May it had no major titles listed for release in the rest of 2020.All eyes will now be on the Kyoto gamemaker to say that it will hold one of its own “Nintendo Direct” online presentations, which has been the company’s favored method of revealing showcase titles in recent years. It has been almost a year since Nintendo held a major one of these announcements in which it unveiled key new titles, with the Mario Kart and Zelda franchises among those due to receive new entries.Beyond this year’s slate, hopes are also high for the company in 2021. JPMorgan analyst Haruka Mori on June 10 raised her price target for Nintendo by 18% to 52,000 yen, saying that the Covid-related demand growth didn’t look temporary. “We believe the Covid-19 pandemic has expanded earnings opportunities for the Nintendo Switch platform beyond one-off special demand,” Mori wrote.Despite a lack of short-term causes for the stock to move, Nintendo has multiple opportunities in the mid-term, Mori said in a note, citing catalysts for 2021 that included a possible new Switch model, a price cut for existing models and advances for its team-up with Tencent Holdings Ltd. in China.(Updates throughout with latest share price and Pokemon information.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Eldorado Resorts Inc. launched the sale of about $6 billion of high-yield bonds on Wednesday to finance its acquisition of Caesars Entertainment Corp.The company is marketing a $3.08 billion five-year secured bond with early pricing discussions in the low-to-mid 6% range, and a $1.875 billion seven-year unsecured bond in the mid-to-high 8% range, according to people familiar with the matter. JPMorgan Chase & Co is leading the sale.Books had already reached about $6 billion as of Wednesday afternoon in New York on the two tranches, about half of which was spoken for before the launch, other people familiar said, who asked not to be named discussing a private transaction.The bonds launched on Wednesday and the deal is expected to price Friday.Under Caesars Resort, the company is also marketing $1.05 billion of five-year secured bonds. Credit Suisse Group AG is leading this portion.The financing was one of the largest commitments signed by banks before the Covid-19 pandemic. The banks on this deal recently negotiated better terms that gave them the flexibility to shift a substantial portion of the debt to secured bonds from leveraged loans.Read more: JPMorgan, Credit Suisse ready $7.2 billion debt sale for casinosThe company also launched a $1.47 billion Term Loan B to fund the acquisition. The commitment deadline was moved up to Friday June 19 from Wednesday June 24 originally. Pricing is being discussed at 450 basis points over the London interbank offered rate with a discount of 96 cents on the dollar.Moody’s Investors Service downgraded Eldorado Resorts on Wednesday by one notch to B2, five steps below investment grade, citing the increase in debt, risks associated with integrating and executing the acquisition. They also cited the disruption to casinos caused by the coronavirus. Moody’s rated the new secured notes B1 and the unsecured notes Caa1.(Updates with book color and Moody’s downgrade starting in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Federal Reserve could increase projected stress-test losses in an adverse scenario, forcing banks to increase their stress capital buffer.