107.90 +0.59 (0.55%)
Pre-market: 7:19AM EDT
|Bid||107.50 x 1000|
|Ask||108.20 x 800|
|Day's range||107.24 - 108.44|
|52-week range||91.11 - 119.24|
|Beta (3Y monthly)||1.15|
|PE ratio (TTM)||10.97|
|Earnings date||15 Oct 2019|
|Forward dividend & yield||3.60 (3.31%)|
|1y target est||120.96|
Chase customers will soon be able to use Chase Pay in more merchant apps including Grubhub and with many more merchant websites in the coming months, the bank announced today. The bank will close its stand-alone Chase Pay app in early 2020. “We continue to focus on our customers and they are using the Chase Pay button on merchant websites and in merchant apps, and now their tap-to-pay Chase cards more than ever,” said Eric Connolly, Head of Chase Pay.
(Bloomberg) -- Rates traders are gearing up for a keynote speech from Federal Reserve Chairman Jerome Powell in Jackson Hole on Friday that could be wildly out of tune with their expectations.Futures markets are calling for the Fed to cut its key policy rate at least 50 basis points by year-end, and more than likely 75. Investors aren’t expecting great detail on the Fed’s plans for interest rates from its marquee annual event in Wyoming, but it’s widely expected that Powell will use the stage to signal more easing.His tone may disappoint. Not for the first time this year, he faces a market heavily invested in lower rates -- and yet again, the domestic data don’t necessarily warrant them. The tightest labor market in 50 years shows little sign of buckling, consumption continues to buoy growth and there’s even improvement on the inflation front. Powell has said the Fed will act to protect the U.S. economy from global risks, but no policy makers are suggesting that would amount to more than a couple of standard easings.Some traders may be waking up to this and preparing, given that short-end Treasury yields have risen relative to long-end yields so far this week. And a JPMorgan Chase & Co. survey of clients published Tuesday shows short positions in Treasuries rising to highest since April.“There seem to be some people out there who think this is going to be some sort of a really dovish speech and I think it’s going to be more balanced than that,” said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co. She doesn’t see “a huge consensus” at the Fed for another 75 or 100 basis points of cuts over the next six or 12 months.There’s no clear sign that the two voters who dissented on the July cut have changed their stance. The Boston Fed’s Eric Rosengren said this week that he needed evidence of a U.S. slowdown to justify further easing.In July, the Fed managed to underwhelm even with the first rate cut in a decade. And this month, thanks to the latest deterioration in U.S.-China trade relations and ugly European data, yields reflect an even darker worldview.Last week, the 10- and 30-year yields dipped below 1.5% and 2%, respectively -- the latter an all-time low -- and they’re not far above those levels now. The two- to 10-year yield curve has recovered modestly from a brief inversion, but its recession signal was widely heeded.The most likely reaction of a dissatisfied market will be further flattening in the curve, Jones says, as traders pare positioning for rate cuts. That’s a rehash of what happened last month following the Fed’s meeting. And the trajectory could well be the same -- where an initial so-called bear flattening is replaced by a sharp decline in long-end yields on concern that the central bank will be too slow to avert a downturn.Reassurance OptionsTo reassure markets, Powell could dwell on the uncertainties arising from faltering trade talks, and the contraction in some of the world’s largest manufacturing sectors.But any confidence he manages to instill may be fragile. This weekend also brings the Group-of-Seven summit in France, and hopes for a more harmonious mood between U.S. President Donald Trump and his counterparts are so low that summit leaders are already making plans to scrap the traditional joint statement.Bret Barker at TCW Group Inc. expects that any snap back from the current lows in yields based on Powell’s remarks will be short-lived.“Our overall long-term view is that rates are heading lower,” he said.He’s favoring the two-year part of the curve, as he reckons the market’s call call on the path of rates this year is about right. He’s just not expecting any strong endorsement from Powell at the Wyoming retreat.For Barker, it’s hard to see why Powell would drop a big message into thin markets, “when he can just wait a couple more weeks and liquidity will be back and it’ll be September.”(Adds fourth paragraph to reflect change in market pricing, sentiment.)To contact the reporter on this story: Emily Barrett in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Benjamin Purvis at email@example.com, Mark Tannenbaum, Vivien Lou ChenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Blockchain is one of the most revolutionary technologies of this generation and has applications that spread across every sector of our economy. The technology has applications that go way beyond a means of transferring wealth.
A JPMorgan Chase & Co precious metals trader pleaded guilty to spoofing, or placing bogus trade offers, on Tuesday, when he also resigned as an executive director at the bank. The guilty plea and resignation of Christian Trunz, 34, of London, were announced by the U.S. Department of Justice. Trunz admitted in the federal court in Brooklyn, New York, to having from July 2007 to August 2016 at JPMorgan and another bank placed thousands of orders for gold, platinum and palladium futures contracts that he never intended to complete.
JPMorgan Chase & Co. announced today the quarterly coupon amount for the Alerian MLP Index ETN . The table below summarizes the coupon amount for the Alerian MLP Index ETN .
(Bloomberg) -- Wall Street watchdogs handpicked by President Donald Trump eased the Volcker Rule’s controversial ban on banks making speculative investments, wrapping up a top deregulatory priority that’s long been sought by the financial industry.The changes, approved Tuesday by the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., seek to provide lenders a much clearer picture of which trades are prohibited, giving them confidence to engage in transactions without fear of violating Volcker.But one Democratic FDIC board member warned the rollback could again endanger the financial system by allowing lenders to recklessly trade hundreds of billions of dollars in assets like they did before the 2008 financial crisis.Read More: Why Push to Redo Volcker Rule Has Traders SalivatingThe Volcker rewrite marks a victory for Wall Street, especially Goldman Sachs Group Inc., which has lobbied aggressively to weaken the rule for years. Yet the changes may not spark a trading revival. Still in place is the rule’s prohibition on proprietary trading -- the practice of banks making market bets with their own money. And lenders continue to face restrictions on investing in private equity and hedge funds.“One of the post-crisis reforms that has been most challenging to implement for regulators and industry is the Volcker Rule,” Jelena McWilliams, who leads the FDIC, said at a Tuesday public meeting. “The amendments will provide clarity, certainty and objectivity.”Huge LossesA response to the 2008 meltdown, Volcker was meant to address concerns that some bank trading desks had behaved like hedge funds, using their firms’ balance sheets to finance risky wagers. The six biggest lenders racked up almost $16 billion losses from their prop-trading units over five quarters during the crisis, leading in part to the huge taxpayer bailouts that stoked public anger as consumers suffered through a recession.Former Federal Reserve Chairman Paul Volcker, the rule’s key advocate, said such trading could sink banks and threaten the broader economy. It was included in the 2010 Dodd-Frank Act, with regulators putting it in place three years later.Almost since the ink was dry, banks have complained that Volcker was exceedingly complex, making the rule difficult to comply with. So regulators picked by Trump arrived at their agencies with a strong interest in simplifying the rule. The revamp, known as Volcker 2.0, is part of a steady effort to soften regulations during his administration. While watchdogs haven’t ripped up the post-crisis rule book, critics argue that taken together, the changes will insert renewed risk into the financial system.What authorities came up with on Volcker relies on what’s known as the market-risk prong to determine which transactions are prohibited for banks with more than $1 billion of trading activity.That standard is something large banks already use and understand, so theoretically, it will be easier for them to determine in real time whether a trade is banned. Under the rule, chief executive officers of banks with more than $20 billion in trading activity will be required to attest to their firms’ compliance. The changes take effect Jan. 1, 2020, but banks will have another year to comply.Dimon’s QuipIn one of the biggest changes, banks will no longer be assumed to be engaging in banned trades when they conduct short-term transactions. The so-called rebuttable presumption was one of Wall Street’s most-hated aspects of the original Volcker Rule with JPMorgan Chase & Co. CEO Jamie Dimon once famously quipping that each trader would need a psychologist and a lawyer by his side to comply.In another assist to banks, regulators provide more clarity on market making -- the permitted practice under Volcker of engaging in trades on behalf of clients. Specifically, watchdogs gave lenders a clear limit for assets held in their market-making portfolios that will allow firms to get right up to the line without fear of violating Volcker.FDIC board member Martin Gruenberg, a Democrat, blasted the changes, saying Volcker has been defanged because he believes the proprietary trading restrictions will no longer apply to many types of financial assets that had been covered. Gruenberg was chairman of the FDIC when the rule was first implemented in 2013.“The Volcker Rule will no longer impose a meaningful constraint on speculative, proprietary trading by banks and bank holding companies benefiting from the public safety net,” Gruenberg, who voted against the revamp, said at Tuesday’s meeting.Banking EvolutionWhile the changes will be welcomed by banks, the industry has evolved dramatically in recent years, casting doubt whether firms will return to the pre-crisis trading heydays. Even Goldman Sachs, burdened by dozens of new rules, has embraced commercial banking. In a sign of how much has changed, Apple Inc. announced Tuesday that is was partnering with Goldman to launch a credit card.As part of Tuesday’s revamp, regulators also provided some flexibility on restrictions on investing in private equity and hedge funds. Banks will now have more freedom to do so on behalf of clients.The changes to the five-agency rule also have to be approved by the Fed, Securities and Exchange Commission and Commodity Futures Trading Commission.With the bulk of Volcker revisions done, there are a number of other Wall Street rules awaiting attention -- many of them being handled by the Fed. They include significant shifts in bank capital rules and leverage limits, plus fundamental changes to the Fed’s annual stress tests.(Adds comments from FDIC board members starting in fifth paragraph.)To contact the reporters on this story: Jesse Hamilton in Washington at firstname.lastname@example.org;Ben Bain in Washington at email@example.com;Yalman Onaran in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jesse Westbrook at email@example.com, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan Chase & Co. announced today that it has commenced a cash tender offer to purchase certain senior debt securities. Information can be found on the Firm’s Investor Relations website at jpmorganchase.com/press-releases.
Investing.com - U.S. futures were flat on Tuesday on a relatively quiet morning that in which Home Depot's quarterly update helped to dispel some concerns about the impact of the U.S.-China trade war on the domestic economy.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The Indian rupee’s outperformance against more export-dependent currencies such as the Korean won has likely come to an end, with JPMorgan Chase & Co. seeing risks shifting to the downside.While JPMorgan had favored the rupee since the U.S.-China trade war took a turn for the worse in May, it now expects the currency to show higher beta to moves in yuan, which it tips to keep falling this year and into the first half of 2020.The weaker outlook for the rupee is linked to waning internal and external growth, it being overvalued in real effective exchange rate terms, and to an easing in the tailwind of falling U.S. real rates, Jonathan Cavenagh, head of JPMorgan’s foreign-exchange strategy for emerging markets Asia, wrote in a recent note.The rupee is down 3.9% over the past month, making it the worst performer in Asia.JPMorgan sees it weakening to 73-74 to the dollar in coming months, from about 71.60 on Tuesday.To contact the reporter on this story: Subhadip Sircar in Mumbai at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Brett Miller, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan Chase & Co. will hold an Investor Day in New York City on Tuesday, February 25, 2020 with presentations given by members of executive management.
Saudi Aramco has formally asked major banks to submit proposals for potential roles in its planned initial public offering, two sources said, in what could be the world's biggest IPO. Aramco's planned IPO, which could potentially raise $100 billion, is the centrepiece of Saudi Arabia's economic transformation drive to attract foreign investment and diversify away from oil.
(Bloomberg) -- After a brief respite at the end of last week, Argentina’s debt is getting hammered again.The nation’s offshore notes approached new lows on Monday, close to wiping out the small rebound from late last week, after the country was downgraded deeper into junk territory by two of the three biggest ratings companies and the Economy Minister Nicolas Dujovne resigned.The extra yield investors demand to own Argentine bonds over U.S. Treasuries widened 205 basis points to 18.58 percentage points, according to a JPMorgan index, while 100-year securities fell 4.7 cents to 47.4 cents on the dollar, approaching last week’s record low. The upfront cost to protect Argentina’s debt for five years using credit default swaps rose to 52% from 47% on Friday. Local markets are closed on Monday for a holiday.“You’re going to see plenty more volatility between now and the end of October,” said Graham Stock, a senior emerging-market sovereign strategist at BlueBay Asset Management in London. Measures taken by President Mauricio Macri last week “won’t be enough” to help him in the Oct. 27 election, and he risks pursuing “too populist an economic agenda” in the lead-up to the vote, Stock said.Macri’s measures to support the economy include freezing fuel prices for 90 days, increasing the minimum salary and modifying taxes paid by workers.Default RiskDespite a two-day respite at the end of last week, the nation’s credit default swaps still imply a 86% chance of a default in the next five years amid expectations the populist opposition will win October’s election. The brutal slump in the peso made the country’s large pile of debt much harder to repay. As of March 31, Argentina had $33.7 billion in foreign-currency debt payments due by year-end, the vast majority in short-term Treasury bills.In an interview on Bloomberg TV, Alejo Czerwonko, an emerging-markets strategist at UBS Wealth Management, said a surprise in the first round for Macri would bolster assets, but that it was very unlikely. Argentines vote in presidential elections on Oct. 27 and the next government would take over on Dec. 10.The sharp market sell-off was prompted by a surprise result in the Aug. 11 primary election showing opposition candidate Alberto Fernandez with a commanding lead over Macri.A delegation from the International Monetary Fund is expected to arrive in Buenos Aires this week for meetings with the government and the opposition ahead of a decision on whether to disburse about $5 billion of additional funds next month. The nation’s reserves fell $3.9 billion last week to $62.4 billion, the lowest since December, aggravating concerns about the country’s finances.Opposition LeaderIn several interviews with local newspapers on Sunday, Fernandez spoke about what he considered successful debt talks during his time as cabinet chief that led to a restructuring of bonds and the need to negotiate with bondholders. While he didn’t say he would necessarily push for a restructuring he said that “no one knows better than us the damage caused by default.” On Monday, his economic adviser, Guillermo Nielsen, said Fernandez has no plans to restructure the country’s debt.“While he added some clarity on his views, he did not shed any light on future cabinet members, which would be necessary to understand his economic policies more concretely,” Citigroup Inc. strategists led by Dirk Willer wrote on a report on Monday.Late last week, Fitch Ratings cut Argentina’s long-term issuer rating to CCC from B, putting the South American nation on par with Zambia and the Republic of Congo. S&P followed, lowering the country’s sovereign rating to B- from B and slapping a negative outlook on it.“Uncertainty continues on the private sector’s predisposition to roll over government debt and hold pesos while depreciation stresses the government’s high financing needs,” S&P analyst Lisa Schineller wrote in a statement accompanying the downgrade. Fitch’s said the deterioration in the macroeconomic environment “increases the likelihood of a sovereign default or restructuring of some kind.”(Adds Nielsen comment on 10th paragraph.)\--With assistance from Sydney Maki.To contact the reporter on this story: Aline Oyamada in Sao Paulo at firstname.lastname@example.orgTo contact the editors responsible for this story: Julia Leite at email@example.com, Daniel CancelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The German government is getting ready to act to shore up Europe’s largest economy, preparing fiscal stimulus measures that could be triggered by a deep recession, according to two people with direct knowledge of the matter.The program would be designed to bolster the domestic economy and consumer spending to prevent large-scale unemployment, said the people who asked not to be identified because the discussions are private. Similar to bonuses granted in the 2009 crisis to prod Germans to buy new cars, the government is studying incentives to improve energy efficiency of homes, promote short-term hiring and boost income through social welfare, the people said.Bunds extended declines while the euro briefly rose as much as 0.2% to $1.1114 before slipping back.Signs are mounting that Germany’s rigid adherence to its balanced-budget policy is softening. On Sunday, Finance Minister Olaf Scholz suggested the government would aim to muster 50 billion euros ($55 billion) of extra spending in case of an economic crisis. Last week, Chancellor Angela Merkel said the economy is “heading into a difficult phase” and that her government will react “depending on the situation.”Germany’s central bank warned on Monday that the economy could be about to slip into recession, adding to the pressure on policy makers to ramp up support.With Europe’s largest economy slowing sharply and Merkel’s coalition becoming increasingly unpopular, pressure has increased at home and abroad for the famously frugal Germans to open the purse strings. Sticking to a balanced-budget policy for roughly a decade has allowed Germany to slash public debt to 60% of gross domestic product from 83% over the past decade.“Considering that industrial weakness has now persisted for one and a half years, it is remarkable how slowly the debate has moved so far,” Greg Fuzesi, an economist at JPMorgan Chase, said in a note. “This is partly because the desire to cut government debt is deeply held by all mainstream parties and because the economic slowdown has felt “strange” so far, with spillovers to the labour market only beginning to emerge now, and in modest scale.”The hurdles for a stimulus program remain high. The government requires the lower house of parliament to declare a crisis so it can issue debt beyond the normal guidelines allowed during a recession. Without a sense of wide-spread malaise that approval could be difficult to justify, and Germany is still officially predicting an economic recovery before the end of the year.What Bloomberg’s Economists Say...“By the end of the year we estimate the German economy might be about 1% smaller than it could have been if the slowdown had been avoided. It could take spending of between 30 billion and 110 billion euros to reverse that damage.”--Jamie Rush.Read his GERMANY INSIGHTEven with German output contracting in the second quarter, officials in Merkel’s administration are wary that a knee-jerk spending spree would fuel imports and savings rather than bolster industrial output and protect jobs, said the people.Industrial capacity utilization would have to drop significantly for fiscal stimulus to have a meaningful impact, they said. Currently, spending in the amount of 1% of gross domestic product would boost growth by less than 0.5 percentage points, a ratio they consider insufficient.(Adds charts, quotes throughout.)\--With assistance from Carolynn Look and Jana Randow.To contact the reporter on this story: Birgit Jennen in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Ben Sills at email@example.com, Raymond Colitt, Chris ReiterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com -- U.S. stocks surged at the start of the new week, with the Dow Jones rising nearly 300 points as the federal government signaled more soft-pedaling on the trade war with China for the time being.
(Bloomberg Opinion) -- Don’t you wish you had a dollar for every beleaguered official who cried “fiscal policy must do more”? Indonesia’s President Joko Widodo actually seems to mean it.Fresh from re-election, Jokowi, as he’s known, is aiming to cushion Southeast Asia's largest economy from a slowdown and make much-needed investments in infrastructure like roads, ports and airports, and even a new capital city. The national budget for 2020, published Friday, seeks record spending.Indonesian growth hasn’t been terrible. The pace of GDP expansion been remarkably steady at 5% through Jokowi's first term. If this were China, people would be muttering conspiratorially that the numbers were too consistent.The country can and should do better, though. Jokowi came to office in 2014 talking about growth of 7%. The president wants to set the bar higher and this year's budget is probably his best shot. He has more support now in the legislature, but in a few years domestic politicking will focus on who might succeed him.Jokowi needs to make good on promises to address the woeful infrastructure that holds Indonesia back. Without an upgrade, it’s hard to see the nation becoming one of the most influential economies by mid-century. The budget is also tacit recognition that the central bank can't do it all. Bank Indonesia is a risk-averse place, even by the cautious standards of monetary policy-making. Officials are very sensitive to the level of the rupiah and the vulnerability presented by the current account deficit. Don't look for dramatic interest rate cuts, even with global and regional monetary policy easing, as I wrote last month.It's tempting to see Indonesia as a model for what countries can do with a bit of will and the right political climate. Other Asian governments have primed the fiscal pump with tangible results. In South Korea, state spending made the difference last quarter between growth and recession. Singapore has flagged stimulus as well. That's one of the primary tasks of fiscal policy, to step in to bolster demand.Jokowi is attempting something different; there’s no contraction to alleviate. While lots of leaders talk about infrastructure, those aspirations rarely translate to substantive action. Indonesia’s president already has runs on the board. Jakarta's subway system finally opened this year after decades of discussions. No fewer than 25 airports are planned, along with power plants and a highway system for Sumatra modeled on the newish one running the length of Java.One of the most fascinating parts of this budget is the idea that the deficit will be 1.76% of GDP, down from this year's estimate of 1.93% and well within the legal limit of 3%. How is this possible? It’s a little fuzzy. Part of the answer is that Finance Minister Sri Mulyani Indrawati has managed to boost tax collection, overcoming a chronic issue of avoidance. In some ways, this budget is an endorsement of Indrawati, who’s a tremendous asset for the government. Jokowi would be remiss not to make greater use of her. What could go wrong with all this? Quite a bit. For one thing, the external environment could deteriorate materially. Slowing global growth, economic conflict between the U.S. and China and skittish markets could foil all Jokowi’s grand plans. With its current account shortfall, Indonesia is highly sensitive to global investor sentiment and anything that may weaken appetite for the currency and its sovereign bonds, about 40% of which are held by foreigners. Sometimes this translates into bullying and even shooting of the messenger. In 2017, the government shelved business partnerships with JPMorgan Chase & Co. after the firm downgraded Indonesian equities. JPMorgan spent some time in the cold before things were eventually patched up. Indrawati’s ministry was a prime mover in that saga. Regardless of her attributes, she would be ill advised to repeat the performance. The global economic and market climate was far more benign in 2017 than now. Harder times bring more scrutiny from investors. Punitive responses, either in public or private, aren’t the right approach for a country with aspirations to join the top tier.Let's applaud Jokowi's ambitions. The execution will determine whether they become a template for others. No own goals, please. To contact the author of this story: Daniel Moss at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
"In the wake of a rather violent decline in yields, inversion of the curve, and volatility in equity markets, we consider the role of poor liquidity and systematic flows in exacerbating these market moves," an invitation from JPMorgan Cross-Asset & Derivatives Strategy said. President Donald Trump held a conference call on Wednesday with the chief executives of the three largest Wall Street banks as financial markets were in turmoil, one source with direct knowledge of the matter said on Friday.
(Bloomberg Opinion) -- With support for globalization and free trade declining in much of the world, Asia has a historic chance to break out of its traditional role as a capital exporter to the West and to instead redirect flows to improve its own economies and financial industries.According to some estimates, the region’s pool of wealth at $110 trillion exceeds those of North America and Europe and is growing faster. Japan and China were at or near the top of foreign portfolio investment in the United States, including stocks and short- and long-term bonds, in 2017 with $2 trillion and $1.5 trillion respectively, a U.S. Treasury survey showed. Yet Asia has a poor record of protecting its assets stranded overseas when the cycle turns. In the 1990s, Japanese investors incurred significant losses, primarily on property. During the 2008 crisis, a range of Asian sovereign wealth funds and high net-worth individuals lost heavily on advanced economy shares, real estate, and mortgage-backed and structured securities.The desire to invest overseas partly reflects concern about political risk and governance at home. But leaving familiar territory brings other risks.Distance, language and cultural differences can put Asian investors at a disadvantage when it comes to information. As a result, investors often rely too heavily on intermediaries whose interests don’t align with their own.Their main failing, though, is a bias toward certain assets. In an echo of the ill-fated Japanese purchases of Rockefeller Center and the Pebble Beach golf course in the 1980s, Asian investors are buying prime office buildings in New York and London. Swanky apartments are quickly snapped up in world cities, especially by Chinese buyers.Lacking cozy domestic informational networks, Asian investors are particularly susceptible to chasing name asset managers or fashionable businesses. That restricts their options since the best funds are frequently closed to new arrivals. Managers often can’t repeat past results. Inadequate expertise frequently leads to unwise choices. In the run-up to 2008, Asian banks and investors suffered losses on purchases of structured products and collateralized debt obligations, or CDOs. High net-worth and retail segments are buying again. Japanese banks have purchased up to 75% of AAA tranches of collateralized loan obligations, and perhaps one-third of all CLOs, which have common features with CDOs.Where investments are leveraged, they must be financed by borrowing dollars and euros in wholesale markets. Losses may create difficulties in rolling over funding. As in 2008, forced sales and the lack of trading liquidity will accelerate declines in prices.Why look abroad at all? There is a mismatch between Asian savings and the size of domestic capital markets, which are marked by low returns, a smaller range of investment products and limited local expertise. The regional rivalries between Singapore, Hong Kong, Shanghai, Mumbai and Tokyo and a bias toward real industry have hampered the development of financial services.Asia lacks quality indigenous banks such as JPMorgan Chase & Co. or The Goldman Sachs Group Inc., or asset managers such as BlackRock Inc. or Pacific Investment Management Co. Most financial institutions are domestically focused. In 2018, assets under management at Asian hedge funds fell 10% to just over $100 billion, a mere 3% of the global total. Private wealth management remains the preserve of Western firms.Asia’s high savings are a global anomaly, driven by rising incomes, a culture of thrift and minimal social safety nets. Governments need to move with greater determination to enable more savings to be absorbed locally. The timing may be right as the world is tilting more toward national interests and self-sufficiency.The first step must be to accelerate development of capital markets to boost size, depth, liquidity and investment choices. Revised listing and issuance rules, harmonized pan-Asian regulations, breakups of family dominated conglomerates, and partial or full privatization of key state-owned firms would improve market depth. Changes in rules and tax incentives should encourage local pension funds or insurance companies to adopt stable, long-term investment practices.Second, the creation of world-class financial institutions and skilled asset managers needs to be a priority. To attract the best and brightest, limited career choices and pay that lags behind international levels need to be addressed. State-sponsored financial skills training and accreditation systems should be improved. A system of mutual recognition of qualifications would increase labor mobility.Finally, retaining capital within Asia requires improving confidence in the security of savings. Key steps include creating independent institutions free from political interference, as well as bolstering the rule of law and transparent and consistent regulations. Singapore and Hong Kong, despite its recent protests, are examples to emulate.Without change, the familiar cycle of exuberant foreign investment and the loss of Asian wealth is likely to be repeated in the next downturn. To contact the author of this story: Satyajit Das at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Satyajit Das is a former banker and the author, most recently, of "A Banquet of Consequences."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Argentina was downgraded deeper into junk territory by two of the three biggest ratings companies as markets brace for a possible default after the populist opposition won a landslide victory in Sunday’s primary election.Fitch Ratings cut Argentina’s long-term issuer rating by three notches to CCC from B, putting the South American nation on par with Zambia and the Republic of Congo. S&P lowered the country’s sovereign rating to B- from B and slapped a negative outlook on it.The move caps a traumatic week for Argentina that saw the peso fall to a record, the benchmark equity gauge suffer one of the worst daily routs in 70 years and the yield on the nation’s century bonds spike to an all-time high. S&P cited Argentina’s “vulnerable financial profile” and the slump in asset prices following the primary.“Uncertainty continues on the private sector’s predisposition to roll over government debt and hold pesos while depreciation stresses the government’s high financing needs,” S&P analyst Lisa Schineller wrote in a statement accompanying the downgrade.As of March 31, Argentina had $33.7 billion in foreign-currency debt payments due by year-end, the vast majority in short-term Treasury bills, or Letes, according to the latest debt report by the Finance Ministry.Fitch’s said the deterioration in the macroeconomic environment “increases the likelihood of a sovereign default or restructuring of some kind.”Argentine bonds had started to recover from the worst of this week’s rout. The average spread on sovereign bonds tightened 80 basis points today, after earlier narrowing 128 bps, according to a JPMorgan index.Past PopulismOpposition candidate Alberto Fernandez trounced President Mauricio Macri in the primary, giving him a seemingly unassailable lead ahead of October’s presidential election. Investors fear that victory for Fernandez will mark a return to the populist policies of the past and a likely default.Moody’s Investors Service already rates the nation’s notes at five levels below investment grade.Fearful Argentines Pull Dollars From Banks After Election ShockThis week’s slump in assets resulted in large losses for some of the world’s biggest money managers, who piled into Argentine assets in a search for yield.It may already be too late for Argentina to avoid a default, according to Siobhan Morden, a New York-based strategist at Amherst Pierpont Securities. She said the weakening peso will push debt ratios even higher.Rising DebtFitch said it expects Argentina’s federal government debt to climb to around 95% of gross domestic product this year, without even factoring in the risk of a further slide in the currency. Meantime, South America’s second-largest economy will probably contract 2.5% by year-end, Martinez said.Financing pressures could intensify in 2020 when the sovereign will need to turn to the market to finance a fiscal deficit and some $20 billion in debt maturities as the nation’s disbursements from the International Monetary Fund run dry, according to Fitch.“Both roll-over and fresh financing could be difficult if local and external borrowing conditions do not improve markedly from current stressed levels,” Martinez said.(Updates with downgrade by S&P Global.)\--With assistance from Aline Oyamada and Justin Villamil.To contact the reporters on this story: Ben Bartenstein in New York at firstname.lastname@example.org;Sydney Maki in New York at email@example.comTo contact the editors responsible for this story: Julia Leite at firstname.lastname@example.org, Philip Sanders, Alec D.B. McCabeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The former investment company of U.S. Commerce Secretary Wilbur Ross has been flourishing in China, even as he marshals billions of dollars' worth of punishing tariffs in America's deepening trade war. U.S. money manager Invesco Ltd - for which Ross was a senior executive from 2006 until he joined Trump's cabinet in February 2017 - has become the top foreign manager of Chinese money in China over the past year through its joint venture Invesco Great Wall Management, according to research firm Z-Ben Advisors, leaping ahead of Switzerland's UBS. It is an unlikely success story that Invesco executives say has nothing to do with government policy, but is instead rooted in the company's decades' worth of relationships in China.
(Bloomberg) -- Japan’s 10-year bond yield slipped to the lowest since July 2016, shrugging off an attempt by the central bank to stem its decline amid a global debt rally. New Zealand’s benchmark rate also fell to a new record low.The JGB yield dropped two basis points to minus 0.255%, as growing fears about world growth and the U.S.-China trade war drive investors to haven assets. The Bank of Japan, widely seen as having a yield target range of about 20 basis points from zero for the benchmark, cut its purchases of 5-to-10 year bonds at Friday’s operations.The world’s negative-yielding bonds have surged to a record $16.7 trillion, while a key part of the U.S. Treasury curve inverted this week, signaling an expectation for the American economy to tip into a recession. With markets pricing in further easing by major central banks, investors including Janus Henderson are continuing to pile into debt.“BOJ’s action came as yields were getting too low,” said Takafumi Yamawaki, head of local rates and FX research at JPMorgan Chase & Co. in Tokyo. “It is difficult for the BOJ to achieve everything, such as monetary expansion guideline, steepen yield curve, boost yield levels and keep the 10-year range. At some point, the BOJ will have to give up something.”READ: Yields Sinking Below Target Puts Spotlight on BOJ’s ResponseNew Zealand’s 10-year bond yield fell as much as 3 basis points to 0.98%, the first time it has dipped under 1%.“Major global central banks are easing, and the fall in global yields will ripple to New Zealand,” said Imre Speizer, head of New Zealand strategy at Westpac Banking Corp. in Auckland. The nation’s central bank could cut rates by 25 basis points to 0.75% in November, he said.New LowsTreasury 30-year yield hit a record low this week, while the 10-year fell below the 2-year rate. Thursday’s U.S. retail sales figures, which showed the consumer remains in fine form, barely had any market impact with investors waiting on clarity about U.S.-China trade and the Federal Reserve policy outlook.The BOJ cut purchases in the key five-to-10 year maturity zone by 30 billion yen ($282 million) from its last operation, its first reduction since December. It has been gradually tapering its outright bond purchases, with the recent focus largely being on steepening the yield curve.“Global yields are sinking or approaching zero, adding momentum for Japanese investors to return to super-long Japanese government bonds,” Kazuhiko Sano, chief strategist at Tokai Tokyo Securities Co., wrote in a note before the operations. “Against this backdrop, it’s unlikely that the drop in yields will stop even when the 10-year yield at minus 0.25% serves as a milestone.”To contact the reporters on this story: Chikako Mogi in Tokyo at email@example.com;Ruth Carson in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Shikhar BalwaniFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The re-emergence of a huge U.S. equity volatility buyer has banks scrambling to hedge the other side of the trades and is even affecting levels on the Cboe Volatility Index, according to Nomura Securities International.In July, a big purchaser accumulated protection against a major sell-off in U.S. stocks over the next month on the so-called VIX, in activity similar to that of the volatility buyer known as “50 Cent” given a penchant for hedging at that level in large amounts. And there’s someone on the other side of all those purchases.Dealers are short a series of VIX calls, especially those with strike prices in the 20 to 24 range, “in massive size due to the ‘50 Cent’ entity’s massive hedging program flows,” Nomura strategist Charlie McElligott wrote via email on Wednesday. “This fund’s return to the VIX options market has the Street beyond capacity because as dealers get short this VIX upside, they have to go out and buy all sorts of crash protection due to their synthetic position.”Read: ‘50 Cent’ Copycat Likely Made $170 Million Hedging During RoutJPMorgan Chase & Co. sees 20 as particularly key for VIX.“We are seeing relatively elevated gamma imbalance tilted toward the calls, with large concentration around the 20 strikes,“ said Peng Cheng, a JPMorgan global quantitative and derivatives strategist. “Since dealers are likely to be short gamma, one would expect ‘reverse pinning,’ i.e. VIX futures to be repelled away from the 20 strike. Therefore the 20 level is likely to be a floor/support for the VIX August future.”The VIX closed down 4.2% at 21.18 on Thursday, while VIX volatility (VVIX) fell 1.5% but remained near its highest levels since October 2018. Six of the VIX’s last nine sessions have seen double-digit percentage moves as markets are whipsawed by U.S.-China trade developments and geopolitical tensions. Skew, the cost of bearish options compared with bullish ones, has gotten expensive and forced investors to look hard for cheap protection. And the MOVE Index, which measures prices swings in Treasuries, is the highest since February 2016.Read: Stock Turmoil Sparks a Wall Street Hunt for Cheap Hedges“VIX, volatility of volatility (VVIX) and skew have been saying over course of July that we were either going to crash up or crash down,” McElligott wrote. “So clearly all this short gamma for dealers in the VIX complex means chase-y moves in either direction, especially with the rates volatility spasm.”(Adds JPMorgan comment and updates market levels.)\--With assistance from Luke Kawa.To contact the reporter on this story: Joanna Ossinger in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Dave Liedtka, Rita NazarethFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JPMorgan Chase & Co. declared dividends on the outstanding shares of the Firm’s Series V and X preferred stock. Information can be found on the Firm’s Investor Relations website at jpmorganchase.com/press-releases.
(Bloomberg) -- Cloudflare Inc., a firm that helps websites protect and distribute content, warned potential investors in its initial public offering that risks to its business go beyond the boilerplate Silicon Valley advisory that it may never become profitable.The San Francisco-based company said in its IPO filing Thursday that the risks include negative publicity from the use of its network by 8chan, a website favored by white supremacists and used by gunmen before mass shootings in El Paso, Texas and Christchurch, New Zealand, this year. It also cited the use of its services by neo-Nazi website The Daily Stormer around the time of the 2017 protests in Charlottesville, Virginia.Activities of such groups have had “significant adverse political, business, and reputational consequences” for the company, Cloudflare said in the filing. Terminating those accounts, though, has raised censorship concerns, it said.“We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this,” according to the filing.Cloudflare co-founder and Chief Executive Officer Matthew Prince has publicly struggled with decisions balancing freedom of speech on the internet with the need to limit hateful, racist online posts and potentially dangerous calls for violence.Risky PrecedentAfter deciding to cut services to The Daily Stormer, Prince said the move could set a dangerous precedent.“After today, make no mistake, it will be a little bit harder for us to argue against a government somewhere pressuring us into taking down a site they don’t like,” Prince wrote.In its filing with the U.S. Securities and Exchange Commission, the company listed the amount of its offering as $100 million, a placeholder that will change when terms of the share sale are set later.Customers, LossesCloudflare said about 10% of Fortune 1,000 companies are paying customers. Its security services blocked an average of 44 billion cyber threats a day during the second quarter, it said.For the first six months of the year, Cloudflare lost $37 million on revenue of $129 million, compared with a loss of $32 million on revenue of $87 million for the same period last year, it said in its filing.Prince currently controls 16.6% of Cloudflare’s shares, according to the filing. Its largest investor is the venture capital firm New Enterprise Associates Inc., with a 20.4% stake, followed by Pelion Ventures with a 18.8% share and Venrock Associates with 16.2%.After going public, the company will have a dual-class stock structure that will give its Class B stockholders 10 votes per share, according to the filing.The offering is being led by Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. Cloudflare is applying to list the shares on the New York Stock Exchange under the symbol NET.(Updates with details of risks starting in second paragraph)To contact the reporter on this story: Michael Hytha in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Liana Baker at email@example.com, Michael Hytha, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.