Thursday, April 13, 2017

Markets fall after US drops a mega bomb in Afghanistan

Dow slumped 138 closing AT THE LOW, decliners over advancers about 5-2 & NAZ gave back 31.  The MLP index lost 2+ to the 319s & the REIT index was fractionally lower to the 351s.  Junk bond funds were up a little & Treasuries rallied.again.  Oil was off a few pennies in the 53s & gold jumped up 10 to 1288, another multi month high, as investors seek safe haven investments.

AMJ (Alerian MLP Index tracking fund)

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JPMorgan Chase, a Dow stock, posted Q1 earnings that beat estimates, fueled by better-than-expected trading results & lending margins.  Markets improved in Mar, helping the biggest US bank post a 17% gain in fixed-income trading revenue to $4.22M & a surprise increase in equity trading, which rose 2% to $1.61B.  Trading revenue rose for a 4th straight qtr, the longest streak in at least a decade.  The results exceeded the $4.02B estimate for bond trading & $1.45B for equities.  The bond gains were fueled by rates trading linked to central bank actions, improved credit trading & upcoming elections in Europe.  Bank shares have climbed since US election in part on expectations the Fed's interest-rate increases would buoy profits.  That appears to be starting, as net interest margin, the difference between what it charges borrowers & pays depositors, rose 11 basis points from the preceding qtr to 2.33 percentage points, the first increase in a year & the highest since Q1-2013.  “With pro-growth initiatives and improving collaboration between government and business, the U.S. economy can continue to improve,” CEO Jamie Dimon said.  Companywide revenue rose 6% to $25.6B, compared with the $25.2B estimate.  Noninterest expenses climbed 9% to $15B, better than $14.6B estimate.  EPS jumped to $1.65 from $1.35, a year earlier.  Adjusted EPS was $1.57, beating the $1.52 estimate.  But the stock slid back a dollar.  If you would like to learn more about JPM, click on this link:

JPMorgan Beats Estimates on Strong Trading, Fatter Loan Margins

J P Morgan Chase (JPM)

Citigroup generated the most revenue from fixed-income trading in 3 years, defying some concerns about a slowdown in interest rate & currency activity during Q1.  Revenue from bond trading jumped 19% from a year earlier to $3.62B on strength in those areas, as well as a business that handles corp debt & bonds backed by other assets.  The figures show mounting strength in Citi's trading operations just as Pres Trump sets out to reshape US policies & the Federal Reserve embarks on interest-rate hikes.  The firm controlled 19% of bond-trading revenue generated by the nine largest global investment banks last year, almost 3 percentage points more than in 2012.  And total trading revenue climbed 17% from a year earlier.  “The momentum we saw across many of our businesses toward the end of last year carried into the first quarter, resulting in significantly better overall performance than a year ago,” CEO Mike Corbat said.  EPS climbed to $1.35.  Excluding a gain on a series of asset sales, EPS was $1.27 a share, beating the $1.24 estimate.  The bond-trading result, outpacing projections by about $100M, was among the surprises.  The provision for loan losses, which at $1.66B was lower than all estimates.  Total revenue rose 3% to $18.1B, compared with the $17.7B estimate.  Non-interest expenses were largely flat at $10.5B, in line with expectations.  The stock slid back 47¢.  If you would like to learn more about Citi, click on this link:

Citigroup Rides 3-Year High in Bond Trading to Earnings Beat

Citigroup (C)

Wells Fargo fell after reporting Q1 revenue that missed estimates as the lender’s troubled community bank weighed on results.  The nation's biggest home lender is facing a slowdown in its mortgage-banking business as rising interest rates crimp customer demand for refinancing.  The unit also is suffering from decreased volume as branch workers make fewer mortgage referrals & lower reimbursements from the Dept of Housing & Urban Development to cover foreclosure costs, CFO John Shrewsberry has said.  WFC reported a 23% decline in mortgage banking revenue from a year earlier said new retail customer accounts fell for the 7th straight month in Mar as the firm struggles with scandal over the opening of bogus accounts.  Net interest margin was unchanged from 3 months earlier at 2.87 percentage points.  The firm has had trouble attracting new retail-bank customers as it has grappled with the scandal.  Customers opened 35% fewer checking accounts in Mar compared with a year earlier, while credit-card applications were down 42%.  Q1 EPS  was $1.00, little changed from a year earlier.  The estimate was for adjusted EPS of 97¢.  Earnings were helped by lower-than-expected provisions of $605M, compared with the $909M forecast, & the release of $200M in loan-loss reserves.  Revenue fell 0.9% to $22B from a year earlier, missing the estimate of $22.3B.  Mortgage revenue declined to $1.23B, compared with the $1.25B estimate.  The pipeline for new home-loan applications fell to $28M, 7% less than 3 months earlier.  The stock fell 1.77.  If you would like to learn more about WFC, click on this link:

Wells Fargo Revenue Misses Wall Street Estimates

Wells Fargo (WFC)

Bank earnings were sort of so-so..  However Trump stole the show today with an escalation in the Afghanistan conflict.  That unsettles investors.  As has been the case since the election, Trump has been calling the shots in the stock market.  Even with a dysfunctional Congress, stocks have had an excellent rally with only a modest pullback, until today.  News on the war front may dominate trader thinking for some time, depending on how things go.  This VIX (^VIX), volatility index, has been around 11-12 for months.  Today it rose slightly to 16 while gold & Treasuries were higher.  Safe haven investments are being purchased when stocks are sold.

Dow Jones Industrials


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