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Follow CEOs at the JPMorgan Healthcare Conference

xnftcrypto — Sat, 06 Jan 2024 11:22:11 +0000

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CNBC’s Jim Cramer on Friday told investors what to watch for on Wall Street next week, highlighting JPMorgan‘s market-moving health-care conference in San Francisco. Taking place from Monday to Thursday, the conference is one of the year’s largest gatherings of major industry CEOs where they reveal earnings guidance and updates on clinical trial research.

“The new year has started with a redistribution of cash out of the ‘Magnificent Seven’ and on to the sidelines,” Cramer said, pointing to health-care stocks as a particularly notable group that will likely be “propelled by what people expect to hear from the JPMorgan Healthcare Conference.”

Cramer will interview several CEOs at the conference, starting with Walgreens CEO Tim Wentworth on Monday. Cramer said he’s interested to hear how the company plans to get its groove back after cutting its dividend nearly in half this week. Cramer will also speak with leadership from Amgen and Medtronic, as well as the new CEO of Bristol Myers, Chris Boerner, whom he’ll ask about the company’s rigorous biotech acquisition plans.

On Tuesday and Wednesday, Cramer will continue to interview the CEOs of major industry names, including Eli Lilly CEO David Ricks. Cramer said he’s particularly interested in the company’s diabetes and weight loss drug as well as its Alzheimer’s initiative. He’ll also speak with CVS Health CEO Karen S. Lynch to discuss the company’s ongoing transition from drug store to health-care provider. Cramer will also hear from the CEOs of Pfizer, Regeneron, Novartis, Abbott Labs and Cencora.

Thursday brings the consumer price index for December. Cramer said he thinks those hoping for soft figures will be disappointed. Cramer will also be tuning into CES, the Consumer Electronics Show, next week. The tech event will include commentary by leadership from Nvidia and Dell.

Earnings season kicks off Friday with reports from major banks including JPMorgan, Bank of America and Wells Fargo. BlackRock will also report, and Cramer said he thinks the company’s earnings could give investors a solid overview of the financial industry. He’ll also be paying attention to Friday reports from UnitedHealth Group and Delta.

Jim Cramer’s Guide to Investing

Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.

Questions for Cramer?Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer’s world? Hit him up!Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram

Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com

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Jamie Dimon’s trades show the benefit of tracking insider buying, selling

xnftcrypto — Sun, 29 Oct 2023 08:51:16 +0000

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For the first time in nearly two decades running JPMorgan Chase, CEO Jamie Dimon will voluntarily sell stock in the bank. The disclosure, in a securities filing Friday, detailed next year’s planned sales — pressuring JPMorgan (JPM) shares and the Dow Jones Industrial Average and highlighting why tracking trades made by executives involving the companies they lead should be an important part of every investor’s homework. Dimon is setting up the trades through a predetermined plan that executives at publicly traded companies use to protect against insider trading accusations. It will mark the first time that the 67-year-old CEO has offloaded shares of JPMorgan for non-technical reasons, such as exercising options. The planned sales – amounting to roughly 12% of the JPMorgan stock owned by Dimon and his family – are being done for tax planning and personal wealth diversification reasons, the bank said. Both are common reasons for executives to sell stock in their firms. The bank also said Dimon continues to believe JPMorgan’s prospects are “very strong,” and his planned trades are not related in any way to succession. Such sales are often seen when CEOs get close to retirement. As you can see, making sense of insider transactions can sometimes be a tall task. When they buy, it’s generally seen as an encouraging sign by Wall Street — and there is, perhaps, no better example of this than another move by Dimon in 2016, when he purchased JPMorgan stock. Fears of a weakening global economy sent stocks into a tailspin in early 2016, driving shares of JPMorgan down nearly 20% and the S & P 500 down more than 10% at their lows. But that weakness didn’t last long. The trajectory of the market changed just six weeks into the new year. That’s when Dimon disclosed — after the closing bell on Feb. 11, 2016 — that he bought 500,000 shares of the bank, worth about $26 million at the time. Dimon’s stock purchase , intended to show confidence in the financial sector, has become legendary on Wall Street. It ultimately coincided with — or perhaps was the reason for — the closing lows for not only shares of JPMorgan in 2016 but also the S & P 500 overall. Jim Cramer has since dubbed Feb. 11, 2016: “The Jamie Dimon Bottom.” JPMorgan finished up 30% that year, while the S & P 500 ended more than 9% higher — both huge turnarounds. While executive stock sales — such as Dimon’s planned transactions next year — are not universally red flags, they can get complicated. Case in point: Moderna (MRNA) and Pfizer (PFE) executives made a series of sales during the Covid-19 pandemic, as their companies worked to develop a vaccine for the virus. The rebuke in the court of public opinion and on Capitol Hill was sharp. Despite executing the sales through the same kind of predetermined plan that Dimon will use, the executives nevertheless faced criticism around the appearance of the sales, including from Jim . To remove any questions, he said at the time: “Memo to Moderna: You don’t have to sell. You can sit on it.” Jim was pointing out that predetermined sales can be canceled. Monitoring executive trades — both sales and purchases – is one piece to the larger buy-and-homework process that Jim advocates for investors who wants to own individual stocks. “In many cases, the insider sale might be immaterial,” according to Eliezer Fich, a finance professor at Drexel University, who has extensively researched executive stock trades. Still, investors should “absolutely” keep an eye on both types of transactions for any signals they send to the market, he said. At the Club, we view stock purchases by executives and directors as bullish indicators. The decision to buy stock — when a sizable portion of executive compensation packages are already equity-related — appears like a straightforward sign of confidence in the enterprise. The only reason an insider would buy is to make money, Jim often says. Stock sales, on the other hand, are more nuanced and may be harder to draw conclusions from, particularly with predetermined plans. There are many reasons an executive might choose to sell shares, including everything from tax purposes to personal wealth diversification – just like Dimon’s stated reasons for his planned sales. The Securities and Exchange Commission earlier this year enacted tougher disclosure rules for predetermined stock-trading arrangements — known as 10b5-1 plans — in an attempt to limit abuses, though many experts say there is still room for improvement. But, in general, the changes offer more assurance that stock sales are done in good faith. Plans made before then were grandfathered in. Insider stock sales Executive stock trades are usually disclosed through SEC filings known as Form 4 documents and accessible through the regulator’s EDGAR database — the electronic data gathering, analysis, and retrieval system. Thanks to the changes implemented earlier in 2023 , these filings now contain the most important piece of information for investors to make sense of a transaction: whether it took place as part of a Rule 10b5-1 trading plan, or was done on the open market. Of course, open-market sales are not automatically nefarious. But they will be viewed differently and often more critically than one completed through a Rule 10b5-1 plan, according to Chester Spatt, a finance professor at Carnegie Mellon’s Tepper School of Business and a former chief economist at the SEC. The very nature of their jobs means executives are in possession of material, non-public information quite frequently — and deciding to buy, or sell, stock based on that confidential info is against the law. At the same time, the market recognizes there’s an “important, legitimate basis for selling” stock, Spatt said, particularly because equity grants nowadays make up a large portion of their total compensation package. Rule 10b5-1 trading plans came into the fold just over two decades ago to reconcile these two discordant facts. Adopting Rule 10b5-1 trading plans gives public-company executives a way to protect against allegations of illegal insider trading in the future. Essentially, these plans allow executives to establish a plan for how — and when — they want to sell stock over a given period. Executives are supposed to adopt a plan in “good faith,” at a time when they did not possess material, non-public information. The plans can vary in structure and complexity, but generally must specify the amount, price and date on which the security will be sold, or bought. More complex plans may be structured around a formula that determines when and how much stock will be sold. Third-party brokers execute the trades. “The executive could say, ‘I’m going to be selling X amount of shares in three-month intervals over the next two years,” Fich, the Drexel University professor, explained in an interview with CNBC. “Nine months from now, one of those transactions is executed, and all of a sudden it happened to coincide with a patent approval that’s thought to be really, really important for the firm, which causes its stock price to increase. [The executive] can say, ‘Well, I set this up about a year ago. I didn’t know this was going to happen.'” Under the new SEC rules to address perceived shortcomings with 10b5-1 plans, a company’s executive officers and directors are now subject to a mandatory “cooling-off” period, which requires them to wait at least 90 days from the time a 10b5-1 plan is adopted or modified before they can trade. In a 2021 paper , researchers at Stanford University and the University of Pennsylvania’s Wharton School argued that short cooling-off periods — or none at all, with trades occurring the same day as adoption — were among the biggest red flags with Rule 10b5-1 plans. “We find that trades of plans with short cooling-off periods avoid significant losses and foreshadow considerable stock price declines that are well in excess of industry peers,” researchers wrote later in the paper. They added, “With longer cooling-off periods, opportunistic trading disappears.” Under the SEC modifications, companies now must disclose in their quarterly 10-Q and annual 10-K filings whether any officers and directors adopted, modified or terminated a Rule 10b5-1 plan during the reporting period. For example, in its most recent 10-Q , Club holding Meta Platforms (META) disclosed that Chief Financial Officer Susan Li entered into a Rule 10b5-1 trading plan during the three months ended June 30. The plan is scheduled to end Dec. 31, 2024, according to the filing. This new requirement seeks to partially address a shortcoming that academics including Drexel’s Fich have highlighted in research on executive stock trades: The ability to opportunistically cancel, or change them, without notice to the investing public. While a plan cannot be modified if the executive is in possession of material, non-public information, it can technically be canceled at any time , Stanford and Wharton researchers noted. In the past, there would never be an SEC filing for a trade that didn’t occur because of a terminated plan. Not anymore, which is good news for investors because the additional information around plan adoption, modification and cancellation can, over time, help investors appropriately interpret the insider stock sales. Drexel’s Fich said he believes a major lingering “loophole” with Rule 10b5-1 trading plans is the use of limit orders, which in practice can prevent stock from being sold if it falls below a certain price on the day it was supposed to be sold. In its December 2022 report announcing amendments to Rule 10b5-1, the SEC said insiders may use limit orders in their trading plans to help protect against “significant market fluctuations” over the months “and even years” that the plans are in effect. In that same report, the U.S. regulator indicated it was concerned about “abnormally profitable insider trading under Rule 10b5-1,” which has been documented in various academic studies. However, it said it appears limit order use “cannot account for the entirety of the abnormal returns documented” in research studies. The SEC opted to still permit the use of limit orders, given that enhanced disclosure requirements may make it easier for other market participants to “gauge some information about the officer’s or director’s trading strategy,” and possibly sell ahead of them, pushing down the stock price by the time the executive’s next tranche of sales is executed. The SEC’s new rules also limited executives’ ability to have multiple overlapping plans and placed restrictions on the use of single-trade plans — two additional practices that had drawn scrutiny. Now, executives can only employ one single-trade plan over a 12-month period. 10b5-1 sale questions To place executive stock sales in the proper context, investors should consider how much stock in the company the insider owns after the trade is completed. Fich told CNBC he asks that question regularly. As an example, he pointed to sales by a handful of executives at Coca-Cola (KO) earlier this year that he chalked up as the non-concerning variety. “There might be some troubling sales, in general, when many executives are selling a lot of shares at the same time,” Fich acknowledged, but Coke’s recent history doesn’t rise to that level when considering the larger picture. “Coca-Cola insiders sold about $2.7 million worth of shares over the past three months, but these guys own $1.8 billion worth of shares” in a company with a market value over $200 billion, Fich explained in early August. “So, I’m not worried.” In a follow-up exchange with CNBC, Fich also noted the net effect of Coke’s insider sales was partially offset by the exercise of stock options. Such was the case with Chief Technical Officer Nancy Quan’s trades in early May, according to Form 4 filings . Quan exercised stock options that resulted in the acquisition of 75,826 shares, on May 2, and the same day sold 85,906 shares. She owned 219,790 shares of Coke before the two transactions, and ended the day owning 209,710 — a decrease of only 4.6%. This illustrates that, with insider sales, the devil is in the details. Putting it all together, executive stock sales that amount to only a tiny fraction of an insider’s overall holdings are unlikely to be cause for immediate concern — just like recent transactions from Salesforce co-founder and CEO Marc Benioff. Despite a steady series of sales since mid-July, Benioff’s overall stake in Club name Salesforce (CRM) has declined only 4.6%, to around 25.27 million shares, securities filings show. Benioff remains the largest individual shareholder in Salesforce, owning a 2.6% stake that’s worth around $5.2 billion based on recent stock prices. Put another way, Benioff’s sales have been relatively minor, considering how much Salesforce stock he still owns, and how much his economic interests still align with the rest of the customer-relationship-management software group’s shareholders. Another assuring fact: Benioff’s sales continued to occur, even as Salesforce’s stock declined from around $229 per share in July, to around $205 this month. CRM YTD mountain Salesforce YTD Investors should also consider executives’ individual histories when assessing their latest transactions, Carnegie Mellon’s Spatt suggested. “If the executive has a history of selling a certain number of shares — or a fraction of his portfolio — each period, I’d be less concerned about that than I would be with very spikey and unusual sales,” Spatt said. This is hardly the first time Benioff has steadily sold shares of Salesforce, not in conjunction with the conversion of stock options. For example, a similar sequence took place beginning in September 2020 and continued through October. He also sold a basket of stock in November 2021 and November 2022, according to SEC filings reviewed by CNBC. Insider stock buys After the stock market closed on May 12, 2022, then-interim Starbucks CEO Howard Schultz disclosed in an SEC filing that he had bought roughly $10 million worth of the coffee chain’s stock. It came at a rocky time for the company, as it sought to counter a growing unionization push among its baristas. On that day, Starbucks (SBUX) shares had closed under $70 each for the first time since April 7, 2022 — in the throes of the first wave of the Covid pandemic while stores were temporarily shuttered. In the first trading session after Schultz’s May 2022 announcement, shares of Starbucks soared 8.15%. The market’s reaction to Schultz’s purchase demonstrates that Wall Street — and the Club, too — likes to see insiders buying their own stock. We started a position in August 2022, shortly after the Schultz buy. It’s typically interpreted as a sign of confidence in the company’s outlook. Otherwise, the thinking goes, why would the executive put their own cash to work when so much of their compensation is already coming in the form of securities? “It’s not so common for the executives to be buying stock in the company,” said Carnegie Mellon’s Spatt. “In and of itself, that’s part of the reason why it’s a pretty positive signal. … The executive is naturally so long in the stock, because of the structure of his compensation. For the executive to be buying … that must mean he’s very optimistic.” That’s the message we took in June 2018, when Nikesh Arora was appointed CEO of Palo Alto Networks (PANW). Not long after, Arora bought around $20 million worth of stock in the cybersecurity firm in open-market transactions. PANW mountain 2019-06-01 Palo Alto Networks’ stock performance since June 2019, when Nikesh Arora took over as CEO. Arora’s big bet helped attract us to Palo Alto Networks for the first time, realizing that the executive was quite literally putting his money where his mouth was. Although we left the stock for a few years, beginning in September 2019, we returned in February as the seeds Arora planted upon his arrival were sprouting a story too good to ignore any longer. More recently, Broadcom (AVGO) board member Check Kian Low bought $9.6 million worth of stock in the company following its post-earnings decline — more than tripling his stake, to 15,951 shares. AVGO YTD mountain Broadcom YTD Jim believes there was initial confusion about Low’s reason for buying — namely, was it to meet minimum-ownership levels required by Broadcom board members? That has since been proven to be an open-market purchase. And, we take that as a very encouraging sign for one of the newest Club holdings. In moments of market-wide turmoil, executive stock purchases can take on broader importance to the rest of the investment community, soothing collective fears. Such was the case with Dimon’s now-legendary purchase in 2016. The increased insider buying activity observed in March 2020, as the pandemic roiled global stock markets, also was viewed at the time as a strong expression of confidence on top of the unprecedented monetary stimulus unleashed by the Federal Reserve. The S & P 500’s Covid-era low came on March 23, 2020. Since then, the index has roughly doubled. Insider buying in March 2020 – including about $5 million from Charles Scharf, CEO of Club holding Wells Fargo (WFC) — reached its highest level since March 2009, CNBC reported at the time , citing data from Washington Service, a firm that tracks such transactions. As it happens, March 2009 is the same month the S & P 500 hit its global financial crisis low . To be sure, even though executive stock purchases are a bullish signal, that doesn’t mean future gains for the stock are automatic, cautioned Columbia Business School professor Sehwa Kim. Investors should be mindful that some executives may be “overconfident about their capability” to create value at a firm when they decide to buy its stock, Kim said in an interview with CNBC. “Whether the firm’s prospect is truly good or not, they have a strong belief in their ability,” he said. Club holding Foot Locker (FL) offers a lesson in interpreting insider purchases, and the patience that investing in the stock market requires. FL YTD mountain Foot Locker YTD This year, Foot Locker CEO Mary Dillon, revered for turning around at Ulta Beauty (ULTA), has twice bought stock in open-market transactions — buying about $501,000 worth of shares on March 28, then nearly $250,000 worth about two months later, on May 30. The first purchase of 12,614 shares came at an average price of $39.74, not long after Foot Locker held an Investor Day that detailed Dillon’s revitalization strategy for the company. That excited Wall Street analysts and investors, including our portfolio managers at the Club. The second buy, which totaled 9,525 shares, came at $26.20 each, on average. As those dramatically different price levels indicate, a lot happened to the market’s perception of Foot Locker between those two transactions. The main turning point arrived May 19, when the company’s disappointing first-quarter earnings report and revised guidance sent shares tumbling 27%. Right now, Dillon may very well be as optimistic on Foot Locker’s long-term prospects as she was in late March when buying that first tranche of stock — even if she’s underwater on that lot. She signaled as much to the market with May’s purchase and in September when she bought $100,000 worth of Foot Locker stock, at an average of $18.17 per share. These transactions might offer a modicum of assurance, but don’t completely change the reality that this year has been a roller coaster for shareholders. Foot Locker shows that the favorable signal being sent by an executive stock purchase might be obscured, or forgotten, by other, more-pressing facts. In the retailer’s case, its first-quarter results and lowered outlook — dragged down by discounting and inventory issues – painted an uglier near-term picture than any insider buys. Indeed, even after Dillon’s second buy on May 30, Foot Locker shares fell on May 31 and June 1. To be sure, the message Dillon attempted to send may breakthrough down the road as the turnaround plan progresses. While disappointed in the performance of Foot Locker shares, we recognize that overhauling a troubled company takes time — even if it’s taking longer than we thought. Bottom line As part of the buy-and-homework process, we keep tabs on how executives, particularly in the C-suite, are trading their own stock while recognizing it’s only one piece of the larger investment-research puzzle. Insider stock sales are best analyzed with a big-picture context, given we know that some sales can be misinterpreted for reasons that include optics, like when the CEOs of drug companies making Covid vaccines were selling stock through predetermined plans and making huge profits. The necessary context starts with understanding whether the trade was made pursuant to a Rule 10b5-1 plan. Fortunately, the new SEC rules should enhance transparency. Then, taking into account the selling executives’ remaining ownership and previous history adds a more robust frame of reference. On the other side, the market views executive stock purchases quite favorably, and so does the Club. Compared with a tiny stock sale executed through a predetermined plan, executive stock buys generally send a much stronger signal: The executive wants to make money, too. And in some cases, like in the case of huge stock buybacks by a company, we’re happy to be right there to buy alongside them. (Jim Cramer’s Charitable Trust is long WFC, META, AVGO, FL, CRM and SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co. says the new U.K. government should be “given the benefit of the doubt.”

Al Drago | Bloomberg | Getty Images

For the first time in nearly two decades running JPMorgan Chase, CEO Jamie Dimon will voluntarily sell stock in the bank.

The disclosure, in a securities filing Friday, detailed next year’s planned sales — pressuring JPMorgan (JPM) shares and the Dow Jones Industrial Average and highlighting why tracking trades made by executives involving the companies they lead should be an important part of every investor’s homework.

Dimon is setting up the trades through a predetermined plan that executives at publicly traded companies use to protect against insider trading accusations. It will mark the first time that the 67-year-old CEO has offloaded shares of JPMorgan for non-technical reasons, such as exercising options.

The planned sales – amounting to roughly 12% of the JPMorgan stock owned by Dimon and his family – are being done for tax planning and personal wealth diversification reasons, the bank said. Both are common reasons for executives to sell stock in their firms. The bank also said Dimon continues to believe JPMorgan’s prospects are “very strong,” and his planned trades are not related in any way to succession. Such sales are often seen when CEOs get close to retirement.

As you can see, making sense of insider transactions can sometimes be a tall task.

When they buy, it’s generally seen as an encouraging sign by Wall Street — and there is, perhaps, no better example of this than another move by Dimon in 2016, when he purchased JPMorgan stock.

Fears of a weakening global economy sent stocks into a tailspin in early 2016, driving shares of JPMorgan down nearly 20% and the S&P 500 down more than 10% at their lows.

But that weakness didn’t last long.

The trajectory of the market changed just six weeks into the new year. That’s when Dimon disclosed — after the closing bell on Feb. 11, 2016 — that he bought 500,000 shares of the bank, worth about $26 million at the time.

Dimon’s stock purchase, intended to show confidence in the financial sector, has become legendary on Wall Street. It ultimately coincided with — or perhaps was the reason for — the closing lows for not only shares of JPMorgan in 2016 but also the S&P 500 overall.

Jim Cramer has since dubbed Feb. 11, 2016: “The Jamie Dimon Bottom.” JPMorgan finished up 30% that year, while the S&P 500 ended more than 9% higher — both huge turnarounds.

While executive stock sales — such as Dimon’s planned transactions next year — are not universally red flags, they can get complicated.

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Russell 2000’s best day since July is good for markets

xnftcrypto — Tue, 17 Oct 2023 08:35:58 +0000

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A Charles Schwab location in New York, US, on Friday, July 7, 2023.

Michael Nagle | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Earnings excitementMajor U.S. indexes rallied Monday as investors grew optimistic over strong earnings reports thus far. Asia-Pacific markets traded higher Tuesday as South Korean indexes led gains in the region. Meanwhile, New Zealand reported two-year low inflation readings: Consumer prices in the third quarter rose 5.6% year on year, less than the second quarter’s 6% increase.

China’s renewed reboundChina’s economic growth will return next year, Mark Makepeace, former head of benchmark giant FTSE Russell told CNBC. “In the short term, China does have some issues … but the potential is there,” Makepeace said. One such issue: The country’s property sector is still struggling. If Country Garden fails to make a $15 million coupon payment today, all of its offshore debt could be in default.

Big Tech might win from the HouseIf Republican Rep. Jim Jordan is elected speaker of the U.S. House, technology giants like Google, Apple and Amazon stand to benefit because Jordan’s against using antitrust regulations to break up companies. He’s “aimed most of his ire at the Biden administration’s pressure on companies — not the companies themselves,” said Adam Kovacevich, CEO of lobbying group Chamber of Progress.

Biden to visit IsraelU.S. President Joe Biden will travel to Israel on Wednesday “to stand in solidarity in the face of Hamas’s brutal terrorist attack,” he said on social media platform X. While there, Biden will try to mitigate an expansion of the war between Israel and Hamas, and work to establish the safe passage of critical humanitarian aid to Gaza, said Secretary of State Antony Blinken.

[PRO] Rising oil prices could boost non-energy stocksExogenous shocks, like supply cuts and the Israel-Hamas war, have forced oil prices upward. That’s good news for energy stocks — but these non-energy, European stocks also stand to benefit when oil and gas prices rise, according to Bank of America.

The bottom line

Despite U.S. Treasury yields rising and the Israel-Hamas war becoming increasingly volatile, major indexes in the U.S. closed in the green. Investors’ excitement over third-quarter earnings season, it appears, powered Monday’s rally in equities.

Companies that have already reported have mostly beat Wall Street estimates, giving their shares a boost. Charles Schwab climbed 4.66% after beating earnings expectations, and on Friday, JPMorgan Chase and Wells Fargo rose following their earnings reports.

Investors are hoping this positive start will follow through for the week, during which 53 companies in the S&P 500 — around 11% of its constituents — will report results. (In fact, RBC Capital Markets’ so optimistic about earnings that it’s raised its forecast for 2023 and 2024 earnings per share. The bank’s new numbers “imply that the S&P 500 could surpass 4,700 by year-end 2023,” said Lori Calvasina, head of U.S. rates strategy at RBC.)

If stocks continue rising at the brisk pace they did Monday, that’s certainly a possibility. The S&P 500 added 1.06% to close at 4,373 and the Nasdaq Composite rose 1.2%. The Dow Jones Industrial Average increased 0.93% for its best day in a month, putting it less than 5% from its 52-week high.

“I really see a relief rally going on,” said Lisa Erickson, senior vice president at U.S. Bank Wealth Management. “Sentiment has just turned relatively more positive.”

Indeed, even the small-cap Russell 2000 rallied 1.59%. “This market is starting to broaden out a little bit,” Richard Bernstein, CEO of Richard Bernstein Advisors, told CNBC.

The Russell 2000 has lagged behind major indexes this year because gains were concentrated in the “Magnificent Seven” mega-cap stocks. But “if the economy is going to re-accelerate, which it is doing, and if profits growth is going to re-accelerate, which it is doing, then small caps should lead the way,” added Bernstein. “That’s what history says.”

With the Russell 2000’s best session since July, it’s no wonder investors are growing excited.

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Deposit drain from small banks into JPM, WFC, C slowed

xnftcrypto — Sat, 25 Mar 2023 23:43:44 +0000

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First Republic Bank headquarters is seen on March 16, 2023 in San Francisco, California, United States.

Tayfun Coskun | Anadolu Agency | Getty Images

The surge of deposits moving from smaller banks to big institutions including JPMorgan Chase and Wells Fargo amid fears over the stability of regional lenders has slowed to a trickle in recent days, CNBC has learned.

Uncertainty caused by the collapse of Silicon Valley Bank earlier this month triggered outflows and plunging share prices at peers including First Republic and PacWest.

related investing news

The situation, which roiled markets globally and forced U.S. regulators to intervene to protect bank customers, began improving around March 16, according to people with knowledge of inflows at top institutions. That’s when 11 of the biggest American banks banded together to inject $30 billion into First Republic, essentially returning some of the deposits they’d gained recently.

“The people who panicked got out right away,” said the person. “If you haven’t made up your mind by now, you are probably staying where you are.”

The development gives regulators and bankers breathing room to address strains in the U.S. financial system that emerged after the collapse of SVB, the go-to bank for venture capital investors and their companies. Its implosion happened with dizzying speed this month, turbocharged by social media and the ease of online banking, in an event that’s likely to impact the financial world for years to come.

Within days of its March 10 seizure, another specialty lender Signature Bank was shuttered, and regulators tapped emergency powers to backstop all customers of the two banks. Ripples from this event reached around the world, and a week later Swiss regulators forced a long-rumored merger between UBS and Credit Suisse to help shore up confidence in European banks.

Wearing many hats

The dynamic has put big banks like JPMorgan and Goldman Sachs in the awkward position of playing multiple roles simultaneously in this crisis. Big banks are advising smaller ones while participating in steps to renew confidence in the system and prop up ailing lenders like First Republic, all while gaining billions of dollars in deposits and being in the position of potentially bidding on assets as they come up for sale.

The broad sweep of those money flows are apparent in Federal Reserve data released Friday, a delayed snapshot of deposits as of March 15. While large banks appeared to gain deposits at the expense of smaller ones, the filings don’t capture outflows from SVB because it was in the same big-bank category as the companies that gained its dollars.

Although inflows into one top institution have slowed to a “trickle,” the situation is fluid and could change if concerns about other banks arise, said one person, who declined to be identified speaking before the release of financial figures next month. JPMorgan will kick off bank earnings season on April 14.

At another large lender, this one based on the West Coast, inflows only slowed in recent days, according to another person with knowledge of the matter.

JPMorgan, Bank of America, Citigroup and Wells Fargo representatives declined to comment for this article.

Post-SVB playbook

The moves mirror what one newer player has seen as well, according to Brex co-founder Henrique Dubugras. His startup, which caters to other VC-backed growth companies, has seen a surge of new deposits and accounts after the SVB collapse.

“Things have calmed down for sure,” Dubugras told CNBC in a phone interview. “There’s been a lot of ins and outs, but people are still putting money into the big banks.”

The post-SVB playbook, he said, is for startups to keep three to six months of cash at regional banks or new entrants like Brex, while parking the rest at one of the four biggest players. That approach combines the service and features of smaller lenders with the perceived safety of too-big-to-fail banks for the bulk of their money, he said.

“A lot of founders opened an account at a Big Four bank, moved a lot of money there, and now they’re remembering why they didn’t do that in the first place,” he said. The biggest banks haven’t historically catered to risky startups, which was the domain of specialty lenders like SVB.

Dubugras said that JPMorgan, the biggest U.S. bank by assets, was the largest single gainer of deposits among lenders this month, in part because VCs have flocked to the bank. That belief has been supported by anecdotal reports.

The next domino?

For now, attention has turned to First Republic, which has teetered in recent weeks and whose shares have lost 90% this month. The bank is known for its success in catering to wealthy customers on the East and West coasts.

Regulators and banks have already put together a remarkable series of measures to try to save the bank, mostly as a kind of firewall against another round of panic that would swallow more lenders and strain the financial system. Behind the scenes, regulators believe the deposit situation at First Republic has stabilized, Bloomberg reported Saturday.

First Republic has hired JPMorgan and Lazard as advisors to come up with a solution, which could involve finding more capital to remain independent or a sale to a more stable bank, said people with knowledge of the matter.

If those fail, there is the risk that regulators would have to seize the bank, similar to what happened to SVB and Signature, they said. A First Republic spokesman declined comment.

While the deposit flight from smaller banks has slowed, the past few weeks have exposed a glaring weakness in how some have managed their balance sheets. These companies were caught flat-footed as the Fed engaged in its most aggressive rate hiking campaign in decades, leaving them with unrealized losses on bond holdings. Bond prices fall as interest rates rise.

It’s likely other institutions will face upheaval in the coming weeks, Citigroup CEO Jane Fraser said during an interview on Wednesday.

“There could well be some smaller institutions that have similar issues in terms of their being caught without managing balance sheets as ably as others,” Fraser said. “We certainly hope there will be fewer rather than more.”

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Silicon Valley Bank collapse: How it happened

xnftcrypto — Fri, 10 Mar 2023 23:10:10 +0000

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A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.

Justin Sullivan | Getty Images

On Wednesday, Silicon Valley Bank was a well-capitalized institution seeking to raise some capital.

Within 48 hours, a panic induced by the very venture capital community that SVB had served and nurtured ended the bank’s 40-year-run.

Regulators shuttered SVB Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever. The company’s downward spiral began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet. What followed was the rapid collapse of a highly-respected bank that had grown alongside its technology clients.

Even now, as the dust begins to settle on the second bank wind-down announced this week, members of the VC community are lamenting the role that other investors played in SVB’s demise.

“This was a hysteria-induced bank run caused by VCs,” Ryan Falvey, a fintech investor of Restive Ventures, told CNBC. “This is going to go down as one of the ultimate cases of an industry cutting its nose off to spite its face.”

The episode is the latest fallout from the Federal Reserve’s actions to stem inflation with its most aggressive rate hiking campaign in four decades. The ramifications could be far-reaching, with concerns that startups may be unable to pay employees in coming days, venture investors may struggle to raise funds, and an already-battered sector could face a deeper malaise.

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Shares of Silicon Valley Bank collapsed this week.

The roots of SVB’s collapse stem from dislocations spurred by higher rates. As startup clients withdrew deposits to keep their companies afloat in a chilly environment for IPOs and private fundraising, SVB found itself short on capital. It had been forced to sell all of its available-for-sale bonds at a $1.8 billion loss, the bank said late Wednesday.

The sudden need for fresh capital, coming on the heels of the collapse of crypto-focused Silvergate bank, sparked another wave of deposit withdrawals Thursday as VCs instructed their portfolio companies to move funds, according to people with knowledge of the matter. The concern: a bank run at SVB could pose an existential threat to startups who couldn’t tap their deposits.

SVB customers said they didn’t gain confidence after CEO Greg Becker urged them to “stay calm” in a call that began Thursday afternoon, and the stock’s collapse continued unabated, reaching 60% by the end of regular trading. Importantly, Becker couldn’t assure listeners that the capital raise would be the bank’s last, said a person on the call.

All told, customers withdrew a staggering $42 billion of deposits by the end of Thursday, according to a California regulatory filing.

By the close of business that day, SVB had a negative cash balance of $958 million, according to the filing, and failed to scrounge enough collateral from other sources, the regulator stated.

By Friday, as shares of SVB continued to sink, the bank ditched efforts to sell shares, CNBC’s David Faber reported. Instead, it was looking for a buyer, he reported. But the flight of deposits made the sale process harder, and that effort failed too, Faber said.

Friday evening, some SVB customers received emails assuring them that it was “business as usual” at the bank.

“I’m sure you’ve been hearing some buzz about SVB in the markets today so wanted to reach out to provide some context,” one SVB banker wrote to a client, according to a copy obtained by CNBC.

“It is business as usual at SVB,” the banker wrote. “Understandably there may be questions and I want to make myself available if you have any concerns.”

Falvey, a former SVB employee who launched his own fund in 2018, pointed to the highly interconnected nature of the tech investing community as a key reason for the bank’s sudden demise. Prominent funds including Union Square Ventures and Coatue Management blasted emails to their entire rosters of startups in recent days, instructing them to pull funds out of SVB on concerns of a bank run. Social media only heightened the panic, he noted.

“When you say, `Hey, get your deposits out, this thing is gonna fail,” that’s like yelling fire in a crowded theater,” Falvey said. “It’s a self-fulfilling prophecy.”

A customer stands outside of a shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.

Justin Sullivan | Getty Images

Falvey, who started his career at Wells Fargo and consulted for a bank that was seized during the financial crisis, said that his analysis of SVB’s mid-quarter update gave him confidence. The bank was well capitalized and could make all depositors whole, he said. He even counseled his portfolio companies to keep their funds at SVB as rumors swirled.

Now, thanks to the bank run that ended in SVB’s seizure, those who remained with SVB face an uncertain timeline for retrieving their money. While insured deposits are expected to be quickly available, the lion’s share of deposits held by SVB were uninsured, and its unclear when they will free up.

“The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due,” the California financial regulator stated. “the bank is now insolvent.”

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Goldman Sachs (GS) 2Q 2022 earnings

xnftcrypto — Mon, 18 Jul 2022 13:39:03 +0000

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Goldman Sachs on Monday posted profit and revenue that exceeded analysts’ estimates as fixed income traders generated roughly $700 million more revenue than expected.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $7.73 vs. $6.58 expectedRevenue: $11.86 billion vs. $10.86 billion expected

Second-quarter profit fell 48% to $2.79 billion, or $7.73 a share, driven by industrywide declines in investment banking revenue. Still, the per share results were more than a dollar higher than the average analyst estimate reported by Refinitiv.

Revenue fell 23% to $11.86 billion, which was a full $1 billion more than analysts had expected, driven by a 55% surge in fixed income revenue.

The bank’s fixed income operations generated $3.61 billion in revenue, topping the $2.89 billion StreetAccount estimate. Goldman attributed the performance to “significantly higher” trading activity in interest rates, commodities and currencies. Equities revenue rose 11% to $2.86 billion, edging out the $2.68 billion StreetAccount estimate.

Goldman shares were up about 4% in premarket trading.

“We delivered solid results in the second quarter as clients turned to us for our expertise and execution in these challenging markets,” CEO David Solomon said in the release.

“Despite increased volatility and uncertainty, I remain confident in our ability to navigate the environment, dynamically manage our resources and drive long-term, accretive returns for shareholders,” he said.

Goldman tends to outperform other banks during periods of high volatility, as displayed by the firm’s strong fixed income results.

Similar to rivals including JPMorgan Chase and Morgan Stanley who posted steep declines in second-quarter advisory revenue, Goldman said investment banking revenue dropped 41% to $2.14 billion, slightly higher than the $2.07 billion estimate. The firm blamed a sharp slowdown in equity and debt issuance in the quarter, one of the casualties of surging interest rates and declines across financial assets.

The bank said its deals backlog shrank compared with the first quarter, which could indicate that potential mergers and IPOs are being killed instead of being pushed back into future quarters.

Goldman also tends to benefit from rising asset prices through its various investment vehicles, and so broad declines in financial assets stung the firm in the quarter.

Asset management revenue fell 79% from a year earlier to $1.08 billion, edging out the $924.4 million estimate. The decline came from losses in publicly traded stocks and smaller gains in private equity holdings, the bank said.

“Macroeconomic concerns and the prolonged war in Ukraine continued to contribute to the volatility in global equity prices and wider credit spreads,” the bank noted.

Last week, JPMorgan and Wells Fargo also posted write-downs tied to declines in loan books or equity holdings.

Goldman’s consumer and wealth management revenue rose 25% to $2.18 billion, essentially matching analysts’ estimates, on rising management fees, credit card balances and deposits in its digital banking business.

Goldman shares have fallen 23% this year through Friday, worse than the 16% decline of the KBW Bank Index.

Last week, JPMorgan and Wells Fargo posted second-quarter profit declines as the banks set aside more funds for expected loan losses, while Morgan Stanley disappointed after a bigger-than-expected slowdown in investment banking. Citigroup topped expectations for revenue as it benefited from rising rates and strong trading results.

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JPMorgan (JPM) 2Q 2022 earnings miss

xnftcrypto — Thu, 14 Jul 2022 13:30:35 +0000

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JPMorgan Chase said Thursday that second-quarter profit slumped as the bank built reserves for bad loans by $428 million and suspended share buybacks.

The actions reflect Chairman and CEO Jamie Dimon’s increasingly cautious stance. “The U.S. economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy,” he said in the earnings release.

“But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road,” he warned.

With this outlook, the bank has opted to “temporarily” suspend its share repurchases to help it reach regulatory capital requirements, a prospect feared by analysts earlier this year. Last month, the bank was forced to keep its dividend unchanged while rivals boosted their payouts.

Shares of the bank fell 3.5% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $2.76 vs. $2.88 expectedManaged revenue: $31.63 billion vs. $31.95 billion expected

Profit declined 28% from a year earlier to $8.65 billion, or $2.76 a share, driven largely by the reserve build, New York-based JPMorgan said in a statement. A year ago, the bank benefited from a reserve release of $3 billion.

Managed revenue edged up 1% to $31.63 billion, helped by the tailwind of higher interest rates, but was still below analysts’ expectations, according to a Refinitiv survey.

The bank’s miss on earnings “is not terrible” because non-Wall Street operations performed well as deposits grew and borrowers continue to repay debts, bank analyst Mike Mayo said Thursday in a research note. But it would be more palatable if the bank lowered guidance on expenses, he added.

JPMorgan, the biggest U.S. bank by assets, is closely watched for clues on how the banking industry fared during a quarter marked by conflicting trends. On the one hand, unemployment levels remained low, meaning consumers and businesses had little difficulty repaying loans. Rising interest rates and loan growth mean that banks’ core lending activity is becoming more profitable. And volatility in financial markets has been a boon to fixed income traders.

But analysts have begun slashing earnings estimates for the sector on concern about a looming recession, and most big bank stocks have sunk to 52-week lows in recent weeks. Revenue from capital markets activities and mortgages has fallen sharply, and firms are disclosing writedowns amid the broad decline in financial assets.

Importantly, a key tailwind the industry enjoyed a year ago — reserve releases as loans performed better than expected — has begun to reverse as banks are forced to set aside money for potential defaults as the risk of recession rises.

The bank had a $1.1 billion provision for credit losses in the quarter, including the $428 million reserve build and $657 million in net loan charge-offs for soured debt. JPMorgan said that it added to reserves because of a “modest deterioration” in its economic outlook.

Back in April, JPMorgan was first among the banks to begin setting aside funds for loan losses, booking a $902 million charge for building credit reserves in the quarter. That aligned with the more cautious outlook Dimon has been expressing. In early June he warned that an economic “hurricane” was on its way.

Asked on Thursday to update his forecast, Dimon told reporters during a conference call that it hadn’t changed, but that the concerns had edged closer, and that some of the financial dislocations he had feared had begun to materialize.

The slowdown in Wall Street deals stung JPMorgan, which has one of the biggest operations on the Street. Investment banking fees fell a steep 54% to $1.65 billion, $250 million below the $1.9 billion estimate. Revenue in that division was impacted by $257 million in markdowns on positions held in the firm’s bridge loans portfolio.

Fixed income trading revenue jumped 15% to $4.71 billion, but that was still well below analysts’ $5.14 billion estimate for the quarter, as strong results in macro trading were offset by weakness in credit and securitized products. Equities trading revenue also jumped 15%, to $3.08 billion, which edged out the $2.96 billion estimate.

One tailwind the company has is rising U.S. rates and a swelling book of loans. Net interest income jumped 19% to $15.2 billion for the quarter, topping analysts’ $14.98 billion estimate.

JPMorgan said at the firm’s investor day in May that it could achieve a key target of 17% returns this year, earlier than expected, thanks to higher rates. In fact, the bank hit that level this quarter.

Shares of JPMorgan have dropped 29% this year through Wednesday, worse than the 19% decline of the KBW Bank Index.

Morgan Stanley also reported earnings Thursday and like JPMorgan, its results were shy of Wall Street’s expectations. The bank was hurt by a drop investment banking revenue.

Wells Fargo and Citigroup are expected to post their results on Friday and Bank of America and Goldman Sachs are slated for Monday.

This story is developing. Please check back for updates.

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