JPMorgan beats, shrugs off tough trading quarter

• Jonathan Garber
 

• 6h
• 3,437

JPMorgan CEO Jamie Dimon.Thomson Reuters

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JPMorgan Chase reported third-quarter earnings on Thursday, and it beat Wall Street estimates.

The bank posted earnings of $1.76 a share, above the $1.65 consensus, with the consumer and community banking and corporate and investment banking units topping forecasts.

The bank shrugged off a weak quarter in fixed income, currencies, and commodities, in which it announced revenue of $3.16 billion, shy of the $3.18 billion that analysts were anticipating. Revenue from fixed-income trading was down 27% from a year ago, "driven by low volatility and tighter credit spreads, against a very strong prior year quarter," according to the earnings release.

Wall Street banks were expected to have a difficult quarter trading as markets have been locked in a period of low volatility.

In a memo to employees, the bank's corporate and investment banking CEO, Daniel Pinto, said that while a lot of attention was paid to trading revenue, the corporate and investment banking unit had "a very healthy quarter."

"While attention is often placed on comparative trading revenue, the overall CIB produced a very healthy quarter. It was one of our strongest investment banking quarters in a decade and our large transaction businesses each generated over $1 billion of steady revenue. Once again, our balanced strength across diverse businesses continues to deliver for clients and shareholders."

Here's a look at the key numbers:

• Earnings per share: $1.76 versus $1.65 expected (may not compare)
• Revenue: $26.2 billion versus $25.6 billion expected
• Equity sales and trading revenue: $1.36 billion versus $1.41 billion expected
• Investment-banking revenue: $1.71 billion versus $1.65 billion expected
• Net income: $6.7 billion versus $5.9 billion expected
• Consumer and community banking posted a 6% increase in revenue to $12 billion. Net income for the unit was up 16% at $2.6 billion.
• In the corporate and investment bank, banking revenue increased 5% to $3.1 billion, with the advisory business posting record third quarter revenues. Markets and investor services revenue dropped 16% to $5.5 billion.
• Commercial banking had a record quarter for revenue, at $2.1 billion, and asset and wealth management had record net income of $674 million.

Shares of JPMorgan were trading down 0.50% immediately after the results.

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Justice Department staff are likely to try and block a potential T-Mobile-Sprint mega deal

• Diane Bartz, Reuters

• 20h
• 992

FILE PHOTO: Smartphones with the logos of T-Mobile and Sprint are seen in this illustration Thomson Reuters

WASHINGTON (Reuters) - When Sprint and T-Mobile bring their expected merger plans to the U.S. Department of Justice for antitrust review, the career staff who do the bulk of the probe into whether the deal will hurt customers will likely recommend that it be stopped, three people familiar with their thinking told Reuters.

The deal between the U.S. third- and fourth-largest U.S. wireless carriers, likely to be announced later this month, is set to test how antitrust enforcers will approach big deals under the administration of President Donald Trump, who is seen as pro-business but also ran a populist campaign aimed at the worries of ordinary Americans.

The Justice Department's main concern is how the deal would affect competition in the U.S. mobile sector. Antitrust staff will want to let T-Mobile continue as it has done, aggressively wooing customers away from market leaders Verizon Communications Inc and AT&T Inc , the people said.

T-Mobile touts itself as the fastest-growing U.S. wireless company, and its annual report lists enticements to attract customers like paying termination fees for new customers who leave their old company.

If combined, T-Mobile U.S. Inc and Sprint Corp would have more than half the market for pre-paid plans, favored by people with little or poor credit, which will likely figure in competition considerations.

"Losing that head-to-head competition could drive up prices for those on a more limited income," said Gene Kimmelman, president of Public Knowledge, a consumer advocacy group.

Sprint and T-Mobile agreed on tentative terms on a plan to merge in late September, sources said.

But it is not clear the deal will be any more successful than three years ago, when Japan's SoftBank Group Corp , which controls Sprint, abandoned talks to acquire T-Mobile for Sprint in the face of opposition from U.S. antitrust regulators.

An informal poll of seven antitrust experts contacted by Reuters found them split between predicting that the deal would be stopped and saying they did not know if it would be allowed. A tiny fraction of deals are blocked.

As influential as the career staff is, the final decision will lie with Trump's antitrust enforcer at the Justice Department, Makan Delrahim, and the Federal Communications Commission.

Deutsche Bank analysts said in a research note this week they were "very bearish on the prospects for deal approval," citing not only regulatory risk, but also political opposition from Democrats to deals that could threaten U.S. consumers.

If the agencies decide to try to stop the merger, they have ammunition.

The U.S. wireless market is dominated by Verizon with about 146 million wireless customers and AT&T with nearly 135 million. T-Mobile is third with 71.5 million and Sprint is No. 4 with 58.5 million, according to Fierce Wireless, which collects and analyzes wireless market data. Together, the four have 98.8 percent of the U.S. wireless market.

T-Mobile dominates the prepaid market. Combining with Sprint would give it 56 percent of the market to provide wireless to people who tend to be poorer or have no or bad credit, according to John Fletcher, an analyst with S&P Global.

One point in the deal's favor is that the mobile market is competitive. Between August 2016 and August 2017, wireless telephone services prices fell a stunning 13.2 percent, according to the U.S. Bureau of Labor Statistics.

"Chances are better now, meaningfully better," that the deal will win approval, said Daniel Bitton, an antitrust attorney with Axinn, Veltrop and Harkrider.

(Reporting by Diane Bartz in Washington; Editing by Bill Rigby)

More: Reuters

Bank of America Merrill Lynch advances its Brexit plan as bank rents huge Paris office

• Reuters

• 9h
• 906
 

The Eiffel Tower (R) and La Defence business district (background) are seen in an aerial view in Paris on Bastille Day July 14, 2011.REUTERS/Charles Platiau

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Oct 11 (Reuters) - Bank of America has signed a lease for office space in Paris, cementing plans to move its European trading hub to France after Brexit, Bloomberg reported on Wednesday, citing people familiar with the decision.

BofA has agreed to rent about 100,000 square feet of space - large enough to accommodate a thousand workers, Bloomberg said. However, bank executives are considering possibly subleasing some of the space to other tenants, Bloomberg said, citing the people.

The bank leased space in a building that is being modernized by a unit of France's postal service, La Poste, which owns the building, Bloomberg said.

Bank of America representatives could not immediately be reached for comment.

Last week, Goldman Sachs said it was leasing space in a new building in Frankfurt, which it said would help execute its "Brexit contingency plan."

Some of the recent bank moves are the result of growing nervousness about the future of London's financial center amid slow and acrimonious negotiations between Britain's Brexit minister David Davis and his opposite number at the European Commission, Michel Barnier.

(Reporting by Sangameswaran S in Bengaluru; Editing by Matthew Lewis)

SEE ALSO: Bank of England: Banks will start leaving if we don't get a Brexit transition deal by Christmas

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Bitcoin passes $5,000 to hit fresh all-time high

• Will Martin
 

• 4h
• 4,403
 

LONDON — Bitcoin hit a fresh all-time high on Thursday, passing the $5,000 mark in early-morning European trade.

The cryptocurrency has held onto those gains into the early afternoon, with bitcoin trading up by close to 8.5% on the day, hitting a value of $5,223 by 12.20 p.m. BST (7.20 a.m. ET) as the chart below illustrates:

Markets Insider

Bitcoin has seen its value increase by more than $750 a coin in the past week alone, with a rally that coincides with renewed interest in the currency from investment banks. The Wall Street Journal last week reported that Goldman Sachs was looking at setting up a bitcoin trading operation, and Morgan Stanley CEO James Gorman said recently that the cryptocurrency was "certainly more than just a fad."

The day's rise comes "as bulls returned to the market with a vengeance," according to Neil Wilson, a senior analyst at ETX Capital.

"Regulatory woes have subsided with reports indicating that China may be ready to allow trading again, albeit with tighter regulation," he added. "The prospect of Goldman Sachs trading Bitcoin is also driving buying as this might give it a toehold on Wall Street that could bring it into the mainstream and attract fresh inflows of capital."

The cryptocurrency's massive boom has its detractors, however, with Michael Novogratz, a former manager at the $72 billion investor Fortress, calling it "one of the great manias of all time" in an interview on CNBC earlier this week.

"It would not surprise me if, in the next six to 10 months, we're over $10,000," Novogratz told CNBC on Tuesday.

Also this week, a team of analysts led by Gautam Chhugani and Gaurav Jangale from the research house Bernstein said that bitcoin was still just a "censorship-resistant asset class," out of the reach of state control and yet to form a part of the system of settlement and credit that defines money.

"Fiat money is still the final form of settlement — governments still collect taxes in fiat money and salaries are still paid in fiat money," the team said in a note to clients on Wednesday.

Get the latest Bitcoin price here.

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