Shortly after the opening bell, we’re selling 100 shares of Morgan Stanley at roughly $101 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 900 shares of MS, decreasing its weighting to roughly 2.65% from roughly 3%. Stocks were poised to open sharply higher Thursday, with the S & P 500 indicating a gain of more than 1.5%, one day after the Federal Reserve cut interest rates by 50 basis points and forecasted more easing before the end of the year. The S & P 500 gave up post-Fed gains Wednesday and closed modestly lower. Morgan Stanley should have a decent pop when trading opens because lower interest rates should boost parts of its business , including investment banking. Morgan Stanley’s roughly 3.7% annual dividend yield also looks a lot more attractive when rates fall . However, for about a week now, we have been talking about taking off some Morgan Stanley as we debate whether to switch the position to a different financial like Goldman Sachs with more leverage to the investment banking cycle. MS YTD mountain Morgan Stanley YTD We thought Morgan Stanley’s share price was too low to sell when we held our September Monthly Meeting last week. But that was when it traded below $97 per share. Based on premarket prices, Morgan Stanley shares were hovering around $101, representing a much better level to take some off. One more factor behind our trim is that the S & P Short Range Oscillator remained in overbought territory after Wednesday’s close. We don’t like to anticipate what the Oscillator will do next. But we have to imagine that it will become even more overbought if the stock market’s opening gains hold. Whenever the Oscillator signals an overbought market, it’s our investment discipline to raise some extra cash. We’ll realize a tiny gain of about 1% on stock purchased in November 2021. (Jim Cramer’s Charitable Trust is long MS. 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.
Tag: Breaking News: Markets
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The Fed forecasts lowering rates by another half point before the year is out
U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., July 31, 2024.
Kevin Mohatt | Reuters
The Federal Reserve projected lowering interest rates by another half point before the end of 2024, and the central bank has two more policy meetings to do so.
The so-called “dot plot” indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 4.4% by the end of this year, equivalent to a target range of 4.25% to 4.5%. The Fed’s two remaining meetings for the year are scheduled on Nov. 6-7 and Dec.17-18.
Through 2025, the central bank forecasts interest rates landing at 3.4%, indicating another full percentage point in cuts. Through 2026, rates are expected to fall to 2.9% with another half-point reduction.
The central bank lowered the federal funds rate to a range between 4.75%-5% on Wednesday, its first rate cut since the early days of the Covid pandemic.
Here are the Fed’s latest targets:
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.
The Fed officials hiked their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June.
Meanwhile, they lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.
— CNBC’s Jeff Cox contributed reporting.
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Here’s what Morgan Stanley, Wells Fargo stand to gain from lower interest rates
Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the bank’s William McChesney Martin building on May 01, 2024 in Washington, DC.
Chip Somodevilla | Getty Images
Big Wall Street banks and interest rates have a complicated relationship.
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JPMorgan creates new role overseeing junior bankers as Wall Street wrestles with workload concerns
JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, D.C., on Dec. 6, 2023.
Evelyn Hockstein | Reuters
JPMorgan Chase has created a new global role overseeing all junior bankers in an effort to better manage their workload after the death of a Bank of America associate in May forced Wall Street to examine how it treats its youngest employees.
The firm named Ryland McClendon its global investment banking associate and analyst leader in a memo sent this month, CNBC has learned.
Associates and analysts are on the two lowest rungs in Wall Street’s hierarchy for investment banking and trading; recent college graduates flock to the roles for the high pay and opportunities they can provide.
The memo specifically stated that McClendon, a 14-year JPMorgan veteran and former banker who was previously head of talent and career development, would support the “well-being and success” of junior bankers.
The move shows how JPMorgan, the biggest American investment bank by revenue, is responding to the latest untimely death on Wall Street. In May, Bank of America’s Leo Lukenas III died after reportedly working 100-hour weeks on a bank merger. Later that month, JPMorgan CEO Jamie Dimon said his bank was examining what it could learn from the tragedy.
Then, starting in August, JPMorgan’s senior managers instructed their investment banking teams that junior bankers should typically work no more than 80 hours, part of a renewed focus to track their workload, according to a person with knowledge of the situation.
Exceptions can be made for live deals, said the person, who declined to be identified speaking about the internal policy.
Dimon’s warning
Dimon railed against some of Wall Street’s ingrained practices at a financial conference held Tuesday at Georgetown University. Some of the hours worked by junior bankers are just a function of inefficiency or tradition, rather than need, he indicated.
“A lot of investment bankers, they’ve been traveling all week, they come home and they give you four assignments, and you’ve got to work all weekend,” Dimon said. “It’s just not right.”
Senior bankers would be held accountable if their analysts and associates routinely tripped over the policy, he said.
“You’re violating it,” Dimon warned. “You’ve got to stop, and it will be in your bonus, so that people know we actually mean it.”
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Bajaj Housing Finance: Near-term opportunity ahead for India’s housing market
Sanjiv Bajaj, Chairman of Bajaj Housing Finance, shares his thoughts on the property and home loan market in India and his outlook for the broader economy.
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Apple is in talks with JPMorgan for bank to take over card from Goldman Sachs
Apple CEO Tim Cook introduces the Apple Card during a launch event at Apple headquarters in Cupertino, California, on March 25, 2019.
Noah Berger | AFP | Getty Images
Apple is in discussions with JPMorgan Chase for the bank to take over the tech giant’s flagship credit card program from Goldman Sachs, a person with knowledge of the negotiations said.
The discussions are still early and key elements of a deal — such as price and whether JPMorgan would continue certain features of the Apple Card — are yet to be decided, said the person, who requested anonymity to discuss the nature of the potential deal. The talks could fall apart over these or other matters in the coming months, this person said.
But the move shows the extent to which Apple’s choices were limited when Goldman Sachs decided to pivot from its ill-fated retail banking strategy. There are only a few card issuers in the U.S. with the scale and appetite to take over the Apple Card program, which had saddled Goldman with losses and regulatory scrutiny.
JPMorgan is the country’s biggest credit card issuer by purchase volume, according to the Nilson Report, an industry newsletter.
The bank is seeking to pay less than face value for the roughly $17 billion in loans on the Apple Card because of elevated losses on the cards, the person familiar with the matter said. Sources close to Goldman argued that higher-than-average delinquencies and defaults on the Apple Card portfolio were mostly because the users were new accounts. Those losses were supposed to ease over time.
But questions around credit quality have made the portfolio less attractive to issuers at a time when there are concerns the U.S. economy could be headed for a slowdown.
JPMorgan is also seeking to do away with a key Apple Card feature known as calendar-based billing, which means that all customers get statements at the start of the month rather than staggered throughout the period, the person familiar with the matter said. The feature, while appealing to customers, means service personnel are flooded with calls at the same time every month.
Apple and JPMorgan declined to comment on the negotiations, which were reported earlier by The Wall Street Journal.
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FDIC unveils rule forcing banks to keep fintech customer data in aftermath of Synapse debacle
Tsingha25 | Istock | Getty Images
The Federal Deposit Insurance Corp. on Tuesday proposed a new rule forcing banks to keep detailed records for customers of fintech apps after the failure of tech firm Synapse resulted in thousands of Americans being locked out of their accounts.
The rule, aimed at accounts opened by fintech firms that partner with banks, would make the institution maintain records of who owns it and the daily balances attributed to the owner, according to an FDIC memo.
Fintech apps often lean on a practice where many customers’ funds are pooled into a single large account at a bank, which relies on either the fintech or a third party to maintain ledgers of transactions and ownership.
That situation exposed customers to the risk that the nonbanks involved would keep shoddy or incomplete records, making it hard to determine who to pay out in the event of a failure. That’s what happened in the Synapse collapse, which impacted more than 100,000 users of fintech apps including Yotta and Juno. Customers with funds in these “for benefit of” accounts have been unable to access their money since May.
“In many cases, it was advertised that the funds were FDIC-insured, and consumers may have believed that their funds would remain safe and accessible due to representations made regarding placement of those funds in” FDIC-member banks, the regulator said in its memo.
Keeping better records would allow the FDIC to quickly pay depositors in the event of a bank failure by helping to satisfy conditions needed for “pass-through insurance,” FDIC officials said Tuesday in a briefing.
While FDIC insurance doesn’t get paid out in the event the fintech provider fails, like in the Synapse situation, enhanced records would help a bankruptcy court determine who is owed what, the officials added.
If approved by the FDIC board of governors in a vote Tuesday, the rule will get published in the Federal Register for a 60-day comment period.
Separately, the FDIC also released a statement on its policy on bank mergers, which would heighten scrutiny of the impacts of consolidation, especially for deals creating banks with more than $100 billion in assets.
Bank mergers slowed under the Biden administration, drawing criticism from industry analysts who say that consolidation would create more robust competitors for the likes of megabanks including JPMorgan Chase.
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KBW CEO Tom Michaud on the Fed’s rate decision, state of banking sector and Basel III requirements
Thomas Michaud, KBW president and CEO, joins ‘Squawk Box’ to discuss this week’s Fed interest rate decision, what to make of the recent volatility in bank stocks, impact of new Basel III requirements on the banking sector, and more.
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It’s a big week for central banks around the world, with a slew of rate moves on the table
Federal Reserve Chair Jerome Powell announces interest rates will remain unchanged during a news conference at the Federal Reserves’ William McChesney Martin Building in Washington, D.C., on June 12, 2024.
Kevin Dietsch | Getty Images
A flurry of major central banks will hold monetary policy meetings this week, with investors bracing for interest rate moves in either direction.
The Federal Reserve’s highly anticipated two-day meeting, which gets underway on Tuesday, is poised to take center stage.
The U.S. central bank is widely expected to join others around the world in starting its own rate-cutting cycle. The only remaining question appears to be by how much the Fed will reduce rates.
Traders currently see a quarter-point cut as the most likely outcome, although as many as 41% anticipate a half-point move, according to the CME’s FedWatch Tool.
Elsewhere, Brazil’s central bank is scheduled to hold its next policy meeting across Tuesday and Wednesday. The Bank of England, Norway’s Norges Bank and South Africa’s Reserve Bank will all follow on Thursday.
A busy week of central bank meetings will be rounded off when the Bank of Japan delivers its latest rate decision at the conclusion of its two-day meeting on Friday.
“We’re entering a cutting phase,” John Bilton, global head of multi-asset strategy at J.P. Morgan Asset Management, told CNBC’s “Squawk Box Europe” on Thursday.
Speaking ahead of the European Central Bank’s most recent quarter-point rate cut, Bilton said the Fed was also set to cut interest rates by 25 basis points this week, with the Bank of England “likely getting in on the party” after the U.K. economy stagnated for a second consecutive month in July.
“We have all the ingredients for the beginning of a fairly extended cutting cycle but one that is probably not associated with a recession — and that’s an unusual set-up,” Bilton told CNBC’s “Squawk Box Europe.”
“It means that we get a lot of volatility to my mind in terms of price discovery around those who believe that actually the Fed [is] late, the ECB [is] late, this is a recession and those, like me, that believe that we don’t have the imbalances in the economy, and this will actually spur further upside.”
Fed decision
Policymakers at the Fed have laid the groundwork for interest rate cuts in recent weeks. Currently, the Fed’s target rate is sitting at 5.25% to 5.5%.
Some economists have argued the Fed should deliver a 50 basis point rate cut in September, accusing the central bank of having previously gone “too far, too fast” with monetary policy tightening.
Others have described such a move as one that would be “very dangerous” for markets, pushing instead for the central bank to deliver a 25 basis point rate cut.
“We are more likely 25 but [would] love to see 50,” David Volpe, deputy chief investment officer at Emerald Asset Management, told CNBC’s “Squawk Box Europe” on Friday.
“And the reason you do 50 next week would be as more or less a safety mechanism. You have seven weeks between next week and … the November meeting, and a lot can happen negatively,” Volpe said.
“So, it would be more of a method of trying to get in front of things. The Fed is caught on their heels a little bit, so we think that it would be good if they got in front of it, did the 50 now, and then made a decision in terms of November and December. Maybe they do 25 at that point in time,” he added.
Brazil and UK
For Brazil’s central bank, which has cut interest rates several times since July last year, stronger-than-anticipated second-quarter economic data is seen as likely to lead to an interest rate hike in September.
“We expect Banco Central to hike the Selic rate by 25bps next week (to 10.75%) and bring it to 11.50% by end-2024,” Wilson Ferrarezi, an economist at TS Lombard, said in a research note published on Sept. 11.
“Further rate hikes into 2025 cannot be ruled out and will depend on the strength of domestic activity in Q4/24,” he added.
Traffic outside the Central Bank of Brazil headquarters in Brasilia, Brazil, on Monday, June 17, 2024.
Bloomberg | Bloomberg | Getty Images
In the U.K., an interest rate cut from the Bank of England (BOE) on Thursday is thought to be unlikely. A Reuters poll, published Friday, found that all 65 economists surveyed expected the BOE to hold rates steady at 5%.
The central bank delivered its first interest rate cut in more than four years at the start of August.
“We have quarterly cuts from here. We don’t think they are going to move next week, with a 7-2 vote,” Ruben Segura Cayuela, head of European economics at the Bank of America, told CNBC’s “Squawk Box Europe” on Friday.
He added that the next BOE rate cut is likely to take place in November.
South Africa, Norway and Japan
South Africa’s Reserve Bank is expected to cut interest rates on Thursday, according to economists surveyed by Reuters. The move would mark the first time it has done so since the central bank’s response to the coronavirus pandemic four years ago.
The Norges Bank is poised to hold its next meeting on Thursday. The Norwegian central bank kept its interest rate unchanged at a 16-year high of 4.5% in mid-August and said at the time that the policy rate “will likely be kept at that level for some time ahead.”
The Bank of Japan, meanwhile, is not expected to raise interest rates at the end of the week, although a majority of economists polled by Reuters expect an increase by year-end.
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Axis AMC CIO: Banking earnings to “be more muted” this year
Ashish Gupta, CIO at Axis Mutual Fund sees a pickup in Indian IPOs in response to increased demand to invest in the Indian market, but a more muted earnings picture for banks as the Reserve Bank of India looks to cut rates in 2024.
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Hong Kong stocks fall as investors digest China economic data, await Fed rate verdict
A man walks along The Bund during the passage of Typhoon Bebinca in Shanghai on September 16, 2024. The strongest storm to hit Shanghai in over 70 years made landfall on September 16, state media reported, with flights cancelled and highways closed as Typhoon Bebinca lashed the city with strong winds and torrential rains.
Hector Retamal | Afp | Getty Images
Asian markets opened mixed Monday, with Hong Kong stocks falling as investors assessed downbeat economic data from China, while several key markets were closed for holidays.
Hong Kong’s Hang Seng index fell 0.76% on open, after China released a slew of worrying economic data over the weekend, with August factory output, retail sales and investment numbers missing expectations. Urban jobless rate rose to a six-month high while year-on-year home prices fell at their fastest pace in nine years.
Investors also await the Federal Reserve’s policy meeting on Tuesday and Wednesday where the central bankers are expected to make their first interest rate cut since 2020
Australia’s S&P/ASX 200 rose 0.44% on open. The Taiwan Weighted Index edged up slightly.
Markets in mainland China and South Korea were closed for Mid-Autumn festival. Japan markets were closed for Respect for the Aged Day.
Typhoon Bebinca has led to cancellation of hundreds of flights in China and Shanghai is expected to be hit by the strongest storm since 1949.
Asian investors also await a swath of key data and central bank decisions from the region.
Japan’s inflation is expected to tick higher in August, according to a Reuters poll, backing the case for the Bank of Japan to stay hawkish as the board sets its policy on Friday.
The central bank is anticipated to keep the rate unchanged while signaling that further rate hikes were in the offing.
The Japanese yen strengthened Monday morning to trade at 140.49 against the greenback. If the yen holds these levels, the currency will close at its strongest in more than a year.
China is poised to set its one- and five-year loan prime rates on Friday. The one-year rate, which affects most new and outstanding loans, is currently at 3.35%, while the five-year rate, that influences the pricing of mortgages, is currently at 3.85%.
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How investors should play Wells Fargo stock after newly announced regulatory action
A person walks past the entrance to a Wells Fargo bank branch on Amsterdam Avenue on June 25, 2024, in New York City.
Gary Hershorn | Corbis News | Getty Images
Wells Fargo’s latest regulatory hiccup isn’t a doomsday scenario.
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Asia-Pacific markets set to climb, with Australia poised to breach all-time closing high
The sails of the Opera House are illuminated with projections on the opening night of Vivid Sydney 2023 in Sydney, Australia, on Friday, May 26, 2023.
Anadolu Agency | Anadolu Agency | Getty Images
Asia-Pacific markets are set to open higher on Friday, extending gains from Thursday as Wall Street’s tech rally continued.
In Asia, investors will react to August inflation figures out from India late Thursday, with showed that the consumer price index rose 3.65% year on year, rising from a five-year low. This was above July’s revised figure of 3.6% and also beat expectations of 3.5% from economists polled by Reuters.
Australia’s S&P/ASX 200 is set to rise and breach its all-time closing high of 8,114.7, with futures standing at 8,115 compared to from its last close of 8,075.7.
Japan’s Nikkei 225 could go either way based off futures data, with the contract in Chicago at 36,945 and its counterpart in Osaka at 36,660 compared to the previous close of 36,833.27.
Hong Kong Hang Seng index futures were at 17,294, higher than the HSI’s last close of 17,240.
Futures for mainland China’s CSI 300 stood at 3,176, just slightly higher than the index’s last close, a near six-year low of 3,172.47 on Thursday.
Overnight in the U.S., the S&P 500 gained 0.75%, marking a four-day winning streak. The Dow Jones Industrial Average rose 0.58%, while the Nasdaq Composite saw the largest gain, rising 1%.
Thursday saw the last major data point for the U.S. economy before the Federal Reserve meeting next week, as the country’s producer price index rose 0.2% month on month, in line with expectations from Dow Jones. On a year-on-year basis, headline PPI rose 1.7%.
—CNBC’s Pia Singh, Jeff Cox and Sarah Min contributed to this report.
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Fed will cut rates by 25 basis points next week, says Neuberger Berman’s Steve Eisman
Steve Eisman, Neuberger Berman senior portfolio manager, joins ‘Squawk Box’ to discuss the financial companies’ current state, his feelings about the banking sector, and what to anticipate for the Federal Reserve next week.
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Wed, Sep 11 202410:22 AM EDT
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Trump Media shares plunge premarket after GOP nominee’s debate with Harris
Former US President and Republican presidential candidate Donald Trump walks away during a commercial break as US Vice President and Democratic presidential candidate Kamala Harris take notes during a presidential debate at the National Constitution Center in Philadelphia, Pennsylvania, on September 10, 2024.
Saul Loeb | Afp | Getty Images
The share price of Trump Media plunged more than 14% before the opening bell Wednesday, a day after its majority shareholder Donald Trump delivered a widely panned presidential debate performance against Vice President Kamala Harris.
Investing in the Truth Social maker’s stock has come to be seen as a way to bet on the political fortunes of Trump, the Republican presidential nominee.
The company has acknowledged that its success at least partly depends on Trump’s popularity, and analysts say its value will rise or fall based on his electoral prospects.
The steep stock decline on the heels of the debate could signal that some of Trump’s supporters weren’t pleased with what they saw on Tuesday night.
Both liberal and conservative political commentators said Harris appeared more prepared, articulate and even-keeled on the Philadelphia stage than Trump, who repeatedly bit on bait she tossed to throw him off topic.
Harris’ team, projecting confidence, immediately challenged Trump to another debate after the first one ended.
Trump said he may not agree to another one.
Trump Media, which trades as DJT on the Nasdaq, had surged as much as 10% in intraday trading Tuesday, possibly indicating optimism about how Trump would fare in the debate.
The company’s gains on Monday and Tuesday offered a respite from a weekslong rout that has seen shares sink as much as 75% from their intraday high in late March, when Trump Media merged with a blank-check firm.
The slump coincided with President Joe Biden dropping out of the presidential race and endorsing Harris to replace him at the top of the Democratic ticket.
It also came in the run-up to the date when Trump and other company insiders can start selling their shares.
Trump owns nearly 59% of the company’s stock, a stake that at Wednesday’s pre-market price was worth nearly $2 billion.
It is unclear if Trump plans to start selling off his stake when a lock-up agreement lifts on Sept. 19.
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Commerzbank shares jump 19% after UniCredit buys 4.5% stake from the German government
A customer enters a Commerzbank AG bank branch in Berlin, Germany, on Tuesday, Aug. 6, 2024.
Bloomberg | Bloomberg | Getty Images
Commerzbank shares jumped on market open on Wednesday, after Italian bank UniCredit acquired a 4.5% stake in the Frankfurt-based lender from the German government.
Frankfurt-listed Commerzbank stock was up 18.86% at 11:06 a.m. London time.
The stake acquisition marks the first step in Berlin’s exit from its position in the German lender. The German government said it had sold around 53.1 million shares — or a roughly 4.49% tranche out of its 16.49% total shareholding — in Commerzbank for roughly 702 million euros ($775 million) to UniCredit.
Even at a reduced 12% position, the German government said it remains Commerzbank’s largest shareholder. Berlin has held its stake in the lender ever since injecting 18.2 billion euros to rescue Commerzbank during the 2008 financial crisis. Around 13.15 billion euros of that sum has been repaid to date, the government said last week.
“Commerzbank has shown that it is once again standing on its own two feet. With this the first partial sale of the investment will mark the completion of the successful stabilization of the investment Bank and thus the federal government’s exit,” said Eva Grunwald, managing director of the federal finance agency.
In a separate statement, UniCredit said it had taken a 9% stake in Commerzbank, confirming that half of this shareholding was acquired from the government.
“To maintain flexibility, UniCredit will submit regulatory filings for authorization to potentially exceed 9.9% of Commerzbank if and when necessary,” UniCredit said. The bank’s own Milan-listed stock was down nearly 1% at 11:06 a.m. in London.
“We have taken note of UniCredit’s announcement this morning and its acquisition of an equity stake in Commerzbank,” Commerzbank said later on Wednesday. “This is also testament to the progress made and the position of Commerzbank. Commerzbank’s management and supervisory board will continue to act in the best interest of all our shareholders and our key stakeholders such as employees and clients.”
Also on Wednesday, the German lender said Commerzbank chief Manfred Knof will fulfil but not seek to renew his term after the end of his contract in December 2025. The bank will begin the process of finding a successor.
Tying up
The latest stake transaction has revived speculation over whether UniCredit, which is already present in Germany through lender HypoVereinsbank, will pursue an acquisition of Commerzbank to create a German banking powerhouse as some analysts see scope for consolidation in European markets.
Earlier this year, market whispers had penciled the possibility that Germany’s largest lender, Deutsche Bank, would pursue a tie-up with its domestic counterpart. The two German banks had briefly pursued, then abruptly abandoned, plans to create a European megabank in 2019. In January, Deutsche Bank CEO Christian Sewing dismissed the possibility of a fusion in January, disclaiming that merger and acquisition operations were not a priority for his group at the time.
By contrast, UniCredit has been active on mergers and acquisitions in recent months and in July announced its acquisition of Belgian digital bank Aion and its cloud platform Vodeno for 370 million euros. That came as UniCredit declared a record first-half performance and a 6% annual growth in net revenues to 6.3 billion euros in the second quarter.
CNBC has reached out to UniCredit for comment over potential takeover intentions.
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Bank stock woes hold back the overall market, but Starbucks’ new CEO is full steam ahead
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
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JPMorgan Chase shares drop 5% after bank tempers guidance on interest income and expenses
Daniel Pinto, president and chief operating officer of JPMorgan Chase, speaks during the Semafor 2024 World Economy Summit in Washington, DC, on April 18, 2024.
Saul Loeb | AFP | Getty Images
JPMorgan Chase shares fell 5% on Tuesday after the bank’s president told analysts that expectations for net interest income and expenses in 2025 were too optimistic.
While the bank expects to be in the “ballpark” of the 2024 target for NII of about $91.5 billion, the current estimate for next year of about $90 billion “is not very reasonable” because the Federal Reserve will cut interest rates, JPMorgan President Daniel Pinto said at a financial conference.
“I think that that number will be lower,” Pinto said. He declined to give a specific figure.
Shares of the New York-based bank dropped more than 7% earlier in the session for the worst decline since June 2020, according to FactSet.
JPMorgan, the biggest U.S. bank by assets, has been a winner among lenders in recent years, benefiting from better-than-expected growth in NII as the bank gathered more deposits and made more loans than expected. But skittish investors are now concerned about the outlook for a bellwether banking stock, along with broader concerns about slowing U.S. economic growth.
NII, one of the main ways banks make money, is the difference in the cost of a bank’s deposits and what it earns by lending money or investing it in securities. When interest rates decline, new loans made by the bank and new bonds it purchases will yield less.
Falling rates can help banks in the sense that customers will slow the rotation out of checking accounts and into higher-yielding instruments like CDs or money market funds. But they also make new assets lower yielding, which complicates the picture.
“Clearly, as rates go lower, you have less pressure on repricing of deposits,” Pinto said. “But as you know, we are quite asset sensitive.”
When it comes to expenses, the analyst estimate for next year of roughly $94 billion “is also a bit too optimistic” because of lingering inflation and new investments the firm is making, Pinto said.
“There are a bunch of components that tell us that probably the number on expenses will be a bit higher than what is expected at the moment,” Pinto said.
When it comes to trading, JPMorgan said it expects third-quarter revenue to be flat to up about 2% from a year ago, while investment banking fees are headed for a 15% jump.
The trading slowdown tracks with Goldman Sachs, which said Monday that trading revenue for the quarter was headed for a 10% drop because of a tough year-over-year comparison and difficult trading conditions in August.
