JPMorgan posts big Q4 earnings beat in record year - Yahoo Finance

JPMorgan Chase’s (JPM), the largest U.S. bank by assets, kicked off earnings season for the big banks on Tuesday, with fourth-quarter results that beat Wall Street estimates.

The bank beat on the top and bottom lines, bolstered by higher lending and deal-making. The results sent JPM’s shares higher by nearly 2% from Monday’s close to $139.50.

Here were the key figures versus the expectations, according to analysts polled by Bloomberg.

• Revenue (adjusted): $29.2 billion vs $27.9 billion expected.

• Earnings per share (adjusted): $2.57 vs $2.36 per share expected

JPMorgan’s net income for the fourth quarter came in at $8.5 billion, up 21%. Even amid widespread economic uncertainty and market volatility, the bank posted record full-year net income of $36.4 billion, or $10.72 per share — making 2019 its most profitable year ever.

In a statement, JPMorgan CEO Jamie Dimon highlighted the resilience and strength of U.S. consumers as he applauded a “solid year” of record revenue and income.

“While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year,” Dimon said.

“The U.S. consumer continues to be in a strong position and we see the benefits of this across our consumer businesses,” he added.

Indeed, brisk consumer activity was a major reason for JPMorgan’s success during the fourth quarter. The bank’s consumer and community units saw client investment assets up 27% and posted a 5% leap in average deposits.

Meanwhile, credit card sales volumes were up 10%, which Dimon noted was driven by a “robust holiday season” as merchant processing volumes climbed 7%. 

Net interest income, a closely-followed metric, came in at $14.3 billion, down by 2% amid a mix of lower interest rates, rising balance sheets and a boost to net interest income.

Elsewhere, JPMorgan maintained its No. 1 spot for global investment banking fees, with 9% of the wallet share in 2019. Dimon noted that the firm grew its investment banking wallet to the highest level in a decade, and held the top spot for the 11th consecutive year. 

During the quarter, the bank experienced a big rebound in trading, with total markets revenue coming in at $5 billion, up 56% from last year. Fixed income revenue rebounded 86% to come in at $3.4 billion, “benefitting from a favorable comparison against a weak prior year.” Equity markets revenue rose 15% to $1.5 billion, driven by higher revenue in prime and cash equities. 

The stock, traded on the New York Stock Exchange, gained more than 41% in 2019, outperforming the S&P 500 Index’s (GSPC) 25.8% rally during the year.

Dimon reiterated the firm’s commitment to investing and growing its lines of business. Last year, JPMorgan added more than 70 new branches across 16 markets, while expanding its commercial banking footprint internationally.

Dimon also touted that the firm became “the first U.S. bank to be approved for a majority-owned securities business in China.”

The CEO touted JPMorgan’s “large investments in technology, including AI, cloud, digital and payments, as well as other investments in innovation, talent, security and risk controls. These actions will help us continue to grow and serve our clients going forward,” he said.

Wells Fargo (WFC) and Citigroup (C) will also report on Tuesday, followed by Bank of America (BAC) and Goldman Sachs (GS) on Wednesday and Morgan Stanley (MS) on Thursday.

Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter.

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• Gundlach says ‘biggest risk’ for markets in 2020 is a Bernie Sanders win

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2020-01-14 12:38:00Z
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Delta's fourth-quarter profit beats estimates thanks to cheaper fuel and strong travel demand - CNBC

A Delta Air Lines Boeing 767-300 landing in Amsterdam.

Nicolas Economou | NurPhoto | Getty Images

Delta Air Lines' fourth quarter profits topped Wall Street's expectations, as lower fuel prices and strong travel demand — particularly for high-priced premium tickets — lifted the Atlanta-based carrier's results and boosted shares more than 4% in premarket trading.

Before the market opened on Tuesday, Delta reported per-share adjusted earnings of $1.70, compared with analysts' expectations of $1.40 a share and a more than 30% increase from a year earlier.

Delta doesn't have the beleaguered Boeing 737 Max in its fleet, the plane that has been grounded since March after two fatal crashes in Indonesia and Ethiopia killed 346 people. Competitors American, Southwest and United do have the Max in their fleets and have had to scale back growth planes without the fuel-efficient jets cleared by regulators to return to service.

The crashed led to a ballooning crisis at Boeing that cost the previous CEO his job and drew ire from lawmakers over internal emails that showed Boeing employees gloating about bullying regulators into approving less-rigorous training than some had requested. Boeing's new CEO, General Electric aviation and Blackstone Group veteran Dave Calhoun, started Monday.

Delta's CEO Ed Bastian told CNBC's Phil LeBeau on Tuesday that the issues don't effect the carrier, which operates older Boeing 737 jets, directly.

"I think it's been widely reported that there's a culture issue at Boeing for some time now," Bastian said. "Dave will clean it up."

Delta reported net income of $1.1 billion, up 8% from the fourth quarter of 2018. Revenues in the three months ended Dec. 31 rose 6% from a year earlier to $11.44 billion, slightly above analysts' estimates. Revenue from Delta's premium cabins, such as business class grew 9% to $3.7% billion, more than twice the clip that main cabin revenue grew, to reach $5.24 billion in the fourth quarter.

Delta benefited from cheaper fuel and the unwinding of its minority stake in Brazilian carrier Gol, the result of Delta's new stake in Gol's larger South American competitor Latam.

Here's how Delta did in the fourth quarter of 2019 compared with what Wall Street expected:

• Adjusted earnings per share: $1.70 versus $1.40 expected.
• Revenue: $11.44 billion versus $11.35 billion expected.

Delta said it expects unit revenues to be flat to up 2% in the first quarter of 2020, and flat margins. The airline reiterated its 2020 guidance of earnings per share of $6.75 to $7.75.

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2020-01-14 12:02:00Z
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BlackRock CEO says the climate crisis is about to trigger 'a fundamental reshaping of finance' - CNBC

The chief of the world's largest money manager believes the intensifying climate crisis will bring about a fundamental reshaping of finance, with a significant reallocation of capital set to take place "sooner than most anticipate."

In an annual letter to CEOs published Tuesday, BlackRock Chief Executive Larry Fink said: "Climate change has become a defining factor in companies' long-term prospects … But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance."

BlackRock's assets under management totaled almost $7 trillion in the third quarter of 2019.

Fink's comments come as business leaders, policymakers and investors prepare to travel to Davos, Switzerland for the World Economic Forum next week.

The theme at this year's January get-together, which is often criticized for being out of touch with the real world, has been designated as "Stakeholders for a Cohesive and Sustainable World."

"Climate change is almost invariably the top issue that clients around the world raise with BlackRock. From Europe to Australia, South America to China, Florida to Oregon, investors are asking how they should modify their portfolios," Fink continued.

"And because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself."

"In the near future — and sooner than most anticipate — there will be a significant reallocation of capital," he added.

'Defining issue of our time'

Alongside 20 other young climate activists, Sweden's Greta Thunberg has called on all of those attending the World Economic Forum in the Swiss Alps to stop the "madness" of ongoing investments in fossil fuel exploration and extraction and "completely divest" from fossil fuels.

In an op-ed for The Guardian, published Friday, Thunberg — who was catapulted to fame for skipping school every Friday to hold a weekly vigil outside Swedish parliament in 2018 — said global leaders must also "end all fossil fuel subsidies."

Youth activist Greta Thunberg speaks at the Climate Action Summit at the United Nations on September 23, 2019 in New York City. While the United States will not be participating, China and about 70 other countries are expected to make announcements concerning climate change.

Stephanie Keith | Getty Images

Protesting against political inaction over climate change, the 17-year-old sparked an international wave of school strikes — also known as "Fridays for Future" — with millions of other children following suit in cities around the world last year.

The United Nations has recognized climate change as "the defining issue of our time," with a recent report calling the crisis "the greatest challenge to sustainable development."

'Climate change is different' to other crises

"Over the 40 years of my career in finance, I have witnessed a number of financial crises and challenges — the inflation spikes of the 1970s and early 1980s, the Asian currency crisis in 1997, the dot-com bubble, and the global financial crisis," BlackRock's Fink said.

"Even when these episodes lasted for many years, they were all, in the broad scheme of things, short-term in nature. Climate change is different."

"Even if only a fraction of the projected impacts is realized, this is a much more structural, long-term crisis. Companies, investors, and governments must prepare for a significant reallocation of capital," he added.

Australia has drawn global attention in recent months, with the country currently experiencing one of its worst bush fire seasons on record.

Record high temperatures and drought exacerbated by the climate crisis have ignited blazes that have killed more than two dozen people and destroyed 2,000 homes since September.

Nearly half a billion animals in Australia's New South Wales state are thought to have been killed by raging wildfires in the last couple of months too.

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2020-01-14 10:01:00Z
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BlackRock Will Put Climate Change at Center of Investment Strategy - The New York Times

Laurence D. Fink, the founder and chief executive of BlackRock, plans to announce Tuesday that his firm will make investment decisions with environmental sustainability as a core goal.

BlackRock is the largest in its field, with nearly $7 trillion under management, and this move will fundamentally shift its investing policy — and could reshape how corporate America does business and put pressure on other large money managers to follow suit.

Mr. Fink’s annual letter to the chief executives of the world’s largest companies is closely watched, and in the 2020 edition he said BlackRock would begin to exit certain investments that “present a high sustainability-related risk,” such as those in coal producers. His intent is to encourage every company, not just energy firms, to rethink their carbon footprints.

“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” Mr. Fink wrote in the letter, which was obtained by The New York Times. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”

The firm, he wrote, would also introduce new funds that shun fossil fuel-oriented stocks, move more aggressively to vote against management teams that are not making progress on sustainability, and press companies to disclose plans “for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized.”

Mr. Fink has not always been the first to address social issues, but his annual letter — such as his dictum two years ago that companies needed to have a purpose beyond profits — has the influence to change the conversations inside boardrooms around the globe.

And now Mr. Fink is sounding an alarm on a crisis that he believes is the most profound in his 40 years in finance. “Even if only a fraction of the science is right today, this is a much more structural, long-term crisis,” he wrote.

A longtime Democrat, Mr. Fink insisted in an interview that the decision was strictly business. “We are fiduciaries,” he said. “Politics isn’t part of this.”

BlackRock itself has come under criticism from both industry and environmental groups for being behind on pushing these issues. Just last month, a British hedge fund manager, Christopher Hohn, said that it was “appalling” of BlackRock not to require companies to disclose their sustainability efforts, and that the firm’s previous efforts had been “full of greenwash.”

Climate activists staged several protests outside BlackRock’s offices last year, and Mr. Fink himself has received letters from members of Congress urging more action on climate-related investing. According to Ceres and FundVotes, a unit of Morningstar, BlackRock had among the worst voting records on climate issues.

In recent years, many companies and investors have committed to focusing on the environmental impact of business, but none of the largest investors in the country have been willing to make it a central component of their investment strategy.

In that context, Mr. Fink’s move is a watershed — one that could spur a national conversation among financiers and policymakers. However, it’s also possible that some of the most ardent climate activists will see it as falling short.

Even so, the new approach may put pressure on the other large money managers and financial firms in the United States — Vanguard, T. Rowe Price and JPMorgan Chase, among them — to articulate more ambitious strategies around sustainability.

When 631 investors from around the world, representing some $37 trillion in assets, signed a letter last month calling on governments to step up their efforts against climate change, the biggest American firms were conspicuously absent.

BlackRock’s decision may give C.E.O.s license to change their own companies’ strategy and focus more on sustainability, even if doing so cuts into short-term profits. Such a shift could also provide cover for banks and other financial institutions that finance carbon-emitting businesses to change their own policies.

Had Mr. Fink moved a decade ago to pull BlackRock’s funds out of companies that contribute to climate change, his clients would have been well served. In the past 10 years, through Friday, companies in the S&P 500 energy sector had gained just 2 percent in total. In the same period, the broader S&P 500 nearly tripled.

In an interview, Mr. Fink said the decision developed from conversations with “business leaders and how they’re thinking about it, talking to different scientists, reading different research.” Mr. Fink asked BlackRock to research the economic impacts of climate change; it found that they are already appearing in a meaningful way in the form of higher insurance premiums, for fires and floods, and expects cities to have to pay more for their bonds.

Wherever he goes, he said, he is bombarded with climate questions from investors, often to the exclusion of issues that until recently were once considered more important. “Climate change is almost invariably the top issue that clients around the world raise with BlackRock,” he wrote in his letter.

He wrote that he anticipated a major shift, much sooner than many might imagine, in the way money will be allocated.

“This dynamic will accelerate as the next generation takes the helm of government and business,” he wrote. “As trillions of dollars shift to millennials over the next few decades, as they become C.E.O.s and C.I.O.s, as they become the policymakers and heads of state, they will further reshape the world’s approach to sustainability.”

While BlackRock makes its green push, the Trump administration is going in the opposite direction, repealing and weakening laws aimed at protecting the environment and promoting sustainability. Indeed, Mr. Fink’s effort appeared to be another example of the private sector pressing on issues that the White House has abandoned.

Still, Mr. Fink made plain that while he intends for the firm to consider climate risks, he would not pursue an across-the-board sale of energy companies that produce fossil fuels. Because of its sheer size, BlackRock will remain one of the world’s largest investors in fossil-fuel companies.

“Despite recent rapid advances in technology, the science does not yet exist to replace many of today’s essential uses of hydrocarbons,” he wrote. “We need to be mindful of the economic, scientific, social and political realities of the energy transition.”

BlackRock manages money for countries across the globe as well as states and municipalities across the nation. It could face opposition for its new stance in areas that benefit from fossil fuels, like countries in the Middle East or states where oil has become a significant part of their economies.

Mr. Fink said that because much of the money BlackRock manages is invested in passive index funds like those that track the S&P 500, the firm was unable to simply sell shares in companies that it felt were not focused on sustainability. But he did say that the firm could do so in what are known as “actively managed funds,” in which BlackRock can choose which stocks are included.

BlackRock also plans to offer new passive funds — including target-date funds that are based on a person’s age and are meant to be used to prepare for retirement — that will not include fossil fuel companies. Investors will be able to choose these instead of more traditional funds. To the extent that fossil fuel companies are in an index, BlackRock plans to push them to consider their eventual transition to renewable energy. Mr. Fink said the company would vote against them if they are not moving fast enough.

“We will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them,” he wrote.

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2020-01-14 08:00:00Z
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US futures point to slightly higher open ahead of bank earnings - CNBC

U.S. stock index futures edged higher Tuesday morning ahead of the kick off of earnings season.

Around 4:50 a.m. ET, Dow futures indicated a positive open of about 25 points. Futures on the S&P and Nasdaq were also higher.

Investors will be keeping an eye on earnings with some of the biggest lenders officially opening the latest round of corporate releases. Citigroup, J.P. Morgan Chase, and Wells Fargo are due to report before the bell. Delta airlines is also set to update investors Tuesday.

On Monday, U.S. equities resumed the rally seen since last week after the United States removed China from a list of currency manipulating countries. The announcement came just a few days before the two largest world economies are due to sign a "phase one" trade deal in Washington, D.C.

Ahead of the signing, the South China Morning Post reported that the trade war is "not over yet" and that Wednesday's ceremony will be more like the "first round of a game."

On the data calendar, the National Federation of Independent Business will release its latest small business survey at 6 a.m. ET, followed by new U.S. inflation figures at 8:30 a.m. ET.

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2020-01-14 06:32:00Z
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These important tax changes in the Secure Act have nothing to do with retirement - MarketWatch

On Dec. 20, President Donald Trump signed into law the imaginatively acronym-ed Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The new law is mainly intended to expand opportunities for individuals to increase their retirement savings. It also includes some other important tax changes that have nothing to do with retirement.

In an earlier column, I covered the three most important changes that can affect individuals. See here. But there’s more. In this column, I’ll cover the rest of the important changes for individuals. Here goes.

Penalty-free early retirement plan and IRA distributions allowed for births and adoptions

If you receive a distribution from a qualified retirement plan, a Section 403(b) tax-sheltered annuity plan, an eligible Section 457(b) deferred compensation plan, or an IRA, you must report the taxable portion as income on your return. Fair enough. But if you receive a distribution before age 59½ (an early distribution) you’ll also get hit with the dreaded 10% early distribution penalty tax on the taxable portion — unless a tax-law exception grants you relief.

New law: For 2020 and beyond, the SECURE Act allows penalty-free treatment for a qualified birth or adoption distribution. That means a distribution made during the one-year period beginning on the date when an eligible child of the account owner is born or the date when the legal adoption of an eligible adoptee of the account owner is finalized. An eligible adoptee means any individual (other than a child of the account owner’s spouse) who has not attained age 18 or is physically or mentally incapable of self-support.

Key point: The maximum penalty-free qualified birth or adoption distribution is $5,000, and this limit is apparently applied on an individual-by-individual basis. So, if both you and your spouse have an eligible retirement plan account or IRA, you can each apparently receive a $5,000 penalty-free qualified birth or adoption distribution.

Graduate fellowship and stipend payments can count as compensation for IRS contribution purposes

IRA contributions for the year generally cannot exceed your compensation (as defined) plus any net self-employment income for that year. However, if you’re married you can count your spouse’s compensation and/or self-employment income.

New law: For 2020 and beyond, the Secure Act stipulates that taxable amounts paid to aid you in the pursuit of graduate or postdoctoral study (such as a fellowship, stipend, or similar payment) count as compensation for IRA contribution purposes.

No more retirement plan loan borrowings through credit cards

Subject to tax-law limitations, employer-sponsored qualified retirement plans can make loans to plan participants. Some plans have allowed employees to access their plan loans using a credit card or similar mechanism.

New law: For plan loans taken out after 12/20/19, the Secure Act stipulates that borrowings cannot be distributed through credit cards or similar arrangements without causing the distributed amounts to be treated as deemed taxable distributions rather than tax-free loan amounts.

Unfavorable TCJA kiddie tax rates retroactively repealed

Before the Tax Cuts and Jobs Act (TCJA), the Kiddie Tax rules taxed a portion of an affected child or young adult’s unearned income (typically from investments) at the parent’s marginal federal income tax rate if that rate was higher than the rate the child or young adult would otherwise pay. The Kiddie Tax rules can potentially apply until the year an affected young adult reaches age 24.

For tax years beginning after 2017, the TCJA changed the deal to tax a portion of an affected child or young adult’s unearned income at the rates paid by trusts and estates. That change could cause the Kiddie Tax to be much more expensive when an affected child or young adult had substantial unearned income.

New law: Belatedly, our beloved Congress became concerned that the TCJA change unfairly increased the federal income tax bills of certain children and young adults, including those who are survivors of deceased military personnel, first responders and emergency medical workers. In effect, the Secure Act retroactively repeals the TCJA Kiddie Tax rate change for all affected children and young adults and reinstates the pre-TCJA Kiddie Tax calculation. So, the calculation is once again based on the parent’s marginal tax rate like before the TCJA was hatched. This development will be a meaningful tax-saver for kids and young adults with substantial investment income. Good!

Effective date: While the Secure Act’s repeal provision is generally effective for 2020 and beyond, you can choose to apply the repeal to 2018 and/or 2019 returns of Kiddie Tax victims. So, if you have a Kiddie Tax victim in your family, an amended 2018 return may be in order. You’ll probably want to follow the Secure Act change for the victim’s 2019 return as well.

Liberalized rules for tax-free Section 529 plan distributions

Section 529 plans are state-sponsored programs that allow you to make contributions to an account established to cover the designated account beneficiary’s qualified college expenses or to prepay qualified college tuition for the account beneficiary. Distributions to cover the beneficiary’s qualified college expenses are federal-income-tax-free. Tax-free 529 account distributions can also be used to cover up to $10,000 of annual qualified expenses to attend public, private, or religious elementary or secondary schools.

New law: The Secure Act sweetens the already-sweet 529 plan deal by allowing federal-income-tax-free 529 distributions to cover eligible apprenticeship costs. This change applies to distributions made after 12/31/18. The Secure Act also allows federal-income-tax-free 529 distributions to cover up to $10,000 of qualified student loan principal and/or interest payments. This change also applies to distributions made after 12/31/18.

Key point: The limited deduction for student loan interest is disallowed to the extent the interest is paid with a tax-free 529 distribution.

Increased penalty for failure to file federal returns

The Secure Act increases the penalty for failure to file affected federal tax returns to the lesser of: (1) $400 or (2) 100% of the amount of tax due. This change applies to returns that are due in 2020 and beyond, including any extensions. Previously, the dollar limit for returns due in 2020 was $330.

The bottom line

The SECURE Act includes important tax changes, including some that have nothing to do with retirement. Now you know. You’re welcome.

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2020-01-13 13:41:00Z
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Jeff Bezos says Amazon is donating $690,000 to Australian bushfire efforts - CNBC

Jeff Bezos, founder and CEO of Amazon, pictured on September 13, 2018.

Bloomberg | Getty Images

Billionaire Amazon founder Jeff Bezos has announced his company will donate $690,000 donation to bushfire relief efforts in Australia.

In an Instagram post on Sunday, Bezos pledged 1 million Australian dollars ($690,000) on behalf of the tech giant — an amount that has faced criticism by some on social media.

"Our hearts go out to all Australians as they cope with these devastating bushfires," Bezos said. "Amazon is donating 1 million AU dollars in needed provisions and services."

The figure was derided by some online, with people comparing the sum with Bezos' personal net worth.

Bezos has a net worth of $116.7 billion, according to Forbes, and according to a 2019 Business Insider analysis was earning almost $9 million an hour in 2018. Meanwhile, Amazon has a market capitalization of more than $930 billion.

The conglomerate's move to help tackle the bushfires was also compared to other high-profile contributions, with many pointing out that a string of celebrities with far less personal wealth than Bezos had donated more out of their own pockets.

Marvel star Chris Hemsworth, whose net worth is estimated at $76 million, matched Amazon's donation, while singer Pink, who Forbes says has a fortune of $57 million, pledged $500,000.

Billionaire Kylie Jenner has donated $1 million, while actress Bette Midler matched Pink's donation and rock bank Metallica gave more than $500,000.

Meanwhile, the CEOs of tech giants Apple and Google have also publicly responded to the crisis in Australia.

Alphabet CEO Sundar Pichai said on Twitter last week that the bushfires were "devastating" to witness, adding that the organization had donated to support relief efforts.

At the end of last year, Apple Chief Executive Tim Cook took to Twitter to announce that the company would be donating to assist with efforts in Australia. Neither Pichai nor Cook disclosed how much the companies had donated.

A spokesperson for Amazon was not immediately available for comment when contacted by CNBC.

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2020-01-13 12:56:00Z
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