Displaying items by tag: jp morgan

(New York)

The very public grudge match between JP Morgan and President Trump appears to be continuing, albeit in a more subtle way this week. Strategists at JP Morgan went on the record saying that one of the biggest risks to the market right now is that Trump overestimates the US economy and makes a major miscalculation in his trade war with China. The big worry is that Trump takes the trade war too far and sends China into a recession, which would then reverberate and cause a global reversal, shocking markets.

FINSUM: China experiencing a significant downturn could cause a chain reaction amongst EM and developed economies which could come back to sting the whole western world.

(New York)

JP Morgan just published what could be the most well-documented financial crisis forecast ever written. The bank’s quant team put out a 143-age report chronicling how the next crisis will unfold which features the opinions of almost 50 of Wall Street’s top analysts and strategists. The consensus is that there will be a major “liquidity crisis” with huge selloffs in major asset classes, and no one to step in to buy. The losses will be exacerbated by the shift to passive management and the rise of algorithmic trading. JP Morgan says that the Fed and other central banks may even need to directly buy stocks, and there could even be negative income taxes. The bank thinks the crisis will hit sometime after the first half of 2019, most likely in 2020.

FINSUM: Assessing the validity of these kinds of predictions is always hard. While we have no idea about the timing, or whether this will actually happen, the argument is well thought out and quite logical.

(New York)

The big rout in emerging markets is starting to look like a full blown crisis. So far the US has proven itself immune to the turmoil, but the contagion is spreading, according to both JP Morgan and BlackRock. The pair say that a herd mentality has taken hold and that investors are indiscriminately selling emerging market assets, so matter what the value or long-term outlook. Even those with holdings that look strong are selling for fear of getting trampled by the rest of the herd, thus feeding the cycle further.

FINSUM: The big selloffs now include not only Argentina and Turkey, but South Africa, Brazil, and Indonesia. Given the Fed’s hawkishness and trade wars roaring, there is no end in sight for the turmoil.

(New York)

It looks like JP Morgan is trying to eat Schwab and Fidelity’s lunch, and the latter’s stock prices show it this week. The mega bank announced that it would offer free stock trading to its clients, allowing 100 free trades a year for most, and unlimited free trades for some. That is a huge change for a bank that formerly charged $24.95 per trade as late as last year. JP Morgan has 47 million online customers, who will now have free trading access. Reacting to the move, the VP of marketing for Interactive Brokers said “Banks and brokers that give away so-called free or cheap trades make their money by paying next to nothing on idle balances, executing trades at inferior prices, and charging exorbitant borrowing fees, which is costly to those that don't do their homework”.

FINSUM: That is a pretty sharp response from Interactive Brokers, and one that sounds true. Still, this is a sign of changing times where trading will soon become largely free.

(New York)

Tesla’s stock is currently in limbo. The company is under SEC investigation on multiple fronts, including for the tweet heard round the world, or Elon Musk’s announcement that he intended to take the company private. Markets are finding it hard to handicap the odds of the deal, which is supposed to take place at $420, actually coming through. However, JP Morgan made a big comment on the company this week, saying the funding to take the company private had likely not been finalized. JP Morgan cut its price forecast to just $195, or well under half the price at which Musk wanted to buy the company back. Tesla’s shares are currently trading around $308.

FINSUM: Based on the news that has come out since the tweet, it does seem like Musk exaggerated having the funding secured, which makes this whole deal look very shaky.