Daily Brief: JPMorgan Unearths $2 Billion, But Those Loans Are Nowhere To Be Found

Daily Brief: JPMorgan Unearths $2 Billion, But Those Loans Are Nowhere To Be Found

over 2 years ago3 mins

Mentioned in story

JPMorgan Chase posted better-than-expected earnings on Wednesday, after America’s biggest investment bank dug up some of the treasure it hid away last year.

What does this mean?

JPMorgan makes a significant portion of its money advising on mergers and acquisitions, and there have been plenty of deals going around as companies capitalize on record-low interest rates and robust cash piles. So it stands to reason that revenue from the firm’s investment banking segment jumped 45% versus the same time last year. And it gets better: JPMorgan had previously set aside cash reserves in case borrowers didn’t pay off their loans during the pandemic, but it was confident enough to release another batch of that money last quarter. Avast, me hearties: that added a tidy $2 billion to its bottom line.

Advisory fees

Why should I care?

The bigger picture: Enjoy it while it lasts.

Trouble is, analysts aren’t sure JPMorgan has much more of that pandemic cash left tucked away, at which point it’ll have to start relying on more traditional revenue streams. Potentially worrying, then, that the firm’s bread-and-butter loans business grew by just 6% last quarter, probably as US government support for individuals and businesses petered out. Still, JPMorgan has been striking an optimistic tone: the investment bank and its rivals say there are signs that customers are starting – albeit gradually – to feel comfortable enough to take on debt again.

JPMorgan stock
Source: The Wall Street Journal

Zooming out: Let us Mansplain.

JPMorgan isn’t the only financial success story: Man Group – the world’s biggest publicly listed hedge fundannounced on Wednesday that the amount of money it’s looking after hit a record high last quarter. That could be because stock markets are so high and bond yields so low that alternative investments are a more promising way to generate returns – and why other hedge funds might’ve done well last quarter too.

Man Group

Keep reading for our next story...

LVMH Reported Better-Than-Expected Results

LVMH image

Luxury conglomerate LVMH reported better-than-expected quarterly earnings earlier this week, as shoppers emerged, pale and blinking, into the humble lifestyle they once knew.

What does this mean?

There weren’t exactly many benefits to lockdown, but the money plenty of us saved up was certainly one of them. And it looks like fashionistas wasted no time making good use of it last quarter: LVMH’s organic revenue from its fashion and leather goods segment climbed 24% compared to the same time last year. And since the segment contributes almost half of LVMH’s total sales, that helped push overall revenue up by 20%. That means the company has made more money in the first nine months of this year than it did during the same period in a pandemic-free 2019. There was one hiccup, though: LVMH warned that increased shipping costs will hurt its profit going forward.

Revenue

Why should I care?

For markets: Luxury is back in fashion.

The pandemic took a serious toll on the luxury industry: it’s hard for shoppers to justify a Louis Vuitton handbag when there’s so much uncertainty ahead, after all. These results, then, are an encouraging sign that the industry’s back on track, which might be why investors sent LVMH’s stock up 3%. And given that they look to the conglomerate for clues about other luxury companies, they’re suddenly feeling a lot more confident about Hermès’ and Gucci-owner Kering’s updates later this month. That might be why they sent those companies’ shares up too.

LVMH stock
Source: CNBC

The bigger picture: Equality isn’t the enemy.

Investors were especially keen to know how LVMH has been doing in China: they’ve been worried that the company’s second-biggest market’s efforts toward “common prosperity” might’ve been impacting how the 1% spend their money. But LVMH said that it hasn’t noticed any changes in shoppers’ behavior so far, which might – temporarily, at least – help put investors’ minds at rest.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG