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Markets News Afternoon: JPMorgan Chase earnings surprise boosts banking shares; Dow heads towards 10,000 again; Shares rise in Europe
By Finfacts Team
Oct 14, 2009 - 4:51:51 PM
The giant Stuyvesant Town apartment complex on Manhattan's East Side - - 110 apartment buildings on an 80-acre property along First Avenue between 14th and 23rd Streets - - was developed by life insurer MetLife for World War II veterans.
The Wall Street Journal says the giant apartment complex on Manhattan's East Side, was one of the biggest, most high-profile deals of the commercial real-estate boom and is in danger of imminent default, say people familiar with the matter, signaling the beginning of what is expected to be a wave of commercial-property failures.
It was acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of bond fund manager BlackRock Inc. -- and is running out of cash. As of the end of September, it had $33.7 million left of the $400 million in interest reserves set up to service its debt, according to the people familiar with the matter.
JPMorgan Chase
JPMorgan Chase & Co., the major US bank which came through the financial crisis, in a very strong position, today reported robust third-quarter earnings as its thriving investment banking business more than offset rising loan losses that the bank warned would continue for the foreseeable future.
Last month, the bank's chief Jamie Dimon fired Bill Winters, who the Financial Times termed "the respected co-head of the investment bank," and moved Steve Black, the old-school banker who was Winters' partner in the division, to another role.
The FT says Dimon did not tell Winters directly of his fate:"people close to the situation say it was Mr Black, not Mr Dimon, who told a stunned Mr Winters of the end his 26-year tenure at JPMorgan. The fact that the news was broken to him on the eve of his 48th birthday - - two days before the announcement - - only added to the perception that, by avoiding that phone call, Mr Dimon had breached one of the codes of honour that binds Wall Street's alpha males."
JPMorgan, said earnings for the July-September period were $3.59 billion profit or 82 cents a share, from $527 million, or 9 cents, in the same period a year earlier but it also said it increased provisions for losses on home and credit card loans in the quarter.
Jeff Harte, of Sandler O'Neill, shares his analysis of JPMorgan's Q3 earnings results on CNBC:
"Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios,"Dimon said.
The second-largest US bank by assets, said for that there are some signs of stabilization in delinquencies among consumer loans that are only recently past due. However, CFO Mike Cavanaugh said during a conference call with reporters that the bank "can't at the moment be certain" that the trend will continue.
Investment-banking revenue from fixed-income surged to a record $5 billion, compared with markdowns of $3.6 billion a year earlier.
The bank raised its consumer credit reserves by $2 billion to, bringing the total to $31.5 billion, or 5.3% of loans.
The retail bank reported net income of $7 million, a decline of $57 million from a year earlier, as the bank set aside more money to cover credit losses.
About 120 jobs are set to be lost in Cork with the closure of US company Harris Corporation.
About 70 full-time workers and 50 part-time workers at the plant were told of the decision at a meeting last week.
Plant closures are never given the flowery treatment of a ministerial announcement unless it's in the minister's constituency.
The company, which makes security electronic devices, was formerly named Tyco Electronics, a unit of the Tyco Corporation, which saw its CEO Dennis Kozlowski and a subordinate in 2005, convicted of looting more than $600 million from the company to pay for lavish parties, fancy art and an opulent Manhattan apartment that featured a $6,000 shower curtain.
Tyco's wireless division, including the Cork operation, was taken over by Harris in May.
Harris said that following a review carried out locally, the decision to phase out operations and close the Little Island plant next June, has been taken.
A redundancy package, which has been described as generous, has been agreed.
The American multinational said the decision was taken because of existing capabilities elsewhere in the company.
Ireland's 3 major airlines call on Government to "Axe the Tourist Tax"
The Chief Executives of Ireland’s three largest airlines, Aer Lingus, Cityjet and Ryanair today called on the Irish Government to axe the €10 tourist tax, which has had such a devastating impact on traffic and visitor numbers at Ireland’s airports since it was introduced on 1st April last.
Calling today upon the Government to remove this tax, Christoph Mueller (Aer Lingus), Geoffrey O’Byrne-White (Cityjet) and Michael O’Leary (Ryanair) made the following points:
1. Since the €10 tourist tax was imposed, the monthly traffic at Dublin Airport has fallen by up to 15%.
2. In 2009 Dublin Airport will lose some 3m passengers, as traffic falls from 24m to approx. 21m.
3. The Belgian and Dutch Governments have recently scrapped their passenger taxes in order to stimulate tourism.
4. The Greek and Spanish Governments have also reduced airport charges (in some cases to zero) to stimulate tourism.
Would the drop in traffic be mainly a result of one of the severest recessions in Europe?
Retail sales fell 1.5 percent in September, less than expected. Export prices were down 0.3 percent, and import prices were down 1.8 percent. The CNBC news team shares their analysis:
US
The US Census Bureau announced today that advance estimates of US retail and food services sales for September, seasonally adjusted, but not for price changes, were $344.7 billion, a decrease of 1.5 per cent from the previous month and 5.7 per cent below September 2008. The end of the "cash for clunkers" car rebate scheme impacted the data.
Strong earnings from Intel and JPMorgan Chase boosted sentiment on Wednesday, pushing the Dow Jones Industrial Average toward the 10000 milestone, which it first crossed in 1999.
Investors also reacted to better than expected September US retail sales.
The Dow was recently up 112 points, or 1.1%, trading at 9983.14, a session
The S&P 500 added 1.2% and chip giant Intel, which reported after the closing bell on Wednesday, rose 2.&%. powering the Nasdaq to a 1.1% rise.
On the New York Mercantile Exchange, oil for November delivery is trading at $74.60 up 45 cents from Tuesday's close. In London, Brent crude for November delivery is trading at $72.63 a barrel.
Frederic Mishkin, former Federal Reserve Board governor and an economics professor at Columbia University, discusses monetary policy with CNBC:
Currencies
The euro is trading at $1.4903 and at £0.9341.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
