JPMorgan Chase Trading forecasts and signals

The market the day beforeThe session on June 23, the main American stock exchanges ended in the green zone. The S&P 500 gained 0.95%, closing at 3,796 points. Nasdaq and Dow Jones rose 1.62% and 0.64%, respectively. Of the 11 sectors in the S&P 500, seven closed in positive territory. The growth leaders were representatives of the healthcare industry (+2.22%) and utilities (+2.35%). Energy companies became outsiders (-3.75%).Company newsThe Novavax (NVAX: +13.92%) Nuvaxovid vaccine from COVID-19 has been approved for emergency use in Taiwan for adults.The Centers for Disease Control and Prevention has approved the Moderna vaccine (MRNA: +5.28%) against coronavirus for patients aged six to 17 years.FedEx (FDX: -0.29%) reported a profit of $6.87 per share for the quarter, while consensus put this result at $6.91. Over the past four quarters, the company's EPS has exceeded forecasts only once.We expectThe Fed's intensive rate hike is putting significant pressure on asset values. At the same time, the regulator has tightened the conditions for passing annual stress tests for banks. According to the Federal Reserve, more than 30 of them, in the event of an economic crisis, which would result in a loss of $612 billion, will continue to meet the minimum capital adequacy requirements. The banks that have passed the stress tests are planning to announce benchmarks in the coming days regarding their dividends and share repurchase programs. Barclays forecasts JPMorgan's total payments (dividend and buy back) in the amount of about $19 billion, despite the fact that in 2021 the bank returned more than $30 billion to shareholders. Bank of America and Wells Fargo will allocate more than $15 billion for these purposes, which, however, is significantly less than last year. Morgan Stanley and Citigroup round out the top 5 in terms of dividends and buybacks. Goldman Sachs is expected to transfer $6-8 billion to its investors.The number of initial applications for unemployment benefits in the week to June 18 decreased by 2 thousand, to 229 thousand, with a consensus of 230 thousand after an increase of 5 thousand over the previous five days. Unemployment in the States remains extremely low, which allows us to count on a continued increase in employment in the non-agricultural sector in June.The yield on 10-year bonds rose to 3.05% the day before, and for "two-year-olds" it rose to 2.97%.Trading on June 23 at the sites of Southeast Asia ended in the green zone. China's CSI 300 gained 1.17%, Hong Kong's Hang Seng rose 2.08%, and Japan's Nikkei 225 rose 1.23%.Brent crude futures are quoted at $110 per barrel. Gold is trading at $1,824 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 3780-3880 points.MacrostatisticsToday, data on sales of new homes in the United States for May will be published (consensus: 595 thousand vs. 591 thousand a month earlier)Technical pictureThe S&P 500 continues the upward trend of the last four days. The RSI remains near neutral values. MACD indicates a weakening of the activity of "bears", but they still dominate the market. The nearest support level for the broad market index is the range of 3600-3660 ...

The US stock market retains a corrective mood, the drivers of which are the lockdown in China, the revision of US consumer demand and confidence benchmarks by economists, as well as changes in the positive forecasts of company management by the end of this year. Over the past two weeks, the S&P 500 has lost 5.06%. The strengthening of the dollar and the tightening of the PREP put additional pressure on high-risk assets.Macro data confirm the persistence of inflationary pressure in the United States. The consumer price index for March is expected to have increased by 1.2% mom and 8.5% YoY. At the same time, there are signs of a softening of the imbalance of supply and demand in the labor market, which may contribute to a slowdown in wage growth as a factor of inflation. In the next two weeks, the focus will be on US GDP growth data for the 1st quarter, data on household incomes and expenditures, business activity and labor market dynamics.Technical pictureThe reporting season for the 1st quarter of this year is in full swing, and almost 80% of S&P 500 companies exceeded market expectations. Last week, the S&P 500 index tried to turn up, but active sales on April 25-26 stopped this attempt. The RSI and MACD indicators confirm the strengthening of the bearish trend, and in the absence of positive triggers in the short term, the index is likely to continue its downward movement.In such a situation, investors begin to actively study their portfolios and review assets. The main thing is to be guided by the rule of optimal diversification, due to which it is possible to increase the stability of investments at the time of correction.Ideas and recommendationsWhen forming a portfolio, special attention should be paid to the energy, industrial, financial, raw materials and technology sectors, as well as look at the securities of manufacturers of essential goods and representatives of the healthcare industry. It is better to choose those issuers that have left or improved their forecasts for the current year, for example, Microsoft, Procter & Gamble, Intuit, Boston Beer, UnitedHealth.JPMorgan Chase & Co. presented mixed results for the 1st quarter of this year, generally reflecting the general trends of the banking sector. The dynamics of net profit fell by 42% YoY and by 20.3% QoQ, which did not meet analysts' expectations. Net interest income continues to grow slowly due to the inflow of funds for deposits and the expansion of the loan portfolio. In addition, the management approved a new $30 billion buyback program, which should be launched from May. Given the continued strong positions of JPMorgan, the recommendation for securities is to "hold" with a target at around $ 150.Gap Inc. announced the departure of the head of the Old Navy brand, a key division for the company. The share of this segment in Gap's revenue is 50%. The company's products belong to the low price segment, and due to delays in supply chains, there is a shortage of goods, which, in turn, leads to lost profits. The change of the CEO of the key direction for GAP may negatively affect the financial performance of the company, which were already under pressure. In this regard, the target price for the securities has been reduced to ...

Despite the fact that large American banks exceeded analysts' expectations for profits, this did not stop the decline of the banking sector.At the moment, reports from 5 of the 6 largest US banks have been released:JPMorgan (JPM);Citigroup (C);Wells Fargo (WFC);Goldman Sachs (GS);Morgan Stanely (MS).The reports are good, why is everything falling?Analysts' expectations were underestimated due to the military actions in Ukraine, so it was not difficult to exceed them. Before the reports were released, it was unclear how much banks would suffer as a result of all this, and the market expected the worst.If you look at the dynamics of profit and compare it with the corresponding quarter of last year, then all banks showed a serious drop. For example, the profits of JP Morgan and Citigroup fell by more than 40%. Wells Fargo showed a decrease of only 20%: it is less focused on the Wall Street divisions, and is focused on retail and commercial customers in the United States.Why did profits decline so sharply?Banks give two reasons:Since the end of 2020, JPMorgan has been releasing its reserves all the time, which has contributed to strong performance. But in the 1st quarter of 2022, the company had to replenish these reserves by almost a billion.The impact of the Russian-Ukrainian conflict. Due to increased volatility and correction in the markets, some banks are experiencing a decrease in profits in the trading and investment banking departments.At the same time, the demand for mortgages has decreased significantly, which also puts pressure on banks.And what about investment banks?JPMorgan, Goldman Sachs and Morgan Stanley have greatly exceeded analysts' expectations in both profit and revenue. This was facilitated by the increased volatility of the markets against the background of Ukraine. In addition, these companies do not need to allocate a large share to reserves due to the specifics of their business. However, they are still under pressure in price due to problems in other segments, for example, in underwriting.What awaits the US banking sector in the near future?Since the beginning of the year, the banking sector has sunk by more than 15%. Investors are afraid of a correction in stock markets due to an increase in the key rate, as well as due to geopolitical problems. Banks are also nervous and raising reserves.Investment banks now look more attractive than their competitors in the sector. But everything depends on further events. The market may react to a serious increase in rates by reducing the value of shares. After all, unlike commodity companies, banks cannot play off all inflationary risks and are highly dependent on the state of the global ...

The market the day beforeThe main American stock indexes ended the trading session on April 13 in positive territory. The S&P 500 rose 1.12% to 4447 points, the Nasdaq added 2.03%, the Dow Jones rose 1.01%. Nine of the 11 sectors of the broad market index showed an increase in quotations. The leaders were manufacturers of cyclical consumer goods (+2.51%) and IT companies (+1.59%). Utilities providers (-0.17%) and the financial sector (-0.08%) looked worse than the market against the background of falling income growth rates after the boom of 2021.Company newsBritish GlaxoSmithKline is considering the acquisition of biopharmaceutical company Sierra Oncology (SRRA: +38.5%) for $55 per share, or $1.9 billion. The transaction is expected to be completed in the third quarter of this year.Delta Airlines (DAL: +6.67%) reported smaller-than-expected quarterly losses. Management predicts revenue recovery to 2019 levels due to increased demand for air travel and bookings ahead of the holiday season.JPMorgan Chase & Co. (JPM: -3.2%) reported a 41.5% YoY drop in quarterly profit due to a reduction in investment banking revenues after record growth in 2021. At the same time, the company announced a $30 billion buy back from May of this year.We expectUS manufacturing inflation accelerated to 1.4% mom in March after 0.8% in February, exceeding the consensus forecast of 1.1%. The annual growth rate reached 11.2% — the maximum value since the beginning of the calculation of the indicator in November 2010. However, even without taking into account volatile prices for energy, food and end-use goods, the basic producer price index increased by 1.1% mom. This is due to the imbalance between sustainable consumption and supply shortages, which is likely to persist in the current quarter due to additional pressure in supply chains due to the suspension of production in China and increased geopolitical tensions. The increase in producer prices may also again contribute to the acceleration of consumer inflation in April after its slight slowdown in March.In a monthly report published yesterday, the International Energy Agency (IEA) lowered its forecast for oil demand due to lockdowns in China and weaker demand from OECD countries. The IEA also expects production volumes in Russia to fall by 27% amid a decline in exports, but believes that an increase in production in other countries and the release of raw materials from state reserves will help achieve a balance in the market. In April-May, a seasonal adjustment of oil quotes is not excluded, however, the geopolitical factor continues to influence market expectations for the time being.The stock exchanges of the Asia-Pacific region ended trading on April 14 with the growth of the main stock indices. Japan's Nikkei gained 1.22%, China's CSI 300 rose 1.25%, Hong Kong's Hang Seng rose 0.56%. EuroStoxx 50 gained 0.16% from the opening of trading.The price of Brent crude oil futures dropped to $108.18 per barrel. Gold is trading at $1970 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4390-4460 points.MacrostatisticsRetail sales data in the US for March will be published today, which will allow us to assess the dynamics of consumer demand. The consensus assumes an increase in sales of the control group of goods by 1.0% mom (after +0.2% in February). A preliminary consumer sentiment index from the University of Michigan for April will also be released (consensus suggests a decline to 59.0 points after 59.4 in March).Sentiment IndexThe sentiment index rose by two points to 49, amid the release of a number of positive corporate news.Technical pictureThe S&P 500 played back Tuesday's drop. The shape of the candle for April 13 formed a pattern of absorption of sales of the previous day. At the same time, the RSI is held in the neutral zone, while the smoothing of the MACD indicator line indicates the parity of "bulls" and "bears". If buyers do not strengthen their positions, the benchmark will be able to test support at the level of 4350 points in the short ...

The market the day beforeOn April 8, the main American stock markets showed mixed dynamics. The S&P 500 declined 0.27% to 4,488 points, the Dow Jones rose 0.4%, the Nasdaq lost 1.34%. Value stocks were in the greatest demand among investors. The energy sector became the leader of growth (+2.76%), IT companies were outsiders (-1.43%).Company newsWD-40 Company (WDFC: +7.1%) reported better than expected revenue and EPS for the second fiscal quarter. However, the annual forecast was revised down due to increased fuel costs, in addition, the company announced an increase in prices.Merit Medical Systems (MMSI: +2.1%), as reported by Reuters, may plan to acquire private investment companies GTCR and CD&R.LXP Industrial Trust (LXP: -12.8%) announced the suspension of the evaluation of strategic alternatives due to changes in macroeconomic, geopolitical and financial conditions. Its own forecast of net profit for 2022 was below the general market consensus.We expectThe focus of attention of bidders is the start of the reporting season for the first calendar quarter of 2022. The current consensus of FactSet suggests that the profit of companies from the S&P 500 will grow by 4.5% YoY, whereas, according to the estimate given at the beginning of the year, the indicator should have increased by 5.7% YoY. Profit forecasts were worsened for the first time since the pandemic, although at the end of the quarter there was still a tendency to increase them. Such volatility of expectations may be associated with a reassessment of the impact of rising energy prices on the results of companies and with the strengthening of the "hawkish" sentiment of the Fed. Management's comments may again relate to the impact on the results of inflation and disruptions in supply chains, which was noted in the previous reporting period. Investors will also focus on the pricing policy of companies, as businesses will strive to maintain profitability in the face of the need to increase costs, including labor costs. Due to geopolitical uncertainty, a number of companies will prefer to give a conservative forecast of financial indicators for the rest of the year.The Fed's policy of actively raising rates and accelerating QT is positive for the banking sector. However, this positive can be offset by softer capital markets, lower fees, reduced buyback programs and the prospect of rising costs.Trading on April 11 on the sites of Southeast Asia ended in the red. China's CSI 300 fell by 3.09%, Hong Kong's Hang Seng lost 0.07%, Japan's Nikkei 225 fell by 0.61%. EuroStoxx 50 has dropped by 0.18% since the opening of the session.The yield of 10-year treasuries rose to 2.71%. Brent crude futures are quoted at $100 per barrel. Gold is trading at $1961 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4440-4500 points.MacrostatisticsThere are no publications of important macrostatistics planned today.Sentiment IndexThe sentiment index dropped by one point to 46.Technical pictureThe S&P 500 is testing support at the 200-day moving average. The RSI is at a neutral level, and the MACD signals a possible continuation of the decline. In the event of a breakdown of the 200-day moving average, the benchmark may continue its downward movement to the range of 4375-4400 points.In sightThis Wednesday, April 13, the reporting for the first quarter will be presented by one of the leading US air carriers Delta Airlines (DAL). The forecast assumes a reduction in loss per share by 2.5 times year-on-year, to $1.27, as well as revenue growth by 111% YoY, to $8.771 billion, which is still 16% lower than the result of the corresponding period of 2019. Delta management's guidance is less optimistic. The beginning of the year is statistically quite a weak season for air carriers, so the market does not expect outstanding quarterly results. This is already embedded in the quotations of DAL shares. We believe that the company will present neutral reports. Meanwhile, the calculations of analytical and marketing agencies specializing in the tourism industry, as well as the air carriers themselves, suggest a significant recovery in both tourist flows and business travel volumes, which may exceed the effect of higher fuel prices. Delta has its own refinery and contracts with third-party refiners, which gives it an advantage over other large air carriers that do not hedge fuel risks.On the same day, JPMorgan Chase & Co. (JPM), the largest US bank by assets, will report for the first fiscal quarter. The FactSet consensus assumes a decrease in net revenue by 5.7% YoY, to $30.55 billion, with a decrease in diluted EPS by 39.7% YoY, to $2.71. Earlier, the bank predicted a 10% YoY reduction in revenue from capital markets activities due to increased volatility on stock exchanges. Due to a decrease in activity in terms of listing and M&A transactions in the first quarter, it is expected that revenues from JPM's investment banking direction will decrease by 10-13.5% YoY. It should be recalled that investment consulting and support of corporate transactions provided about 42.5% of the bank's revenue by the end of 2021. Investors' special attention will be focused on the dynamics of JPM's expenses, since the increase in salaries in the previous quarter led to an increase in non-interest costs by 11.46% YoY and put pressure on profits. At the same time, this year the bank planned to increase investments in development and technology by about 30% ...

The market the day beforeYesterday, the American stock exchanges did not work, because Martin Luther King Day was celebrated in the United States. On January 14, the main stock indexes showed mixed dynamics. The S&P 500 rose 0.08% to 4,663 points, the Dow Jones lost 0.56%, and the Nasdaq rose 0.59%. Energy companies looked better than the market (+2.45%) due to the rally in oil prices. The outsiders were the real estate sector (-1.18%) and finance (-1.01%) against the background of the publication of quarterly reports.Company newsWells Fargo's quarterly results (WFC: +3.7%) exceeded market expectations for EPS due to an increase in lending volume, an increase in interest margin and commission income. In addition, a positive guidance was given on interest income and costs.Boston Beer (SAM: -8.1%) lowered its forecast for fiscal year 2021 for EPS due to increased logistics costs.JPMorgan Chase (JPM: -6.2%) reported EPS better than market-wide expectations, management guidance on NII also beat consensus. However, the spending forecast for 2022 disappointed investors.ExpectationsToday, the market will continue to monitor the reporting season in the financial sector. Despite the fairly strong results of the companies for the fourth quarter, the forecast for expenses for 2022 in most cases may turn out to be a negative factor for quotations.Also in the focus of investors' attention remains the question of how significantly the spread of the omicron strain affects the economy. The number of new infections in the United States is still at record high levels of 800 thousand - 1 million per day. Discussions are resuming about possible pressure on supply chains due to the zero-COVID approach adopted in China, which puts major cities at risk of lockdowns. This can lead to port closures, production disruptions and prolonged transport delays. China's four largest port cities have tightened restrictions in response to the spread of the omicron strain. Although the docks remain open for the time being, the possible closure of ports threatens to cause large delays in the delivery of orders. These delays will spread through supply chains and, ultimately, spur inflation. The pressure on logistics chains in the United States is compounded by a shortage of labor due to the large number of infections with the omicron variant. Against this background, respondents surveyed by the WSJ this month lowered their expectations of GDP growth in the first quarter by more than 1 percentage point, to 3% YoY, compared with their forecast of 4.2% in October.Asian stock exchanges ended trading on January 18 in different directions. China's CSI 300 added 0.97%, Japan's Nikkei 225 fell by 0.27%, Hong Kong's Hang Seng sank by 0.43%. EuroStoxx 50 has been falling by 1.11% since the opening of the session.Risk appetite is uncertain. The yield of treasuries rose to 1.77%. Brent crude futures are quoted at $87.6 per barrel. Gold is trading at $1814.7 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4620-4680 points.MacrostatisticsThe NAHB/Wells Fargo Housing Market Index, which reflects the level of confidence of developers, will be published today. According to the consensus, the January indicator will coincide with the December value of 84 points.Technical pictureOn the eve of the open market index found local support at the level of 4615 points, continuing to move within the ascending channel. The shape of Friday's "candle" indicates the possibility of a short-term reversal to growth. The RSI indicator continues to fluctuate near 50 points. The MACD is not giving signals for a reversal yet.In sightToday, the quarterly report will be published by the second largest US bank by assets, Bank of America (BAC). According to FacstSet's forecast, quarterly EPS will reach $0.77 (+18% YoY), net revenue may reach $22.18 billion (+10% YoY). Based on the results of reports from other key US banks published earlier on Friday, we expect that the main support for BAC's non-interest income will be provided by an increase in remuneration for investment banking services (in particular, consulting and underwriting) due to the high activity of companies in the M&A and IPO market. It is expected that BAC will continue to disband reserves for possible credit losses, as management has already indicated a decrease in the share of net write-offs on loans in October-November. Nevertheless, in subsequent reporting periods, the bank may reduce the release of reserves in the context of tightening credit conditions by the Fed. Also, at the end of the quarter, net interest income is likely to show weak dynamics in the conditions of low interest rates, while the growth in lending volumes is only beginning to recover. A decrease in volatility in financial markets may cause a reduction in income from trading operations. The growth rate of net profit at the end of the quarter is expected to slow down due to an increase in operating expenses against the background of bonuses and employee compensation payments at the end of the year, as well as increased investment in technology.On January 20, the streaming service Netflix (NFLX) will present quarterly results. The consensus forecast predicts revenue growth of 16% YoY, to $7.7 billion, with a decrease in EPS from $1.19 to $0.83. It is expected that the subscriber base will expand by 8.4 million, while management three months ago predicted an increase of 8.5 million. We expect a mixed report from Netflix. In particular, we note the risk that the actual growth of subscribers may be weaker than forecasts. The phenomenal success of the series "The Squid Game", most likely, could not provide a stable trajectory of growth in the fourth quarter. However, given the 16% drop in shares since the publication of the last report, we believe that the market has already taken into account more moderate expectations for expanding the customer base in NFLX quotes. The reaction of investors will also depend on whether the company's forecast for the dynamics of the indicator for the first quarter of 2022 coincides with the consensus of expectations, which assumes an audience growth of 5.8-5.9 million people. In addition, an important aspect of the report will be the issue related to the decision to increase the cost of subscriptions in the United States and Canada by about 11%, which was announced on January 14.On January 21, the largest oilfield services company Schlumberger (SLB) will report for the fourth quarter. We expect strong results from the issuer due to increased global drilling activity. On average, the number of active drilling rigs in the last three months of 2021 was 1,537 units, which is 8.2% higher than in the third quarter. SLB's revenue is expected to increase to $6.1 billion (+10.1% YoY, +4.2% QoQ). At the same time, adjusted net profit may grow to $0.39 per share (+77.3% YoY, +8.3% QoQ). In our opinion, the company's shares are trading above fair value, so positive reporting can be considered as a signal for profit-taking on SLB securities. It is worth noting that the first quarter of the year, as a rule, is weak for oilfield service companies due to a seasonal decrease in drilling ...

The largest bank by assets in the United States, JPMorgan Chase & Co. (JPM), reported for the fourth quarter of 2021 a decrease in diluted earnings per share by 12% YoY, to $3.33, having managed, however, to exceed the consensus forecast at $3.01. Net profit decreased by 14% YoY, to $10.40 billion, due to continued growth in operating expenses (+11.47% YoY, to $17.88 billion) with weak revenue dynamics.As of the end of the fourth quarter, the issuer showed a slight change in net revenue (-0.27% YoY), which amounted to $29.26 billion. The result was slightly lower than the general market expectations at $29.78 billion. Net interest income showed a slight increase of 2.58% YoY. Non-interest income decreased by 1% YoY, to $15.6 billion, due to a noticeable reduction in income from brokerage and dealer services (-38% QoQ, -35% YoY) and commissions in the mortgage lending segment (-48% QoQ, -59% YoY). This was offset by an increase in commission income from investment banking services (+35% YoY) and asset management (+13%). Net interest margin was 1.57% at the end of 12 months, down from 1.62% in the previous quarter. However, we expect its gradual growth in subsequent reporting periods due to an increase in interest rates as part of the change in the Fed's monetary policy.In terms of business units, the main increase in net revenue was provided by asset management (Asset & Wealth Management) - by 15.6% YoY, to $4.47 billion. The weak revenue growth was demonstrated by the investment banking segment (Corporate & Investment Banking), expanding by only 2% YoY to $11.53 billion, which is mainly due to a decrease in revenues for servicing transactions with fixed income instruments (-16% YoY) and for transactions with shares (-2% YoY). The Commercial Banking segment provided revenue growth of 6% YoY, up to $2.61 billion. Revenue in the consumer and public banking segment (Consumer & Community Banking) decreased by 3.5% YoY, to $12.27 billion. All areas, except for the asset management division, showed a reduction in profit, but still remain marginal. The exception is the Corporate segment, whose profit deteriorated by 199% YoY.The Bank continued to release reserves for possible credit losses, reducing provisions by $1.89 billion to $12.34 billion. This is due to the fact that the issuer predicts the stability of the macroeconomic situation and the recovery of business and consumer activity in 2022. At the same time, the bank maintains the quality of the loan portfolio at a high level. The percentage of net write-offs at the end of 2021 decreased to 0.49% compared to 0.76% in the fourth quarter of 2020. In 2021, JPM was able to significantly increase net profit - by 66% YoY, to $48.33 billion, but showed a slowdown in net revenue growth to 1% by the end of the year. The Bank confidently maintains the basic capital adequacy ratio at the level of 13.0%.In subsequent reporting periods, JPM may improve its financial performance by resuming the growth of lending volumes and increasing the profitability of long-term treasuries, which may contribute to an increase in interest income. However, it should be noted that the increase in interest rates has the opposite effect on demand for credit products, increasing pressure on the creditworthiness of borrowers.Our base target price for JPM shares is $178, the securities look fairly priced and have the potential to grow. With the development of an optimistic development of events, the bank's quotes may rise to $196, in case of correction, the share price will not exceed ...

The market the day beforeOn January 13, the main American stock indexes finished trading in the red zone. The S&P 500 fell 1.42% to 4,659 points, the Dow Jones declined 0.49%, and the Nasdaq lost 2.51%. Only issuers from the utilities sector (+0.45%), non-cyclical consumer goods (+0.22%) and industry (+0.18%) closed in the black. The outsiders were IT companies (-2.65%) and manufacturers of cyclical consumer goods (-2.08%).Company newsKB Home Construction Company (KBH: +16.5%) reported better than expected for the fourth quarter, helped by continued high demand for housing.The quarterly results of Taiwan Semiconductor Manufacturing (TSM: +5.3%) were better than analysts' forecasts due to the growing demand for semiconductors. The chip manufacturer also plans to modernize and expand production facilities around the world.Virgin Galactic (SPCE: -18.9%) has announced plans to raise up to $500 million through convertible bonds.ExpectationsThe producer price index increased by 0.2% mom in December, falling short of the consensus forecast (+0.4% mom) and the November value revised down (+0.7%). The increase in annual terms (+9.7%) was the largest since 2010, while almost coinciding with analysts' expectations. The increase in the cost of services in various areas, including retail trade in fuel and lubricants, air transportation and retail trade in food, contributed to the growth of the indicator. At the same time, prices for goods decreased for the first time since April 2020 by 0.4% mom against the background of a correction in the cost of gasoline. The increase in the producer price index excluding food and energy was 8.3%. It is expected that the price increase will have a negative impact on the marginality of companies. As a result, investors will pay special attention to this financial metric in the coming weeks of the reporting season.According to published data on the labor market, 230 thousand initial applications for unemployment benefits were submitted over the past week, which turned out to be higher than the consensus of analysts and indicators over the past two months. Nevertheless, the number of repeated applications for unemployment continues to decline, ahead of market forecasts.The reporting season for banks starts today. JPMorgan, Citi and Wells Fargo will be the first to publish the results. In the preliminary reports on the income of these credit institutions, the main topic was the expectations associated with a short-term change in the volume of lending, an improvement in net interest income, and the still high quality of loans/assets, normalization of income from trading operations and mortgage lending, high return on capital and continued growth of expenses.Asian stock exchanges ended trading on January 14 in the red zone. China's CSI 300 fell by 0.82%, Japan's Nikkei 225 declined by 1.28%, Hong Kong's Hang Seng adjusted by 0.19%. EuroStoxx 50 has been losing more than 0.70% since the opening of the session.Risk appetite is uncertain. The yield of treasuries is at the level of 1.71%. Brent crude futures are quoted at $84.47 per barrel. Gold is trading at $1,821 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4630-4690 points.MacrostatisticsData on retail sales in December will be published today (consensus: unchanged after +0.3% a month earlier).ReportsToday, the largest American bank JPMorgan Chase & Co. (JPM) will release a report for the fourth quarter. According to the forecast of FactSet, the revenue of the credit institution will reach $29.82 billion (-1% YoY). Earnings per share (EPS) may be $3.00, which is lower than last year's result ($3.79). At the same time, according to the results of the full fiscal year 2021, EPS may increase by 69% YoY, to $15.03, with a slight increase in revenue to $123.11 billion after $122.98 billion last year. In 2021, the increase in the bank's net profit was mainly due to the release of reserves to cover possible loan losses, which, however, is not a permanent source of income, but may contribute to positive profit dynamics in the medium term. The drivers of JPM's growth can also be attributed to the increase in commissions for investment banking services against the background of high activity in the M&A sector. JPMorgan has maintained its position as the second largest provider of mergers and acquisitions consulting services after Goldman Sachs.Technical pictureThe day before, the index of the Russian market corrected and broke through the support level in the area of the 50-day moving average. Nevertheless, the S&P 500 continues to move within the ascending long-term corridor. The RSI indicator dropped slightly below 50 points, closer to the oversold zone. The MACD signals a possible continuation of the downward ...

The JPMorgan Chase & Co (JPM) annual healthcare conference ended in San Francisco on January 13. This event with a forty-year history is considered one of the most significant in the medical community: pharmaceutical company executives participate in it, important statements about mergers and acquisitions are made on its site, new drugs are presented and breakthrough research is announced.Taking into account the new realities, for the second year in a row, the event is held in an online format. Let's list the most interesting industry trends that were outlined in the speakers' speeches.The use of RNA is recognized as the main trend in pharmacologyRibonucleic acid (RNA) is one of the three main macromolecules in the cells of all living organisms. Although the functions of RNA are not yet fully understood, studies show that this acid plays an important role in the coding and regulation of genes.Ribonucleic acid has attracted increased attention in connection with the development of vaccines against Covid-19. The previous generation of vaccines involved the introduction of a weakened virus into the body to form a subsequent immune response. Moderna (MRNA) and Pfizer (PFE) vaccines, created on the basis of informational RNA, work differently: they ”teach" human cells to produce a protein that triggers an immune response to prevent infection with coronavirus. Thus, the immune system of a vaccinated person is trained to recognize a protein containing Covid-19 and produce antibodies to it.As part of the conference, Pfizer announced the conclusion of three agreements with smaller industry players to accelerate RNA developments. The company sees a huge potential for RNA-based drugs - in particular, in the treatment of cancer and rare diseases. Amgen's interest in collaborating with Arrakis Therapeutics in the study of RNA is widely discussed, which could result in an order for several billion dollars for the latter. Pharmaceutical giants Johnson & Johnson (JNJ) and Eli Lilly (LLY) have so far limited themselves to restrained statements that they are exploring the possibilities of RNA technologies.Coronavirus pushes for partnerships instead of mergersFor the second year in a row, the healthcare sector has not heard about major deals. The coronavirus has shuffled all the cards. Previously, when a breakthrough technology was discovered, a pioneer was usually expected to be absorbed at a premium to the market, but the pandemic has taught companies to think in a new way, and now they are increasingly inclined to partnerships.The most telling example was the collaboration in the development of a coronavirus vaccine between Pfizer and BioNTech (BNTX). Through partnership, large players actually place an order for development to specialized companies with lower turnover. As a result, both sides benefit: pharmaceutical giants save money, and their partners receive orders and financing.Covid-19 ComebackHaving not had time to fully vaccinate against Covid-19, humanity faced a threat in the form of a new and more contagious variant of the coronavirus - "omicron". A strain from South Africa sets anti-records for morbidity in developed countries, involving pharmaceutical giants in a new development race.Some companies at the conference reported on the supply of their drugs against coronavirus. So, Moderna reported that its sales in 2021 amounted to $ 18.5 billion. GlaxoSmithKline (GSK), in partnership with Vir Biotechnology (VIR), reported on the supply to the US government of 600 thousand doses of the drug for the treatment of Covid-19 sotrivimab. Novavax (NVAX) announced that it has already made the first shipments to Europe of its Covid-19 vaccine, but did not specify the volume of orders. And Gilead Sciences (GILD) has informed that its drug remdesivir may soon be approved by the US regulator for the treatment of coronavirus.As for the development of drugs aimed directly against the omicron strain, only Regeneron (REGN) and Pfizer have made statements about this. Regeneron is going to test the treatment of omicron with antibodies in the first quarter, and Pfizer spoke about the progress in creating a new vaccine against Covid-19, which will also work against the new strain.There is an opinion that omicron as an opportunity rather than a threat. Perhaps omicron is our salvation from coronavirus restrictions, since the body of vaccinated people, having met with a new strain of virus from South Africa, gives an immune response, which can be considered as an alternative to booster vaccination. Which, in a global effect, can give massive protection against coronavirus infection.Patent diversificationLarge pharmaceutical companies are in a hurry to reassure investors who are beginning to pay attention to the patent terms of drugs that occupy a large share in their sales.As a rule, after the expiration of a patent for a particular drug, the market is flooded with its cheaper copies, which significantly reduces the revenue of the manufacturer of the original drug. Therefore, investors expect a diversified portfolio of developments from pharmaceutical giants, which will include not only expensive cancer drugs, but also a wide range of medicines for other diseases.For example, the patent of the anti-cancer drug from Merck & Co (MRK) Keytruda expires in 2028. Total sales of this drug for 2020 amounted to $14.4 billion, which accounted for 30% of Merck's revenue. If the company does not explain to investors before the expiration of the exclusivity period how it is going to compensate for the upcoming "loss” of sales volumes, the market reaction can be very negative.Analysts' opinionAn endless "arms race" continues in the pharmaceutical sector. Since breakthrough technologies and patents provide only a temporary competitive advantage, companies have to constantly set themselves new and new goals.However, the JPMorgan conference reflected some changes in the behavior of both pharmaceutical companies and their investors. Industry representatives confirmed their propensity to create partnerships, and investors confirmed their demands for diversification of development portfolios.The most obvious new trend among the elite of pharmacology has been the use of ribonucleic acid to encode the human immune system. It is assumed that with the proper development of technology, scientists will be able not only to achieve the necessary immune response to various infectious diseases, but also to eliminate defects in hormones or blood quality.And the main intrigue remains who will be the first to develop a vaccine against the omicron strain. Leading pharmaceutical giants are studying its characteristics, causes of origin and the reaction of previously vaccinated people to it. Thus, the beginning of this year is similar to the beginning of the previous one. Back then, we were also on the verge of creating a working version of the vaccine and watched the deadly virus walk around the planet ...

Warren Buffett got rid of all airline shares. How else has the Oracle of Omaha investment portfolio changed? We look at which stocks are now included in the top ten of the portfolio and whether they were hit by the coronavirusThe news that Warren Buffett has sold all his shares in the airline business has stirred up Wall Street. The COVID-19 pandemic does not give a chance for an early recovery of this sector, the investor said. And, remaining true to his rule of buying only strong companies, he went into the cache.But it's not just airlines that have been affected by the coronavirus outbreak. The fall did not bypass other stocks included in the investment portfolio of the Berkshire Hathaway conglomerate, which Buffett controls. At the beginning of the year, the value of the portfolio was estimated at $256 billion, and now it is about $194.5 billion.1. AppleThe market value of the largest asset in Buffett's portfolio — the technology giant Apple — is almost $76.2 billion (at market closing prices on May 7). The Berkshire Hathaway conglomerate owns a 5.7% stake in the iPhone manufacturer.As of December 31, 2019, Apple's stake in the portfolio was estimated at almost $71.9 billion. Now it is worth about $76.2 billion. It turns out that Apple's securities have already managed to recover from the coronavirus collapse — the value of the Apple package in the portfolio increased by $4.3 billion.According to the consensus forecast of the Refinitiv service, Apple shares have almost exhausted their growth potential. Nevertheless, the majority of experts recommend buying securities — 29 out of 39 respondents. And only three advise to get rid of them.2. Bank of AmericaBank of America is the largest financial asset of Buffett's company. Berkshire Hathaway owns a 10.9% stake in the bank. The value of this stake is currently about $21.6 billion, while at the beginning of the year the asset was worth almost $32.6 billion.Bank of America securities grew well throughout the past year — from January 2019 to mid-February 2020, they rose by almost 43%. But as a result of the market collapse due to the pandemic, the bank's shares lost 49%. In mid-March, they were given no more than $18 apiece for them.Industry analysts predict the growth of Bank of America shares. According to Refinitiv, the potential is more than 15%. Of the 26 analysts surveyed, 15 recommend buying bank shares, and the remaining 11 recommend continuing to hold previously purchased securities.3. Coca-ColaWarren Buffett has owned shares of the oldest American manufacturer of soft drinks Coca-Cola for more than 30 years, since 1988. Over the years, the investor has accumulated securities worth $17.84 billion. Berkshire Hathaway currently owns 9.3% of the cola manufacturer.Does owning this business justify itself? At the beginning of the year, the value of the Coca-Cola stake was $21.4 billion, today it is about $17.84 billion, that is, the asset has depreciated by almost $3.6 billion in four months. Now the securities are almost close to the level of January 2019, but they are still 19% cheaper than at the beginning of 2020.Shares of Buffett's favorite - Coca-Cola - may rise in price by 12.7% during the year, to $52, according to analysts surveyed by the Refinitiv service. Of the 22 respondents, 16 recommended buying securities, and six more recommended keeping them in a portfolio.4. American ExpressAnother financial asset in the Berkshire Hathaway portfolio is American Express. The company is known worldwide for its credit cards and traveler's checks. Buffett's company owns 18.8% of the capital of American Express.Over the past four months, the American Express package in the Berkshire Hathaway investment portfolio has depreciated by $5.72 billion. As a result of the "coronavirus" fall, which began at the end of February, securities collapsed by 51% in a month. The shares recovered most of these losses — from the end of March to May 7, their value increased by 30%.Wall Street analysts continue to believe in American Express. Industry experts predict the growth of securities during the year by 13.4%, to $100.52. Half of the respondents (14 out of 28) recommend buying shares, 13 experts adhere to the hold recommendation, and only one analyst advises selling securities.5. Kraft HeinzAmong the ten largest assets in the Berkshire Hathaway portfolio is a stake in Kraft Heinz. Warren Buffett owns 26.7% of the ketchup manufacturer. The value of the asset for four months decreased by $1.07 billion.A year ago, Warren Buffett admitted that he had greatly overpaid for Kraft Heinz. Since then, the shares of the food holding company have become even cheaper — they have fallen by 33% over the past 16 months. Since the beginning of the COVID-19 pandemic, the fall in securities has intensified, but since the market began to recover from a strong collapse in mid-March, the shares have managed to reduce losses in price. As a result, the decrease in securities since the beginning of this year amounted to 10.3%.According to the consensus forecast of Refinitiv, the securities of the American food holding may rise by 4.5% during the year, to $30.79 per piece.6. Wells FargoThe third largest financial asset of Berkshire Hathaway is Wells Fargo Bank. Berkshire Hathaway's share in the bank's capital is 8.5%. This is 4.48% of the value of the entire investment portfolio.In the four months of 2020, the value of Wells Fargo in Buffett's portfolio has halved — from $17.38 billion to $8.72 billion. Securities fell by 53.1% against the background of the coronavirus pandemic.According to Refinitiv surveys, Wells Fargo's quotes may rise by 25.7% to $32.07 in the next 12 months. 17 analysts recommend holding shares in portfolios. Only three analysts advise buying Wells Fargo securities, and seven give a recommendation for sale.7. Moody'sMoody's asset is one of the oldest in Buffett's investment portfolio. The holding first invested in it in 2001. Now the package of the international rating agency has more than 24.6 million shares. Berkshire Hathaway's share in Moody's capital exceeds 13%.The rating agency's share price doubled from January 2019 to February 2020 — from $140 to $287 per share. But then the "coronavirus" collapse deprived the paper of 42% of its value. But even with this in mind, the company's shares have grown by 4.3% since the beginning of the year. And their value in Buffett's portfolio increased from $5.85 billion to $6.11 billion.The securities exceeded all Wall Street expectations and are now trading 3.8% above the annual target set by the Refinitiv consensus. At the same time, none of the analysts surveyed gives a recommendation to sell. And the recommendations buy and hold are equally in the consensus.8. JP Morgan ChaseThe fourth financial asset in the portfolio is one of the largest American investment banks, JP Morgan. As of December 31, 2019, Berkshire Hathaway had more than 60 million shares of JP Morgan worth $8.3 billion in its portfolio. But this package has significantly devalued since the beginning of the year — by May 7, its value fell by $2.82 billion, to $5.48 billion.Since January 2019, JP Morgan shares have been growing until February 19, 2020. But on the general wave of the falling market, the securities fell by 44%. Now the bank's shares are recovering, but their price is still 34.6% lower compared to the beginning of the year.Refinitiv's consensus forecast is optimistic: JP Morgan shares are expected to grow by 13.6%, to $105.42. But only 12 out of 26 analysts recommend buying securities, 13 advise keeping them in portfolios, and one recommends selling them.9. U.S.BancorpIn the top ten of Warren Buffett's portfolio, there is a stake in U.S. Bancorp, the fifth largest US bank by assets. Berkshire Hathaway conglomerate owns 9.9% of the financial holding company. Since the beginning of the year, when the asset was estimated at $7.85 billion, its value has fallen by $2.72 billion.U.S. Bancorp shares rose by almost 30% in 2019, but since the beginning of 2020 they have lost all this growth, falling by 42.3% against the background of the general market collapse.Analysts positively assess the holding's securities — the Refinitiv consensus forecast indicates a potential of 19.5% - up to $41.33 for the next year. If the papers have already been purchased, then they should be kept in a briefcase. Recommendations for the purchase of U.S. Bancorp shares were given by seven experts, for the sale — by four.10. Bank of New York MellonA block of shares of Bank of New York Mellon (1.5% of the value of the entire portfolio) displaced shares of another American bank — Goldman Sachs (1.21% of the portfolio value) from the top ten assets of the Berkshire Hathaway portfolio.Buffett's company owns 10% of the capital of Bank of New York Mellon. Since the beginning of the year, the package has depreciated by $1.36 billion. The bank's shares have started to decline in price since the beginning of the year, losing about 30% of their value.Wall Street analysts give a positive outlook on Bank of New York Mellon securities. During the year, the shares can rise by more than 20%, up to $43, according to experts surveyed by Refinitiv. Seven of them recommend buying bank shares, nine — holding already purchased securities, and one — selling.SummaryBerkshire Hathaway's investment portfolio has depreciated by 24%, or $61.5 billion, since the beginning of the year. If on December 31, 2019, its cost was $256 billion, then on May 7-a little more than $194.5 billion.An analysis of the dynamics of the top 10 stocks in the portfolio shows that all securities, with the exception of Kraft Heinz shares, grew during 2019. Their growth was interrupted by an outbreak of coronavirus, which caused a global market collapse from mid-February to mid-March this year. Only two stocks from the top 10 - Apple and Moody's — managed to recover losses after the so-called "coronavirus" fall and show positive dynamics since the beginning of the year.Read more: How to invest in stocks and what you need to knowThere was only one change in the top 10 assets of Buffett's portfolio — Goldman Sachs lost the tenth position to Bank of New York Mellon.Compared to the beginning of the year, Berkshire Hathaway's portfolio has four fewer shares. In April, Warren Buffett sold all shares in American Airlines, Delta Air Lines, United Airlines and Southwest Airlines. However, none of the airlines was included in the top ten assets of the portfolio, so the sale of the air transportation business did not affect the total value of the largest assets of the ...

After a lot of profit and loss reports, which American bank is the best to invest in? Let's take a look.Choosing the best American bank for investment can be a difficult task. It is necessary to carefully study their balance sheet, to find the organizations with the highest costs and the largest obligations. Sometimes such expenses can be an unavoidable evil. With the growing number of online-only competitor banks seeking to capture market share by appealing to millennials, well-known brands will inevitably seek to actively invest in improving their infrastructure.Currently, there is an opinion that investors are spoiled for choice, if we talk about the best stocks of American banks. After a year complicated by the coronavirus pandemic, the four largest consumer-oriented brands showed steady results in the second quarter of 2021.The Big FourWells Fargo's net profit for the three months to June 30 was $6.04 billion, which is in sharp contrast to a net loss of $3.8 billion for the same period in 2020. However, the bank warned that "low interest rates and moderate demand for loans" are still a concern.Bank of America expressed similar concerns when it presented its latest earnings report. Net profit of $9.2 billion was increased due to the release of $1.6 billion previously held in reserve in case of default of borrowers on their loans. But interest income fell by 6%, partly due to the persistently low base rate set by the US Federal Reserve.Other contenders for the title of the best shares include Citigroup, which also made a profit of $1.1 billion after releasing some of the cash. The bank's CEO Jane Fraser, saying that consumer and corporate confidence is growing, said: "This was observed in all our companies, which was reflected in the indicators of investment banking and stocks, as well as in a noticeable increase in expenses on our credit cards. Although we should be aware of the uneven recovery on a global scale, we are optimistic about the future."And another bank, no less important than the previous ones. This is JPMorgan Chase, whose quarterly net profit was $12 billion. Again, a large role was played here by the issuance of credit reserves in the amount of $3 billion. The bank's chairman and chief executive officer, Jamie Dimon, said that total credit card expenses increased by 45% this quarter and were 22% higher than before the pandemic in the second quarter of 2019. It is not surprising that the main drivers of growth were spending on travel and entertainment.If we put together the results of all four major American banks, the overall picture shows that they collectively received $33 billion in profit, 9 billion of which can be associated with the release of reserve funds. This is $9 billion more than analysts expected.Although the US inflation rate is rising, the mood in Washington suggests that banks will have to contend with near-zero interest rates for some time yet. Federal Reserve Chairman Jerome Powell told a Congressional committee that the central bank does not plan to raise the base rate earlier than 2023. This may become an undesirable obstacle to the profitability of the US banking sector, even if the demand for loans increases.Read more: Causes of inflation and scientific approaches to their studyThe Best Shares of American Banks in 2021Even as net income recovers, data from the Financial Times shows that costs are also rising significantly, as the shares of the largest US banks are trying to fend off the threat from smaller (and possibly more flexible) competitors in the financial technology sector. The total expenses of the "big four" for the last quarter amounted to $6.6 billion, an increase of 10% compared to the same period last year.Technology and marketing are mainly behind this growth. Given how the use of cash has decreased due to the coronavirus pandemic, some banks are now trying to catch up by introducing digital services. In the US, Internet-only companies, including Current, Varo and Chime, sought to attract customers by processing their payments faster, offering elegant smartphone applications and refusing transaction fees and minimal balance balances.In particular, it seems that the monetary assistance to American households has taught the traditional banking sector a lesson: consumers expect speed and will vote with their feet if they do not receive their funds quickly enough. Indeed, a study by Cornerstone Advisors suggests that in the US in December 2020, 15% of millennials had digital bank accounts, compared with 5% at the beginning of the same year.However, JPMorgan, Wells Fargo and Citigroup closed more than 250 branches in the first half of 2021, and more closures are expected. This is due to the confidence that those customers who started using online banking during the blocking will not return to the branches in the near future. It could also free up capital to expand digital offerings, which are quickly becoming the main focus for people opening accounts and applying for loans.Frequently Asked Questions1. Why are bank shares falling?Stocks of the best American banks can sometimes serve as a barometer of the state of the economy and can fall when Wall Street is nervous about the danger of an economic recovery. Despite the steady numbers on macroeconomic indicators in the second quarter, shares of companies such as Citigroup fell due to continuing concerns about interest rates.2. Are bank stocks a good investment?According to CNN Business, currently, the consensus among investment analysts is that it is worth buying shares of Wells Fargo, Bank of America, JPMorgan Chase, and Citigroup. As for the projected growth in stock prices, the average forecast for Citigroup is the most attractive, as it is expected that they will grow by 26.3% in the next 12 months.3. How do bank stocks perform during inflation?Thomas Michaud, CEO and president of the investment bank Keefe, Bruyette&Woods (KBW), recently stated that, in his opinion, "bank stocks are a good place if concerns about inflation continue to ...