JPMorgan Slips on Report Trading Loss Widened to $9 Billion

JPMorgan Chase & Co. (JPM) fell more than 6 percent in European trading after the New York Times (NYT) reported the lender’s trading losses from credit derivatives may total as much as $9 billion, exceeding the firm’s initial estimate.
The shares fell to $34.50 as of 1 p.m. in Frankfurt trading from their $36.78 close in New York yesterday.

JPMorgan Chief Executive Officer Jamie Dimon said on May 10 the bank lost more than $2 billion on bets in credit markets taken by its chief investment office in London and that the loss could increase by as much as $1 billion this quarter. Dimon, 56, has said JPMorgan is in no rush to unwind the trades, even if adverse market moves produce bigger losses in the short term.

The firm’s losses have increased in recent weeks as JPMorgan sought to exit its holdings, the New York Times reported today, citing unidentified former traders and executives at the bank. The company has already closed out more than half of its positions, the newspaper said.

“We are now in the realms of speculation in terms of the sheer scale,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA, who has a ‘neutral’ recommendation on JPMorgan. “The final loss will be offset by a number of items including a debt-valuation adjustment gain and gains on the sale of some of their treasury securities. However, the larger the number, the more difficult it is to reduce the impact.”

Dimon told lawmakers this month the company would be “solidly profitable” when it reports second-quarter earnings on July 13. Although the trading loss had grown to $2 billion for the quarter when the company disclosed it in May, the net loss for the CIO division at that time was $800 million. Dimon said the bank had $8 billion in gains in another trading portfolio within the CIO and had used $1 billion of that to offset the loss on the credit derivatives portfolio in London.
Patrick Burton, a spokesman for JPMorgan in London declined to comment on the New York times story.

 Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

JPMorgan Slips on Report Trading Loss Widened to $9 Billion

JPMorgan Chase & Co. (JPM) fell more than 6 percent in European trading after the New York Times (NYT) reported the lender’s trading losses from credit derivatives may total as much as $9 billion, exceeding the firm’s initial estimate.
The shares fell to $34.50 as of 1 p.m. in Frankfurt trading from their $36.78 close in New York yesterday.

JPMorgan Chief Executive Officer Jamie Dimon said on May 10 the bank lost more than $2 billion on bets in credit markets taken by its chief investment office in London and that the loss could increase by as much as $1 billion this quarter. Dimon, 56, has said JPMorgan is in no rush to unwind the trades, even if adverse market moves produce bigger losses in the short term.

The firm’s losses have increased in recent weeks as JPMorgan sought to exit its holdings, the New York Times reported today, citing unidentified former traders and executives at the bank. The company has already closed out more than half of its positions, the newspaper said.

“We are now in the realms of speculation in terms of the sheer scale,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA, who has a ‘neutral’ recommendation on JPMorgan. “The final loss will be offset by a number of items including a debt-valuation adjustment gain and gains on the sale of some of their treasury securities. However, the larger the number, the more difficult it is to reduce the impact.”

Dimon told lawmakers this month the company would be “solidly profitable” when it reports second-quarter earnings on July 13. Although the trading loss had grown to $2 billion for the quarter when the company disclosed it in May, the net loss for the CIO division at that time was $800 million. Dimon said the bank had $8 billion in gains in another trading portfolio within the CIO and had used $1 billion of that to offset the loss on the credit derivatives portfolio in London.
Patrick Burton, a spokesman for JPMorgan in London declined to comment on the New York times story.

 Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

Google Fundamental Report

With Google (GOOG) being the number one search engine, as well as a powerhouse in mobile technology, and nearly anything of an internet-related product, the decline in its stockover the past few months has come as a surprise to some investors and financial analysts. This has raised the question, is this just temporary or is this is a sign of the dark times that lie ahead for this company?

Last April, Google announced a new device that it has been working on. Called "ProjectGlass," the project is a pair of eyeglasses that has the capabilities of a Smartphone. This project, however, is still in the early stages of development and Google has unveiled it only to gather some feedback from its target audience. As expected, this futuristic device has received a lot of positive feedbackfrom consumers who can't wait to get this amazing technology in their hands- a sign that when this project is finally released to the public, it may give Google a huge boost. The development of Project Glass is slow, with Google making sure to keep its press spread out and managed. Still, some wonder if this is the only thing on Google's horizon to save the stock from stagnation. In my opinion, this is wrongful thinking - as Google has been busy with acquisitions and other developments.

Just recently, Google has made another announcement, which is the acquisition of Meebo, a social platform that connects thousands of users on the internet. This program supports Face book (FB), Yahoo! (YHOO) Messenger, and Google Talk to name a few. But how will this affect its performance in the stock market? Well, it actually had an immediate effect on the stock. Just after the announcement was made, its price shot up 1.3% (no small feat when shares trade for as high as they do).

This is basically a way for Google to counter Face book or to compete with the company by continuing to develop Google Plus. But as you already know, Face book has already gone publiclast month and its stock has struggled, to say the least. But in Google's case, this is not really its main concern. The decision or the motive behind buying Meebo stems from the goal of snatching away the more than 1 billion Face book users and lure them to use Google Plus instead. After all, Google has shown that it is more apt in turning profits from advertising than Face book is, and with the increase in users, the competition would really be muted. The question for Face book remains how to makemoney, the question for Google is how to grab users.

Moreover, with regard to the acquisition, the Google team also wants to acquire the pool of talented developers that work for Meebo to actually help it create a powerful social networking site in Google Plus, as clearly its plans so far have been unsuccessful.

And when it comes to building internet relationships, Meebo is not a company to beunderrated. It has reportedly earned more than $70 million since the company came into existence in 2005. Furthermore, Meebo has a positive reputation that can bring more credibility to Google Plus. And, with what's happening to face book right now, it is expected that by the end of 2012, there will be more userson Google than on Face book. The question, then, is how active these users are on the sites, a point in which Face book still has a clear advantage.

Google's acquisition tear hasn't stopped with Meebo, just as it didn't stop with its taking over of Motorola earlier this year. Google recently boughtthe Mobile Transmit Delivery (MTD) patent portfolio of Magnolia Broadband, a move that continues along the trend of large tech companies buying up patents to secure its own standing, as well as give it an offensive possibility in future court cases. Already this year we've seen Google defend itself in court as well as take other companies to court over patents (the Oracle (ORCL) casebeing the biggest, in which Google emerged as the victor), and with the ambiguous lines in technology these days, this trend could go on for years to come.

In its other arenas, Google has managed to extend its search engine lead over competitor Yahoo! and any other search engine websites out there (with the exception of Baidu.com (BIDU)in China). The search engine aspect has long since been the driving force behind Google stock, yet it remains the calling card of the entire operation. Recent news has broken with some uncomfortable news regarding Google's search engine and the power it wields. Google has reportedthat in just the last six months it has received over 1,000 requests to remove content from governments. The news is unsettling not only because it challenges the free speech of the World Wide Web, but also because Google has become the singular go-to point for contention between large government institutions and people like bloggers, video posters and analysts.

The censorship is expected with Baidu's filtering of search results, but the large amount of requests that Google handles is something of a shocker. The worry here is twofold: the fear of either the large institutions turning on Google for its refusal to censor, or the turning away of users who believe Google is acting as a proxy for those trying to limit speech. Either way, this is a perfect example of the problems that come with power. Google, being as large as it is, will have to deal with issues like this moving on, and the handling is particularly tricky.

Watch Google's developments closely. At this point, the company is so large that some setbacks will obviously occur. However, with projects on the horizon and acquisitions opening new doors everyday, Google should continue to make its investors happy

 Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

Google Fundamental Report

With Google (GOOG) being the number one search engine, as well as a powerhouse in mobile technology, and nearly anything of an internet-related product, the decline in its stock over the past few months has come as a surprise to some investors and financial analysts. This has raised the question, is this just temporary or is this is a sign of the dark times that lie ahead for this company?

Last April, Google announced a new device that it has been working on. Called "Project Glass," the project is a pair of eyeglasses that has the capabilities of a Smartphone. This project, however, is still in the early stages of development and Google has unveiled it only to gather some feedback from its target audience. As expected, this futuristic device has received a lot of positive feedback from consumers who can't wait to get this amazing technology in their hands- a sign that when this project is finally released to the public, it may give Google a huge boost. The development of Project Glass is slow, with Google making sure to keep its press spread out and managed. Still, some wonder if this is the only thing on Google's horizon to save the stock from stagnation. In my opinion, this is wrongful thinking - as Google has been busy with acquisitions and other developments.

Just recently, Google has made another announcement, which is the acquisition of Meebo, a social platform that connects thousands of users on the internet. This program supports Face book (FB), Yahoo! (YHOO) Messenger, and Google Talk to name a few. But how will this affect its performance in the stock market? Well, it actually had an immediate effect on the stock. Just after the announcement was made, its price shot up 1.3% (no small feat when shares trade for as high as they do).

This is basically a way for Google to counter Face book or to compete with the company by continuing to develop Google Plus. But as you already know, Face book has already gone public last month and its stock has struggled, to say the least. But in Google's case, this is not really its main concern. The decision or the motive behind buying Meebo stems from the goal of snatching away the more than 1 billion Face book users and lure them to use Google Plus instead. After all, Google has shown that it is more apt in turning profits from advertising than Face book is, and with the increase in users, the competition would really be muted. The question for Face book remains how to make money, the question for Google is how to grab users.

Moreover, with regard to the acquisition, the Google team also wants to acquire the pool of talented developers that work for Meebo to actually help it create a powerful social networking site in Google Plus, as clearly its plans so far have been unsuccessful.

And when it comes to building internet relationships, Meebo is not a company to be underrated. It has reportedly earned more than $70 million since the company came into existence in 2005. Furthermore, Meebo has a positive reputation that can bring more credibility to Google Plus. And, with what's happening to face book right now, it is expected that by the end of 2012, there will be more users on Google than on Face book. The question, then, is how active these users are on the sites, a point in which Face book still has a clear advantage.

Google's acquisition tear hasn't stopped with Meebo, just as it didn't stop with its taking over of Motorola earlier this year. Google recently bought the Mobile Transmit Delivery (MTD) patent portfolio of Magnolia Broadband, a move that continues along the trend of large tech companies buying up patents to secure its own standing, as well as give it an offensive possibility in future court cases. Already this year we've seen Google defend itself in court as well as take other companies to court over patents (the Oracle (ORCL) case being the biggest, in which Google emerged as the victor), and with the ambiguous lines in technology these days, this trend could go on for years to come.

In its other arenas, Google has managed to extend its search engine lead over competitor Yahoo! and any other search engine websites out there (with the exception of Baidu.com (BIDU) in China). The search engine aspect has long since been the driving force behind Google stock, yet it remains the calling card of the entire operation. Recent news has broken with some uncomfortable news regarding Google's search engine and the power it wields. Google has reported that in just the last six months it has received over 1,000 requests to remove content from governments. The news is unsettling not only because it challenges the free speech of the World Wide Web, but also because Google has become the singular go-to point for contention between large government institutions and people like bloggers, video posters and analysts.

The censorship is expected with Baidu's filtering of search results, but the large amount of requests that Google handles is something of a shocker. The worry here is twofold: the fear of either the large institutions turning on Google for its refusal to censor, or the turning away of users who believe Google is acting as a proxy for those trying to limit speech. Either way, this is a perfect example of the problems that come with power. Google, being as large as it is, will have to deal with issues like this moving on, and the handling is particularly tricky.

Watch Google's developments closely. At this point, the company is so large that some setbacks will obviously occur. However, with projects on the horizon and acquisitions opening new doors everyday, Google should continue to make its investors happy

 Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

Germany slams EU debt-sharing plan

European proposals to reshape the crisis-struck euro area ran into immediate criticism from Germany for putting too much emphasis on debt sharing and too little on controlling national budgets.

The 10-year roadmap, released Tuesday by four officials led by European Union President Herman Van Rompuy, centered on common banking supervision and deposit insurance and a “criteria-based and phased” move toward joint debt issuance. It also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro.

 “Parts of it read like a wish list,” German Deputy Foreign Minister Michael Link told reporters in Luxembourg. The proposals lean “toward various models for mutualizing debt. What comes up short is improved controls,” he said.

Angela Merkel was quoted as telling a meeting of one of the parties in her coalition on Tuesday that Europe would not have shared total debt liability “as long as I live.”

The chancellor said there would be no shared liability of debt in Germany either — after her government agreed plans with federal states to issue joint “Deutschland bonds” — in comments reported by participants in a meeting with the Free Democrats (FDP), junior partners in her centre-right coalition.

Germany’s instant opposition lessened the chances that a June 28-29 summit — the 19th since the debt crisis broke out in early 2010 — will point the way out of the turmoil that threatens to splinter the euro currency.

Van Rompuy collaborated on the proposals with European Central Bank President Mario Draghi, European Commission President Jose Barroso and Luxembourg Prime Minister Jean-Claude Juncker, who manages meetings of euro finance ministers.

Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

Germany slams EU debt-sharing plan

European proposals to reshape the crisis-struck euro area ran into immediate criticism from Germany for putting too much emphasis on debt sharing and too little on controlling national budgets.

The 10-year roadmap, released Tuesday by four officials led by European Union President Herman Van Rompuy, centered on common banking supervision and deposit insurance and a “criteria-based and phased” move toward joint debt issuance. It also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro.

 “Parts of it read like a wish list,” German Deputy Foreign Minister Michael Link told reporters in Luxembourg. The proposals lean “toward various models for mutualizing debt. What comes up short is improved controls,” he said.

Angela Merkel was quoted as telling a meeting of one of the parties in her coalition on Tuesday that Europe would not have shared total debt liability “as long as I live.”

The chancellor said there would be no shared liability of debt in Germany either — after her government agreed plans with federal states to issue joint “Deutschland bonds” — in comments reported by participants in a meeting with the Free Democrats (FDP), junior partners in her centre-right coalition.

Germany’s instant opposition lessened the chances that a June 28-29 summit — the 19th since the debt crisis broke out in early 2010 — will point the way out of the turmoil that threatens to splinter the euro currency.

Van Rompuy collaborated on the proposals with European Central Bank President Mario Draghi, European Commission President Jose Barroso and Luxembourg Prime Minister Jean-Claude Juncker, who manages meetings of euro finance ministers.

Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

A Quick Glance at News (28/06/2012)

Chicago Federal Reserve Bank President Charles Evans, one of the U.S. central bank's strongest advocates for further monetary policy easing, Top Federal Reserve officials differed on whether the U.S. central bank needs to be more aggressive in spurring economic growth, indicating another round of easing is far from certain.

Euro-area finance ministers set the stage for today’s gathering in Brussels of the European Union’s 27 chiefs, approving Cyprus’s bailout and detailing how they would aid Spanish banks. Consensus breaks down on safeguarding governments in Spain and Italy, with German Chancellor Angela Merkel rejecting calls to do more to cut their borrowing costs.

Merkel is increasingly isolated as French President Francois Hollande, Italian Prime Minister Mario Montiand Spanish Premier Mariano Rajoy unite to push for quicker action to ease the crisis that emerged in Greece in late 2009.

Asian stocksrose a second day and oil climbed after bigger-than-expected gains in Japanese retail sales and U.S. housing boosted confidence in global growth. The dollar fell before a European summit on the debt crisis.

China’s benchmark stock index slid for a seventh day, the longest stretch of losses in 13 months, as concern the nation’s economic slowdown is curbing earnings growth overshadowed an improving outlook for exports to the U.S.

Gold edged up on Thursday after the euro showed some resilience ahead of a European Union summit, which is unlikely to deliver new measures to tackle the region's debt crisis and may prompt investors to turn to the safety of the U.S. dollar

Brent crude advanced a fourth day in Londonas a strike by Norwegian energy workers over pensions halted 15 percent of the country’s oil output. Futures climbed as much as 0.6 percent after closing at the highest price in a week yesterday. U.S. home sales and durable- goods orders beat forecasts in May, as a European Union ban on Iranian oil takes effect, central banks act to protect growth and on speculation OPEC will curb some of its excess supply.

Rupee, euro crisis hits gold demand in India, Weaker local currencies are weighing on golddemand from India, the world's largest consumer of the precious metal, and Indonesia, another leading Asian buyer, as traders also favour cash on concerns over deterioration in the euro zone crisis.

Japan’s retail sales rose more than forecast in May, a sign that consumer spending will help sustain a rebound in the world’s third-largest economy.

Treasuries extended a monthly loss on concern yields that are within 20 basis points of the record low will curb demand when the U.S. sells $29 billion of seven- year notes today

India may spend 300 billion rupees ($5.3 billion) tripling the length of its expressway network to ease traffic jams that are slowing trade, wasting fuel and sapping economic growth.

Indian Prime Minister Manmohan Singh pledged to restore confidence in Asia’s third-largest economy as he resumed control of the finance ministry after growthslowed to the weakest in almost a decade and the rupee slumped.

Amazon.com Inc. (AMZN) will make it easier for developers to add social features to games for the Kindle Fire tablet, a person with knowledge of the matter said, working to narrow Apple (AAPL)Inc.’s lead in the market for tablets.

Apple Inc. (AAPL) plans an overhaul of iTunes that would mark one of the largest changes to the world’s biggest music store since its 2003 debut, according to people with direct knowledge of the matter.

Google Inc will sell its first tablet from mid-July for $199, hoping to replicate its Smartphone success in a hotly contested market now dominated by Amazon.com Inc's Kindle Fire and Apple Inc's iPad.

Google Inc expects to roll out a consumer version of its electronic eyewear that can live-stream images and audio and perform computing tasks in less than two years, though it stopped short of putting a price tag on the "smart" glasses.

Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae

A Quick Glance at News (28/06/2012)

Chicago Federal Reserve Bank President Charles Evans, one of the U.S. central bank's strongest advocates for further monetary policy easing, Top Federal Reserve officials differed on whether the U.S. central bank needs to be more aggressive in spurring economic growth, indicating another round of easing is far from certain.

Euro-area finance ministers set the stage for today’s gathering in Brussels of the European Union’s 27 chiefs, approving Cyprus’s bailout and detailing how they would aid Spanish banks. Consensus breaks down on safeguarding governments in Spain and Italy, with German Chancellor Angela Merkel rejecting calls to do more to cut their borrowing costs.

Merkel is increasingly isolated as French President Francois Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy unite to push for quicker action to ease the crisis that emerged in Greece in late 2009.

Asian stocks rose a second day and oil climbed after bigger-than-expected gains in Japanese retail sales and U.S. housing boosted confidence in global growth. The dollar fell before a European summit on the debt crisis.

China’s benchmark stock index slid for a seventh day, the longest stretch of losses in 13 months, as concern the nation’s economic slowdown is curbing earnings growth overshadowed an improving outlook for exports to the U.S.

Gold edged up on Thursday after the euro showed some resilience ahead of a European Union summit, which is unlikely to deliver new measures to tackle the region's debt crisis and may prompt investors to turn to the safety of the U.S. dollar

Brent crude advanced a fourth day in London as a strike by Norwegian energy workers over pensions halted 15 percent of the country’s oil output. Futures climbed as much as 0.6 percent after closing at the highest price in a week yesterday. U.S. home sales and durable- goods orders beat forecasts in May, as a European Union ban on Iranian oil takes effect, central banks act to protect growth and on speculation OPEC will curb some of its excess supply.

Rupee, euro crisis hits gold demand in India, Weaker local currencies are weighing on gold demand from India, the world's largest consumer of the precious metal, and Indonesia, another leading Asian buyer, as traders also favour cash on concerns over deterioration in the euro zone crisis.

Japan’s retail sales rose more than forecast in May, a sign that consumer spending will help sustain a rebound in the world’s third-largest economy.

Treasuries extended a monthly loss on concern yields that are within 20 basis points of the record low will curb demand when the U.S. sells $29 billion of seven- year notes today

India may spend 300 billion rupees ($5.3 billion) tripling the length of its expressway network to ease traffic jams that are slowing trade, wasting fuel and sapping economic growth.

Indian Prime Minister Manmohan Singh pledged to restore confidence in Asia’s third-largest economy as he resumed control of the finance ministry after growth slowed to the weakest in almost a decade and the rupee slumped.

Amazon.com Inc. (AMZN) will make it easier for developers to add social features to games for the Kindle Fire tablet, a person with knowledge of the matter said, working to narrow Apple (AAPL) Inc.’s lead in the market for tablets.

Apple Inc. (AAPL) plans an overhaul of iTunes that would mark one of the largest changes to the world’s biggest music store since its 2003 debut, according to people with direct knowledge of the matter.

Google Inc will sell its first tablet from mid-July for $199, hoping to replicate its Smartphone success in a hotly contested market now dominated by Amazon.com Inc's Kindle Fire and Apple Inc's iPad.

Google Inc expects to roll out a consumer version of its electronic eyewear that can live-stream images and audio and perform computing tasks in less than two years, though it stopped short of putting a price tag on the "smart" glasses.

Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae