This is how beggar-thy-neighbor monetary policies work, and perhaps why they ultimately fail.» Read More
Sentiment on Wall Street has gotten so bad that it's good, at least according to one indicator with a high degree of accuracy.
Investor optimism has continued to erode through the current correcting, with some gauges showing bearishness at multiyear highs.
One in particular — the Bank of America Merrill Lynch Sell Side Indicator — puts sentiment "close to where it was at the market lows of March 2009," the firm's strategists said in a report Monday. That date will be familiar to many investors as it marked the Great Recession low and preceded a 200 percent bull market surge.
The gauge is a fairly basic measure of how the biggest portfolio managers are positioned. Over the course of the past 15 years, the traditional stock weighting is around 60 percent; currently, that level stands at 52.1 percent, a 0.7 percentage point slide from December and below the 52.9 percent threshold that would trigger a "buy" signal.
Using a little math, the indicator points to a 17 percent price return for the next 12 months, which gets the S&P 500 to the 2,270 range, based on Friday's closing level.
The JPMorgan Chase staffers stopped, briefly startled by construction sounds resembling a jackhammer that interrupted their gathering on the ninth-floor offices of its digital headquarters. They quickly returned to the task at hand: billiards.
Needless to say, this is not your ordinary bank office.
JPMorgan's digital initiative made its new home in 5 Manhattan West, near the city's developing Hudson Yards district and representative of a culture shift taking place on Wall Street. The bank aims to recruit millennial talent away from startups and tech industry titans, whose experience is ripe for financial services products that are increasingly being consumed online.
Today, the bank's digital operations headcount is more than 1,500; it seems certain that figure will only grow.
"We really need to attract talent from across the industry spectrum," Gavin Michael, JPMorgan Chase's head of digital, told CNBC.com in an interview.
Wall Street has to compete for tech talent with Silicon Valley companies eager to cater to needs and whims with in-office chefs, exotic retreats and benefits extending to employees' pets. It comes as pay on Wall Street, especially on the entry-level scale, has failed to match the banking business' outsized expectations.
When it comes to economic growth, 2016 is looking a lot like 2015 — and probably even worse.
Friday's report showing that gross domestic product grew just 0.7 percent in the fourth quarter brought to a conclusion another year of dashed hopes for economic liftoff — "escape velocity," as it is sometimes called.
Seven years of zero interest rates, $3.7 trillion worth of Fed money printing and more than $6 trillion piled onto the public debt resulted in an economy still struggling to break 2.5 percent full-year growth. In fact, if
At the start of 2015, most economists expected U.S. growth of 3 percent or better, predicated on sizable gains in consumer spending, business investment and construction. Instead, the year featured consumers mostly hanging onto their gas savings, weak capital expenditures (including a decline of 1.8 percent in the fourth quarter) and slumping oil prices battering investment instead of lifting spending.
Looking ahead, the early indicators are not good, with chances of a recession gaining more traction on Wall Street.
The new year has been tough for U.S. investors, but as the results from MasterCard and Visa show consumers appear unfazed by the stock market's choppiness and the fears of a recession that has generated.
In the fourth quarter MasterCard reported that purchase volume in the U.S rose 8.4 percent, up from 7.6 percent in 2015. Visa's volume declined slightly to 8.9 percent from 9.4 percent.
In an interview following the earnings call, MasterCard CFO Martina Hund-Mejean told CNBC that the company feels pretty good about consumers and does not anticipate a change in their spending patterns this year. Hund-Mejean said the fourth-quarter purchase volumes reflect an increased willingness of consumers to spend the money they have been saving on lower gas prices.
"What they are doing, and this only happened in the latter part of the year, is that rather than saving it, they are now feeling they can put it toward other discretionary spending," she said.
Whether it's head count, bonuses, branches or share price, there's not a lot on Wall Street that's moving higher in 2016. Except for activity in mobile products.
Wall Street is diving headlong into digital as funding for start-ups looking to chip into banks' market share appears to have reached a multibillion-dollar crescendo. From 2010 through 2015 the number of fintech investors has mushroomed more than threefold to nearly 900, according to research firm CB Insights. But for big banks, the mobile revolution is only beginning.
In 2012, Bank of America launched mobile checking, and by the end of the year 4 percent of its 19 million customers were cashing checks through their phones rather than at branches. By the end of 2015, the figure grew to 15 percent, according to its most recent earnings report.
It's not the only business at Bank of America migrating to the smartphone, it's just the latest. Among the other conveniences the bank has focused on, it uses the iPhone thumbprint verification tool to positively identify customers and, when they request it, connects them to live customer service specialists. Thanks to the digital security enhancement, customers accessing the bank this way will not find themselves repeating account numbers and passwords after being connected to a service rep.
"You don't have to wait to answer any questions," said Bank of America digital chief Michelle Moore, adding that the app is meant to allow consumers "to access the entire bank from the touch of a thumb."
The uneasy marriage between financial markets and the Federal Reserve finally may be on the rocks.
For seven years, the pervasive Wall Street belief was that whatever was wrong with the markets, the Fed could fix it.
But the new-found tether Wall Street has with oil and the increasingly ambiguous commitment the Fed has to backstopping the market has challenged that notion.
Analysts and economists largely viewed the Federal Open Market Committee's post-meeting statement Wednesday as dovish, fueled by nods toward market volatility and expressions of concern that long-awaited signs of inflation remain elusive.
The statement, however, stopped well short of indicating that Fed officials might change course from the multiple rate hikes in 2016 forecast in December's summary of economic projections. The result appears to be a somewhat confused climate among investors, evidenced by Wednesday's sell-off and Thursday's choppy back-and-forth trading climate.
"The tension is fairly evident," Aaron Kohli, a fixed-income director for BMO Capital Markets, said in an interview. "You've got the Fed that's trying very hard to keep some of the hikes this year on the table, and you've got a market that is pricing in just one hike. There are quite a few investors who believe the Fed may be cutting soon. That dichotomy certainly has widened quite a bit."
Top-performing bank JPMorgan Chase is putting its ball in the court of the top-performing Golden State Warriors.
The Warriors, the NBA 2014-15 champions and the odds-on favorite to win the title this year as well, will play at the Chase Center in San Francisco beginning in 2019, when the team's new venue is expected to be completed.
It's a 20-year deal, meaning that through 2039, the Warriors will be playing at a stadium named for JPMorgan's consumer banking arm.
CEO Jamie Dimon joined Warriors point guard and baby-faced assassin Steph Curry and Warriors majority owner Joe Lacob to make the announcement.
Bank of America is looking be the next U.S. consumer bank to take the plastic card out of the ATM transaction.
The company is developing automated teller machines that customers will be able to withdraw cash from using their smartphones instead of plastic cards, according to a person familiar with the bank's plans.
"We're going to spend a lot of money on the ATM network this year," the person said.
BofA isn't focusing on cardless transactions alone in its 2016 ATM upgrade.
It includes enabling ATMs to accept payments from BofA's credit card customers and cashing checks from the machines. It also wants to allow customers to get varying denominations of cash from its ATMs.
Swelling recession fears are creating both an extended stock market sell-off and an opportunity for investors ready to pounce, according to Goldman Sachs.
The firm's strategists believe investors have become too fearful of the U.S. economy, which ended 2015 with barely any growth in the fourth quarter. A fear-driven sell-off has resulted in the S&P 500 slumping 10 percent from its December high, a decline Goldman felt would bring in buyers.
However, buyers have stayed away, with last week's market gains doing little to boost confidence.
Goldman clients "almost universally expressed a desire to buy the market 10 percent lower," but have refused, owing to five main reasons, David Kostin, Goldman's chief U.S. equity strategist and others said in a note: Fear of catching the proverbial falling knife; a contraction in U.S. manufacturing and industrial activity bringing down consumers; reduced business investment from the plunge in oil prices; China's slowdown triggering global deflation; and a need for equity prices to decline even further "to offer an attractive risk-adjusted return given heightened economic and market risks."
If early returns hold, 2016 is shaping up as another year where the bond market's demise has been greatly exaggerated.
Numerous forecasts around Wall Street warned investors away from fixed income, particularly longer duration U.S. government issues. The thinking was that the Fed's rate-hiking trajectory would push up Treasury yields, eroding prices and sending investors to bond-like equities.
That theory has pretty much blown up in January.
Wobbly economic growth coupled with slumping oil prices and contagion fears from a hard landing in China substantially lowered expectations for rate hikes. With stock market indexes tumbling, investors have flocked to bonds as a safe haven. Funds that track long-dated Treasurys have crushed the stock market and lured in strong investor cash flows.
While many of their colleagues on the Street warned investors to avoid long-dated bonds, Morgan Stanley strategists believe government fixed income both in the U.S. and a number of other countries represent great value.
This is how beggar-thy-neighbor monetary policies work, and perhaps why they ultimately fail.
UBS has reacted to the financial market turbulence by freezing salaries for its investment bankers until at least mid year. The FT reports.
Janet Yellen is expected to attempt to balance raising interest rates against the risks of a weaker global economy.