Market is better setup for a 75 bps hike, says JPMorgan's Gabriela Santos

Report:DOJ Approves of CVS-Aetna Merger

According to trade publication Reorg Research,the relevant US Department of Justice staff will not oppose the merger of drugstore chain/pharma benefits manager CVS Health with health insurer Aetna,sending a sigh of relief through the sector and an uptick in share prices.The 69 billion dollar transaction is a move seen at least partly as a reaction to the entry of electronic commerce giant Amazon into the health care field.Another possible reaction was by health insurer Cigna as it seeks to merge with pharma benefits manager Express Scripts.
In January 2018,Amazon,Berkshire Hathaway and JP Morgan Chase,which collectively employ more than 500,000 people,announced they are forming a joint enterprise to provide care for staff at a reasonable cost by enabling simplified,high quality and transparent health care through technology.JP Morgan Chase CEO Jamie Dimon explained:
The three of our companies have extraordinary resources,and our goal is to create solutions that benefit our US employees,their families,and,potentially,all Americans.*
Reorg Research provides automated docket updates;breaking news;and analysis for distressed debt investors;lawyers;and restructuring professionals.The New York-based company seeks to provide independent,insightful and timely market intelligence and analysis for better business and investment decisions.*
The DOJ staffers will submit their recommendation to their superiors for final approval at the end of July.*
Aetna Inc (AET),Cigna Inc (CI),CVS Health (CVS),Express Scripts (ESXR)

Analysts Pessimistic About Q1 Earnings - where investors should look now

Wall Street analysts are not hopeful about Q1 earnings season,which began,in accordance with tradition,with Alcoa's report after the closing bell.It is supposed to be the worst earnings season since the financial crisis.They foresee a 10% drop in Q1 profit.Despair is unwarranted,however..By Q3,the Street expects a rebound into earnings growth;and,by Q4,it predicts a return to profit growth.*
Scott Wren,Senior Equity Strategist and Managing Director at Wells Fargo Advisors,recommends leaning into those cyclical sectors that have fared best since the February low:consumer discretionary;industrials;and technology.*
Alcoa reported earnings per share of 0.07 per share versus the estimate of 0.02,a significant beat.This success was tempered,though,by their revenue of 4.95 billion versus an estimate of 5.2 billion,a slight miss.The ambiguity may be ascribed to the steep decline in aluminium prices.*
Also reporting this week will be money center banks JP Morgan Chase,Citigroup and Bank of America/Merrill Lynch.*
Alcoa (AA),iShares Global Consumer Discretionary ETF (RXI)

The Global Market Cave-In and Where People Are Hiding

European markets caved in 3.5 % to 16-month lows on fears of further ECB rate cuts;and US stocks followed suit with the S&P 500 slipping 1.42% as falling oil prices and Fed rate increase worries,as well as the overseas weakness,rattled investors on Monday.Concerns are that,in a climate of negative interest rates in Europe and Japan,and prolonged dovish monetary policy,banks' profitability will be squeezed,said Jaisal Pastakia,investment manager at Heartwood Investment Management.According to Michael Bell,global market strategist at JP Morgan Asset Management,the market is pricing in a 50% chance of a European recession.
Both Brent crude and light sweet crude fell about 2.5% Monday,with Brent closing at 33.20 bbl and light sweet crude subsiding to the 30.12 mark.As for the safe havens,London spot gold peaked at 1176.66 an ounce at 1104 GMT,an increase of 0.3% on top of last week's 5 % gain;while NYMEX April gold settled up 3.5% at 1197.00 an ounce,and silver climbed 0.32% to 15.36 an ounce.*
Ian Taylor,CEO of Vitol Group B.V.,the world's largest independent energy trader,believes oil will stay low for the next 10 years.Brent crude will close the year out at 48.00 bbl,Mr.Taylor predicted.The Rotterdam,Netherlands company ships more than 270 million tonnes of crude a year in its fleet of 200 supertankers and other ships.*
Gold has made a spectacular move the past 20 days,said Frank Holmes,CEO of US Global Investors.World trade is still in negative territory,and negative real interest rates are helping gold.As well,there is a strong physical demand for bullion worldwide.US gold coin dealers had their second-best year ever in 2015,despite the price of gold having declined last year.I think it's going to continue to do much better this year than last year,unless some catastrophe happens around the world.China needs to back 3% of its currency with gold,buying all new mine supply.I think 1100 an ounce is the floor price,and it could easily go to 1500 and ounce,Mr.Holmes projected.*
We think there is more upside,said ETF Securities analyst Martin Arnold.The next big level is 1200,but it may take a while to test it.*
The rare stocks that did well in the Dow Jones Industrial Average included Exxon Mobil;Chevron;Apple;Procter&Gamble;and Johnson&Johnson.*
Exxon Mobil (XOM);Apple Computer (AAPL);Procter&Gamble (PG);Johnson&Johnson (JNJ);Chevron (CVX);iShares MSCI Global Silver Miners ETF (SLVP);iShares MSCI Global Gold Miners ETF (RING)

Asia This Day:Indian Prime Minister Departs for Russia,China

Indian Prime Minister Manmohan Singh has embarked on a five day journey to Russia and China.While in China,he will be discussing the Border Defence Cooperation Agreement the two countries have been negotiating to avoid clashes over extensive sections of their 4,000 kilometer border.Mr.Singh will also attempt to improve trade with both Russia and China,including energy and defence projects.*
The scope of our relationship with Russia is unique,the Prime Minister said,encompassing strong and growing cooperation in areas such as defence,nuclear energy,science and technology,hydrocarbons,trade and investment.*
India and China have historical issues and there are areas of concern,Mr.Singh continued.The two governments are addressing them with sincerity and maturity,without letting them affect the overall atmosphere of friendship and cooperation.I will be discussing some of these issues as part of strategic communication between leaders with a forward-looking and problem-solving approach.*
Besides arms purchases from Russia,while in Moscow he will also discuss completion of a nuclear reactor Russia has been building on India's southern coast that has caused safety concerns.*
In April,Indian and Chinese troops faced off for three weeks in a remote Himalayan desert region,when India accused Chinese soldiers of intruding 20 kilometers/12 miles into Indian territory.Another standoff occurred in August.*
China's Fosun International is buying 1 Chase Manhattan Plaza in New York City for 725 million dollars.It is the largest ever NYC purchase by a Chinese buyer.JP Morgan Chase will relocate most of its employees from the iconic 60 storey tower,which has 2.2 million square feet of office space,to other sites in the city.The US is China's number one choice for real estate investing;Canada is second.*
In golf,South Korean Jin Jeong won the European Tour's ISPS Handa Perth International in Australia Sunday,defeating England's Ross Fisher in a playoff.Australians Brody Ninyette and Dimitrios Papadatos,along with Englishman Danny Willett,tied for fifth place.*
JP Morgan Chase(JPM)

Should You Invest in Japan

Japan's Tankan survey has recorded a marked improvement in business confidence among large manufacturers.It went up to 4 in June from -8 in March.
According to Nicholas Weindling,a fund manager at JP Morgan Asset Management,this tallies with everything we're hearing from companies in the bottoms up survey we're doing.Hotels went up from 60 to 85 on rising prices per room.There is unprecedented demand for people to work in financial services.
It's all about looking to what Abenomics can achieve medium to long term.There are problems here,but there's a real sense of purpose.Everybody's moving in the same direction at the same time,which is different than before.
We see strong companies that are underappreciated just by virtue that they are located here in Japan.Banks,real estate,retail and services are big bets for us here.
Abenomics is the economic policies of Prime Minister Shinzo Abe.They include monetary and fiscal policies,as well as economic growth strategies,to encourage private investment in Japan.For instance,there is an inflation target of 2%,plus extensive quantitative easing,or bond buying,and limiting of the yen's appreciation,as well as a policy of increasing public investment.
iShares Japan Index Fund(EWJ)

Should You Invest in JP Morgan Chase

Money center bank JP Morgan Chase scored record profits for Q1,up 33% to 6.5 billion dollars.Their credit quality also improved and they raised their dividend.On the down side,revenue dropped 3.6% to 25.1 billion because of lower interest income,as well as lower margins and higher costs in their mortgage business.
Overall,it was a good quarter at Chase.Interest income is something they have no control over.That is based on Federal Reserve policy.
We do believe in getting rid of too big to fail,said Marianne Lake,Chief Financial Officer,who is British.I've been in the financial community here at JP Morgan Chase for more than a decade.We're diligent in our work.We say what we know.We tell the truth.
It's intense to work with CEO Jaimie Dimon.We do have an open dialogue.I disagree with him now and then.
It's a really good bench.We're all old hands at JP Morgan Chase.The operations committee is a great bench,Ms.Lake emphasised.
JP Morgan Chase(JPM)

Stock Market Signals-and what to do about them

I don't like stocks now,said Dennis Gartman,editor of the well-known newsletter "The Gartman Letter."I wouldn't be surprised to see 10% to the downside.After triple digit moves four out of five days,I'm on the sidelines and glad to be there.
I want to own bonds and gold.It'll be price action that brings me back in.For a while,it's a risk off environment.
What really bothers me is,the bond market is doing really well.It's up,telling you that risk is being taken off the table.The bond market is the smartest of the markets,and it's going up.The worst of the liquidation of gold may have passed.I'm holding gold in yens,and may add some in euros.
Christian Thwaites,President and CEO of Sentinel Asset Management does like some stocks.Large cap equities are still very low-priced and an attractive value,such as General Dynamics,Caterpillar,Church and Dwight.He also likes Ritchie Brothers Auctioneers.
Thomas Lee,Managing Director and US Equity Strategist at JP Morgan,said we still think we're in a secular bull market.We got a caution signal the week before last,but this is a tactical,short term call.Hedge funds are basically all in.We want to be dip buyers in areas such as materials,industrials and consumer discretionary.
General Dynamics(GD),Caterpillar(CAT),Church and Dwight(CHD),Ritchie Brothers Auctioneers(RBA)

Asia This Day:China Reins In Property Market;National Party Congress Convenes

The Shanghai property index was down 8.53% in early Monday trading,with some shares dropping as much as 10% on news of new government restrictions on the sector.It was the worst decline in five years.
The property market has really taken off,according to Jing Ullrich,Chairman of JP Morgan Global Markets China,triggering government concern about social inequality and the middle class.I think buyers may slink to the sidelines again.
Property is the one area the middle class can stash their wealth.The rising income of the middle class has stoked prices.
Property prices are hardly affordable for newcomers.There may be declines for the next three months,but in the long term,urbanisation and income growth are still very positive for the property sector.There may be a great deal of volatility in the next month or two as the new measures are applied.
This year should be a better year for the stock market than 2012.In the near term,Hong Kong shares should hold up better than the mainland,being supported by international investors,but the mainland shares are cheaper.People need to think about China concept stocks such as those of  multinational firms doing business in China.They could make double digit gains.
The National Party Congress in Beijing will be attended by 3,000 delegates over the next 10 days.Xi Jinping will be formally named President.There should be social services and urbanisation developments.Big ministries may be reshuffled.There may be financial services reform to create more of a level playing field between State-Owned Enterprises and Small and Medium-sized Enterprises,and to make the financial services industry globally competitive.
About 280 million migrant workers live in Chinese cities without social benefits.Only those born in cities have medical care.Migrant workers do not have benefits.They are second class citizens.
The Indian Nifty Fifty and Sensex indexes were both down in early Monday trading.There was a lot of pressure on auto stocks from poor February sales.Asia shares generally were down on the new Chinese property market restricitons.
Australian company profits declined,led by mining and manufacturing,as commodity prices fell.
iShares FTSE China 25 Index Fund(FXI)

Market Strategy in Tough Times

The Dow Jones Industrial Average has recently given back all its gains on the year.Fear is dominating the day,said Stephen Wood,PhD,Chief Market Strategist at Russell Investments.Liquidity is at a premium.People are accepting lower yields so they can sleep at night,losing money in the long run.This is a panic environment.Companies will have to fund pension plans,not hire workers or build facilities.They're gonna want to have dry powder so they don't have to go hat in hand in an illiquid market. What do you do?You need to look at a diversified,multi-asset strategy to generate return,in Dr.Wood's opinion. Robert Hagstrom of the Legg Mason Focus Fund thinks that,for investors,this is a very attractive time.Lower prices increase your rate of return.It's been said that,when the time to buy comes,you won't want to.Even trading is freezing up,which is a big problem for the market.The risk appetite is not very high. Seven percent of our portfolio is in financials,including JP Morgan Chase,the only money center bank in it.We are holding onto that position,Mr.Hagstrom revealed. JP Morgan Chase(JPM)

BHP Shares Rise On Gillard Policy Win

Shares of natural resource firm BHP Billiton rose Monday morning on news that the Australian Labour Party is lifting its ban on the export of uranium to India.Prime Minister Julia Gillard said the move will help the Australian economy by tapping into India's demand for energy.Her critics pointed out that India hasn't yet signed the nuclear non-proliferation treaty.
Japanese shares also rose on optimism that the Euro debt crisis is being seriously addressed.Jesper Koll,Head of Japanese Equity Research at JP Morgan Japan,described Japan as the forgotten angel.It is showing good job creation,wage growth and policy decisions.Goldman Sachs agreed,saying Japanese profits could rise significantly in 2012.
Mr.Koll is a longtime resident of Japan and has many years of experience analysing its economy.
BHP Billiton Ltd.(BHP),iShares MSCI Japan Index Fund(EWJ),JP Morgan Chase(JPM),Goldman Sachs(GS)

Chase Hiring Event

Chase is holding a Special Career Event in the risk management sector.There will be access to hiring managers and on-the-spot interviews on October 27 from 12PM-7PM at
Chase Center on the Wilmington,North Carolina Riverfront.They seek experienced professionals in Finance,Information Technology,Operations,Risk,Analytics and Marketing.
RSVP by October 20 to Chase.talent.acquisition@Chase.com
Chase:Opportunity is knocking at Chase.

Asia This Day:Japan Rebounds Strongly

The earnings reports coming form Japan are very good,says Jesper Koll of JP Morgan Chase.Corporate Japan is recovering very nicely.For April-June,it is very likely there was a sharp increase in aggregate earnings,a very steep recovery in overall sales.You could see 10-15% up in aggregate terms,Mr.Koll believes.
In Thailand,we're definitely seeing a return of foreign buying after the election,Andrew Yates of Asia Plus,the RBS partner in Thailand,indicated.It seems to be business as usual.The foreign flows are very strong.
We continue to like the banks.People are also looking at property and consumer plays.The SET property index is up 12% since the election.The single biggest concern is inflation.The Bank of Thailand has been pushing up rates,but the current 4% of inflation isn't too bad,in Mr.Yates'opinion.
Golfer Yani Tseng of Taiwan won the RICOH Women's British Open in Carnustie,Scotland on Sunday.
Most Asian shares were higher Monday morning in relief at the U.S. debt ceiling agreement.In Taipei,it was 90F under scattered clouds.Winds were N at 5 mph,and the humidity was 59%.

Investing Today:Strategies For a Choppy Period

According to Stephen Wood,PhD,chief market strategist at Russell Investments,what we're looking at is a square root sign,a market plateauing at a lower rate of growth.It's probably a significant slow patch in the overall recovery.This is not terribly surprising.
There are gonna be choppy markets.Consider Japan,the Middle East,the Greek debt issue-a lot of headlines could cause volatility.
You're probably in a lower return environment.A portfolio should be globally diversified and have more equities,commodities and infrastructure.
Dr.Wood likes JP Morgan Chase.It has a 2.40 yield and is an industry leader,coming through the financial crisis extremely well.It has a strong balance sheet and is a good,old-fashioned consumer bank.
He also favors Pfizer.The economy's gonna do O.K.,but not spectacularly.Pfizer levels the volatility.People stay in it longer.People are gonna have to ride out the volatility with a more disciplined long term time horizon.
As for Google,longer term,it's probably gonna be a name that's the 500-pound gorilla in its space,Stephen Wood believes.
Stephen Wood has been with Russell Investments since 2005.He has conducted research on the economy,capital markets,portfolio strategies and investor behavior,also serving as a commentator on those topics.In addition,Dr.Wood has worked with institutional clients and retail partners to explain Russell's investment process and portfolio management.
JP Morgan Chase(JPM),Pfizer(PFE),Google(GOOG)

JP Morgan's U.S. Outlook

We've already hit the 2011 low,according to JP Morgan's chief U.S. equity strategist Thomas H. Lee.By year's end,he expects to see the S&P at 1425.He likes the materials,industrial and energy sectors.Avoid stocks sensitive to oil prices.There will be moderate to severe disruption to supply chains in tech because of the Japan disaster.
Near term,Q1 earnings are really gonna be a support for markets.Markets may be troubled from June to September,rangebound because of the expiration of the Federal Reserve's QE 2 support program.The housing market will improve,however,driving the S&P higher by the end of 2011.
Equity market rallies are really driven by corporate profit recoveries.Investors are buying the dips because they're under-exposed.In the financial sector,we've seen improvement in credit trends,but not demand,Mr.Lee added.
In addition to his JP Morgan post,Thomas H. Lee is Chairman and CEO of Thomas H. Lee Partners,L.P.A 1965 Harvard graduate,he is a trustee of Rockefeller and Brandeis Universities.Mr. Lee is also a director of the Lincoln Center for the Performing Arts.
JP Morgan Chase(JPM)

Industry Reacts To FinReg

The Financial Services Roundtable,a trade group,has been digesting the new financial reform bill just signed into law by President Barack Obama.They're in the accepting reality stage,said CEO Steve Bartlett.Their industry finances about 65% of the American economy.Most people believe there will be some diminution of credit because of the new law.Lending has been pretty flat for a couple of quarters as it is.The systemic risk part of the law is really good.They're just gonna live with the new law.They're just gonna make it work.
JP Morgan Chase,Fidelity and State Farm are among the trade group's members.Pure investment banks such as Goldman Sachs are not.Goldman Sachs is a great,very sophisticated company.Although they're not members,it's important to the economy that they do well.
Price controls on debit cards are a scary thing.The breadth of the law's consumer protection language is beyond belief.You shouldn't have regulations for price controls or product selection.The free checking is probably gonna go away to pay for the new debit card rule.The industry and some of the companies did go overboard with fees,admitted Steve Bartlett of the Financial Services Roundtable.
Mr.Bartlett is a former Member of Congress and mayor of Dallas.
JP Morgan Chase(JPM),Goldman Sachs(GS)

Coach Gets An Upgrade

Luxury retailer Coach,which offers a line of fine leather goods,received an upgrade from JP Morgan.The old investment firm raised Coach from hold to buy,also increasing its price target for the stock from 35 to 40 dollars.JP Morgan cited Coach's improving margins and increased square footage.
As the affluent's portfolios rebound from the financial crisis,they are returning to the stores.Another member of the group that is benefiting is department store chain Saks.Others to watch for include department store Nordstrom and jeweler Tiffany.

It Could Take Years

Don't look for a full economic recovery any time soon,according to David Kelly of JP Morgan Asset Management.The market is still dozens of percent below its all-time high.It's gonna be a rocky road.We're not quite out of the woods yet.Investor sentiment is still rather fragile.We could have a long period of years for employment to come back.Stocks are a long term bet,Mr.Kelly says.You do want to have an international position.The other countries will benefit from a U.S. recovery.Indeed,in the long run,they will grow faster than the U.S.,Mr.Kelly predicts.

Gross Sees Limitations

Bond expert Bill Gross of Pimco thinks the Federal Reserve will cut short term interest rates to two percent,but there's a certain point beyond which it doesn't help the economy.Lower and lower interest rates produce a weaker and weaker U.S. dollar,causing global inflation.The bond markets on a global basis are afraid of inflation.U.S. Treasury bonds are perhaps the most overvalued asset in the world.Mr.Gross likes corporate bonds with AA or AAA ratings,such as General Electric(GE) or JP Morgan Chase(JPM).

Historic Night

Sunday night was a long,historic one.WSW heard of an emergency Federal Reserve action at about 7PM,and worked until 11:30 PM to ascertain the facts.The central bank had cut the discount rate-the rate at which the Fed loans to troubled banks-by .25% to 3.25%.It also opened the discount window to investment banks-an extraordinary move-and extended the loan period to 90 days.David Roche of Independent Strategy said the Fed was making policy on the hoof.It was a panic move,but it would probably work,Mr.Roche said as the Asian markets opened in crisis.The Federal Reserve was bracing the markets for the news that old line firm Bear Stearns(BSC)was near collapse and had been bought for 2.00 U.S. a share by JP Morgan Chase(JPM).Bear's partners had lost confidence in it and refused to loan it any more money,since Bear was deeply involved in the subprime mortgage debacle.The Fed agreed to back JP Morgan's bid with 30 billion dollars in securities guarantees.It could not let Bear,the fifth largest U.S. broker-dealer,fail,as that would devastate the already weak credit markets.