Jan 22

JPMorgan CEO gets 35% pay raise to $27M amid cutbacks

NEW YORK –Even as Wall Street braces for more cuts to jobs and bonuses, JPMorgan Chase CEOJamie Dimon was paid $27 million in 2015, up from $20 million the year before, the company said Thursday.

The pay raise comes after JPMorgan announced record annual profits last week, thanks to cost-cutting that helped to offset stagnating revenue growth.

JPMorgan’s board paid Dimon a $1.5 million salary, a $5 million cash bonus and $20.5 million in performance-based stock grants, the company said in a regulatory filing.

Last year, Dimon was paid a $7.4 million cash bonus and $11.1 million in stock awards. His $1.5 million salary has remained unchanged.

This year’s stock grants are tied to new, three-year performance metrics. This could could help alleviate criticisms, which bubbled up last year, that Dimon’s pay is not properly tied to performance.

JPMorgan “is now one of the few, if not the only, large financial institution that does not tie any element of CEO pay to achievement of goals for a specific metric or metrics,” proxy advisory firm ISS said last year ahead of a controversial shareholder vote on the bank’s pay.

Banks emerged from a tough 2015 only to face worsening conditions this year, including rising costs tied to souring energy loans.

As a result, bank CEOs are expected to take the ax to personnel costs — their single largest expense — as they scout for new ways to boost profits.

Morgan Stanley and Bank of America have already said they are planing to slash expenses this year through either layoffs or by moving jobs to cheaper cities.

In 2015, JPMorgan cut staff by 3%, or 6,761 jobs. Compensation costs at the New York bank fell by 1% last year.

Jan 22

DEA Hired A TSA Informant To Help Take Cash From People’s Luggage

“A Department of Justice watchdog officially condemned the U.S. Drug Enforcement Administration this month, following a report that the agency had recruited a Transportation Security Administration security screener to search bags for cash that the DEA could confiscate… the same criticism could be made about the entire practice of civil asset forfeiture, which allows law enforcement officials to seize a person’s property — including cash, cars, jewelry and houses — without obtaining a conviction or even charging the owner with a crime.”

Jan 22

The World Has Discovered a $1 Trillion Ocean (ARCTIC OPENING)

… [The] World Economic Forum advisory council [will] Develop guidelines for those nations looking to do business at the top of the world. That framework is to be released Thursday, in Davos.

“The history of economic development in regions of the world has really been fraught with a mass of mistakes,” said Minerd, who before Guggenheim worked at Credit Suisse and Morgan Stanley. “It really seems that someone needed to start developing a minimum standard, as a guide for economic development in the region.”

The Arctic Investment Protocol, developed by a 22-member WEF “global agenda council,” puts forward sustainability principles similar to initiatives developed for mature economies in recent years. The focus is long-term: tap the expertise of indigenous communities and treat them as commercial partners, protect ecosystems (even as rising temperatures change them before our eyes), and prevent corruption while encouraging international collaboration. The Arctic nations include Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the U.S.,  so there is a lot of collaboration to be had. 

The Arctic guidelines are voluntary, like many other sustainable investment initiatives, including the Principles for Responsible Investment or even the WEF’s own work on “sustainable competitiveness.”

Jan 22

This time, cheaper oil does little for the U.S. economy

“We got this wrong,” John C. Williams, president of the Federal Reserve Bank of San Francisco, told an audience in Santa Barbara, California, this month.

Economists at JPMorgan Chase, who predicted last January that lower oil prices would add about 0.7 of a percentage point to the economic growth rate in 2015, now estimate that lower prices might have shaved 0.3 of a percentage point off the growth rate.

Lower oil prices historically were a cause for celebration in the developed world… but this time is different. The losses from lower prices are larger and quicker than expected as energy companies cut back on investment and lay off workers, while the gains are smaller and slower to materialize, as consumers save some of their windfalls.

We’d also like to point out that some of this “surprise” is the result of statistics-blindness; confused by the statistics showing a “higher savings rate” after the credit crisis amidst the “Great Recession”, economists and market-boosters of stripes interpreted that as a sign of economic strength. But paying down one’s debt because of financial distress (including stubbornly high interest rates for consumers who don’t get the benefits of being Fed Primary Dealers or leveraged-loan market operators) is not a sign of fundamental strength. No doubt consumers would like to spend more, but in all practicality, the marginal freed-up cash flow due to low fuel prices merely allows them to perform the same debt paydowns a bit quicker. In other words, once the financial and base economic situation (and consumer psychology) has changed to one of a defensive posture, a little bit of extra cash is not going to cause a stampede to the malls to buy baubles.

Jan 22

US home purchases rebound; 2015 had most sales in 9 years (LOOKS PEAK-EY TO US!)

Last month’s rebound concluded a year that produced the highest annual sales total since 2006. Steady job growth and low mortgages drew more buyers into the market, causing both sales and prices to climb.

Despite greater demand, the housing market continues to recover slowly from the bursting of the housing bubble more than eight years ago. Sales remain well below their peak of 7.08 million in 2005, when adjustable-rate mortgages with no money down and other risky loans fueled a buying frenzy that eventually fizzled and triggered the worst downturn since the Great Depression.

Jan 22

Draghi’s Groundhog Day Heralds Seven Weeks of ECB Market Dialog (AKA "DO WHATEVER IT TAKES 4.0"??)

“The European Central Bank president’s hint that policy makers will bolster stimulus on March 10 raises the prospect of the Governing Council delivering another expansion to its 1.5 trillion-euro ($1.6 trillion) bond-buying program, including potentially taking it into new asset classes. Emphasizing the ECB’s ambition to reporters on Thursday, Draghi said that there are “no limits” to how far officials will go to safeguard their inflation goal.
“It’s a bit like Groundhog Day,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt, reminiscing about the 1993 Bill Murray comedy. “The only question is, will he fulfill the dreams of markets this time around, or will he disappoint again?”

Jan 22

China Is Moving Mountains For The New Silk Road – Literally

Like most other cities in China, Lanzhou found a need to expand and create new areas for development. Urban construction land is one of the most valuable commodities in modern China, and the building of new cities, districts, hi-tech zone, logistics centers, and infrastructure is what keeps the fiscal wheels of this country’s local municipalities spinning. In this climate, running out of new development land can be akin to a financial travesty, but this is exactly what once happened in Lanzhou — a city that’s built on a 50 kilometer strip of land that’s wedged down into the Yellow River Valley, hemmed in by mountains.

So what was Lanzhou to do? The answer was evident: the city would simply remove the barriers to its expansion. If it was the mountains that prevented the city from achieving its full economic potential then the mountains would need to go.

Jan 22

Over 120,000 Greek homes close to repossession

An estimated 122,700 households in Greece are facing the threat of losing their homes due to accumulated loan and tax obligations that they cannot pay, a survey by Marc research company for the Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE) showed on Thursday.

Households’ fears are on the rise due to a change in the legislative framework concerning repossessions valid as of January 1 that has made the criteria for acquiring protection status stricter.

See also Survey: 3 in 10 Greeks cannot afford heating or hot water.