Ina Drew retired as chief of JPMorgan’s Chief Investment Office, following last week’s revelation of a $2bn trading loss. Matt Zames, co-head of Global Fixed Income, will replace Drew (Financial Times). Mike Cavanagh, head of the bank’s Treasury and Securities Services group, will lead a review of the trading error. Other members of the CIO are expected to leave in the coming days, including Achilles Macris, the unit’s London chief, and Bruno Iksil, the ‘London Whale’ (Wall Street Journal). Zames announced a ‘renewed focus’ on hedging risk in an internal memo to CIO staff (Bloomberg).
Lightsquared filed for bankruptcy under Chapter 11. Phil Falcone, whose Harbinger Capital had a 74 per cent stake in the telecoms company as of January, will remain on its management board (Bloomberg). The company said the bankruptcy filing would ‘give it time to resolve regulatory issues’ which have prevented its plans for a nationwide 4G wireless network from coming to fruition (Lightsquared). Normal business operations will continue, it added. A move to file had been expected for weeks amid a dispute with creditors who want to reduce Falcone’s stake (Reuters).
Groupon posted its first quarterly profit. Pro forma net income was 2 cents per share, compared to a consensus forecast of one cent per share. Stock in the daily deals company rose to $13 a share after hours (Reuters). Groupon also extended the lock-up period for its shares to June 1 (Groupon statement).
Best Buy’s founder and chairman became a casualty of its chief executive’s ouster. A company review found that Richard Schulze failed to tell other members of the board that Brian Dunn was allegedly having an inappropriate relationship with a female employee (Financial Times). Schulze will step down as chairman next month. Shares in the company rose 1.5 per cent following the announcement, with analysts citing an opportunity for new leadership (Wall Street Journal).
Chesapeake said it will shift from ‘asset capture to… asset harvest’ as it seeks to restore investors’ confidence in its strategy. Shares in the company rose as much as 11 per cent after Aubrey McClendon, its chief executive, told an analyst call that assets worth up to $60bn will be retained even after asset sales this year to fund capital improvement (Financial Times, Reuters). McClendon confirmed that one ‘VPP’ deal for financing linked to its Eagle Ford field production would be scrapped.
US CPI data (consensus 0.0 per cent month-on-month) should be interesting… any drop in the index (energy prices have brought headline inflation lower) would be the first since May 2010.
April retail sales (consensus 0.1 per cent, excluding autos 0.2 per cent) are also out, alongside Empire State manufacturing data (consensus 9.0) – though watch out if the latter remains at the low level seen in April (when it dived from 20.2 to 6.6).
– Dick Fuld sighting du jour.
– Paul Krugman, zapped by a raygun (really).
– Falkenblog — harsh on Dimon the hedger.
– Wonkishness ahoy — embedded options and the zero lower bound.