The Closer

ROUND-UP

Flat S&P 500, rising Goldman. Shares in the bank ended up 4.1 per cent and at their highest level since May 2011 after its earnings. The S&P 500 closed up 0.02 per cent at 1,472.63 (Reuters).

JPMorgan’s London Whale will cost Jamie Dimon half his 2012 bonus. Dimon will be left with a $10m payout on top of $1.5m base pay after an internal investigation concluded that he “bears ultimate responsibility” for losses and management failures surrounding the ‘Whale’ trades (Bloomberg). A 129-page report released on Wednesday details how the bank’s Chief Investment Office built up a large portfolio of synthetic credit positions as part of a bid to reduce risk-weighted assets (JPMorgan report, Wall Street Journal).

Profit at JPMorgan rose sharply in the last three months of 2012, posting $5.7bn in net income compared to $3.7bn a year earlier (Financial Times).

Goldman tripled profits and cut pay by 11 per cent in the fourth quarter. Remuneration costs dropped to 21 per cent of the bank’s revenue, one of the lowest levels since Goldman went public in 1999. Goldman posted $2.89bn in net income, its largest quarterly profit since the first three months of 2010 (Wall Street Journal). A recovery in asset prices combined with the lower expenses to produce the profit surge, including $2bn of revenue from Goldman’s own-portfolio “principal transactions” unit (Financial Times).

Businesses were largely unfazed by December’s fiscal cliff, according to the latest Beige Book data from the Federal Reserve. All 12 regional Fed districts reported moderate or modest growth, suggesting the cliff’s combination of tax hikes and spending cuts did not stop the economy’s overall momentum. But retailers said that “concerns that consumers will spend cautiously due to ongoing fiscal uncertainty” could affect future sales, while only six districts reported manufacturing growth, with some businesses reporting a slowdown in export orders (Financial Times).

Hewlett-Packard has received “expressions of interest” for buying its Autonomy and EDS units. HP is not in “selling mode” despite the offers from suitors including other US tech companies, but could find it easier to offload Autonomy than EDS as a more recent, and troubled, acquisition. HP bought Autonomy for $11bn in 2011 but alleged late last year that the company had misled on accounting (Wall Street Journal).

Carl Icahn took a “small” stake in Herbalife after Bill Ackman unveiled his $1bn short thesis on the company according to an investor. It is not clear if Icahn still owns the stake, although he has clashed with Ackman in the past (Wall Street Journal).

FURTHER FURTHER READING

- What non-economists really think about economists.

- Was JPMorgan a lot worse at responding to a crisis than preventing one?

- Dealbreaker takes on the Whale report.

- So does Deus Ex Macchiato.

- Why the debt ceiling is really, only, grandstanding.