Investors Aren’t Buying Bank Chiefs’ Optimism

The heads of America’s biggest three banks all spoke positively about the economy Tuesday as their share prices fell sharply

Bankers are often criticized for being out of touch with the real world. Often that is unfair, but on Tuesday, as the leaders of the nation’s three biggest banks told investors that the economy was great, investors were acting like the boom was over.

Speaking at the Goldman Sachs financial conference, the chief executives of JPMorgan Chase , JPM -4.46% Wells Fargo WFC -4.54% and Bank of America BAC -5.43% all said they see exceptionally strong economic conditions at the moment, citing strong consumer spending and business confidence.

On closer inspection, all three bank executives gave hints of trouble just beneath the surface.

JPMorgan Chase Chief Executive James Dimon spoke of the indirect costs of trade tensions to business confidence and investment. He sounded skeptical these tensions would be resolved within the cease-fire time period agreed to by the U.S. and China over the weekend. “There’s no way you can finish the complexity of these trade negotiations in 90 days,” he said.

.. Mr. Dimon also suggested he’s been puzzled that middle-market borrowers haven’t ramped up their borrowing more as the economy has improved… Bank of America’s Brian Moynihan struck a similar note, saying medium to large-size clients are already making changes to their supply chains in response to the trade uncertainty, which he said costs them money while adding no value for their customers.

Wells Fargo Chief Executive Timothy Sloan cited a different risk, saying the biggest concern he hears from business clients is “their inability to hire enough workers.” This is the kind of thing that can lead to what Mr. Dimon referred to as a “traditional recession” caused by Federal Reserve raising interest rates as wages and prices rise.

Sometimes the risks are greatest just when things seem to be at their best. Investors are right to brace for what may come next.

Why Sexual Harassment Matters to Investors

It poses legal, financial, and reputational risks that investors are increasingly focusing on.

 

U.S. investors overseeing around $10 trillion in assets now incorporate nonfinancial factors such as environmental, social and governance metrics in their decision making. For both corporate boards and investors, thinking about issues like child labor or climate change has become mainstream.

 

Yet thinking about sexual harassment has lagged behind. An October study by theBoardlist and Qualtrics found that 77% of boards hadn’t talked about sexual harassment, 88% hadn’t implemented a plan of action as a result of recent revelations and 83% hadn’t evaluated the company’s risks when it came to sexual harassment.

Their most commonly cited reason for inaction? A perception that sexual harassment wasn’t a problem at the company.

.. Then there is the loss of valuable assets. Mr. O’Reilly at Fox, Kevin Spacey at Netflix, and Matt Lauer at Comcast’s NBC were central to their companies’ success.

.. Advertisers, attuned to the new landscape, are paying close attention. “That helps explain why NBC pulled the plug so quickly,” on Mr. Lauer, says Jon Hale of Morningstar. “They don’t want to take the reputational hit of a long, drawn-out process that could cost them viewers and ad revenue.”

.. sexual harassment can be a slow, costly drain. A 2007 study found that it has a negative effect on employee recruitment and retention, increases sick leave costs, and lowers productivity. Lost talent and ideas are more difficult to quantify. But research shows that gender-diverse companies deliver higher returns on capital and lower volatility.

 

New report shows just 100 companies are source of over 70% of emissions

Groundbreaking ‘Carbon Majors’ research finds 100 active fossil fuel producers including ExxonMobil, Shell, BHP Billiton and Gazprom are linked to 71% of industrial greenhouse gas emissions since 1988.

  • Carbon Majors Database is the most comprehensive dataset of historic company greenhouse gas (GHG) emissions ever compiled;
  • 100 active fossil fuel producers are linked to 71% of global industrial greenhouse gases (GHGs) since 1988, the year in which human-induced climate change was officially recognized through the establishment of the Intergovernmental Panel on Climate Change (IPCC);
  • Almost a third (32%) of historic emissions come from publicly listed investor-owned companies, 59% from state-owned companies, and 9% from private investment;
  • Over half of global industrial emissions since 1988 can be traced to just 25 corporate and state producers;
  • Fossil fuel companies and their products have released more emissions in the last 28 years than in the 237 years prior to 1988;
  • Over half (52%) of all global industrial GHGs emitted since the start of the industrial revolution in 1751, have been traced to these 100 fossil fuel producers;

The Angst of Endangered CEOs: ‘How Much Time Do I Have?’

a common lesson this year: The pay is great, but job security has rarely been shakier.

chief executive churn reflects a broader reality for the country’s business elite: An array of challenges—from

  • increasing impatience on Wall Street and in boardrooms to
  • a corporate landscape rapidly transformed by new technologies and rival upstarts

—have made the top job tougher and more precarious than just a few years ago

.. The typical CEO of a major company a decade ago resembled a ship captain “who could rally a group of people with a lot of process and procedures,” said Deborah Rubin, a senior partner at RHR International, a leadership-development firm. “Today’s CEO has to be much more like a race car driver,” she added. “You have to do the sharp maneuvers.”

.. Flush with more cash than ever, activist investors are pursuing bigger corporate prey.

.. Even GE CEO Jeff Immelt’s disclosure that he would depart this summer came amid brewing tensions with activist investor Nelson Peltz

.. Mr. Peltz’s Trian Fund Management LP had recently stepped up pressure on GE to cut costs more aggressively and boost profits, setting off speculation about when the longtime CEO might leave.

.. Growing shareholder clamor for quick results comes as new technologies are upending entire industries. If you run a retailer, for instance, “you are watching your whole market go away in just a matter of years,”

.. Likewise, Ford’s ouster of Mark Fields after less than three years in its highest job was the starkest sign yet of how tech players such as electric-car maker Tesla Inc. and Alphabet Inc.’s autonomous-car unit, Waymo, threaten the traditional auto sector.

Trump Uses and Betrays His Collaborators

Spicer was determinedly dour and looked miserable. He was puffy, pinched and pale. And little wonder: Trump has sucked the lifeblood out of him.

.. Washington is abuzz with speculation about when Spicer will be shown the door, but it doesn’t really matter. His credibility, and his dignity, have already been defenestrated.

.. Trump has a long history of walking out of disasters unscathed. It’s those around him — the Spicers of the world — who are destroyed.

  • Trump entities filed for bankruptcy protection six times. Investors, lenders and workers took hits — and Trump moved on.
  • Trump was caught on tape boasting to Billy Bush about sexually assaulting women — and Billy Bush lost his job.
  • Corey Lewandowski and
  • Paul Manafort poured themselves into Trump’s campaign and were unceremoniously dumped.
  • Michael Flynn is out and potentially in legal trouble.
  • The FBI’s Comey arguably handed Trump the election — and learned of his dismissal from TV.
  • Deputy Attorney General Rod Rosenstein tarnished his sterling reputation in just two weeks.
  • Vice President Pence has been “unflagging in his loyalty,” only to be made “the public face of official narratives that turn out to be misleading or false.”
  • Trump humiliated Steve Bannon by publicly downplaying their association.
  • Trump repaid House Speaker Paul Ryan’s loyalty by winking at calls for Ryan’s ouster.
  • Attempts to defend Trump by aides Reince Priebus and Kellyanne Conway and Senate Majority Leader Mitch McConnell have left them sounding clownish.

.. avoided answering questions by saying no fewer than 22 times how very “clear” he or Trump had been about this or that.

.. And, as many a Trump loyalist has discovered, you are useful to Trump until you are not — and then you are cast aside.

What effect the Trump administration will have on the housing market

At a meeting of the National Association of Home Builders in August, Trump said that “there’s no industry, other than probably the energy industry, that is more overregulated than the housing industry.” However, changing those regulations may be beyond his scope.

.. “He could try to use his power to ease it, but a lot of the problems are at the state and local levels,” Goodman said.

.. Goodman said the two biggest issues the housing market faces are supply constraints and credit availability.

.. But Trump’s stance on immigration could have a detrimental effect on housing supply.

“Immigration plays a big part in the labor force for construction,” Smoke said. “It’s one of the constraints we have in new construction.”

.. Something to watch under Trump could be what happens to Fannie Mae and Freddie Mac. Reform efforts have stalled the past several years. But hedge-fund billionaire John Paulson, who is part of the president-elect’s economic policy team, could push for action. Paulson bought shares of Fannie and Freddie in the hope of cashing in when they regained their independence. Since being placed under government control, the mortgage-backers have sent nearly all their profits to the U.S. Treasury, not investors.

“Paulson cares passionately about this, given his positions,” Goodman said.

Walmart Chief Defends Investments in Labor, Stores and the Web

In the last year, Walmart has stopped selling Confederate-flag merchandise as well as assault rifles, has publicly supported gay rights and, after years of criticism, has raised its minimum starting wage to $9 an hour.

Now, progressives may be cheering, but Wall Street is not. Investors fear that Walmart’s heavy investments in labor, in the Internet and in discounts will weigh on the retailer’s short-term earnings — and many are running the other way.

“Walmart expects a return from these wagers,” Michael Lasser, a retail analyst at UBS, wrote in a note. Still, “it’s unclear if its investment of $1.5 billion in labor and ‘several billion dollars’ in pricing will push it ahead of others, or just keep pace.”

..  Walmart.com is set to offer 10 million products by the end of the year. That is impressive, until you consider that a shopper will find an estimated 300 million items for sale on Amazon.com.

.. Last year, Amazon sold almost $90 billion worth of products online, compared with just $12.2 billion Walmart sold through its website. E-commerce still makes up only about 2.5 percent of Walmart’s annual sales, and its growth online is slowing.