1. Bank of America Profit Plunges 56%
2. JPMorgan Revenue Hits New Record
3. BlackRock Acquires GIP for $12.5 Billion
4. Tesla Slashes EV Prices, Halts Plant Operations
5. U.S. PPI Unexpectedly Falls for Third Straight Month
6. Citigroup Reports $1.8 Billion Loss, Will Cut 20,000 Jobs
7. Ackman Blasts Harvard Endowment
1. Bank of America Profit Plunges 56%
Today, Bank of America released its Q4 earnings report, showing a 56% plunge in net profit to $3.14 billion—twice the decline analysts had expected.
As the second-largest bank in the U.S., BofA explained that the industry’s phaseout of the LIBOR benchmark rate resulted in a $1.6 billion cost to the bank. Additionally, several other cost items increased.
During Q4, revenue from fixed income, foreign exchange, and commodities trading dropped 5.8% to $2.21 billion, due to shaken investor confidence and geopolitical tensions.
Furthermore, one of the bank’s key revenue sources—net interest income—fell 5% to $13.9 billion in Q4, slightly better than analysts’ 5.1% drop expectation.
To some extent, BofA’s earnings reflect how Fed rate hikes are affecting consumers.
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2. JPMorgan Revenue Hits New Record
According to a statement and earnings report released today by JPMorgan Chase & Co., the company earned $24.2 billion in net interest income during Q4 2023 and expects to generate $90 billion in 2024.
CEO Jamie Dimon said that the record-breaking performance in 2023 was fueled by net interest and credit income, and that the company is well-positioned to maintain strong returns. However, he cautioned that inflation may last longer than investors expect.
In Q4, JPMorgan’s expenses rose 29% to $24.5 billion, in part due to wage increases.
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3. BlackRock Acquires GIP for $12.5 Billion
Today, BlackRock announced it will acquire infrastructure investment firm Global Infrastructure Partners (GIP) for $12.5 billion.
BlackRock will pay $3 billion in cash and issue 12 million shares, worth $9.5 billion as of this Thursday.
The deal is expected to close in Q3. GIP CEO Adebayo Ogunlesi will join BlackRock’s board and global executive committee.
GIP manages $100 billion in assets. This is BlackRock’s largest acquisition in over a decade and marks a significant expansion in its alternative investments strategy.
CEO Larry Fink, 71, aims to build BlackRock into a one-stop shop for all types of investment products.
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4. Tesla Slashes EV Prices, Halts Plant Operations
According to Tesla’s website, the company has again cut prices for its Model 3 and Model Y SUVs in China, by 5.9% and 2.8%, respectively.
Additionally, Tesla announced that due to geopolitical issues, some suppliers’ cargo ships were forced to reroute, leading to a planned shutdown of its Berlin factory from January 29 to February 11.
Before today’s market open, Tesla shares dropped another 3.4%, marking losses in 11 of the past 12 trading sessions.
Since late 2022, Tesla has repeatedly slashed EV prices, prompting rival automakers to follow suit, compressing margins across the industry.
Analysts expect China’s EV market growth to slow again in 2024.
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5. U.S. PPI Unexpectedly Falls for Third Straight Month
The U.S. Labor Department reported today that the Producer Price Index (PPI) unexpectedly declined by 0.1% month-over-month in December, marking a third consecutive monthly drop, suggesting cooling inflation at the producer level.
Year-over-year, PPI rose by 1%. Core PPI, excluding food and energy, increased 1.8% year-over-year—the smallest gain since late 2020.
Thursday’s CPI data showed rising goods prices, indicating that inflation control remains challenging.
U.S. stock futures recovered after initial losses, Treasury yields declined, and the dollar weakened.
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6. Citigroup Reports $1.8 Billion Loss, Will Cut 20,000 Jobs
Citigroup’s Q4 earnings show a 25% drop in fixed income trading revenue to $2.6 billion—its worst performance in five years—mainly due to reduced client investments.
The bank posted a $1.8 billion loss for Q4, largely due to $780 million in employee severance costs.
CEO Jane Fraser wrote that Q4 performance was very disappointing, but said progress on simplifying the company structure and cleaning up assets was solid, and 2024 would be a turning point.
Fraser stated that Citi will cut 20,000 jobs, aiming to save $2.5 billion.
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7. Ackman Blasts Harvard Endowment
Billionaire Harvard alum Bill Ackman harshly criticized Harvard University’s endowment performance in a CNBC interview and said he would establish a think tank to rigorously examine systemic injustices in U.S. higher education.
Harvard President Claudine Gay recently resigned, a move Ackman’s public criticism strongly influenced. He noted that Harvard’s 10-year annualized return was only 8.2%, underperforming the broader market.
Ackman said he has no fear of being “canceled” for his views and invited those who disagree with him to unfollow. His personal wealth, he added, gives him full freedom of expression.
Among the eight Ivy League schools, Harvard’s endowment returns ranked second to last.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.