1 Sharp fall in JP Morgan profits (BBC) US banking giant JPMorgan Chase has reported a sharp fall in profits at the start of 2014, which it blamed on declines in its mortgage business. The bank said net income in the three months to the end of March was $5.3bn – a fall of 19% compared with a year earlier. Profits from its mortgage business stood at $114m, down $559m from last year. The figures mark the second successive quarterly fall in profits at the bank.
It comes as Wells Fargo, the biggest US mortgage lender, reported a higher-than-expected 14% rise in first-quarter net profit. But it said the rise in profits was the result of a series of equity investment gains, which helped offset a continuing slowdown in its home loan business. Both JPMorgan and Wells Fargo suffered from a fall in remortgaging activity. Wells Fargo provides almost one in five US home loans. It said income from mortgage banking fell by 46% to $1.5bn from $2.7bn a year earlier.
For JPMorgan, 2013 was marred by huge legal settlements over its mortgage practices in the run-up to the 2008 crisis. The “London whale” trading scandal and other controversies including legal costs relating to the fraudster Bernie Madoff also dented earnings in 2013. JPMorgan chief executive Jamie Dimon still described the bank’s first quarter results as “good” given the industry-wide headwinds in both investment banking and mortgages.
2 Once-soaring tech stock take a beating (San Francisco Chronicle) The stock market’s laws of gravity are ravaging its highest fliers. Stung by an abrupt change in sentiment, the stocks of recent stars such as Netflix, Facebook, Twitter and LinkedIn are 20 percent to 45 percent below their recent peaks. The steep downfall is raising questions about whether this is just a fleeting fit of fickleness or the foreshadowing of another market bubble about to burst.
Optimists expect a rebound. They point out that technology remains a bright spot in an otherwise dreary economy as software, computers, mobile devices and the Internet fill increasingly instrumental roles in work, entertainment and communications. “Tech is where the action is,” says longtime industry analyst Roger Kay.
Pessimists view the tech sector as Ground Zero for a long-overdue reckoning. They say the stock market has been pumped up by the flood of money that the Federal Reserve has funneled into the long-term bond market since the financial meltdown of 2008 decimated the economy. Now that those government-backed bond purchases are tapering off, people are starting to realize “the only thing holding this balloon up is the Fed blowing air in it,” said Fred Hickey, editor of The High-Tech Strategist newsletter.
3 Bezos on groceries and drones (Dawn) CEO Jeff Bezos’ annual letter to shareholders offers a glimpse into Amazon’s internal workings and what it is aiming for in the future, including more grocery services and the much-discussed drone delivery. Bezos has outlined Amazon’s offerings, including its fresh grocery business called Prime Fresh, which it has offered for five years in Seattle and expanded to Los Angeles and San Francisco. For $299 a year members get same-day and early morning delivery on groceries and other items ranging from toys to electronics and household goods. Bezos said the goal is to expand to more cities over time.
After making a hubbub about testing delivery by aerial drones in December, the company said its Prime Air team is testing fifth- and sixth-generation aerial vehicles and in the design phase on generations seven and eight. In December Bezos said Amazon was working on creating unmanned aircraft to deliver packages, but said it would take years to advance the technology and for the Federal Aviation Administration to create the necessary rules and regulations.
In a quirk, Bezos also said Amazon offers employees money to leave the company, a program called Pay to Quit, modeled after a similar program at Zappos. Once a year, the company offers $2,000 to quit, adding $1,000 a year, up to a maximum of $5,000. “The goal is to encourage folks to take a moment and think about what they really want,” Bezos said. “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
Amazon.com has changed the consumer shopping landscape, transforming itself into the largest US online retailer, selling books, gadgets and most everything else, usually at cheaper prices than its competitors. The Seattle company has long focused on spending the money it makes to add business and expand into new areas, from movie streaming to e-readers, grocery delivery and most recently a set-top streaming device called Fire TV. Amazon’s stock is down 17 percent from the beginning of the year.
4 India’s Narendra Modi declares assets, wife (Raymond Zhong in The Wall Street Journal) Narendra Modi is richer than he was in 2012, according to official nomination documents filed Wednesday. Oh, and he’s married. In the past, Mr. Modi, who decribes himself as single in speeches and interviews, had left the “spouse” fields blank in election filings. This year, running as the Bharatiya Janata Party’s candidate for prime minister, he said that he has a wife named Jashodaben.
That’s not exactly news. Indian press long ago reported that Mr. Modi’s parents betrothed him to a local woman when the pair were teenagers. Jashodaben Modi, now a retired teacher living in a village near where Mr. Modi was born, has given interviews in which she was quoted referring to herself as Mr. Modi’s wife and saying she still has a book he gave her as a gift, as well as a photo of him taken in his early 20s. Wednesday’s affidavit marks the first time Mr. Modi has publicly acknowledged his marriage, though the filing doesn’t include information about his wife’s income, saying such information is “not known.”
India’s Supreme Court ruled last September that information had to be “fully furnished” on candidates’ nomination forms, with all fields filled in. As for Mr. Modi’s own finances, he reported income for the 2013 fiscal year of 454,095 rupees ($7,600), more than three times the 150,630 rupees he declared when running for Gujarat’s legislative assembly in 2012. His savings also grew to 4.4 million rupees ($73,000) from 2.7 million rupees two years ago.
Most of his wealth is tied up in a plot of land in Gandhinagar, Gujarat’s capital, that he bought in 2002 and values today at 10 million rupees ($166,000). The land is 3,531 square feet, or less than a tenth of an acre, and is in an area of the state capital where many politicians and bureaucrats live. Spokespeople for Mr. Modi and the BJP didn’t answer phone calls or respond to text messages seeking comment.