Finance

JP Morgan CEO Jamie Dimon gives a speech during the inauguration of the new French headquarters of US’ JP Morgan bank on June 29, 2021 in Paris.Michel Euler| AFP | Getty ImagesJPMorgan Chase granted Jamie Dimon new stock options as a retention bonus to incentivize the chief executive officer to lead the banking giant for a few more years.Dimon was awarded 1.5 million stock appreciation rights, a form of options contracts which he can exercise in five years if the stock price rises. JPMorgan shares closed at $149.71 on Tuesday after climbing 18% this year on the back of the economic reopening.”This special award reflects the board’s desire for Mr. Dimon to continue to lead the firm for a further significant number of years,” the bank said in a regulatory filing.These options would give Dimon a profit of approximately $49 million after a 10-year vesting schedule, the Financial Times reported, citing people familiar.”In making the special award, the board considered the importance of Mr. Dimon’s continuing, long-term stewardship of the firm, leadership continuity, and management succession planning amid a highly competitive landscape for executive leadership talent,” the bank said.Dimon, 65, took over JPMorgan in 2005 and built the New York-based lender into the biggest U.S. bank after the financial crisis. For years, he had a running joke of saying he’s always five years away from stepping down. That coincided with the departure of a few executives who had been seen as potential successors.In May, the bank named Marianne Lake and Jennifer Piepszak to run the company’s sprawling consumer bank after its long-time manager announced his retirement.Succession talks had resurfaced after Dimon had a close call that required emergency heart surgery last year.The bank kept Dimon’s annual pay at $31.5 million for 2020. The CEO got a 1.6% raise in the previous year after his bank posted record earnings and shares of the company surged.JPMorgan is fresh off a better-than-expected quarter as the bank released money set aside for loan losses amid its improving outlook on the U.S. economy.— CNBC’s Hugh Son contributed reporting.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

Signage illuminated at the China Huarong Asset Management Co. headquarters on Financial Street in Beijing, China, on Wednesday, May 19, 2021.Yan Cong | Bloomberg | Getty ImagesBEIJING — Weak spots are emerging in China’s growing debt pile.National debt levels have climbed to nearly four times of GDP, while an increasing number of corporate bonds have defaulted in the last 18 months.Although the latest defaults represent a fraction of China’s $13 trillion onshore bond market, some high-profile cases have rattled investors since the common perception has been that the Chinese government will not let state-supported firms fail.The case of Chinese bad debt manager Huarong has also spooked investors, causing a market rout this year when the firm failed to file its earnings in time and its U.S. dollar-denominated bonds plunged.Analysts said cases like these signal how the state’s so-called implicit guarantee is changing as the government tries to improve the bond market’s quality — weeding out the weaker firms, and allowing for some differentiation within the industry.As China’s growth slows, authorities are looking to strike a better balance between maintaining control and allowing some market-driven forces into the economy in order to sustain growth in the long term.In the first half of this year, the total number of defaulted corporate bonds in China amounted to 62.59 billion yuan ($9.68 billion) — the most for the first half of a year since 2014, according to data from Fitch Ratings. Of that, defaults by state-owned companies contributed to more than half that amount — about 35.65 billion yuan.For the whole of 2020, bond defaults amounted to 146.77 billion yuan, a huge leap from just six years ago in 2014, according to Fitch. That year, defaults totaled 1.34 billion yuan, and there were no defaults by state-owned firms, the ratings agency said.As investor fears ramp up, here are three important developments to watch, economists say.1. Bond default in a grey area of local governmentA major milestone to counter the idea of implicit guarantee in China’s market would be a default of a bond issued by a local government financing vehicles (LGFV).These companies are usually wholly owned by local and regional governments in China, and were set up to fund public infrastructure projects. Bonds issued by such firms have been surging amid an infrastructure push as the Chinese economy improved.”Many LGFV are even worse than so-called Zombie companies, in the sense that they could not pay the interest, not (to) mention the principal on their own,” Larry Hu, chief China economist at Macquarie, said in a June 25 note. Zombie companies are those that are heavily indebted and rely on loans and government subsidies to stay alive. “They could survive only because of the supports from the governments.””The year of 2021 is a window to break implicit guarantee, as it’s the first time in a decade that policymakers don’t have (to) worry about the GDP growth target. As a result, they could tolerate more credit risk,” Hu said, noting it’s only a matter of time before an LGFV bond default occurs.In 2015, electrical equipment manufacturer Baoding Tianwei became the first state-owned enterprise to default on its debt, following the first default in China’s modern onshore bond market a year earlier.Nomura said LGFVs are a “major focus” of China’s tightening drive, and noted that bonds issued by the sector surged to a record 1.9 trillion yuan ($292.87 billion) last year, from just 0.6 trillion yuan in 2018.2. Huarong’s ‘big overhang’ on the sectorFor investment-grade bonds in China, a major factor for future performance is how the case of Huarong Asset Management is resolved, Bank of America analysts said in a note last month, calling the situation a “big overhang.”China’s biggest manager of bad debt, Huarong, has been struggling with failed investment and a corruption case involving its former chairman, who was sentenced to death in January.After missing its March deadline to publish its 2020 results, the firm also said “auditors will need more information and time to complete” the audit procedures. It added, however, that failure to provide the results does not constitute a default.Huarong’s biggest backer is the Ministry of Finance. China’s economy will need to grow quickly enough to ensure the central government budget isn’t strained further.If there is a disorderly default of Huarong’s dollar bond, we could see a broad sell-off of China credits, especially (investment grade) credits.Bank of AmericaIf Huarong’s case is resolved with government support, it should boost China’s asset management sector, as well as other Chinese government-linked entities, says Bank of America.However, the bank added: “If there is a disorderly default of Huarong’s dollar bond, we could see a broad sell-off of China credits, especially (investment grade) credits.”Regulators are pushing Huarong to sell non-core assets as part of a revamp, according to a Reuters report in early June.In the event of a Huarong default, the cost of capital could rise “significantly” for other state-owned companies as “markets re-evaluate perceptions of implicit guarantees by the state,” Chang Wei-Liang, macro strategist at Singapore bank DBS, told CNBC via email. As risks go up, firms have to offer higher returns to draw investors.Chang said China has enough money on hand to address Huarong’s problems.However, “the key question is whether the state will choose to intervene by providing support with additional capital, or by imposing losses on equity holders and debt holders first to reinforce market discipline,” he added.3. Weak points in some provinces and local banksIn an effort to find out where potential hot spots for SOE defaults might be, S&P Global Ratings analysts found that small banks concentrated in north and south-central China face deteriorating asset quality.”City and rural commercial banks with above-sector-average problematic loans would have to write-off Chinese renminbi (RMB) 69 billion in these loans to bring their ratio to sector-average levels, with those in the Northeast worst hit,” the June 29 report said.A fiscally weaker province is probably related to a less dynamic economic situation, (and) a weaker economic situation means there could be more corporate bond defaults.Francoise Huangsenior economist, Euler HermesThat could affect the ability of small banks to support local state-owned companies, potentially requiring larger banks to step in to maintain system stability, the report said.The provinces with greater issues are those exposed to cyclical industries, S&P Global Ratings credit analyst Ming Tan told CNBC.Authorities need to strike a balance between allowing poorer quality loans to have a riskier rating, and keeping problems from accelerating, Tan said. “There’s definitely risk of mismanagement happening down the road, but so far, what we’re seeing, is this has been managed quite well.”China’s banking and insurance regulator disclosed last week that in 2020, the banking industry disposed of a record high 3.02 trillion yuan — or $465.76 billion — in non-performing assets. Other data released last week showed China’s GDP grew 7.9% in the second quarter from a year ago, a touch below expectations.Read more about China from CNBC ProBernstein picks 5 high-yielding China stocks to buy while the regulatory crackdown hits techMorgan Stanley downgrades Tencent Music, warns of hit from new Chinese regulationsChinese tech stocks face other risks on top of tighter regulation, says portfolio managerSome analysts have pointed to weakness at a local level. Pinpoint Asset Management analysis found that consumption declined year-on-year in May for four provincial capitals — Wuhan, Guiyang, Shijiazhuang and Yinchuan.”A fiscally weaker province is probably related to a less dynamic economic situation, (and) a weaker economic situation means there could be more corporate bond defaults,” said Francoise Huang, senior economist at Euler Hermes, a subsidiary of Allianz.The longer-term issue is restructuring the economy of these weaker provinces to allow more dynamic ones to grow, she said. “I don’t think the solution would be (to) continue investing into these less-performing sectors just for the sake of keeping them alive.” More

Revolut’s new travel booking feature, Stays.RevolutLONDON — European fintech giant Revolut is jumping into the travel industry.The London-based firm launched a new feature Tuesday called Stays, which lets users book hotels and other accommodation through its app.Customers can receive up to 10% cashback on bookings made through Revolut, the company said.The move marks a challenge to travel industry giants like Booking Holdings, Expedia and TripAdvisor. It’s also the company’s first product to launch outside the realm of finance.”As the world begins to cautiously open up, we know everyone is desperate to get away whenever they can — whether it’s to Margate or Mallorca,” said Marsel Nikaj, Revolut’s head of savings and lifestyle.”We’ve built Stays to make it easy for people to find and book their perfect break in their ideal destination. After 18 months of endless restrictions and lockdowns, we want to give people more and make their money travel further.”Revolut began life in 2015 as a digital-only banking and payments platform for spending abroad without paying steep currency exchange fees. The company has since expanded its offering, rolling out new features for trading shares and cryptocurrency.The firm is one of a number of popular “neobanks” that have emerged in Europe and other parts of the world, luring mostly younger customers with a slick user experience and colorful bank cards.Rivals include Monzo and Starling in the U.K., N26 in Germany and Chime in the U.S.Last week, Revolut was valued at $33 billion in a monster funding round, making it Britain’s top fintech start-up and the second-largest fintech in Europe. The company has 16 million users globally.Revolut is aiming to become what’s known as a “super app,” which offers multiple services through one interface. The trend has gained traction in Asia, popularized by companies like Grab and GoTo in Southeast Asia and Alibaba and Tencent in China.Revolut’s Stays feature is first launching in the U.K. on Tuesday before rolling out to Europe and the U.S. in the coming months. It will only offer accommodation for now, but there are plans to include flights, car hire and other travel options later down the line.It comes as some European countries are tightening restrictions on public life due to fears over a resurgence in Covid cases. In stark contrast, England lifted nearly all its remaining coronavirus curbs on Monday. More

U.S. stock futures were steady in overnight trading on Tuesday after the major averages clawed back much of their losses from Monday’s sell-off.Dow futures rose 40 points. S&P 500 futures gained 0.15% and Nasdaq 100 futures rose 0.1%.Netflix reported disappointing third quarter subscriber guidance after the bell on Tuesday, but the stock was flat in extended trading. The streaming giant said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analysts’ estimates. The company also reported earnings that missed expectations.Meanwhile, shares of Chipotle rose 4% in after hours trading as the Mexican fast-food reported quarterly revenue that surpassed pre-pandemic levels as dine-in customers returned to its restaurants.Zoom In IconArrows pointing outwardsOn Tuesday, stocks rebounded sharply from Monday’s sell-off triggered by a Covid-inspired global growth scare. After its worth day in 8 months on Monday, the Dow Jones Industrial Average rallied nearly 550 points or 1.6%. It was the biggest jump for the Dow in more than a month.The S&P 500 registered a gain of 1.5%. The Nasdaq Composite rose 1.6%.The small-cap benchmark Russell 2000 surged 3% as reopening plays popped. American Airlines rose 8.4% and Norwegian Cruise Line rose 8.3%.Bond yields also rebounded with the U.S. 10-year stabilizing around 1.2%, after falling it its lowest level in 5 months on Monday.”Until the 10-year yield rises back above 1.3% and stays above that level for a few days, today’s stock market rally is likely tentative,” said Jim Paulsen, chief investment strategist at the Leuthold Group.Some strategists see the market heading into a volatile period, in which there could be a deeper pullback. Investors are juggling inflation concerns as well as new Covid cases are rebounding in the U.S. as the delta variant spreads.”I think what we’ve seen here are the early warning shots of a correction that we’ll see probably… in late August, September, October,” said Matt Maley, equity strategist at Miller Tabak. Earnings season continues on Wednesday with key reporting from Coca-Cola, Johnson & Johnson, Verizon, CSX, Las Vegas Sands and Texas Instruments. About 85% of S&P 500 companies that have reported so far have beaten estimates, according to FactSet.— with reporting from CNBC’s Patti Domm. More

A button for launching the Netflix application is seen on a remote control in this photo illustration in Warsaw, Poland on April 25, 2019.Jaap Arriens | NurPhoto | Getty ImagesCheck out the companies making headlines after the bell:Netflix — Shares of the streaming platform slid 2% in after hours trading after reporting disappointing earnings and third quarter subscriber guidance. Netflix earned $2.97 per share, below estimates of $3.16 per share, according to Refinitiv. Revenue beat expectations. The company said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analysts’ estimates.Chipotle — Shares of the Mexican fast-food chain rose 4.5% in extended trading after beating on the top and bottom lines of its quarterly results. Chipotle reported earnings of $7.46 on revenue of $1.89 billion. Analysts expected earnings of $6.52 on revenue of $1.88 billion, according to Refinitiv. United Airlines — Shares of the airline dipped just 0.5% after the bell after reporting a loss of $3.91 per share, in line with analysts estimates, according to Refinitiv. United Airlines made $5.47 billion in revenue, topping expectations of $5.37 billion. United said it expects to post a third quarter and fourth quarter profit on a pre-tax basis. Interactive Brokers — Shares of the online brokerage ticker 1% lower in after hours trading after releasing its quarterly results. Interactive Brokers reported EPS of 82 cents per share, in line with estimates, according to Refinitiv. The retail investing company made $754 million in revenue, which wasn’t comparable to estimates. More

An American Airlines plane lands at the Miami International Airport on June 16, 2021 in Miami, Florida.Joe Raedle | Getty ImagesCheck out the companies making headlines in midday trading.Simon Property Group — The mall operator rose 7.2% after Stifel upgraded the stock to buy from hold. The Wall Street firm said Simon Property Group’s recent underperformance is a good entry point into a stock that poised to rebound.Banks — Banks bounced Tuesday after taking a hit Monday as bond yields plummeted. JPMorgan, Citigroup and Bank of America are all up more than 2% as the U.S. 10-year Treasury rose above 1.2%. Regionals are trading even higher, with Zions adding 7%, and Regions and Fifth Third adding more than 4.5%.Virgin Galactic — Shares of the space tourism company fell 1.1% after rival Blue Origin successfully completed its first manned flight with billionaire founder Jeff Bezos aboard. Virgin Galactic and its found Richard Branson completed its own inaugural flight earlier this month.PPG Industries – Shares fell 4.4% after the company reported worse-than-expected earnings results. The paint and coatings maker earned an adjusted $1.94 per share for its latest quarter, falling short of analysts’ $2.19 consensus estimate. PPG also warned that input and other costs would increase during the current quarter.Airlines — The sector was among the hardest hit during Monday’s selloff, losing about 4%, but are now climbing higher and recovering their losses. United and Delta Airlines rose about 4% in midday trading. American Airlines jumped about 5%.Royal Caribbean Cruises — The cruise company’s stock rose 7.8%, regaining its losses from Monday. Shares of Carnival and Norwegian are also trading higher by about 6%.IBM – Shares of the enterprise technology and services provider advanced 1.5% after the company’s second quarter earnings beat top- and bottom-line estimates. IBM earned an adjusted $2.33 per share on $18.75 billion in revenue. Analysts had been expecting the company to earn $2.29 per share on $18.29 billion in revenue, according to estimates from Refinitiv. Revenue grew 3% year over year.Halliburton – The oilfield services company advanced 3.7% after reporting a profit for a second straight quarter amid a rebound in oil prices. The company earned 26 cents per share, which was ahead of the expected 23 cents. Revenue came up short, however, at $3.71 billion versus the expected $3.74 billion.Apple — Shares of the tech giant rose 2.6%, helping to lift the broader markets. UBS hiked its price target for Apple ahead of next week’s earnings report, saying that strong iPhone and Mac sales should boost the stock.Citizens Financial — Shares rose 3.6% after reporting better-than-expected earnings. The company posted EPS of $1.46 per share, topping estimates by 35 cents, according to Refinitiv. Revenue, however, fell short of expectations.KeyCorp — Shares rose 3.3% after the company beat on the top and bottom lines of its quarterly results. KeyCorp reported earnings of 73 cents on revenue of $1.77 billion. Analysts expected earnings of 54 cents on revenue of $1.73 billion, according to Refinitiv.Philip Morris International — The cigarette manufacturer dropped 3.1% after the company missed second-quarter revenue estimates. Philip Morris reported $7.59 billion in quarterly revenue versus Wall Street’s estimate of $7.69 billion, according to Refinitiv.— with reporting from CNBC’s Tanaya Macheel, Hannah Miao, Pippa Stevens and Jesse Pound. More

An employer holds flyers for hospitality employment during a Zislis Group job fair at The Brew Hall on June 23, 2021 in Torrance, California.Patrick T. Fallon | AFP | Getty ImagesMillions of Americans are poised to lose their unemployment benefits or see a lower weekly payment due to a collision of state rules and the expiration of federal programs.Such workers are reaching the end of their “benefit year,” which marks a year since they applied for assistance.Seeking aid past this point typically triggers a review from state labor agencies. They assess a worker’s recent earnings record to judge whether the person qualifies for a new installment of benefits — and, if so, the appropriate amount.More from Personal Finance:College is more expensive than ever. Here’s how families are payingHow to negotiate for a pay raiseDo’s and don’ts during a stock market sell-offHowever, recipients who haven’t found a job or have worked few hours since the start of the pandemic may be out of luck. Little earnings will likely mean a much lower — if any — benefit.Until now, a federal program — Pandemic Emergency Unemployment Compensation — has largely kept income support intact for these long-term unemployed, even if their “benefit year” elapsed.But that program ends nationwide after Labor Day. Around two dozen states, mostly Republican-led, ended it early.Roughly 4.7 million people — a third of all recipients — were collecting benefits through the program as of June 26, according to Labor Department data.It’s unclear how many of them first applied for benefits more than a year ago. But another data set, from the Bureau of Labor Statistics, suggests 2.9 million Americans have been out of work for more than a year, though not all necessarily collect jobless benefits.”Maybe there could be several hundred thousand, maybe 1 million at the high end [who’d qualify for benefits again],” said Andrew Stettner, a senior fellow and unemployment expert at The Century Foundation, a progressive think tank.”And for everyone else, they’ll have to scramble to find a job, go on food stamps, use their savings,” he added. “Rental assistance should still be available, but they won’t have cash income, really.”(This benefit-year issue applies to those eligible to collect state unemployment insurance. About 5.7 million self-employed, gig, freelance and other workers who are ineligible for state benefits are collecting federal aid through the Pandemic Unemployment Assistance program, which also ends Sept. 6.)The Pandemic Emergency Unemployment Compensation program has been available to workers since the beginning of the pandemic.Created by the CARES Act, it offers aid to those who exhaust their allotment of standard state benefits — generally up to 26 weeks but sometimes much less, depending on the state.Congress has twice extended the program’s duration via Covid relief measures passed in December and March. The most recent, the American Rescue Plan, extended it to Sept. 6.Twenty-two states opted to end federal unemployment assistance — including aid for the long-term unemployed — in June or July. (Another four opted for an early end to a $300 weekly supplement to benefits.)State officials claimed the extra benefits were causing recipients to stay home instead of look for jobs. Critics of that stance say other factors, like ongoing health risks and child-care duties, played a bigger role in any perceived labor shortages.Meanwhile, an upswing in U.S. Covid cases from the delta variant, largely among the unvaccinated, may negatively impact local economies and potentially lead workers to turn to the unemployment system again.States use different formulas to determine how workers can re-qualify for assistance once their benefit year has elapsed. All of them require at least some recent work history to be eligible, though to varying degrees.”That new benefit year will be based on earnings throughout the pandemic,” said Michele Evermore, a senior policy advisor for unemployment insurance at the U.S. Labor Department’s Employment and Training Administration. “And [payments] may be significantly less than they were getting before, if they’re eligible at all.” More

Check out the companies making headlines before the bell:Travelers – The insurance company earned $3.45 per share for its second quarter, easily beating the consensus estimate of $2.39. Revenue also topped forecasts, with Travelers benefiting from higher premiums, improved investment returns and lower catastrophe losses. Nasdaq – Nasdaq shares rose 1% in the premarket after the exchange operator announced plans to spin out its Nasdaq Private Market, its platform for private company shares, into a separate company. It will do so in partnership with a group of banks including Citigroup, Morgan Stanley and Goldman Sachs.Halliburton – Halliburton jumped more than 2% in premarket trading, after beating estimates by 3 cents with quarterly earnings of 26 cents per share. The oilfield services company posted its second straight quarterly profit as rebounding oil prices boosted demand.IBM – IBM beat estimates by 4 cents with adjusted quarterly earnings of $2.33 per share, while revenue beat estimates as well. IBM’s revenue increase of 3.4% from year-earlier levels was its strongest in 3 years, helped by IBM’s cloud and software businesses. IBM jumped roughly 3.5% in premarket action.PPG Industries – PPG earned an adjusted $1.94 per share for its latest quarter, falling short of the $2.19 consensus estimate, though the paint and coatings maker did see revenue slightly above Wall Street forecasts. PPG also warned that input and other costs would increase during the current quarter. PPG tumbled roughly 6.5% in the premarket.Johnson & Johnson, McKesson, Cardinal Health, AmerisourceBergen – U.S. states are expected to announce a $26 billion settlement this week with companies accused of fueling a nationwide opioid epidemic, according to multiple reports. The settlement would involve payments from drug maker J&J as well as the three drug distributors. McKesson jumped more than 5% in the premarket, with Cardinal Health adding 4.5%. Comcast, ViacomCBS – Comcast CEO Brian Roberts and ViacomCBS Chair Shari Redstone in recent weeks discussed a possible international streaming partnership, according to people familiar with the matter who spoke to the Wall Street Journal. ViacomCBS gained 1.3% in premarket trading, with Comcast up 0.1%.Zions Bancorp – Zions earned $2.08 per share for the second quarter, well above the consensus estimate of $1.29, with the bank’s revenue topping Street forecasts as well. Its results were boosted by a reversal of pandemic-related loan loss provisions, among other factors. The company said future credit-related losses will be significantly less than previously expected. JB Hunt Transport – JB Hunt Transport came in 4 cents ahead of estimates with quarterly earnings of $1.61 per share, while the logistics company’s revenue also beat estimates. The company saw strong freight demand across all its segments during the quarter.Crown Holdings – Crown Holdings reported adjusted quarterly earnings of $2.15 per share, compared to a consensus estimate of $1.78, with the maker of packaging products for consumer goods also seeing revenue top Wall Street forecasts. Its performance was helped in part by strong demand in the beverage can segment. Crown shares jumped nearly 4% in the premarket. More