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Wednesday January 17, 2018



JPMorgan Chase Reports Strong Earnings

JPMorgan Chase & Co. (JPM) announced its quarterly earnings on Friday, January 13. The bank reported record-breaking revenue and earnings that surpassed analysts' expectations.

JPMorgan reported revenue of $24.3 billion in the fourth quarter. This was an increase from last year's fourth quarter revenue of $23.7 billion and above the $23.9 billion in revenue analysts predicted.

"Our results this quarter were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses," said JPMorgan CEO Jamie Dimon. "In the Consumer business, we had double digit growth in deposits and core loan balances, our credit card sales volume was a record, and for the year we had over $1 trillion of merchant processing volume."

Net income in the fourth quarter surged to $6.7 billion from $5.4 billion a year ago. On an earnings per share basis, profit rose to $1.71 per share compared to $1.32 per share in the same quarter last year.

JPMorgan, America's largest bank based on assets, had a strong finish to 2016 with earnings topping $24 billion for the full-year. Big banks have bounced back in recent months as post-election enthusiasm and increased interest rates launched an uptick in trading. In the earnings release, Dimon was optimistic about the road ahead, stating, "The U.S. economy may be building momentum. Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities, and we are well positioned to play our part."

JPMorgan Chase & Co. (JPM) shares ended the week at $86.70, up 1.1% for the week.

Delta Air Lines Revenue Beats Expectations

Delta Air Lines, Inc. (DAL) released its quarterly and full-year earnings on Thursday, January 12. The company reported decreased revenue and net income.

Revenue for the quarter was $9.46 billion, down 0.5% from the prior year's quarter, but exceeding analysts' expected revenue of $9.40 billion. For the full year, Delta's revenue was $39.64 billion, which is a 3% drop from last year's $40.7 billion.

"Delta had a year of record-breaking performance in 2016 - financially, operationally and for our customers - and it's an honor to recognize our employees' efforts this year with over $1 billion in profit sharing," said Delta CEO Ed Bastian. "As we move into 2017, we are seeing our unit revenues turn positive which should return the company to margin expansion by the back half of the year. This will allow us to produce the solid returns and cash flows that investors rely upon from Delta."

The company reported quarterly net income of $622 million, far below the $980 million reported during the same quarter last year. Delta's full-year net income was $4.37 billion, down from $4.53 billion for the prior year.

Delta came in second place overall in the Wall Street Journal's annual airline rankings, trailing only Alaska Airlines. The rankings take into account such factors as on-time arrivals, cancelled flights, extreme delays, two-hour tarmac delays, mishandled baggage, involuntary bumping and complaints.

Delta Air Lines, Inc. (DAL) shares ended the week at $51.23, up 3.6% for the week.

Rocky Mountain Chocolate Factory's Profits Rise

Rocky Mountain Chocolate Factory, Inc. (RMCF) released their quarterly results on Thursday, January 12. The company reported increases in both revenue and net income.

The company reported $9.96 million in revenue for the quarter. This was a 1.5% increase from $9.8 million during the same quarter last year.

"On December 9th, 2016, the company paid its 54th consecutive quarterly cash dividend to shareholders in the amount of $0.12 per share," said company COO Bryan Merryman. "During the first quarter of this year, we acquired certain assets of two small confections companies, FernCreek Confections and Elaine's Toffee Company. These acquisitions allowed us to acquire an all-natural gluten-free line of products and a high-end toffee line, as well as expanding our customer relationships."

Net income for the quarter was $1.01 million. This is up from $441,000 in net income during the same quarter last year.

Rocky Mountain Chocolate Factory has a combination of company-owned stores, franchises and co-branded licensees across the globe. Same-store pounds purchased by franchisees and licensees dropped 0.8% during the quarter. Shipments to other customers, however, increased 15.8%, leading to a rise in total factory sales of 4.5%.

Rocky Mountain Chocolate Factory, Inc. (RMCF) shares ended the week at $10.93, up 6.7% for the week.

The Dow started the week of 1/9 at 19,931 and closed at 19,886 on 1/13. The S&P 500 started the week at 2,274 and closed at 2,275. The NASDAQ started the week at 5,528 and closed at 5,574.

Treasury Yields Slide Further

U.S. Treasury bond yields fell again this week, which comes on the heels of a sell-off over the last two months of 2016. After several weeks of apparent optimism, investors are returning to the bond market.

Treasury yields began their rise in November, following Donald Trump's election victory. Many investors believed the time was right to move away from the safety of Treasury bonds and into riskier investments, such as stocks.

The late-year rise in yields was also due in part to anticipation of the Federal Reserve's long-awaited rate hike at its December 13-14 policy meeting. Following a brief period of increases, however, yields began to level off in the wake of the Fed's decision.

The benchmark 10-year Treasury note yield climbed from 1.83% at the beginning of November to its peak of 2.64% on December 15. During trading on Friday, the 10-year Treasury note yield was at 2.40%.

"When you look back about two months ago," said Ninh Chung, Head of Investment Strategy and Portfolio Management for SVB Asset Management. "[T]he equities market has rallied so much while the bonds market has sold off. I think we're going to see a breather until we get more details."

The 10-year Treasury note yield finished the week of 1/9 at 2.36%, while the 30-year Treasury note yield was 2.96%.

Mortgage Rates Fall for Second Consecutive Week

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 12. Mortgage rates fell for the second consecutive week.

The 30-year fixed rate mortgage averaged 4.12% this week. This is down from 4.2% last week. During this time last year, the 30-year fixed rate mortgage averaged 3.92%.

The 15-year fixed rate mortgage averaged 3.37% this year, down from 3.44% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.19%.

"After absorbing a mixed December jobs report; the 10-year Treasury yield fell 8 basis points," said Freddie Mac Chief Economist Sean Becketti. "The 30-year mortgage rate moved in tandem with Treasury yields falling 8 basis points to 4.12%, the second decline since the presidential election. The December jobs report showed 156,000 jobs added, barely meeting many experts' expectations, while wage growth was at the high end of expectations at 0.4%. If strong wage gains persist, they may push inflation and interest rates higher."

Based on published national averages, the money market account finished the week of 1/9 at 0.58%. The 1-year CD finished at 1.19%.

Published January 13, 2017
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