Blackrock Annual Report quote and JP Morgan Annual Report Quote

Source: Blackrock 2015 Annual Report
Blackrock (BLK) CEO Larry Fink warns investors of the consequences of negative interest rates
Investors today are facing tremendous uncertainty fueled by slowing economic growth, technological disruption and social and geopolitical instability. Particularly worrying is the adoption of negative interest rates by central banks attempting to spark economic

growth. These actions are severely punishing the world’s savers and creating incentives to reach for yield, pushing investors into less liquid asset classes and increased levels of risk, with potentially dangerous financial and economic consequences.”





Source: JP Morgan 2015 Annual Report
JPMorgan (JPM) COO Matt Zames says the bank is really a technology company in disguise
“We are a Technology Company.  Technology is the lifeblood of our organization, and it drives the deliv- ery of the secure products, platforms and services our customers and clients value and trust. We serve nearly 40 million digital customers and process $1 trillion in merchant transactions annually. Each day, we process $5 trillion of payments, as well as trade and settle $1.5 trillion of securities. We see technology as an essential core competency and a key differentiator to drive future growth in all of our businesses.”


JP Morgan 1Q16 Earnings Call Notes

Marianne Lake

Will see continued reserve builds this year

“While oil prices have improved somewhat in March, they do remain near historically low levels and the market is not expecting the recovery to be strong. Further natural gas, which is a meaningful portion of our portfolio, does remain depressed. We don’t feel that current prices are sufficient to spur a meaningful restart of production and many of the cost reductions and conservation actions that have been taken are not easily and quickly reversed. Therefore, the impact of oil prices is somewhat asymmetric on credit costs. Reserves are name-specific. They’re based on downgrades reflecting the actual financial condition and liquidity position of borrowers. As such, we likely will see some incremental reserve build for the rest of the year, but they will be increasingly situation specific, and our ability to estimate them will improve over time.”

Markets are still quite illiquid in certain parts

“With respect to the second quarter, the relative stability we saw in March has continued into April so far. However, it’s also the case that markets are still quite illiquid in certain parts and will be prone to somewhat abrupt corrections. So while investors have started to deploy cash and capital markets are wide open for well-understood names, there is still remaining caution for more challenging issuers. Although there has been noise in the data globally, there is an emerging belief that it’s fundamentally better but we need to continue to see no downside surprises. And as such, we remain somewhat cautious about the second quarter.”

Commercial loan space is competitive but not irrational

“The C&I space is very competitive. Commercial real estate is also competitive, but it’s not irrational and we aren’t seeing, or at least we are not seeing very irrational proposals on structure and risk. ”

We are still positioned for rising rates

“We are positioned for rising rates, as you know, and have been, but we also understand what the performance of the company looks like if there are no more rate rises or when we stress our portfolios in lots of different ways. So we are positioned for rising rates. It is our central case that that will happen. The market is pricing less than one hike in this year. The Fed dots say two. Our research says two. We’re just going to have to wait and see.”

Expecting credit to remain favorable

“it is our expectation across both the Consumer and the Wholesale businesses outside of energy that the credit trends will remain favorable, credit will be relatively benign. We’re not expecting to see material increases except for the fact that we’re growing our loan portfolios. So when we did Investor Day we talked about charge-offs this year will go up year on year and they’ll go up to potentially as high as $4.75 billion and about half of that would be on the back of the fact that we’re growing our portfolios”

JS Earnings Call Notes – JPM

JP Morgan (JPM) CFO Marianne Lake said the company saw strength across its consumer loan segment

“We saw strong growth in consumer drivers, on the back of improvement in the U.S. economy in large part generating core loan growth of 16% for the company.”

The firm is reserving liabilities for its oil & gas clients who will struggle after the recent energy sell off

“the biggest area of stress in wholesale being oil and gas, against, which we built about $550 million in reserves this year including $124 million this quarter.  And has the outlook for oil has weakened, we would expect to see some additional reserve build in 2016 but prices would need to remain at this level for an extended period for them to be significant.”

JP Morgan (JPM) CFO Marianne Lake stated that with the Federal Reserves recent decision to lift interest rates off of zero, the company expects to deliver additional net interest income

With the December rate hike alone so in a rate flat scenario, together with the loan growth that we have seen and expect, we would expect to deliver about $2 billion of incremental NII.”

They were able to deliver significant profitability with lower headcount and lower expenses

You can see headcount was down by 12,000 for the year and nearly 43,000 since 2012.”

The firm held its title from previous years as number one in investment banking fees market share

In Investment Banking for the full year, we continue to rank number one in global ID fees and number one in North America and EMEA.”

JP Morgan (JPM) CFO Marianne Lake said that the 2016 M&A landscape looks different than that of 2015

I would say that the pipeline coming into 2016 in M&A was good.  Obviously, volatility can dampen the confidence of Boards and CEOs. Dialogues are pretty active and we think the types of deals that we’ll see in 2016 will look different. But I think in the first couple of weeks it’s not being particularly strong and we do need to see some of the stability come back I think for us to really see our conversions start to pick up.  Less mega deals, more mid-sized deals, more cross border, it’s a little different. Actually more deal count, less big mega deals could be very constructive for revenue but we’re likely to see it be a little bit different in 2016.”

JP Morgan (JPM) CEO Jamie Dimon said a little bit of weakness in the oil price doesn’t affect a fortress like JP Morgan

Surprisingly the cost again to get the oil out of the ground has also dropped dramatically and probably much more than most of us would have expected. So you take these producing wells. You take the cash flow. You discount. You discounted it 8% or 9%. You lend against it. And so these are our forecasts.  Our energy book isn’t that large relative to JPMorgan Chase. We’re not worried about the big oil companies. These are mostly the smaller ones that you’re talking about these reserve increases on.”

JP Morgan (JPM) CEO Jamie Dimon reminded investors that the bank generates significant goodwill by lending to clients in both bad times and good times

A bank is supposed to be there for clients in good times and bad times. So it’s not a trading market where you try to support clients. So then we can responsibly support clients we are going to. And we lose a little bit more money because so be it. We’ve done that around the world. We did it in 2007, 2008 and 2009. We tried to do responsibly. If banks just completely pull out of markets every time something gets volatile and scary, you’ll be sinking companies left and right.”

JP Morgan (JPM) CEO Jamie Dimon said the economic landscape doesn’t look so bad to him

The U.S. economy has been chugging along at 2% to 2.5% growth for better part of five years now. In the last two years it has created 5 million jobs. And if you look at the actual household formation, car sales, wage, people working, it still looks okay. Corporate credit is quite good. Small business formation, it’s not back to where it was but it’s quite good. Household formation is going up. So, obviously, market turmoil we all look at it every day but I’m not sure most of the 143 million Americans look at it that much who have jobs and you have a big change in the world out there. People are getting adjusted to China slowing down. When you have commodity prices go down like that there are big winners and losers. The oil companies are the losers. Consumers are the benefit. Brazil gets hurt. India benefits. South Korea benefits. Japan benefits. And those kind of terribly worse and hopefully this will all settle down. It’s not the beginning of something really bad.”


JP Morgan 4Q15 Earnings Call Notes

JPMorgan Chase’s (JPM) CEO Jamie Dimon on Q4 2015 Results

Jamie Dimon

We wish we could reserve more but the accounting rules dictate what you can and can’t do

“we try to be very conservative always and so we’re not trying to put up as little as possible. You know me, I’d put up more if I could but accounting rules dictate what you can do”

We’re not worried about the big oil companies, we’re more worried about the small ones

“We’re not worried about the big oil companies. These are mostly the smaller ones that you’re talking about these reserve increases on.”

Remember these are asset backed loans

“Remember, these are asset backed loans. A bankruptcy doesn’t necessarily mean your loan is bad; have to be a little bit careful.”

Banks have a responsibility to support clients in good times and bad

“There is also, Mike a philosophical thing a bank is supposed to be there for clients in good times and bad times. So it’s not a trading market where you try to support clients…If banks just completely pull out of markets every time something gets volatile and scary, you’ll be sinking companies left and right.”

Obviously credit is likely to get worse, we’re not forecasting a recession though

“you point out that credit card, Commercial Bank, middle market, large Corporate credit is as good as it’s ever been. Obviously, it’s going to get a little bit worse. I wouldn’t call it a cycle per se. If you have a recession you will see a normal cyclical increase in all those losses. We’re not forecasting a recession. We think the U.S. economy looks pretty good at this point.”

There are big winners and losers. It’s not the beginning of something bad

“The U.S. economy has been chugging along at 2% to 2.5% growth for better part of five years now. In the last two years it has created 5 million jobs. And when you look — if you look at the actual household formation, car sales, wage, people working, it still looks okay. Corporate credit is quite good. Small business formation, it’s not back to where it was but it’s quite good. Household formation is going up. So, obviously, market turmoil we all look at it every day but I’m not sure most of the 143 million Americans look at it that much who have jobs and you have a big change in the world out there. People are getting adjusted to China slowing down. When you have commodity prices go down like that there are big winners and losers. The oil companies are the losers. Consumers are the benefit. Brazil gets hurt. India benefits. South Korea benefits. Japan benefits. And those kind of terribly worse and hopefully this will all settle down. It’s not the beginning of something really bad.”

Haven’t seen bank loans repricing as credit market spreads have widened

“We’ve seen no real repricing in loans on the balance sheet. You have seen a little bit of it, people are getting other revenues to make up for their credit exposure.”

Marianne Lake

Oil prices would need to stay here for an extended period for reserve builds to be significant

“And has the outlook for oil has weakened, we would expect to see some additional reserve build in 2016 but prices would need to remain at this level for an extended period for them to be significant.”

Charge offs slightly higher in auto, but still below long term expectations

“on credit, in auto net charge-offs were 50 basis points and while higher, they were still below our long-term expectations and in card, the net charge-off rate was 242 basis points for the quarter, 251 for the year, and given our underwriting discipline, client selection and the improving economy we expect net charge-offs to stay at these levels in 2016.”

Debt underwriting fees down 43% y/y

“debt underwriting fees were down 43% from a record last year where we saw an unprecedented number of large fee events.”

Pipeline for M&A coming into ’16 was good, but volatility can dampen confidence some

“I would say that the pipeline coming into 2016 in M&A was good, solid, up in fact. Obviously, volatility can dampen the confidence of Boards and CEOs. Dialogs are pretty active and we think the types of deals that we’ll see in 2016 will look different. But I think in the first couple of weeks it’s not being particularly strong and we do need to see some of the stability come back I think for us to really see our conversions start to pick up.”

If oil stayed here for a long time reserve builds might be $750m

“we said last quarter, if oil reached $30 a barrel, here we are and stayed there for call it 18 months, you could expect to see reserve builds of up to $750 million and that assessment hasn’t fundamentally changed. So it is not the current market expectation that oil will flat line. It is the expectation right now that there will be a modest recovery. Based upon that we would expect to take some additional reserves but for them to be more modest, less significant.”

Not seeing down grades in other sectors besides energy, metals and mining

“energy, metals and mining, we’re watching very closely industries that could have knock on effects like industrials and transportation but we’re not seeing anything broadly in our portfolio right now. We’re just watching very closely, which is why — now, obviously, you can take our reserve build number and you can say it’s almost essentially all made up of oil and gas and metals and mining and behind the scenes we’ve had upgrades and down grades of a number of other different companies across sectors but nothing particularly thematic yet but we’re watching.”

JP Morgan at Goldman Sachs Conference Notes

JPMorgan’s Management Presents at Goldman Sachs U.S. Financial Services Broker Conference

Marianne Lake — CFO

We don’t see widening spreads in high yield as an indication of broader credit deterioration

“we don’t see it as being a broader indication of credit deterioration and with respect to how it’s impacted our trading — look overall, spot trading, credit trading in the quarter has been and particularly in secondary markets have been quite good, no particular impacts.”

The stresses that we are seeing are reasonably tightly contained to energy

“if we look across our portfolio right now and think about the stresses that we are experiencing, they are reasonably tightly contained within energy sector. And specifically on borrowing base determinations downgraded to certain clients. We are seeing materials kind of secondary impact or other stress in the rest of the portfolio more broadly. That’s not to say there aren’t downgrades of individual names, not just thematically and materially not, and it’s really going to depend on — we are expecting that things will remain relatively soft in 2016. But it depends on how stressed that would get as to whether if that would expand. Right now no. ”

Realistically the rate environment is going to drive earnings growth in 2016

“look, I think, if I’m realistic in 2016, the single big thing that is going to drive earnings growth is going to be the rate environment, that doesn’t undermined all of the other work we’re doing.”

Credit is our friend

“Credit will be benign. So credit is our friend, but it’s already very benign. So I think in 2016 to be honest with you, its going to be a little bit rate driven, but beyond that it’s all of the things that we have talked about.”

Miscellaneous Earnings Call Notes 11.19.15

El Pollo’s (LOCO) CEO Steve Sather on Q3 2015 Results

We’ve seen reduced visits from some of our more price conscious consumers

“it was reduced the visits from some of our more price conscious consumers.”

It’s going to take some time for consumers to come back in and see these value initiatives

“I think it’s going to take some time to as consumers come in and see these value initiatives that are on the menu now as well as the service improvements that we’re making. And I think that’s just going to take more time to bring those consumers back. Let them experience that both on the price side and the service side and regain those customers.”

We’re fortunate that minimum wage headwind is being offset by lower commodity prices

“In terms of then managing pricing versus margins, I’m not ready to get into a full discussion about 2016 margins. One thing I will highlight is obviously we do have a minimum wage impact. Fortunate thing is on the commodity side, as we highlighted it worked 3% to 4% deflation, which were actually offset the minimum wage impact on our business”

Value conscious consumer is trading down

“when we did the research what we found is that we saw that the fact — the frequency has declined in our business, especially among we call more value conscious consumers. And we ask them where do you go instead of El Pollo Loco, it was pretty clear where they’re going, which was down to the lower end called the Taco Bells, In-N-Out Burgers and McDonalds.”

Burberry Group’s (BURBY) CEO Christopher Bailey on Q2 2015 Results

Impacted by weaker Chinese Consumer

“given the importance of the Chinese consumer to the luxury sector, our retail sales were affected by a slowdown in total Chinese spending. This reflected weakening consumer sentiment following the stock market turbulence and economic uncertainty over this summer.”

The US slowed markedly in the second quarter

“the U.S. slowed markedly in the second quarter. This reflected uneven demand from both the domestic and tourist consumer. The drivers here remain hard to read against a backdrop of a generally positive economic picture. However, we believe recent stock market volatility may have influenced local sentiment, and that the strong dollar discouraged tourist spend.”

The fundamentals of the luxury industry are changing. Growth is slowing

“current macroeconomic uncertainty, notwithstanding, there is no doubt that the fundamentals of the luxury industry are changing. Growth in Chinese luxury spending is moderating, competition in digital is intensifying, pricing leverage and space growth are tempering and customer behavior is rapidly evolving. For these reasons and more, sector growth is now forecast at just 1% to 2% in 2015 compared with 7% just a couple of years ago.”

Xinyuan Real Estate (XIN) Q3 2015 Results

Xinyuan Real Estate says that Chinese government policies continue to favorably impact business

“With respect to our operational effort on the government policies to continue to favorably impact our business. In the fourth quarter, we remain committed to driving performance of our shareholders with our quarterly cash dividend program. We will execute our sales purchase program as appropriate based on valuation.”

Bancolombia (CIB) Q3 2015 Results

Saw a significant depreciation of the Colombian peso against the US dollar

“During this period, we saw a significant depreciation of the Colombian peso against the U.S. dollar, which caused Bancolombia balance sheet to grow faster when presented in pesos. Let’s remember that the depreciation on an annual basis, it is 53%; and in a quarterly basis, it is 19%.”

Minimal impact though because operations are dollarized

“Nevertheless, despite every expression of assets and abilities into Colombian pesos, the impact in shareholders’ tangible equity is very small. This is due to the fact that all of our operations in Central America are dollarized and the assets that we have in U.S. dollars in Colombia are funded with liabilities in U.S. dollars as well.”

NIM was impacted by a raise in rates by the central bank

“A third topic that drove, and is driving the business environment today is of the monetary policy in Colombia. The Central Bank increased rates by 75 basis points over the last couple of months, which currently proceeds at a level of 5.25%. These increase coupled with our lower growth in deposits in the Colombian system and the higher stock of long-term debt caused the cost of funds to increase during the third quarter. As a result, we experienced a compression in the net interest margin during the quarter.”

Cresud’s (CRESY) CEO Alejandro Elsztain on Q1 2016 Results

Low commodity prices affecting our portfolios

“The low commodity prices are affecting all of our portfolio in all the region and there was a big drop that we saw on the prices mainly on the corn and soybean is effecting margins in all region too. ”

Good weather conditions for crops

“we can see how good weather condition in the region allows a positive start during this planting moment. Rainfall for this summer is above average as we’re going through a New Year. As we can see in the map Argentina presents good weather conditions in general particularly good in the Northeast of the country. In Brazil, even though the rainy season got delayed, the rains went back to the average levels along the normal soybean and corn productions.”

Copa Holdings SA (CPA) Pedro Heilbron on Q3 2015 Results

Latin America continues to be affected by slower economic growth

“Financial results for the quarter were in line with expectations, as Latin America continues to be affected by slower economic growth and weaker currencies. We expect the situation to continue in the short to medium term.”

We expect things to stabilize next year, but not expecting dramatic improvement

“we’re not building into our guidance an economic – an improvement in the economics of our region, we are expecting currencies to be stable, to stabilize, but we’re not building in a dramatic improvement to the economies.”

The Coca-Cola’s (KO) Management Discusses on Morgan Stanley Global Consumer & Retail
Sandy Douglas – President-Coca-Cola North America

Now expecting 4 point worse headwind from FX than expected on 3Q call

“Since our third quarter earnings call, the U.S. dollar has continued to strengthen. So while our business results are on track, we now expect a greater headwind from currency. After considering our hedge positions, current spot rates, and the cycling of our prior year rate, we now expect a seven point headwinds on net revenue and 11 point headwind on income before taxes for the quarter. Now, this is a four percentage point worse than the guidance that we provided.”

Consumers are moving to smaller packages which is higher revenue per volume

“The consumer is now changing. The consumer is moving to smaller packages. A 12-ounce can traded to a 7-ounce can is a 30% reduction in volume, but it’s an increase in revenue.”

TJX Companies’ (TJX) CEO Carol Meyrowitz on Q3 2016 Results

Carol Meyrowitz – Chairman and Chief Executive Officer

We like competition

“there is always competition and our job is to be outrageous value every day and have a very unique eclectic mix and that’s what we strive for. We don’t harp on we move forward, we don’t harp on the competition, we like competition, we like when we are next two, I won’t name certain stores, but we’re fine with it, it brings traffic and our job is to do a better job.”

JPMorgan Chase’s (JPM) Management Presents at the Bank of America Merrill Lynch
Daniel Pinto – Chief Executive Officer, Corporate and Investment Bank

IN fixed income trading you need to have scale and diversification

“when I look at the fixed income business, I think that, in my view the key of success in fixed income is scale. It’s a relatively expensive business to run and if you have scale, you can make it profitable. The other component that is important to me is to have diversification because when you look at what has happened for the last couple of years, two, three years, one of the challenges in business was the rate business. This year is doing very well. So credit has done very well in the last few years even though the climate this year has a bit more challenge than before.”

I do believe the Fed will move in December

“I do believe that the Fed will move in December. I think that, as you look at where the market is pricing today, is probably pricing 75% probability of that were to happen. So I think that the impact in trading will be not very relevant at all. I think that the Fed is starting to cycle.”

M&A is still healthy. Companies have to show growth somehow

“The M&A process is still very healthy and will continue to be so in the sense that companies will – the S&P earnings growth this year is zero when you look at the evaluation. So you would argue that companies need to demonstrate some growth. At this level of growth, in the United States for the economy, there will have to be a bit more inorganic than organic, so therefore the M&A will continue as long as funding and capital is available. I think that funding and capital is available. I think that the risk appetite overall has dropped recently.”

Walgreens Boots Alliance’s (WBA) Management Presents at Morgan Stanley Global Consumer & Retail Brokers Conference
George Fairweather – Chief Financial Officer

This whole industry is going to see reimbursement pressure

“I think specialty like other parts of market will continue to come under reimbursement pressures. I don’t think there is any part of the market that’s going to escape. And this is just the way of – the way of our industry. The healthcare expenditure here in the United States is still a high proportion of GDP versus perhaps what you might see in Europe where I come from. And I believe that what we are going to see in our market is continued pressure on growth in healthcare expenditure. We will see pressures in various reimbursements and then what we have got to do is continue to drive efficiency, drive the front-end profitability.”

Micron Technology Presents at UBS Global Technology Brokers Conference
Ernie Maddock – Chief Financial Officer and Vice President, Finance

It would be pretty silly for the Chinese to try to compete in DRAM

“I would tell you that if you aren’t in the DRAM space, it’s kind of tough to imagine finding that a particularly appealing space to want to deploy a lot of capital and a lot of effort in and certainly as has been released in the press over the last couple of days, I think there’s been some commentary made about at least one particular Chinese entity having not being interested in DRAM per se. But it’s a business that is quite mature. It’s hard to envision that capacity expansion will be required based upon what we know of bit growth and where we think folks would be on the technology curve. And I think whether your perspective is that DRAM technology is very near the end of its technical capability or not quite to near the end. I think there is at least some amount of finite lifetime that certainly [indiscernible] if I were thinking about a rational economic investment in an industry, it wouldn’t be one that is in this state of maturity, because I think the opportunities for success there would be pretty low.”

Still in the very early stages of understanding the potential of 3D X Point

“because it is arguably the first new memory technology in 20 years, we’re having to learn how that market is going to develop. And of course, there is a relationship between how quickly the market develops, how quickly output ramps up and what happens to cost as a result of that. So there are still a lot of variables at pay that are quite different than the visibility, the understanding and comprehension we have of the NAND business or the DRAM business. So we are at the very early stages of learning here”

E-House’s (EJ) CEO Xin Zhou on Q3 2015 Results

Next year’s real estate market wont be much different from this year’s in China

“Overall, we don’t think next year’s real estate market will be very different from this year’s. The main theme is still efforts encouraged by the government to reduce inventory, reduce the overall level of inventory. And we continue to believe the Tier 1 and Tier 2 market overall will be healthier relative to the Tier 3 and Tier 4 business, which will continue to experience difficulties.”

Staples’ (SPLS) CEO Ron Sargent on Q3 2015 Results
Ron Sargent – Chairman and CEO

Markets softened across all categories early in the quarter

“Early in the quarter, the markets softened across all categories relative to the trends we had seen during the first half of 2015. We also saw deceleration in our contract print business as we cycled a couple of large customer wins from last year and continue to feel pressure from the ongoing digitization of our forms business.”

I don’t know if there’s been a lot of change in corporate spending behavior

“from my perspective, I don’t know if there’s been a lot of change or differences in corporate spending behavior. I know in general, technology has been weak and we have had great success in selling products beyond office supplies.”

Office supplies down to only 45% of sales mix

“You look at the total company mix, gosh, it wasn’t that long ago, we were probably 75% to 80% office supplies and today I think that number for the whole company is probably about 55% office supplies and 45% BOS or beyond office supplies, and obviously, as BOS continues to grow, at some time point those lines will cross and will be more non-office supplies than we are office supplies.”

Macy’s Management Presents at Morgan Stanley Global Consumer and Retail Broker Conference
Karen Hoguet – Chief Financial Officer

Clearly the consumer isn’t doing as badly as our industry

“clearly the consumer isn’t doing as badly as what my industry, our industry is doing, because of some of the shifting in spending patterns of the customer. But that didn’t change between Q2 and Q3.”

Top malls are still going to be fabulous shopping experiences

“one of the thought from the industry that I hear most often is what is the future of malls? And we kept hearing ourselves saying, we have absolutely no doubt that the top malls are going to continue to fabulous shopping experiences.”

Wells Fargo’s (WFC) Management at BAML conference
David Carroll – Senior EVP, Wealth and Investment Management

I’m bullish on financials

“Personally, I’m very overweight financials; I have it for a long time. But seriously, I’m pretty bullish on the sector. I think institutions are very positively positioned relative to raising rates. I think if we do get any kind of economic expansion, financials are going to be the beneficiary of it. But, we are better capitalized more liquid than we have been in a decade. I think in our case, given the breadth of our business mix, whatever parts of the economy, you are experiencing growth we are going to benefit from it.”

DOL proposals on fiduciary standard have unclear impact

“Again we don’t know. There is speculation that this could be the catalyst for the demise of 12b-1 fees and other types of network — networking fees. We don’t know. So it’s kind of pointless to speculate on it. At the end of the day, we have enough confidence in our platform and in our client relationships. We think we’ll be successful.”

Tractor Supply Company’s (TSCO) CEO Gregory Sandfort Presents at Morgan Stanley Global Consumer and Retail Brokers Conference

There’s a lot of things that can’t be delivered to a customer via drone

“Omnichannel for us is a growing business but there are a lot of things that can’t be sold on omnichannel and delivered to the customer through a drone or through an easy methodology. And some of these things are things that are unique to Tractor and we have to find ways to get it to our customer.”

Philip Morris International (PM) Management Presents at Morgan Stanley Global Consumer and Retail Brokers Conference
Jacek Olczak – Chief Financial Officer

Russian market responding to price increases reasonably well

“So far the total industry volumes are responding to the price increases within the sort of acceptable elasticity ranges, but we’ll have to – I think Russia will remain one of the least of the countries to watch the next year. I mean so far everything seems to be working well. There is some down trading, but with the price increases which we are taking there, I mean obviously you will have some down trading.”

No Macro environment that really concerns me

“Nothing today stands in the least which would worry me. There are few places to watch, but I think it’s pretty manageable going forward.”

General Motors’ (GM) CEO Mary Barra Presents at Barclays 2015 Global Automotive Conference

More change in this industry in the next 5 years than we’ve seen in the last 50

“I believe that we’ll see more change in this industry in the next five to 10 years than we’ve seen in the last 50, but we are not waiting to follow, we are not waiting to be disrupted, we are disrupting ourselves because with all these changes and challenges there is also opportunity whether it’s the strength in the U.S. market whether it’s the growth potential in China although China is moderating and even with the non-traditional entrants coming in the space when you look at the assets that we have and I’ll cover them as we go through the presentation, we feel we are well positioned.”

Will be launching the Bolt 200 mile range

“And we’re very excited about the next generation Volt which is the foundational technology that enables us to be able to be launching the Bolt, and the Bolt will go 200 miles on a charge, this really starts to change the equation in all electric, remember the Bolt is extended range electric vehicle because once you get to 200 miles you really get to a point for most drivers most days even with unexpected, you’re not going to create range anxiety”

You could make the argument that sharing cars will expand the market

“”when you look at sharing you can look at it and say, hi that’s going to be less cars sold. But you can also say it’s going to enable people either the use or people who have some impairment or at an age where they are not able to drive. And so I think it expands the market.”

JP Morgan 3Q15 Earnings Call Notes

Marianne Lake – CFO

Mixed underlying results

“Underlying results were somewhat mixed on the back of market conditions.”

Trading business able to do well where there was volatility, but it was pretty slow where there wasn’t

“we did pretty well where there was volatility. And where there wasn’t, it was more about, to your point, more about low levels of activity, people on the sidelines. So it was just tougher to make money because less was happening, rather than anything else more significant than that.”

We would say the economy is doing pretty well

“we would say that the U.S. economy is doing pretty well there. We’re seeing good demand for loans in the consumer space and reasonably good sentiment in the business banking space, and our core loan growth numbers do show that. So there’s nothing particularly funky in the loan growth numbers. We do our very best to show them in the right light.

The jobs report was still 2x what is required for stable unemployment

I would take a slightly different perspective on the jobs report, the non-farm payrolls, and not to sort of overthink it, but while I know it was somewhat lower than people were expecting or possibly hoping for, it still at around 140,000 was almost two times what would be required to have stable unemployment. So, you know, it’s only one report too, you can’t overreact to it.”

Credit quality of portfolio is quite high

“Our portfolio quality is really getting quite high. We’re fighting through most of the significant risks. So, reserve releases will be more modest and a little bit more periodic. And several hundred million dollars next year, maybe 300 plus or minus, but not significantly more than that.”

Not expecting material reserve increases in energy in the next quarter

‘Obviously I’m not saying that there may not be any net incremental reserve build, but we’re not expecting them to be significant. A lot of companies have tried to adjust their expense basis and otherwise help their position. So if energy prices stay around these levels and recover slowly, we’re expecting net not to have material incremental reserves in the next quarter. We may see some.”

Trading business was fine in China because were not directionally positioned

“there was a lot of volatility, particularly in China in the second part of or the last part of the second quarter. We were — we did pretty well, we helped our clients, we didn’t have significant open risk position, we weren’t very directional, so we were able to do well in that situation. Also in the reverse, also on currency moves. So really — it really is the comment I made about we’re here to serve our clients. They were transacting. We were able to do risk intermediation [interj] for them. And so we kind of made money on both ends.”

Jamie Dimon – CEO

There are good expenses and bad expenses

“I’ve spoken my whole life about good expenses and bad expenses. You know, bad expenses are wastes, things you don’t need, you don’t [inaudible] through processing, things like that. But we want certain expenses to go up. When we find marketing opportunities in card, we’re going to spend. If the investment bank does better, the comp accrual [ph] is going to go up. So that’s how we run the Company. It’s not ever going to change”

70% financial institution?

” it’s happened that JPMorgan built a global corporate investment bank, 70% of it is financial institution and 30% corporate. We easily could have been built the other way around, it’s who you focus on over time. So when I say over time, it might be quite easy for us to say over five to six years, let’s focus more on the corporates and less in financials, and that will affect your GCIB fairly substantially. ”

Explaining the process for energy loan redeterminations

‘ the reserve-based lending, you basically take essentially current prices, you discount at a discount rate, you assume expenses, you have to really engineer your cores [ph] and things like that, and you see if you can make — roll over the loan at a sound, call it 65% LTV, and we think it’s pretty good.”

We’re here to lend to clients, particularly in tough times

“That’s what we’re here for, to lend to clients, particularly in tough times. You can’t be a bank that every time something goes wrong you run away from your client.”

JS Earnings Call & Investor Presentation Notes 9.22.2015 – AZO, JPM, GIS

Autozone (AZO) William Rhodes said the company continues to focus on the “do-it-yourself” auto retail segment while also growing it’s commercial garage business

DIY remains our number one priority. Our DIY business continues to grow, remains the largest portion of our sales, and continues to generate tremendous returns.  We also see significant opportunities for new store growth and improved productivity in our existing stores. As our commercial business continues to grow and is intertwined with our retail business, we’ve continued to identify opportunities to optimize our inventory placement and distribution strategy in order to respond to the ever increasing challenge of parts proliferation in the industry.”

Despite robust sales and profitability growth over the last decade, he said the company can still improve and often missing out on sales opportunities due to inventory being out of stock

To this day, it surprises me how often we’ve to say sorry, we don’t have that available. Even with our new part additions too many customers leave our stores without their needs being met. In this spirit to help the customer we continue to make significant systems enhancements and to capture data about our customer shopping patterns across all of our platforms.”

And the company continues to benefit from the tailwind of increased mileage by drivers

As new vehicle sales are reaching all-time highs and gas prices on average are down year-over-year, vehicle miles driven continue to increase.  This trend is encouraging.  We continue to believe that lower gas prices have a real impact on our customers’ ability to maintain their vehicles, and cost reductions help all Americans, we hope to continue to benefit from this increase in disposable income.”

And the company’s management team restated their “return on capital” mindset as opposed to “grow sales at all costs” mindset

We should also highlight another strong performance in return on invested capital, as we were able to finish fiscal 2015 at 31.2%. We are very pleased with this metric and is one of the best in all of hardline retail.  Our primary focus has been and continues to be that we ensured every incremental dollar of capital that we deployed in this business provides an acceptable return, well in excess of our cost of capital. It is important to reinforce that we will always maintain our diligence regarding capital stewardship as the capital we invest is our investor’s capital.”





JP Morgan (JPM) CEO Jamie Dimon is taking the long view on his economic outlook for China

“Our view of China is in 20 years it will be a large developed nation probably housing 20% to 25% of the global Fortune 2000 or something and that’s where we are keeping our eye on. We know that between here and then, they are going to have some serious bumps in the roads in a couple of ditches and maybe even a rough like we had in 2008 or 2009. And I think they are very bright, the reason for that though is, they have a lot of lot of issues they got to deal with and they are very open about these issues.”

JP Morgan (JPM) CEO Jamie Dimon said it doesn’t matter when the Fed raises interest rates

“It’s a lot of chatter about nothing. I don’t want to add to that chatter. Let the Fed decide when they want to raise rates and wherever I go I ask businesses, consumers, small business, large business, will it affect you if rates go 25 basis points? I haven’t found anyone who says, Oh my god. By the way, if someone says oh my god, I’m in trouble.”

He went on to say the bank’s returns have come down but they expect them to go up in the long run 

I mean, when you look at a business, if you add just one checking account and in the old days the NPV of that was 25% or so, the IRR is 25% and you do it today and the IRR is 12% or 8%. Would you not open that account? Of course, we open the account because that will change over time and as spreads go up. So we’re looking at – we’re keeping our eye on the long haul here and not the short one.”

JP Morgan (JPM) CEO Jamie Dimon said the bank has no acquisition plans 

We are not the acquisition business right now unless it was kind of a small fit in something. And obviously we can’t do a bank here and I don’t think we are going to try a bank overseas right now. There is no reason for JPMorgan in getting a fight with regulators around the world what we’re trying to do and distract us from our mission at hand. I believe we’ll grow organically for a long time.  We are legally not permitted to buy banks in the United States.”

And he explained to what degree the bank will become more profitable in a higher interest rate environment

So we make a disclosure in our 10-K that if rates go up 100 basis points, we will make little over $2 billion more. More of that’s in the short and long end, but obviously how they go up really matters and how fast they grow up really matters, but in general rates going up, all things being equal will do better. “   





General Mills (GIS) CFO Donal Mulligan said the company has implemented many cost savings initiatives in hopes of reducing expenses

“In addition we are making good progress on our incremental cost savings initiatives, including Project Catalyst, Project Century, Project Compass and the changes to our administrative policies and practices. Taken together these initiatives remain on track to deliver between $285 million and $310 million in annual savings this fiscal year and more than $400 million in fiscal ‘17.”

General Mills (GIS) CFO Donal Mulligan stated that the company is using the Proctor & Gamble focus strategy of prioritizing its most profitable and popular brands

We are prioritizing what we call our Power 450 SKUs. These are our 450 best turning national items. In fact they turn at a rate that is nearly four times faster than the other items in our portfolio. These products represent three-quarters of our U.S. Retail volume, but less than 20% of our SKUs. More importantly we have on average less than 350 of these 450 items on the shelf. That’s almost a 25% distribution gap and a significant growth opportunity for our largest and most profitable brands.”

General Mills (GIS) Senior VP Shawn O’Grady said E-commerce is one of the fastest growing sales channels for the company’s products

On the e-commerce front, in the U.S. food sales that are going through online are between 1% and 2%. Now that’s changing pretty quickly, meaning moving from 1% to 2%. If you said what does it look like out four or five years ahead, all the projections I’ve seen are in the 5% to 6% range. So it’s going to be a high growth area. Obviously Amazon is leading some of the thought there, is investing a great deal to make sure that they and utilizing their stores to make sure they are competitive. And that really is causing all the players in the marketplace to one of the actives in the e-commerce space.  We have only to look at other markets where we do business like the UK and France where, for some of our categories our online sales are approaching 10%. So it’s pretty clear that we’re going to move in that direction very rapidly in the U.S. and this is an area that we’re investing in at General Mills to develop our capability.”

JP Morgan at Barclays Conference Notes

Jamie Dimon – Chief Executive Officer

It’s been a challenging three years

“Certainly lot, it’s been a challenging three years. We’ve had lots of new rules and regulations and all the banks I know has been a tremendous amount of time writing code, getting people in place, pushing down capital liquidity, the products, clients, countries, adjusting their business models et cetera.”

The economy is still tugging along

“The economy itself which is far more important is still tugging along and I don’t know I think anything changed it that much.”

We think this is a speed bump for China

“In regard to China, I think we’ve been fairly consistent. I think we just saw is speed bump in China and not that bigger deal. China, our view of China is in 20 years it will be a large developed nation probably housing 20% to 25% of the global Fortune 2000 or something and that’s where we are keeping our eye on.”

The Fed is a lot of chatter about nothing. This isn’t even a tightening

“It’s a lot of chatter about nothing. I don’t want to add to that chatter. Let the Fed decide when they want to raise rates and wherever I go I ask businesses, consumers, small business, large business, will it affect you if rates go 25 basis points? I haven’t found anyone who says, Oh my god. By the way, if someone says oh my god, I’m in trouble, okay honestly you’re not paying attention, they’re going to go up and when it goes up September, October, November it isn’t it’s a psychological thing, folks. It’s not a economic thing, it’s not really in my opinion tightening. They could raise rates – tightening in the old days meant you’re taking cash out of the system.”

The system doesn’t even work the same way that it used to. They’re not taking money out.

“by the way the system doesn’t work the same anymore. In the old days if they said they want rate of x, they would buy treasuries that would create reserves, presumably banks would lend them out with some kind of money multiplier and they can do rates that way. The reserve banking doesn’t exist anymore because all those reserves bank have – I’m going to call them – they are not required under old reserve requirements, they required an LCR, so that – it won’t work that way, but they can set IOER, which the rate they pay us if rates go immediately there and it’s not necessarily taking money out.”

The American consumer is doing fine

“the American consumer is doing fine, I wish the economy is going faster, but I think it will take good policy have that happen.”

The next issue is not going to come from credit

“I don’t think it’s going to be credit. I mean if you look at the credit, it’s being written out mortgage, it’s pristine.”

But I do expect credit to get worse

“I don’t see something out a horizon credit that’s terrible. But I do expect it will get worse. So don’t misread this as being good for this long. Never seen it stay this good for 20 years. I will be this good and then it’s going to charges will go up and the economy will change obviously.”

We don’t run the business with expense initiatives

“We don’t run the business that way and they are not expense initiatives. We run the business that you think the way you want to do, you invest what you got to invest, you built the systems you need, you open the branches you need.”

I would love to acquire into new markets but we’re not allowed

“we are legally not permitted to buy banks in the United States. We are at the 10% FDIC limit. So, if I could buy 50 branches I’d go do that, but we have to build them instead. So, it is a lower return way then – I mean you would buy the branches if you could, if it was even at reasonable premium you buy them, it would be more effective way to go to market.”

There is nothing like what happened in the last cycle going on in banks today

“The last crisis obviously the heart of it, the nucleus, was mortgages in the banking system, outside the banking system, mortgages, and Fannie Mae and Freddie Mac; it was mortgages; that was the corruption that caused the whole crisis. I don’t see anything like that in banks, zero, nada, nothing, zilch.”

Non banks are not big enough to pose a systemic issue

“Non-banks, they are not big enough to pose a systemic issue. Now there might be a systemic issue five or seven years from now, so don’t quote me today if there’s been a change.’

The one thing I worry about a little is treasuries, because so many people in this business have never seen interest rates go up and the biggest buyers are reversing course

“the one thing I do worry about a little bit by the way is treasuries. I mean, there has been – interest rate has been so low for so long, there is an oracle, a paper that I kind of wrote it, but it was kind of funny that not only that the traders have they never seen interest rates go up, but their bosses have never seen interest rate go up. Anyone into this business since 2006 has never seen interest rates go up, they saw a little bit of a crisis here, but they never seen interest rates go up”

“And the biggest buyers of treasuries were central banks, foreign exchange managers effectively and banks. And all three of those are going to reverse. So I wouldn’t be shocked to see 10-year treasuries, when rates are going up, people change their mind, they change direction, that they will be vitally volatile and go up much faster than people think. I’m not predicting that, I’m simply saying in the back of mind, I think that’s a possibility and we will be prepared for that.”

I’m not afraid about leverage lending business for banks at all

“I’m not afraid at all about the leverage lending business, zero.”…

Leverage in the middle market is coming from non-banks

“If you go to middle market lending, all the leverage – and not all, but a big chuck of leverage lending in the middle market is now non-banks. Now one of the issues again with that is, we will lend to our clients in bad markets, markets will not lend their clients in bad markets and all hedge funds. So if you are a client, if you are the middle market client who bought hedge fund or private equity in making that loan they will not be there; in bad time, they can’t. So that’s the market to market right away and that will be a huge hit. You can’t make a loan and then have an immediate 20% loss.”

I don’t want to retire

“I don’t want to retire. So I don’t know, I mean as long as the board wants me and I could still do the job and I have my other stuff like that and I want to work hard.”

JS Earnings Call Notes SLP, FAST, JPM, WFC

Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.


Simulations Plus (SLP) CEO Walt Woltosz says the firm continues to see high retention rates amongst its customers

“Our software renewal rates continue to be very, very high, 99% based on fees, based on actual number of licenses that would be slightly lower but typically when we lose a license its an academic license or something that is not being full retail price.”




Fastenal CEO (FAST) Lee Hein says the company continues to sustain its maniacal focus on cost controls

“To execute, you must be disciplined. And so we put a call out to our folks to the blue team we call them and we ask them to scrutinize every expense and to reduce where possible. The reason we did this and we tell our folks over and over why are we doing what we do. And in this point, we look to reduce expenses so we could add energy into the stores.  We’re starting again to show discipline and balance and what we’re trying to do in our growth initiative of offering or getting more energy into our stores, again to offer a high level of service, immediate service when needed to stay in line on these large key customers and to serve our customers on a local level.

Fastenal CEO (FAST) Lee Hein says his customers loathe to switch suppliers

“If I look at that fastener business, a lot of production business in there. The beauty of that business is incredibly sticky. It’s really invasive and complicated and painful to switch a fastener supplier. Because that’s a very tight relationship because I’m supplying you the stuff you need in what your producing and the quality, the source supply, all those things we bring to the table are critical and it’s very, very disrupted to change your supplier.”

And they believe they are taking market share from competitors

“That’s about Fastenal taking market share that’s not about Fastenal being impacted by the economy. We’re out taking market share as fast as we’ve ever done. I look at our signings in the first six months of this year; they are ahead of our signings in the first six months of last year. So, I feel very good about the underlying business as far as our ability to take market share.”




Wells Fargo (WFC) CFO John Shrewsberry did say they saw an uptick of oil & gas firms defaulting on their loans during the quarter

“We had an increase in non-performing loans in our energy portfolio. Oil and gas loans are only 2% of our total loan portfolio and balances in this portfolio declined by approximately $700 million from first quarter reflecting pay downs.  Our energy team completed their spring re-determination process during the second quarter and as expected, the drop in energy prices did impact the cash flow and collateral values of a number of our borrowers leading to downward portfolio migration.”

Wells Fargo (WFC) CFO John Shrewsberry said the firm continues its shift to a digital-centric bank and is thinking about launching it’s own robo investment offering

There are a number of initiatives underway in that business to modernize and to create service capability to attract new investors and to better serve the investors that we have. And that turns up in the – sort of primary systems that our financial advisors use to interact with our customers. It will turn up in our mobile and online offerings that allow people to do more for themselves and at some point, it could even include service or capability that competes with some of the sort of the robo advisory people out there today who rely primarily on technology to construct portfolios and make offerings to customers.”




JP Morgan (JPM) CFO Marianne Lake says the firm intends to further increase profitability by reducing expenses

“We remain focused on our commitment to reduce expenses by $2 billion in 2017 relative to 2014, while continuing to self fund investments in the business. In the first half of this year, expenses were down approximately $0.5 billion versus the same period last year, and our headcount down roughly 6,000 year-to-date.”

JP Morgan (JPM) CFO Marianne Lake said the functionality of the banking branch is changing

And then as you know really looking at the nature of branches as a footprint the way we’re using them, the way we’re staffing them importantly moving them to more advice and less transaction, more automation. So, definitely responses to the evolution in customer preferences and mobile and online is not only a fantastic customer experience evidenced in our experience that, but it’s also a lower cost to serve. So we’re also improving the profitability of the very highly transactional customers. So, I mean I think Gordon used the word omni-channel. It’s, we have a place for everything in our fleet and branches are very important. And we’re just going to be evolving them to continue to meet customer needs.”

JP Morgan (JPM) CEO Jamie Dimon said he continues to see corporations take advantage of low interest rates and issue bonds denominated in Euros

“We’ve almost never seen before in the EU, the volume of American companies financing in euro, because it’s cheaper to do that even if you swap back to dollars. So a lot of American companies go to Europe to do that.”