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1. JPMorgan settlement is in the books: $13 billion
Jamie Dimon had good news and bad news. The bad news is that the bank under his watch had to dish out $13 billion, a record settlement of any company to the Justice Department, for its role in selling risky mortgage-backed securities to unknowing investors leading up to the housing bubble.
The good news is that the settlement that has lasted longer than the filming of Lord of the Rings is over with. Both The Justice Department and JPMorgan Chase (NYSE: JPM ) made official news releases confirming the settlement that's been negotiated for months (Bloomberg).
This single settlement is a one-lump settlement of three different banks' wrongdoings. Bear Sterns and Washington Mutual both belong to the supersized JPMorgan Chase, but with the assets and profits of these acquisitions also came insane legal risks. This massive penalty hits JPMorgan where it hurts (the piggy bank) and will be cited for years as the huge possible downside threat of profitable but sometimes shady and unethical trading business.
What happened to JPMorgan's stock? It barely moved Tuesday. That's because the size of this settlement was widely expected by the market and Dimon has huge legal reserves ready to pay the tab.
2. Best Buy earnings get unplugged
Big Blue was brutally black and blue after its earnings report released Tuesday. America's largest electronics chain, Best Buy (NYSE: BBY ) , reported net earnings of $54 million compared to a $10 million net loss from the year before. That topped analysts expectations and is a good sign for the hefty retailer, but Best Buy shares still plummeted nearly 11% (CNBC).
So why did the big store fall hard? Christmas. Best Buy warned Wall Street in its earnings report that it's expecting a super-challenging holiday season as more competitors up the promotions ante this year. Wal-Mart even just unveiled its electronics/toys price-match guarantee. Best Buy is trying to avoid becoming the world's official home for trying out goods and buying them elsewhere.
The takeaway is that Best Buy is trying its best. CEO Hubert Joly (great name) took control of the struggling retailer last year and has been restructuring management like he's fixing a decade-old Dell desktop. Investors had low expectations for Best Buy's earnings, but they're waiting to see if ol' Hubert can turn things around -- and the stock is up 227% year to date.
3. Home Depot earnings kick
When life gives you lemons, Home Depot turns them into Linoleum countertops. America's biggest home-improvement store released third-quarter earnings Tuesday -- Home Depot (NYSE: HD ) had 4% more customer transactions than last year, and each transaction, on average, was 54 bucks, 3% higher than last year. The result was a 7% increase in sales to $19 billion and a 47% rise in profits to $1.4 billion (Forbes).
The CEO is three for three on raising his estimates for full-year 2013 earnings during earnings conference calls this year. Horrible declines in housing values since '06 destroyed homeowners' confidence, and Home Depot's profitability and stock price got crushed as a result. But a year-and-a-half of steady recovery in housing prices has boosted homeowner confidence enough to fix up their old homes with MTV Cribs-inspired enthusiasm.
The big-box store that helps build all the other big-box stores relies on homeowner confidence that things will get better. Confidence is crucial for homeowners to take on housing projects (like installing a casino royale style poker table or batman movie cave) and Americans are buying the lumber and supplies to improve their casas. Thanks to improved business and a stock repurchase plan that's reduced the total number of Home Depot shares, the CEO expects 2013 profits per share to be up a whopping 24%. Stockholders are loving it, sending Home Depot up 30% year to date and 150% since mid-2011.
- "Minutes" from the Fed's last meeting
- Existing home sales
- Third-quarter earnings from Green Mountain Coffee Roasters, Staples...