Winter Helps Retail Sales, Jim Beam Gets Sold, and JPM Earnings Hurt

Good mornin', good lookin'. Here are the four things you should know on Jan. 15.

Jan 15, 2014 at 6:00AM
Wall Street is pretty excited about these new burrito vending machines we wish were everywhere. And after a four-day losing streak, Wall Street's also hungry for some good econ data. Impressive retail sales pumped the Dow Jones Industrial Average (DJINDICES:^DJI)up 116 points Tuesday, but it was Jim Beam and J.P. Morgan who got all the attention.

1. Temperature drop sends retail sales up
The number of the day is 0.2%. That's how much retail sales jumped by in December, twice as much as the economists' forecasts. We know you've been hearing that holiday shopping sales were coming in below analysts' projections (which they did), but according to the data, sales rose at the end of December.

Why the December surprise? Simple: cold weather. Some brutally low numbers on the thermometer hurt car sales but forced most warm-blooded Americans to splurge on discounted winter clothing. Internet shopping in particular saw a jump as folks cozied up to computers to order their North Face fleeces online.

2. Japan buys Jim Beam
Bourbon and bacon are our two favorite indulgences on Independence Day -- but now we'll need to find new ones. That's because Beam (NYSE:BEAM) announced that Japan-based Suntory will buy it for $13.6 billion. That makes Suntary the Sumo-sized third largest distillery globally, now that it owns labels Jim Beam and Maker's Mark.

The takeaway is that analysts think (and American adult beverage connoisseurs hope) that this will be the last major American liquor acquisition for a while. Many mammoths of the American liquor biz are family owned (like Brown-Forman's Jack Daniel's), and they've been guzzling on solid profits as they ride the craft-beer and whiskey resurgence of the past decade -- to analysts, that means no interest in outside financing.
 
3. JPMorgan earnings just miss estimates
Ouch. That last Bernie Madoff fine that JPMorgan Chase (NYSE:JPM) paid -- a hefty $2.6 billion, to be exact -- hurt its fourth- quarter profits just enough to miss analysts' estimates of $1.35 a share by about 5 cents. Altogether, America's largest bank earned $5.3 billion, down slightly from the $5.7 billion earned in last year's fourth quarter.

It's called planning ahead. Even though the bank didn't settle the investigations into its role in the Madoff Ponzi scheme until January, JPM expensed $1.1 billion in legal costs during the fourth quarter. Looks like their lawyers knew it was going to take a lot of cash to satisfy Uncle Sam's wrath. If you've got a pen and paper, do the math, and exclude this cost, JPM actually earned $1.40 a share, beating estimates.

CEO Jamie Dimon had a bruising 2013, and he announced that all legal matters are behind the company, $22 billion in fines later. Now it can focus on growing the business, even though investors gave the report a thumbs sideways, as the stock didn't move Tuesday.
 
4. Wells Fargo sets record profits of $22 billion
What've your bankers been up to the past three months? Wells Fargo (NYSE:WFC), the San Francisco-based bank, announced earnings of more than $5.6 billion for the fourth quarter of 2013, which is up 10% from last year. How did it get there? America's got better credit than last year.

Wells Fargo isn't Wall Street. In fact, it doesn't even like the Dave Matthews Band's "Grey Street." Wells is more interested in the mortgage business that you can't get to with an MTA MetroCard. It made more than $21 billion in revenues related to financing homes for people. It's also benefiting majorly since Americans' credit ratings are improving, just like the economy, so Wells could cash in on some money it had set aside for lost reserves.

Are you going to cry, No. 2? Total profits for 2013 were $21.9 billion, beating JPMorgan Chase for the first time since 2004 (before JPMorgan got "Chased"). Investors weren't as impressed as you'd think, though. The fact that a big chunk of profitability was due to the improving credit of its customers means it's not a sustainable profit driver. Wells is still pumped even though the stock barely moved Tuesday.

Today:
  • The Federal Reserve's "Beige Book"
  • New York "Empire State" manufacturing index
  • Earnings: Bank of America

Fool contributors Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Bank of America, Beam, and Wells Fargo and owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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