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
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.
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.
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.
- The Federal Reserve's "Beige Book"
- New York "Empire State" manufacturing index
- Earnings: Bank of America
As originally published on MarketSnacks.com
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