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Features - 16 October 2014

Third Quarter Earnings Season Starts

JP Morgan Chase started the ball rolling in third quarter earnings for the banking sector, reporting $5.57 billion third quarter profit – results much different from the $380 million loss reported for the same period last year. A boost to the fixed income trading unit of the nation's largest bank was one of the motivating factors behind the turnaround, as fixed income revenues rose 2.1 percent year-on-year to beat analysts' forecasts. Earnings were weakened by the $1.1 billion reserved for legal costs*, resulting in a drop of 26 cents per share. Nonetheless, JP Morgan's results have raised investors' hopes that other Wall Street financial institutions will present favorable results in the coming weeks.

Netflix reported third quarter earnings on Wednesday and despite figures matching or exceeding the company's and Wall Street's forecasts, shares took a tumble after hours, apparently due to dissatisfaction over the number of new subscribers gained over the past three months. Netflix shares dropped 26 percent to $331.41 per share after reporting 96 cents per share earnings and revenue of $1.41 billion. Pricing fluctuated during the day and ended down 0.12 percent at the conclusion of trading. It has been speculated that Netflix investors may be reacting negatively to the announcement from Time Warner's HBO that it plans to provide a stand-alone streaming service next year. When making the announcement chief executive of HBO, Richard Plepler, noted that up to 10 million homes in the United States subscribe to broadband streaming video services and don't have cable subscriptions, and as such they have no access to HBO. He went on to say that this presents a "large opportunity that should not be untapped". In its quarterly letter, Netflix conceded that HBO is their primary competitor, going on to say that the competition will drive both companies to be better.

*JP Morgan is one of six of the world's largest banks expected to admit to flaws in their global forex trading business, the others being Citigroup, UBS, Royal Bank of Scotland, HSBC and Barclays, for which they are likely to be liable for hefty penalties.


Ethical Investing and Shareholder Activism - 6 October 2014

A growing number of investors are building investment portfolios that include companies considered to be ethical – in their products, services, carbon footprint, social responsibility and other criteria relating to environmental, social and corporate governance (ESG) . While it's clear that the whole point of investing is to make money, there is a group of investors who believe that there is money to be made while sticking to their principles. Moreover, with the increased demand for transparency in publicly traded companies, dodgy dealings are difficult to get away with and can result in billions of dollars in litigation and payouts that inevitably have an impact on shareholders.


Fed Interest Rate Policy Boosts Markets - 18 September 2014

Major indexes on Wall Street responded positively Wednesday to indications from the Federal Reserve that it intends to keep its near-zero short-term interest rate for a while still. The Dow Jones industrial average ended the day up 24.88 points (0.2 percent) at 17,156.85, being a record high for the year, while the S&P 500 climbed 2.59 points (0.1 percent) to 2,001.57, a figure just short of its September 5 high of 2,007.71. The Nasdaq composite gained 9.43 points (0.2 percent) to close at 4,562.19.


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